Upcoding in a National Health Service: the evidence from Portugal

How do hospitals respond to payment unbundling for diagnostic imaging of suspected cancer patients?

Payments for some diagnostic scans undertaken in outpatient settings were unbundled from Diagnosis Related Group based payments in England in April 2013 to address under-provision. Unbundled scans attracted additional payments of between £45 and £748 directly following the reform. We examined the effect on utilization of these scans for patients with suspected cancer. We also explored whether any detected effects represented real increases in use of scans or better coding of activity. We applied difference-in-differences regression to patient-level data from Hospital Episodes Statistics for 180 NHS hospital Trusts in England, between April 2010 and March 2018. We also explored heterogeneity in recorded use of scans before and after the unbundling at hospital Trust-level. Use of scans increased by 0.137 scans per patient following unbundling, a 134% relative increase. This increased annual national provider payments by £79.2 million. Over 15% of scans recorded after the unbundling were at providers that previously recorded no scans, suggesting some of the observed increase in activity reflected previous under-coding. Hospitals recorded substantial increases in diagnostic imaging for suspected cancer in response to payment unbundling. Results suggest that the reform also encouraged improvements in recording, so the real increase in testing is likely lower than detected.

The end of an era? Activity-based funding based on diagnosis-related groups: A review of payment reforms in the inpatient sector in 10 high-income countries

CONTEXT

Across the member countries of the Organisation for Economic Co-Operation and Development, policy makers are searching for new ways to pay hospitals for inpatient care to move from volume to value. This paper offers an overview of the latest reforms and their evidence to date.

METHODS

We reviewed reforms to DRG payment systems in 10 high-income countries: Australia, Austria, Canada (Ontario), Denmark, France, Germany, Norway, Poland, the United Kingdom (England), and the United States.

FINDINGS

We identified four reform trends among the observed countries, them being (1) reductions in the overall share of inpatient payments based on DRGs, (2) add-on payments for rural hospitals or their exclusion from the DRG system, (3) episode-based payments, which use one joint price to pay providers for all services delivered along a patient pathway, and (4) financial incentives to shift the delivery of care to less costly settings. Some countries have combined some or all of these measures with financial adjustments for quality of care. These reforms demonstrate a shift away from activity and efficiency towards a diversified set of targets, and mirror efforts to slow the rise in health expenditures while improving quality of care. Where evaluations are available, the evidence indicates mixed success in improving quality of care and reducing costs and expenditures.

Incidence of moral hazards among health care providers in the implementation of social health insurance toward universal health coverage: evidence from rural province hospitals in Indonesia

Objective

To identify the incidence of moral hazards among health care providers and its determinant factors in the implementation of national health insurance in Indonesia.

Methods

Data were derived from 360 inpatient medical records from six types C public and private hospitals in an Indonesian rural province. These data were accumulated from inpatient medical records from four major disciplines: medicine, surgery, obstetrics and gynecology, and pediatrics. The dependent variable was provider moral hazards, which included indicators of up-coding, readmission, and unnecessary admission. The independent variables are Physicians' characteristics (age, gender, and specialization), coders' characteristics (age, gender, education level, number of training, and length of service), and patients' characteristics (age, birth weight, length of stay, the discharge status, and the severity of patient's illness). We use logistic regression to investigate the determinants of moral hazard.

Results

We found that the incidences of possible unnecessary admissions, up-coding, and readmissions were 17.8%, 11.9%, and 2.8%, respectively. Senior physicians, medical specialists, coders with shorter lengths of service, and patients with longer lengths of stay had a significant relationship with the incidence of moral hazard.

Conclusion

Unnecessary admission is the most common form of a provider's moral hazard. The characteristics of physicians and coders significantly contribute to the incidence of moral hazard. Hospitals should implement reward and punishment systems for doctors and coders in order to control moral hazards among the providers.

Do budget constraints limit access to health care? Evidence from PCI treatments in Hungary

Under Hungary's single payer health care system, hospitals face an annual budget cap on most of their diagnoses-related group based reimbursements. In July 2012, percutaneous coronary intervention (PCI) treatments of acute myocardial infarction were exempted from that hospital level budget cap. We use countrywide individual-level patient data from 2009 to 2015 to map the effect of such a quasi-experimental change in monetary incentives on health provider decisions and health outcomes. We find that direct admissions into PCI-capable hospitals increase, especially in central Hungary, where there are several hospitals which can compete for patients. The proportion of PCI treatments at PCI-capable hospitals, however, does not increase, and neither does the number of patient transfers from non-PCI hospitals to PCI-capable ones. We conclude that only patient pathways, plausibly influenced by hospital management, were affected by the shift in incentives, while physicians' treatment decisions were not. While average length of stay decreased, we do not find any effect on 30-day readmissions or in-hospital mortality.

Dementia-related agitation: a 6-year nationwide characterization and analysis of hospitalization outcomes

OBJECTIVES

To characterize all hospitalizations held in mainland Portugal (2010-2015) with dementia-related agitation based on International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) coding, and to investigate whether there is a relationship between agitation and hospitalization outcomes.

METHODS

A retrospective observational study was conducted using an administrative dataset containing data from all mainland Portuguese public hospitals. Only hospitalization episodes for patients aged over 65 years who have received a dementia diagnosis ascertained by an ICD-9-CM code of dementia with behavioral disturbance (294.11 and 294.21) and dementia without behavioral disturbance (294.10 and 294.20) were selected. Episodes were further grouped according to the presence of an agitation code. For each episode, demographic data and hospitalization outcomes, including length of stay (LoS), in-hospital mortality, discharge destination and all-cause hospital readmissions, were sourced from the dataset. Comparative analyses were performed and multivariable logistic methods were used to estimate the adjusted associations between agitation (exposure) and outcomes.

RESULTS

Overall, 53,156 episodes were selected, of which 6,586 had an agitation code. These were mostly related to male, younger inpatients (mean 81.19 vs. 83.29 years, p < 0.001), had a higher comorbidity burden, stayed longer at the hospital (median 9.00 vs. 8.00 days, p < 0.001) and frequently ended being transferred to another facility with inpatient care. Agitation was shown to independently increase LoS (aOR = 1.385; 95%CI:1.314-1.461), but not the risk of a fatal outcome (aOR = 0.648; 95%CI:0.600-0.700).

CONCLUSION

These results support the importance of detecting and managing agitation early on admission, since its prompt management may prevent lengthy disruptive hospitalizations.

Financial risk allocation and provider incentives in hospital-insurer contracts in The Netherlands

In healthcare systems with a purchaser-provider split, contracts are an important tool to define the conditions for the provision of healthcare services. Financial risk allocation can be used in contracts as a mechanism to influence provider behavior and stimulate providers to provide efficient and high-quality care. In this paper, we provide new insights into financial risk allocation between insurers and hospitals in a changing contracting environment. We used unique nationwide data from 901 hospital-insurer contracts in The Netherlands over the years 2013, 2016, and 2018. Based on descriptive and regression analyses, we find that hospitals were exposed to more financial risk over time, although this increase was somewhat counteracted by an increasing use of risk-mitigating measures between 2016 and 2018. It is likely that this trend was heavily influenced by national cost control agreements. In addition, alternative payment models to incentivize value-based health care were rarely used and thus seemingly of lower priority, despite national policies being explicitly directed at this goal. Finally, our analysis shows that hospital and insurer market power were both negatively associated with financial risk for hospitals. This effect becomes stronger if both hospital and insurer have strong market power, which in this case may indicate a greater need to reduce (financial) uncertainties and to create more cooperative relationships.

Predicting diagnostic coding in hospitals: individual level effects of price incentives

The purpose of this paper is to test if implicit price incentives influence the diagnostic coding of hospital discharges. We estimate if the probability of being coded as a complicated patient was related to a specific price incentive. This paper tests empirically if upcoding can be linked to shifts in patient composition through proxy measures such as age composition, length of stay, readmission rates, mortality- and morbidity of patients. Data about inpatient episodes in Norway in all specialized hospitals in the years 1999-2012 were collected, N = 11 065 330. We examined incentives present in part of the hospital funding system. First, we analyse trends in the proxy measures of diagnostic upcoding: can hospital behavioural changes be seen over time with regards to age composition, readmission rates, length of stay, comorbidity and mortality? Secondly, we examine specific patient groups to see if variations in the price incentive are related to probability of being coded as complicated. In the first years (1999-2003) there was an observed increase in the share of episodes coded as complicated, while the level has become more stable in the years 2004-2012. The analysis showed some indications of upcoding. However, we found no evidence of widespread upcoding fuelled by implicit price incentive, as other issues such as patient characteristics seem to be more important than the price differences. This study adds to previous research by testing individual level predictions. The added value of such analysis is to have better case mix control. We observe the presence of price effects even at individual level.

Hospital response to a case-based payment scheme under regional global budget: The case of Guangzhou in China

Both developed and developing countries have been searching for effective provider payment methods to control health expenditure inflation. In January 2018, Guangzhou city in Southern China initiated an innovative case-based payment method for inpatient care under the framework of the regional global budget, called the Diagnosis-Intervention Packet (DIP). Contrary to the usual practice of the case-based payment, the DIP payment scheme includes a price adjustment mechanism through which the actual reimbursement for each case is determined ex post. By employing the difference-in-difference method and data from Beijing and Guangzhou, we evaluate the effects of the DIP payment on medical expenditures and provider behaviors. We find that total health expenditures per case have decreased by 3.5%, which is mainly driven by a substantial decrease in drug expenditures. It suggests that the DIP payment reform achieved a short-term success in slowing down the growth of health expenditures. However, the average point volume per case for local inpatients with social health insurance coverage has increased by more than 3%, primarily due to an increasing likelihood of performing at least one procedure. We also find suggestive evidence of up-coding. All these results suggest that healthcare providers have taken strategic behaviors in response to the DIP payment. These findings hold lessons for the ongoing payment reforms in China and other countries.

DRG grouping by machine learning: from expert-oriented to data-based method

Background

Diagnosis-related groups (DRGs) are a payment system that could effectively solve the problem of excessive increases in healthcare costs which are applied as a principal measure in the healthcare reform in China. However, expert-oriented DRG grouping is a black box with the drawbacks of upcoding and high cost.

Methods

This study proposes a method of data-based grouping, designed and updated by machine learning algorithms, which could be trained by real cases, or even simulated cases. It inherits the decision-making rules from the expert-oriented grouping and improves performance by incorporating continuous updates at low cost. Five typical classification algorithms were assessed and some suggestions were made for algorithm choice. The kappa coefficients were reported to evaluate the performance of grouping.

Results

Based on tenfold cross-validation, experiments showed that data-based grouping had a similar classification performance to the expert-oriented grouping when choosing suitable algorithms. The groupings trained by simulated cases had less accuracy when they were tested by the real cases rather than simulated cases, but the kappa coefficients of the best model were still higher than 0.6. When the grouping was tested in a new DRGs system, the average kappa coefficients were significantly improved from 0.1534 to 0.6435 by the update; and with enough computation resources, the update process could be completed in a very short time.

Conclusions

As a new potential option, the data-based grouping meets the requirements of the DRGs system and has the advantages of high transparency and low cost in the design and update process.

Analysis of root causes of problems affecting the quality of hospital administrative data: A systematic review and Ishikawa diagram

INTRODUCTION

Administrative hospital databases represent an important tool for hospital financing in many national health systems and are also an important data source for clinical, epidemiological and health services research. Therefore, the data quality of such databases is of utmost importance. This paper aims to present a systematic review of root causes of data quality problems affecting administrative hospital data, creating a catalogue of potential issues for data quality analysts to explore.

METHODS

The MEDLINE and Scopus databases were searched using inclusion criteria based on two following concept blocks: (1) administrative hospital databases and (2) data quality. Studies' titles and abstracts were screened by two reviewers independently. Three researchers independently selected the screened studies based on their full texts and then extracted the potential root causes inferred from them. These were subsequently classified according to the Ishikawa model based on 6 categories: "Personnel", "Material", "Method", "Machine", "Mission" and "Management".

RESULTS

The result of our investigation and the contribution of this paper is a classification of the potential (105) root causes found through a systematic review of the 77 relevant studies we have identified and analyzed. The result was represented by an Ishikawa diagram. Most of the root causes (25.7%) were associated with the category "Personnel" - people's knowledge, preferences, education and culture, mostly related to clinical coders and health care providers activities. The quality of hospital documentation, within category "Material", and aspects related to financial incentives or disincentives, within category "Mission", were also frequently cited in the literature as relevant root causes for data quality issues.

CONCLUSIONS

The resultant catalogue of root causes, systematized using the Ishikawa framework, provides a compilation of potential root causes of data quality issues to be considered prior to reusing these data and that can point to actions aimed at improving data quality.

The pilot of a new patient classification-based payment system in China: The impact on costs, length of stay and quality

With the urgent need to regulate provider behaviors, China developed a novel patient classification with global budget payment system, expecting to achieve both easy implementation and cost containment. The new system, called "diagnosis-intervention packet (DIP)" payment, is based on a deterministic patient classification approach, which groups patients according to the combination of principal diagnosis ICD-10 (International Classification of Diseases, 10th Revision) codes and procedure ICD-9-CM3 (International Classification of Diseases, 9th Revision, Clinical Modification) codes and links each group to relative historical costs market-wide. This study investigated the impact of the DIP-based payment on inpatient costs, length of stay, and quality of care in the largest DIP pilot city of China. In 2018, the city changed from the "fixed rate per admission with a cap on annual total compensation" policy to DIP with global budget for all insured inpatients. A difference-in-differences approach was employed to identify changes in outcome variables before and after the DIP policy among insured relative to uninsured patients. We found an average of 8.5% (p = 0.000) increase in inpatient costs per case (as intended), trivial changes in length of stay, and a 3.6% (p = 0.046) reduction in postoperative complication rate in response to DIP adoption among patients with high severity. Our findings suggested that the DIP-based payment helped regulate provider behaviors when treating high-risk patients. And the new payment has the potential for rapid rollout in resource-limited areas where lack a uniform coding practice or high-quality historical data.

The effects of audits and fines on upcoding in neonatology

Upcoding is a common type of fraud in healthcare. However, how audit policies need to be designed to cope with upcoding is not well understood. We provide causal evidence on the effect of random audits with different probabilities and financial consequences. Using a controlled laboratory experiment, we mimic the decision situation of obstetrics staff members to report birth weights of neonatal infants. Subjects' payments in the experiment depend on their reported birth weights and follow the German non-linear diagnosis-related group remuneration for neonatal care. Our results show that audits with low detection probabilities only reduce fraudulent birth-weight reporting, when they are coupled with fines for fraudulent reporting. For audit policies with fines, increasing the probability of an audit only effectively enhances honest reporting, when switching from detectable to less gainful undetectable upcoding is not feasible. Implications for audit policies are discussed.

From downcoding to upcoding: DRG based payment in hospitals

A prospective disease group-based payment is a reimbursement rule used in a wide array of countries. It turns to be the hospital's payment rule to imply. The secret of this payment is a fee payment as well as a hospital's activity based payment. There is a consensus to consider this rule of payment as the least likely to be manipulated by the actors. However, the defined fee per group depends on recorded information that is then processed using complex algorithms. What if the data itself can be manipulated? The result would be a fee per group based on manipulated factors that would lead to an inefficient budget allocation between hospitals. Using a unique French longitudinal database with 145 million stays, I unambiguously demonstrate that the implementation of a finer classification led to an upcoding-learning effect. The end result has been a budget transfer from public non-research hospitals to for-profit hospitals. The 2009 policy lead to upcoding disconnected from any changes in the trend of production of care.

Real-Time Operative Coding for Endoscopic Sinonasal Procedures: Quality Improvement in Practice

Objective: investigate the impact of an intraoperative coding sticker (ICS) on the accuracy of coding in endoscopic sinonasal procedures. Methods: this was a two-cycle audit evaluating the accuracy (and financial impact) of intraoperative coding of sinonasal procedures at a single tertiary centre. An ICS was introduced following consultation with the coding department. The accuracy of coding was measured before (cycle 1) and after (cycle 2) the ICS was introduced to a pilot firm and compared to a control firm. The ICS was used in 35% of the pilot firm cases. Results: the accuracy of clinical coding for endoscopic sinus surgery was 60% in the first cycle. Switching to the ICS has improved the accuracy in that firm from 50% in first cycle to 70% in the second cycle (p = 0.936; Chi-squared test). The median reimbursement for endoscopic sinus surgery was equal in both cycles of £1493.00 per patient. However, inaccurate coding resulted in £109.92 excess tariff payment in first cycle and £130.96 deficiency in the second cycle. Users of ICS reported it to be easy to use for clinicians, staff and clinical coders, whilst minimizing human error. Conclusions: The integration of the ICS improves the coding in sinonasal procedures and offers low-fidelity option alternative to live coding on the computer. The accuracy was not statistically significant in the study possibly due to the low number of observations. This can allow a precise coding standard with reliable service remuneration.

Do hospitals respond to changing incentive structures? Evidence from Medicare's 2007 DRG restructuring

In 2007, the Centers for Medicare and Medicaid restructured the diagnosis related group (DRG) system by expanding the number of categories within a DRG to account for complications present within certain conditions. This change allows for differential reimbursement depending on the severity of the case. We examine whether this change incentivized hospitals to upcode patients as sicker to increase their reimbursements. Using the National Inpatient Survey data from HCUP from 2005 to 2010 and three methods to detect the presence of upcoding, our most conservative estimate is an additional three percent of reimbursement is attributable to upcoding. We find evidence of upcoding in government, non-profit, and for-profit hospitals. We find spillover effects of upcoding impacting not only Medicare payers, but also private insurance companies as well.

Trend of depression and its association with sociodemographic and clinical factors among multiple myeloma hospitalizations: A Portuguese nationwide study from 2000 to 2015

OBJECTIVE

Patients hospitalized with multiple myeloma (MM) are particularly vulnerable to depression. The present study aims to determine the frequency of depression among MM hospitalized patients, in order to assess the possible differences between those with and without depression in relation to sociodemographic and clinical variables and to measure the impact of depression on hospitalization outcomes.

METHODS

An observational retrospective study was performed using an administrative data set of all hospitalizations with a primary diagnosis of MM between 2000 and 2015 in Portuguese mainland public hospitals. Codes related to depressive disorders were grouped to generate the dichotomous variable of depression (yes/no). A multivariate analysis was conducted and adjusted odd ratios (aOR) calculated between different variables and depression.

RESULTS

Of a total of 14.575 MM hospitalizations studied, a concurrent code of depression was registered in 666 patients (4.6%). A greater odds of depression was observed in female patients (aOR = 2.26; 95%CI = 1.91-2.66), transplanted patients (aOR = 1.78; 95%CI = 1.44-2.20), patients with plasma cell leukemia (aOR = 1.79; 95%CI = 1.22-2.64) and patients with a higher Charlson Comorbidity Index (CCI) (aOR = 1.10; 95%CI = 1.05-1.15). Length of stay was longer in patients with a registered diagnosis of depression (aOR = 1.01; 95%CI = 1.01-1.02) while the odds of in-hospital mortality were lower in these patients (aOR = 0.53; 95%CI = 0.41-0.68).

CONCLUSIONS

These results may help identify MM inpatients at higher risk of presenting depression (female gender, younger age, high CCI, plasma cell leukemia, transplant procedure). This will enable timely psychological assessment and treatment to prevent worse outcomes and higher healthcare costs associated with depression.

Opening the black box of diagnosis-related groups (DRGs): unpacking the technical remuneration structure of the Dutch DRG system

While we know that upcoding of diagnosis-related groups (DRGs) regularly occurs, we have little knowledge of the role of the technical features of coding systems in inducing coding behaviour. This paper presents methods for investigating the financial structure of the Dutch DRG system, and more in particular the grouper software, to gain such insight. The paper describes a system for investigating the robustness of the reward structure, by simulating the response of the DRG system to small changes in individual coding. The results from these analyses are used to visualise some data on coding behaviour, and to investigate how this behaviour is affected by incentives in the technical features of the DRG system. A number of technical weaknesses in the system are also identified.

Quality of coding within clinical datasets: A case-study using burn-related hospitalizations

The quality of clinical data held in administrative databases is crucial for appropriate funding of health care services. As Diagnosis-Related Groups (DRGs) continue to play an important role in hospital payment mechanisms, proper coding of diagnoses and procedures is of most concern. This study used an administrative, nationwide Portuguese inpatient database to characterize and assess coding patterns in burn-related hospitalization data, with a special focus on identifying suspected miscoding practices that could be affecting APR-DRG (All-Patient Refined Diagnosis-Related Groups) classification. Using coded clinical data of 4,182 burn-related admissions occurred between 2011 and 2015, we compared APR-DRG and Severity of Illness (SOI) frequencies between hospitals with a burn unit in Portugal. The frequencies of individual diagnosis and procedure codes among episodes grouped within the same APR-DRG were also compared. Hospitals with a burn unit in Portugal differed significantly in the frequencies of APR-DRGs 842 and 844. Proper coding of extensive third-degree burns might be related with the observed discrepant frequencies of APR-DRGs across the evaluated hospitals. Facilities also differed significantly concerning the proportions of SOI levels in certain APR-DRGs. Significant differences in reporting certain comorbidities and common hospital procedures, especially non-operating room procedures, might have influenced the observed discrepancies in SOI levels. Moreover, there seems to be a lack of standard in coding debridement procedures among the evaluated hospitals. Overall, we found some suspected coding patterns that could potentially be associated with miscoding practices impacting APR-DRG classification. Those findings could not only be relevant for planning future audit processes and improving medical coding practices, but also for discussing quality and desirable features of burn-related clinical data, keeping in mind their use for other purposes beyond DRG grouping, namely clinical and health care services research, as well as health care management.

How do hospitals respond to price changes in emergency departments?

Little is known about how prospective provider payment affects the provision of services led by unpredictable demand. We investigate hospital responses to a 32% increase in price for two treatments in emergency departments in England in April 2011 using data on 11,532,304 attendances (79 hospitals) between 2009/2010 and 2013/2014. We compare changes in the volumes of these two treatments to a treatment not attracting additional reimbursement using a difference-in-differences framework. Additional reimbursement led to 76% and 152% increases in the volumes of the two incentivised treatments. Hospitals received an additional £64.4 M between April 2011 and March 2014 for providing these treatments, of which 40% (£25.9 M) was attributable to the unanticipated hospital response to the price increase. We use time in treatment to distinguish real increases in treatment from reductions in undercoding or increases in upcoding. The association between the recorded receipt of these treatments and time spent in treatment was the same before and after the price increase, and there was no association between hospital-specific increases in recorded treatment volumes and changes in treatment times. The persistence of the treatment time increment suggests the increase in recorded treatment was a real increase in provision of treatments.

Dishonesty in health care practice: A behavioral experiment on upcoding in neonatology

Dishonest behavior significantly increases the cost of medical care provision. Upcoding of patients is a common form of fraud to attract higher reimbursements. Imposing audit mechanisms including fines to curtail upcoding is widely discussed among health care policy-makers. How audits and fines affect individual health care providers' behavior is empirically not well understood. To provide new evidence on fraudulent behavior in health care, we analyze the effect of a random audit including fines on individuals' honesty by means of a novel controlled behavioral experiment framed in a neonatal care context. Prevalent dishonest behavior declines significantly when audits and fines are introduced. The effect is driven by a reduction in upcoding when being detectable. Yet upcoding increases when not being detectable as fraudulent. We find evidence that individual characteristics (gender, medical background, and integrity) are related to dishonest behavior. Policy implications are discussed.

Health records as the basis of clinical coding: Is the quality adequate? A qualitative study of medical coders' perceptions

BACKGROUND

Health records are the basis of clinical coding. In Portugal, relevant diagnoses and procedures are abstracted and categorised using an internationally accepted classification system and the resulting codes, together with the administrative data, are then grouped into diagnosis-related groups (DRGs). Hospital reimbursement is partially calculated from the DRGs. Moreover, the administrative database generated with these data is widely used in research and epidemiology, among other purposes.

OBJECTIVE

To explore the perceptions of medical coders (medical doctors) regarding possible problems with health records that may affect the quality of coded data.

METHOD

A qualitative design using four focus groups sessions with 10 medical coders was undertaken between October and November 2017. The convenience sample was obtained from four public hospitals in Portugal. Questions related to problems with the coding process were developed from the literature and authors' expertise. The focus groups sessions were taped, transcribed and analysed to elicit themes.

RESULTS

There are several problems, identified by the focus groups, in health records that influence the coded data: the lack of or unclear documented information; the variability in diagnosis description; "copy & paste"; and the lack of solutions to solve these problems.

CONCLUSION AND IMPLICATIONS

The use of standards in health records, audits and physician awareness could increase the quality of health records, contributing to improvements in the quality of coded data, and in the fulfilment of its purposes (e.g. more accurate payments and more reliable research).

Hospital responses to price shocks under the prospective payment system

Under the prospective payment system (PPS), hospitals receive a bundled payment for an entire episode of treatment based on diagnosis-related groups (DRG). Although there is ample evidence regarding the impact of the introduction of the PPS, there is little research on the effects of the ensuing changes in payment levels under the PPS. In 2005, the Medicare PPS changed its definition of payment areas from the Metropolitan Statistical Areas to the Core-Based Statistical Areas, generating substantial area-specific price shocks. Using these exogenous price variations, this study examines hospital responses to price changes under the PPS. The results demonstrate that, while the average payment amount significantly increases in the affected areas, no parallel trend is observed in admission volume, treatment intensity, and quality of services. Conversely, hospitals facing a price increase are more liable to the perverse incentives that the PPS is known to encourage, namely, selecting or shifting patients into higher-paying DRGs. These results suggest that paying a higher price for a given service may not induce hospitals to offer services of better quality, but can rather prompt even higher payments through other behavioral responses.

Limited Consequences of a Transition From Activity-Based Financing to Budgeting: Four Reasons Why According to Swedish Hospital Managers

Activity-based financing (ABF) and global budgeting are two common reimbursement models in hospital care that embody different incentives for cost containment and quality. The purpose of this study was to explore and describe perceptions from the provider perspective about how and why replacing variable ABF by global budgets affects daily operations and provided services. The study setting is a large Swedish county council that went from traditional budgeting to an ABF system and then back again in the period 2005-2012. Based on semistructured interviews with midlevel managers and analysis of administrative data, we conclude that the transition back from ABF to budgeting has had limited consequences and suggest 4 reasons why: (1) Midlevel managers dampen effects of changes in the external control; (2) the actual design of the different reimbursement models differed from the textbook design; (3) the purchasing body's use of other management controls did not change; (4) incentives bypassing the purchasing body's controls dampened the consequences. The study highlights the challenges associated with improvement strategies that rely exclusively on budget system changes within traditional tax-funded and politically managed health care systems.

Is it good to be too light? Birth weight thresholds in hospital reimbursement systems

Birth weight manipulation has been documented in per-case hospital reimbursement systems, in which hospitals receive more money for otherwise equal newborns with birth weight just below compared to just above specific birth weight thresholds. As hospitals receive more money for cases with weight below the thresholds, having a (reported) weight below a threshold could benefit the newborn. Also, these reimbursement thresholds overlap with diagnostic thresholds that have been shown to affect the quantity and quality of care that newborns receive. Based on the universe of hospital births in Germany from the years 2005-2011, we investigate whether weight below reimbursement relevant thresholds triggers different quantity and quality of care. We find that this is not the case, suggesting that hospitals' financial incentives with respect to birth weight do not directly impact the care that newborns receive.

Economic incentives and diagnostic coding in a public health care system

We analysed the association between economic incentives and diagnostic coding practice in the Norwegian public health care system. Data included 3,180,578 hospital discharges in Norway covering the period 1999-2008. For reimbursement purposes, all discharges are grouped in diagnosis-related groups (DRGs). We examined pairs of DRGs where the addition of one or more specific diagnoses places the patient in a complicated rather than an uncomplicated group, yielding higher reimbursement. The economic incentive was measured as the potential gain in income by coding a patient as complicated, and we analysed the association between this gain and the share of complicated discharges within the DRG pairs. Using multilevel linear regression modelling, we estimated both differences between hospitals for each DRG pair and changes within hospitals for each DRG pair over time. Over the whole period, a one-DRG-point difference in price was associated with an increased share of complicated discharges of 14.2 (95 % confidence interval [CI] 11.2-17.2) percentage points. However, a one-DRG-point change in prices between years was only associated with a 0.4 (95 % CI [Formula: see text] to 1.8) percentage point change of discharges into the most complicated diagnostic category. Although there was a strong increase in complicated discharges over time, this was not as closely related to price changes as expected.