Two decades of casemix - great ideas crippled by tunnel vision

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Two decades of casemix - great ideas crippled by
tunnel vision

• Professor Kathy Eagar
• Centre for Health Service Development
• University of Wollongong
• 2008 Casemix Conference, Adelaide, 16-19 November
  2008

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Overview

• Personal reflections on 20 years involvement in
  casemix development in Australia
• Where we started
• What was promised
• What was achieved
• Where we are in 2008
• Where we need to be

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What I have learned in the last 30 years

• No matter what I look at, I find significant
  variation between hospitals and between community
  health and care providers
• costs
• quality
• health outcomes
• Most of which cant be explained
• were different, our patients are sicker,
  our clients have more needs

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TYPES OF VARIATION

• 1 Variation due to differences in the ways that
  health services treat patients
• 2 Variation due to differences in the kinds of
  patients treated

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Casemix and Variation

• We must be able to control for one type of cause
  of variation in order to understand the other
• Casemix classifications have the potential to
  help to control for variations between patients
• By controlling for variations between patients
  we produce information which can potentially help
  to understand the differences between providers
• costs, quality, outcomes

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A definition of casemix

• The mix of cases
• The classification of patient episodes based on
  those patient attributes that best explain the
  cost of care (cost drivers)
• A generic term
• The Diagnosis Related Group classification is one
  casemix system
• But there are lots of others
• Casemix is not a synonym for DRGs

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Known cost drivers in healthcare (1992)

• acute inpatients
• rehabilitation
• psychiatry
• palliative care
• emergency
• neonatology

• diagnosis, age, procedure (as a proxy for
  diagnosis)
• functional impairment, ability to manage
  Activities of Daily Living (ADLs)
• ADL function, symptom severity, social and
  economic circumstances, aggression
• pain, symptoms, carer support, ADL function
• urgency, symptoms
• birth weight

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An observation

• Those factors that drive costs are also measures
  of need for health care as well as predictors
  of health outcomes
• acute inpatients - diagnosis, age, procedure
• rehabilitation - functional impairment, ability
  to manage Activities of Daily Living (ADLs)
• mental health - ADL function, symptom severity,
  social and economic circumstances
• palliative care - pain, symptoms, carer support,
  ADL function
• emergency - urgency
• neonatology - birth weight

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Implication

• If developed well, casemix classifications can be
  used to measure need for health care (at both the
  individual and population level) and measure both
  service quality and patient health outcomes
• casemix-adjusted health outcomes
• The possibilities are endless!

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A potted history of casemix in Australia
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A bit of history

• 1983 - US Prospective Payment System based on
  DRGs
• 1987-1993 First Australian casemix developments
  by the Commonwealth
• George Palmer, Don Hindle, Richard Scotton,
  Stephen Duckett and others
• 1988 - first Australian Casemix Conference

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The original thinking behind using DRGs
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More history

• 1988 - Casemix Development Program (CDP) included
  in the 1988-1993 Medicare Agreement (5m)
• The CDP became the Hospital Information and
  Performance Information Program in the 2003
  Australian Health Care Agreements
• Casemix Development Program Goal
• development of a hospital payment system which
  takes into account casemix - adjusted output
• Target date for new system - 30 June 1993

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Casemix Development Program Priorities

• Patient abstracting and coding
• Patient costing
• Quality assurance
• Education
• Information systems
• Payment system design

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Casemix systems

• 1992 - First Australian DRG system (AN-DRG) based
  on input from the Australian Clinical Casemix
  Committee
• 1998 - AR-DRGs introduced, with progressive
  versions since

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Payment system design

• 1990 Scotton and Owens Case payment in
  Australian hospitals issues and options
• preferred option - Commonwealth fund hospitals
  directly at the marginal cost of the DRG, with
  states and territories funding the remaining
  costs

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Patient abstracting and coding (1992)

• The DRG classification system should be used for
  the classification of acute patient episodes of
  care. It should not be used for the
  classification of all patients who are treated in
  an "acute" hospital.
• Recommendation
• That there be three acuity levels (care types)
  termed acute, sub-acute and non-acute

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Patient abstracting and coding

• That the AN-DRG classification be used to
  classify acute episodes of care.
• That the DRG classification system not be applied
  to sub-acute and non-acute episodes of care.
• That psychiatric episodes of care, regardless of
  acuity, be excluded from the DRG classification
  system

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Problems with DRG-centred models

• DRGs don't work for many case types
• mental health
• rehabilitation
• chronic illness
• intensive care
• DRGs not sufficiently refined
• multiple conditions
• principal diagnosis

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3 Care Types

• Diagnosis-related care (acute)
• Function-related care (sub-acute) and
• Supportive care (non-acute, including residential
  care and community substitutes)
• Mental Health
• Closer to function-related than diagnosis-related
  care

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Other casemix classifications would be required

• National acute care ambulatory classification
  system/s
• emergency departments
• outpatients
• community health
• National sub-acute classification system
• National supportive care (non-acute)
  classification system
• National mental health classification system

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An episode of care

• A phase of treatment defined by either
• the setting (inpatient outpatient, community)
• the goal (oncology palliative care etc)
• May be treatment for a whole Episode of Illness
  or just one part of it
• With the capacity to measure the outcomes of each
  episode of care
• And link episodes of care to form episodes of
  illness (patient journeys) and measures
  outcomes at that level

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Some underpinning ideas

• Casemix classifications for each episode of care
• The information technology to bundle multiple
  episodes of care into an episode of illness
• The capacity to develop smart funding models
  based on an explicit understanding of who would
  carry what risks
• A recognition of new models of care, especially
  more definitive care in the community

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Casemix matrix - horizontal and vertical
approaches
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Casemix development studies

• Urgency, Disposition and Age Groups (UDAGs)
• Australian National Sub-Acute and Non-Acute
  Patient classification (AN-SNAP)
• Mental Health Classification and Service Costs
  study (MH-CASC)
• Smaller or state specific studies such as
• Home Care, Community Health, Outpatients
• Internationally - disease staging, disease
  clustering

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Great ideas

• Casemix ideas in the 1990s offered so much
  promise. Not only paying for healthcare but also
• Measuring population need
• Measuring outputs
• A meaningful way of measuring health outcomes and
• Assessing value for money

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Some real progress
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In 1992 there was no agreement about

• the definition of a hospital
• the definition of the boundary between
  non-inpatient and inpatient care
• how to calculate hospital length of stay
• the classification of boarders
• the classification of newborns
• the recording of activity occurring in Emergency
  Departments
• the definition of a Principal Diagnosis

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The AR-DRG system

• Recognised internationally as one of the best
• A basic information building block in various
  payment and funding systems

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Use of other classifications byStates and
Territories

• Use of the Australian National Sub-Acute and
  Non-Acute Patient (AN-SNAP) classification in
  some states
• Version 2 released in 2007, 10 years after
  Version 1
• Use of outpatient clinic and emergency department
  classifications in some states

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Some lost opportunities

• Tunnel vision

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The way some people still think
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Theres more to health care than acute inpatient
care!

• But, 20 years on, the only classification that is
  recognised and supported at a national level is
  the DRG system
• With virtually nothing known at the national
  level about other forms of care, their costs or
  their outcomes

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DoHA website 2008

• The term Casemix refers to the type or mix of
  patients treated by a hospital or unit. Casemix
  based funding is one of the key funding models
  currently used in Australian health care services
  for reimbursement of the cost of patient care.
  Casemix was developed for in-patient use, but
  some states and territories have developed
  Casemix funding models for outpatient and
  ambulatory care settings.

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Casemix classifications on the DoHA website 2008

• Australian Refined-DRGs
• Historical information about Australian
  National-DRGs

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The use of DRGs

• DRGs have gradually been re-defined as a tool for
  payment and funding
• used to inform the funding of hospitals, not
  clinical units within hospitals
• with few exceptions, in funding models that lack
  the incentives to systematically drive change at
  the clinical level
• Little systematic use for measuring (improving)
  health outcomes or quality
• with little clinical involvement or interest in
  them any more

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Outpatients and community health

• Most development (by States) has focused on
  classifying occasions of service based on the mix
  of services (clinic names) rather than the mix of
  cases
• Little or no progress in defining episodes of
  care beyond inpatient. Instead, the level of
  classification is the attendance/occasion of
  service. So
• cant measure outcomes
• cant get the risk sharing right

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Little evidence of smart purchasing
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2008 and beyond
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Multiple national reviews and strategies under
development

• To redesign the Australian health system
• National Health and Hospitals Reform Commission
• National primary care strategy
• National prevention taskforce
• National performance indicators
• If casemix is such a great idea, why isnt it
  central to national reform thinking?

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National report cards

• The Commonwealth has been clear that it wants to
  move to national public reporting of hospital
  performance
• Resistance from both states and territories and
  clinical associations is based on concern that
  the results will be misleading
• If casemix is the way of adjusting for variations
  in the mix of patients, why is everyone so
  worried?
• And, if the existing DRG system isnt good enough
  for the job, what have we done wrong over the
  last 20 years?

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New models of care

• Acute inpatient classification has been
  progressively refined over 20 years (at a high
  cost), but...
• New models of care have been developing elsewhere
  
• in the community
• And we have almost no systems in place to
  classify these new models or to routinely assess
  the impact or value for money of substitutable
  models
• Developing these systems is 20 years overdue

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Principal Diagnosis

• The concept of a Principal Diagnosis is
  increasing problematic
• Changing patterns of morbidity
• more people with multiple chronic diseases and
• Changing models of care
• less people admitted to hospital with a clear
  principal diagnosis
• Time to revisit ideas such as disease staging and
  disease clusters?

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A better future

• Casemix ideas are terrific its time that we
  start using them to help with the real
  challenges
• A realisation that services of equal cost are not
  of equal value (and that services of equal value
  are not of equal cost)
• Shift the concerns
• from cost to value for money,
• from outputs to outcomes.

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What measure of success?

• Well know the answer to 3 questions
• 1 Are we doing the right thing?
• 2 Are we doing it right?
• 3 Are we getting the right result?