Monitor wants to shift the basis on which Payment by Results prices are calculated away from average costs and towards the actual cost of treating individual patients.
The regulator, which is assuming responsibility for developing the NHS tariff with the NHS Commissioning Board, says in a paper published yesterday that enough acute trusts have now implemented patient level information and costing systems to make this feasible.
It says PLICS have now been implemented at 93 trusts in the NHS, and that 145 or 80% have implemented, are in the process of implementing, or are planning to implement these systems.
On this basis, it says it will conduct a voluntary collection of 2012-13 PLICS data from acute providers for treatment delivered to patients admitted to hospital in the coming year.
This will be used for analysis and “potentially to inform price setting in 2015-16.” Trusts will be asked to self-assure their data using costing standards developed by the Healthcare Financial Management Association, and to explain where they can and cannot meet them.
However, ‘Costing Patient Care: Monitor’s approach to costing and cost collection for price setting’, acknowledges that shifting the basis of the tariff in this way is a long-term aim.
In the short and medium term, the regulator says it will need to continue to collect and improve the data quality of the reference costs that have underpinned PbR since it was introduced just under a decade ago.
Audit bodies have repeatedly criticised the quality of costing data, and the quality of the coding and record keeping on which it is based; while noting that poor record keeping is also a patient safety issue.
Monitor says it will introduce a programme of external checks to tackle the problem, while requiring trust boards to sign-off on the data.
Patient-level costing has its roots in the activity based costing systems developed in US manufacturing firms in the 1970s, and has been adopted by hospitals in the US and some parts of Europe.
The NHS has been relatively slow to adopt it, despite interest from the HFMA and Department of Health, with business intelligence experts split on whether the health service needs the level of costing information it supplies.
The Nuffield Trust issued a report in September backing PLICS and outlining case studies showing how trusts had been able to use it to undertake a detailed analysis of the real cost of their services and use these to negotiate with commissioners.
However, the authors warned that if clinical commissioning groups were not given access to PLICS data, they could be even more disadvantaged than other commissioners have been.
The Monitor paper says that PLICS data would enable the costs of individual patients to be tracked over a year, which would support a move away from paying for episodes of care and towards paying for packages of care for patients with long-term conditions.
It wants to create a national PLICS database “as a valuable source of information for other users”, for policy makers and planners, and for trust benchmarking exercises.
The changes will not affect mental health or community care. Attempts to introduce a tariff for mental health were put off earlier this year, after auditors warned reference cost data for the sector was too poor to support the move.
The Monitor paper says it still wants to see “improved activity and costing data” in these sectors, and that the regulator is working with the DH to encourage this.
© 2012 EHealth Media.
Am I alone?Soothsayer 67 weeks ago
Am I alone in seeing the more sinister extension of a move to cost per case? This government has raised the spectre of "personal health budgets" as a means of highlighting healthcare costs to the public, and many (most?) will say, the opening up of healthcare to the private market.
Such a strategy can only work with a very American, cost per case approach, where the cash till rings with every patient interaction. Those of us familiar with the Cerner approach will recognise that every logged interaction/task can be linked to a billing event.
Somehow, I don't think the public will want their healthcare to go in this direction - with my health history, I'd have overspent a long time ago and if I'm in poor health, I couldn't work to pay the top up fees that will rapidly follow limitations of personal budgets.
Greater precision of cost is important, particularly in the current economy, but it is a short step to something more scary.
Be careful what you wish for......
At the root of itmukesh 67 weeks ago
"Patient-level costing has its roots in the activity based costing systems developed in US manufacturing firms in the 1970s, and has been adopted by hospitals in the US and some parts of Europe."
For manufacturing environments this is great -predicatability, identify areas for improvements, well defined tasks/activities that can be streamlined; all to improve productity, reduce cost and become more efficient.
Whilst there is a lot to be learnt from this model, the major difference is that the NHS are dealing with people, whose needs vary vastly from one to another (and hence the cost of thier treatment). So whilst the data can provide costing information, what purpose does it serve? Will "more expensive" patients be treated differently?
Data can be plenty, information derived from the data a good reference point but the real value is actional information that has an impact.
Agree totally that costing is mandatory, but what value does it buy ? Is the real value of the model in understanding best practices (across a diverse population) and looking at innovative ways of delivering the service; by design the cost will be optimum where cost can be used as a measure of improvement (ie cost before and after initiative)
re: At the root of itmrtablet 67 weeks ago
I am sceptical about obtaining interpretable outcomes measurements in medicine which allow comparison between institutions or providers. I believe outside of well designed and funded controlled clinical trials it's barely and rarely possible - even for hard outcomes like death - and all the casemix gerrymandering in the World cannot overcome this.
But say I'm wrong (along with the entire twin disciplines of medical statistics and clinical epidemiology).... what is the use of outcome measurement if you haven't ascertained input?
Say Trust A has a 5% lower rate of diabetic nephropathy than Trust B. Would your interpretation of this change if Trust A spends five times as much per patient?
Aside from performance monitoring - NHS Secondary Care has barely any idea what treating a patient costs! How can any business operate like this? Private hospitals have this information - and thus will run rings around the NHS in the brave new commissioning World.
You asked 'Will more expensive patients be treated differently?'
Well they should be! I suggest they will get better treatment under a system using 'after the fact' individual patient billing.
I fear the prospectively negotiated block contracts the NHS is rushing into can't support expensive patients q.v. Organisation A agrees to manage all Organisation B's diabetics for the next three years. Expensive patients risk being shortchanged or squeezed out of any 'bulk' commissioning system.
Finally any true notion of patient choice is IMO only compatible with "after the fact" individual patient billing.
There's no way any political party will return us to the to the arguably benign non-commercial 'administered' NHS of the 1970's - some sort of managed pseudo-market is inevitable. Unless we have individual patient costs we are condemned to a Soviet style nail factory system. If we want the money to follow the patient - not the other way around - individual billing may be the only way.
yes, Yes, YES!mrtablet 67 weeks ago
Accurate 'billing' at individual patient level is the other side of the electronic patient record coin. They are IMO inseparable - this is the only way to align business and clinical priorities.
Insist on hospitals accurately capturing consultations, procedures, investigations, dispensed medications, hotel costs etc. at the individual patient level!
Then they cannot possibly avoid creating an individual patient record useful to and used by front line professionals.
A leading reason NHS secondary care 'clinical' electronic patient records have failed to materialise is bean counters have shown no interest in accurate patient level detail - only the crude abstractions of healthcare resource groups, datasets etc.
Despite lip service paid for deriving mandatory datasets from data captured in routine patient care this has never been achieved. Reams of futile forms burden clinicians while hordes of spreadsheet jockeys toil in backrooms to feed the DoH dataset beast - garbage in garbage out.
Capture the actual cost of treating individual patients and all this badness goes away!