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In the May issue of the newsletter, we presented an article on the principles of payment by results (PbR) in its current evolution.

In this, the second paper, we focus on implications of PbR for Geriatric Medicine.
Payment by results is a model of allowing money to flow between different parts of the NHS, involving hospital Trusts charging commissioners (usually the local Primary Care Trust (PCT)) for treatments and services provided for individual patient services.

It was introduced first in 2002 by the Department of Health, and is becoming more powerful as an economic model within the NHS. In the past, commissioners (usually PCTs) negotiated ‘block contracts’ for services from their local acute hospital Trust. In a block contract, a PCT would pay a fixed sum of money for a geriatric medicine service, and except for cursory contract monitoring; it did not matter if 500 patients or 1000 patients passed through a service annually.

The Present
Currently not all services come under PbR, although the Department of Health’s vision is that every service will ultimately be remunerated under this system. The situation of ‘block contracts’ is rapidly being phased out, being replaced by PbR. The complex negotiating rounds associated with ‘block contracts’ will cease, to be replaced by an equally complex system of generating a tariff per patient attendance or admission (out-patients and in-patients respectively), based on their individual patient journey and their clinical diagnoses, treatment and care. Local tariffs can also be agreed with commissioners where mandatory tariffs have not been released to cover a service.

Relevance of PbR to Geriatric Medicine
As described more fully in the previous article, Health Resource Groups (HRG) are the currency under PbR and each HRG has a tariff allocated to it. A patient’s investigations, diagnoses and management are all collated to produce an HRG, which is then charged to the relevant commissioner.

HRGs are a tool for classifying patients into a manageable number of groups that are clinically similar and also require similar levels of healthcare resources for their diagnosis, treatment and care. Additionally HRGs provide a means of categorising the treatment of patients in order to monitor and evaluate the use of resources.

At most hospitals, clinical coding for in-patient episodes relies heavily on the patient’s discharge letter, completed usually by Foundation Doctors or Advance Nurse Practitioners/Specialists. Audits have shown that these documents are often inaccurate in many clinical specialties, geriatric medicine being no exception, as the examples below illustrate.

In 2007, the Audit Commission analysed the data used to code the in-patient episodes of 70 geriatric medicine patients, which were submitted to commissioners under PbR (5). They found the primary diagnosis was inaccurate in 30% of patients, when the discharge documents were compared to the clinical notes. In terms of HRGs, there was a HRG variance of 17%, which could theoretically lead to either under- or over-payment by commissioners. The audit concluded that in this particular cohort of notes audited, the differences in information could be valued at £38,369.

A recent internal audit at University Hospital of North Staffordshire within the Elderly Care Department compared the accuracy of information contained on 64 in-patient discharge summaries (which were used by the Clinical Coding Department to generate tariff data) with a retrospective detailed case-note analysis to ascertain the in-patients’ journeys regarding diagnoses and treatments. Thirty six percent of notes were inaccurately coded, resulting in payment inaccuracies of £23,788 (comprised of theoretical underpayments of £13,745 and overpayments of £10,043).

Other external and internal audits at UHNS have shown similar results in other specialties with regard to the accuracy of data recorded for coding into tariffs
It is widely acknowledged that the source data used for coding, which are primarily obtained from a patient’s discharge letter, are frequently at best ‘brief’ and at worst inaccurate. The main aim of a patient’s discharge letter previously, was medical communication with their general practitioner (GP), to ensure patient safety on discharge. There is now a sea change and this document has become vital for the financial stability of the hospital. This new role of the discharge letter, and its importance, cannot by over-stated.

In terms of under- and over-payments, acute hospitals are probably more likely to under-charge than over-charge commissioners. Under the rules of PbR, PCTs are not obliged to pay any additional monies that come to light after an individual tariff fee is submitted, yet they are empowered to (and frequently do) question cases where they feel overpayment has happened. This is particularly a problem where co-morbidities that are listed do not correspond to the GP’s list, when cross checked. As PbR is evolving, knowledge around the processes is shallow and experience is limited, a large DGH can get as many as 100 queries per month about potential over-payments. It is perhaps not unreasonable to suggest that PCTs may have better procedures and systems for detecting discrepancies than acute trusts currently do, primary care having adopted successful business model principles and systems for several years.

It is not only the accuracy but also the timeliness of discharge data that is vital to the running of PbR, and for Trusts to receive accurate remuneration for services provided. Under the rules of PbR, hospital Trusts submit data for payment by Primary Care Trusts monthly, on the third working day after the previous month. For example, September coding data is submitted for payment by 3rd October (presuming the 1st-3rd October are working days). If any data is submitted after this deadline, only 10% of any amount due can be recovered.

Geriatric medicine faces particular challenges regarding the accuracy of discharge documentation, as patients are, by definition, often very complex in terms of their in-patient and out-patient journeys. Under PbR, different tariffs can be applied depending on the background medical co-morbidities, so it is vital for accurate remuneration that none are accidentally omitted (6). Frail elderly patients also often have rehabilitation (albeit sometimes only for a couple of days) as part of their acute medical in-patient episode, and therefore this must be recorded, including how many days of rehabilitation have been provided for a patient, in order for the hospital to secure appropriate payment; this becomes even more important under the new version of HRG.

If an elderly person lives alone, this is noted within the final HRG code as a small additional payment. Additionally, if the patient’s discharge is delayed as a result of his/her awaiting social care or a Nursing Home placement (perhaps taking them over the ‘trim point’ for their particular diagnosis), this can also be reflected within the HRG generated. However, none of this information will be easily accessible to the Coding Department unless documented on discharge data provided by the clinical team.

The Future: Will Geriatric Medicine ‘win’ or ‘lose’ under PbR?
As ‘block contracts’ are being replaced by PbR tariffs, leading to all treatments being individually remunerated, it will soon be apparent what the actual cost is of providing a geriatric service within a particular acute hospital Trust. Rehabilitation is also one of the services that has been proposed for ‘unbundling’, and although the initial date of 1st April for this to commence was suspended, rehabilitation along with many other services, will become an individually charged and thus distinct activity financially within a patient’s episode of care.

Geriatric rehabilitation must thus prove its efficiency and cost-effectiveness, to maintain its clinical activities. Bringing rehabilitation (and NHS care in general) closer to patients’ homes is one of the government core pledges, and thus rehabilitation provided in secondary care acute hospital Trust wards may be a less attractive option for commissioners of these services.

It is not controversial to suggest that geriatric medicine may have been sometimes financially squeezed, and that some block contract funds may have been diverted from their intended purpose, whilst the therapists and clinicians have continued to develop services for an ever-expanding frail population. PbR may be a rude-awakening, both for commissioners and providers, when they see the true cost of a geriatric service effectively ‘itemised.’

This may produce financial gains for those departments who have been (voluntarily or involuntarily) financially prudent, whilst remaining clinically productive. It will be impossible for geriatric medicine to remain as a financial ‘Cinderella’ if it is recognised as a major income generator for hospital Trusts. If the payment gap between ‘block contracts’ and PbR income generates excess income for Geriatric Departments, the onus will be on its consultants to ‘hold onto’ that income, rather than allowing it to be diverted to other parts of their Trust, and this could by expanding clinical working, or trialling novel ways of working, with the aid of newly discovered financial flexibility. It is fair to say however, that some Trusts will find a deficit between their block contract and PbR funding for Geriatric Medicine and this will need to be studied in more detail to ensure that the Geriatric Medicine activity is being captured appropriately.

In the longer term, it remains to be seen whether commissioners will be willing to pay the true cost of an effective comprehensive geriatric service, or whether they will seek “cheaper” alternatives, perhaps by using alternative providers for some services, for example rehabilitation.

Conclusions
Geriatric medicine faces particular challenges. It is difficult to predict how PbR will affect clinicians on an individual Trust level. There may need to be changes to local working practices, in response to either a rise or fall in income generated at both departmental and/or Trust level. Yet it may also be an opportunity for clinicians and managers to work together to raise the general profile of geriatric medicine and drive changes that will benefit our very complex patient population.

Sally Chambers
Specialist Registrar in Geriatrics and General Medicine
R Kirkham
Data Quality and Clinical Coding Manager,
Amit Arora
Consultant Physician and Geriatrician, University Hospital of North Staffordshire, Stoke on Trent

BGS Newsletter, July 2009
Issue 22 ISSN 1748-6343 22