procedure-related group incremental reform

How Israel reimburses hospitals based on activity: the Procedure-Related Group (PRG) incremental reform

Shuli Brammli-Greenberg1,2, Ruth Waitzberg1, Vadim Perman3 and Ronni Gamzu4

1Smokler Center for Health Policy Research, Myers-JDC Brookdale Institute2School of Public Health at the University of Haifa3Director of Pricing at the Department of Planning, Budgeting and Pricing, Ministry of Health4Retired Director General, Ministry of Health. OECD health policy Analyst

Brammli-Greenberg, S., Waitzberg, R., Perman V., and Gamzu, R. (2015) "How Israel reimburses hospitals based on activity: the Procedure-Related Group (PRG) incremental reform". Presented at the 4th Meeting of the Joint Network on Fiscal Sustainability of Health Systems for the OECD Working Party of Senior Budget Officials (SBO) forum. In Paris, 16-17 February, 2015. Available at: http://www.oecd.org/gov/budgeting/sbonetworkonhealthexpenditures.htm

2

How to cite this work:

Brammli-Greenberg, Waitzberg, Perman and Gamzu, 2015 at OECD forum

http://www.oecd.org/gov/budgeting/sbonetworkonhealthexpenditures.htm

Part of the OECD project on "innovative payment schemes"

1. Overview of the Israeli healthcare system

2. The Israeli hospital market

3. The hospital payment reform: from per diem to PRG

4. Conclusions

5. Lessons for other countries

3

Outline


Source: Brammli-Greenberg et al., 2014

Overview of the Israeli healthcare system funding

4

The Total Health Expenditure (THE) in 2012 was ~€15.3 billion

HPs supplementalinsurance (83%)

Commercial

Insurance

(42%)

Breadth(% of adult population covered by type of VHI)

Depth

Scope

PRIVATE HEALTH EXPENDITURE (39% of THE)

Maccab

i (25

%)

Me

uh

ed

et (14

%)

Leu

mit (9

%)

Breadth: universal coverage(% of adult population covered by HP)

Depth

Scope

PUBLIC HEALTH EXPENDITURE (61% of THE)


6

6.5

7

7.5

8

8.5

9

9.5

10

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Total Expenditure on Health, as % of GDP 2000-2012

Israel OECD median

5 Sources: 2013; CBS, 2014

Low and stable expenditure on health


THE ISRAELI HOSPITAL MARKET

6Brammli-Greenberg, Waitzberg, Perman and Gamzu, 2015 at OECD forum

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Acute care beds/1,000 population

Israel OECD AVERAGE

OECDIsrael 2012

3.31.9Acute care beds/1,000

7.46.5ALoS (all cases):

5.64.0ALoS (acute care):

7798Occupancy rate of acute care beds

8.94.8Nurses/1,000 population

15,59016,356Discharge rates/100,000 (all causes)

General hospitals resources and activities: overload

Source: OECD , 20147


• 25% of total health expenditure• Tight regulation for cost containment:

– Strict certificate of need regulation on beds and tech.– Stringent control on salaries and standard positions–Maximum price-lists–Cap on annual revenue from each HP (min and max)

• Discounts arrangements between hospitals and HPs• MoH subsidizes gov. hospitals retrospectively

8

Public Hospital Financing


9

Distribution of Governmental hospitals' gross income by type of service provided and type of reimbursement, 2012

Inpatient care –PRG23%

Inpatient care - per diem40%Emergency care -

FFS6%

Outpatient careFFS21%

Births (NII rates)8%

Other2%

Source: MoH, 2014


• Under-compensation selection, deficits, waiting times

• Overcompensation increase activity, inappropriate care

• Too much per diem share underutilization of resources

• Unbalanced competition between public and private market

10

Problem: inadequacy between costs and prices

Refined costing and pricing mechanism

Substitution of per diem by payments based on activity


THE HOSPITAL PAYMENT REFORM:FROM PER DIEM TO PRG


The objectives of the reform

1. Reimburse hospitals more fairly

2. Reduce inefficiencies caused by gaps between costs/prices

3. Improve risk-sharing between hospitals and HPs

4. Maintain the overall budget and balance of resources allocation

5. Improve transparency

6. Improve MoH's capacity to set policy, priorities, supervise, control

7. Strengthen public hospitals


47

16

24

13

40

23 21

16

0

5

10

15

20

25

30

35

40

45

50

per diem PRG ambulatory FFS births and other

2003 2012

Gradual costing and pricing PRGs replace per diem

Government hospitals income by type of reimbursement (%)

13

280+ PRGs = 50% of procedures

Source: MoH, 2014Brammli-Greenberg, Waitzberg, Perman and Gamzu, 2015 at OECD forum

Why PRG?

• Insufficient data to build DRG

• Solution: build "in house" PRGs based on its own data collection for micro-costing

• Led hospitals to better register and report activities + capacity of supervision and control + transparency


Why incremental?

• The players involved are strong (MoF, HPs, hospitals)

• Gives the players time to adjust to changes during the implementation process

• Keep players in the picture avoid opposition

• Budget neutral: no winners or losers

• Zero-sum game within players


Advantages

• Increases activity with same budget

• Shortens unnecessary hosp. days

• Reduces gaps between costs/pricesReimburses more fairly

• Increases transparency

• Balanced risk sharing payers/providers

• Simple accounting process

• Less room for gaming and up-coding

• +Technological developments

Disadvantages

• Not applicable for diagnoses that lack interventional procedures

• Demands monitoring quality of care

• Broad groups or non-accurate pricing: preference or oversupply of (profitable) procedures

• Technological developments: constant updates

16

Conclusions and discussion


Lessons for other countries

1. How to implement activity-based payments with a partial database

2. How to implement a controversial reform by

involving the main players avoiding opposition

Incremental implementation

3. Create monitoring tools to assess for changes in quality of care and waiting times.


[email protected]

Thank you

18

Acknowledgments:Bruce Rosen, Tamar Medina-Artom and Ido Elmakias from the Smokler Center for Health Policy

Research, Myers-JDC Brookdale Institute for the constructive comments and advice.Boaz Aricha, Economist in the pricing department, planning, budgeting and pricing division

at the MoH for the valuable inputs.


mailto:[email protected]

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