Casemix & Activity Based Funding Developments in Australia

1. Casemix & Activity Based Funding Developments in Australia Philip Burgess & Tim Coombs AMHOIC: 13 June 2013

2. "It’s time to remember NOCC is also about casemix: Australian casemix development in mental health" Philip Burgess, Analysis & Reporting AMHOC: 19 November 2010 Mental Health Outcomes in Australia: The future of information development in practice

3. What we talked about then … • Casemix 101 • Casemix Myths: • Not just DRGs – there are over 100 casemix classification systems; • Not a payment system: but a tool that can be used for payment purposes • Not about reducing quality of care – but a tool that can be used to look at relationship between quality & cost Branching Out: The 4th Australasian Mental Health Outcomes and Information Conference 2013

5. Diagnosis Related Groups • The most widely used casemix classification • Used to classify acute admitted care • Not used for non-admitted care • Classes defined by principal medical diagnosis, plus variables such as other diagnoses, age and procedures • These variables are ‘cost-drivers’ • They drive (predict) the cost of acute care • But they have not proven to be good predictors of the cost of mental health

6. Problems with DRG-centred models DRGs don't work for many case types: • mental health • rehabilitation • chronic illness • palliative care • intensive care DRGs not sufficiently refined in some areas • multiple conditions • principal diagnosis Because the principal diagnosis is not the main cost driver

7. Branching Out: The 4th Australasian Mental Health Outcomes and Information Conference 2013

8. MH-CASC findings • There is an underlying episode classification, not just in inpatient care but also community; • Modest but acceptable levels of variation explained; • The costs being driven by ‘casemix’ are often confounded by the costs driven by provider variations Branching Out: The 4th Australasian Mental Health Outcomes and Information Conference 2013

9. MH-CASC findings • The variables driving costs in inpatient settings are also driving costs in the community but: • the patterns of care are different …. so …. • the importance of the variables differs across the two settings (e.g., focus of care) Branching Out: The 4th Australasian Mental Health Outcomes and Information Conference 2013

10. MH-CASC based on: DIAGNOSIS SEVERITY, using the HoNOS scales as the main measure LEVEL OF FUNCTIONING, measured through an amended Life Skills Profile (adults) or child/adolescent specific measures; and Other CLINICAL AND SOCIO-DEMOGRAPHIC characteristics e.g., age Branching Out: The 4th Australasian Mental Health Outcomes and Information Conference 2013

11. Some indicative comparisons:% RIV Completed Inpatient Episodes • 1997 – AR-DRGs (V3) – costs 11.3% (8 classes); • 1997 – MH-CASC – costs 17.3% (9 classes); • 2009 – AR-DRGs (V6) – LOS 15.1% (9 classes); • 2009 – MH-CASC – LOS 22.7% Branching Out: The 4th Australasian Mental Health Outcomes and Information Conference 2013

12. Reflections 2010 • A better system than DRGs but not great; • No real appetite among stakeholders for its implementation: • other than the NOCC was designed to capture to necessary clinical attributes; but • Linkages to costing and activity collections remained unresolved Branching Out: The 4th Australasian Mental Health Outcomes and Information Conference 2013

13. 2011: Brave New World • National Health Reform Agreement (NHRA) • Signed by COAG 31 July 2011 • Health system splits into 5: • Hospitals - State responsibility • Private sector primary care - Commonwealth responsibility • “Aged care” – Commonwealth responsibility • Disability services - State responsibility • Community health, population health and public health - State responsibility Branching Out: The 4th Australasian Mental Health Outcomes and Information Conference 2013

14. Commonwealth Premise Hospitals - big white buildings surrounded by a fence Everything outside the fence is either ‘primary care’ or ‘aged care’ or a ‘disability service’ no terms defined Specialist services outside the fence (public and private) not adequately recognised or addressed Hospitals the centre of the health reform

15. Commonwealth role Pay a ‘national efficient price’ for every public hospital service Fund States (and through them LHNs) a contribution for: teaching, training and research block funding for small public hospitals Agreement has detailed arrangements for defining a ‘hospital’ service that the Commonwealth will partly fund

16. Scope of Commonwealth funding • Hospital services provided to both public and private patients in a range of settings and funded either: • on an activity basis or • through block grants, including in rural and regional communities; • teaching and training undertaken in public hospitals or other organisations (such as universities and training providers) • research funded by States undertaken in public hospitals and • public health activities managed by States • Community health not included unless a “hospital service”

17. 2012: Activity Based Funding From 1 July 2012, funding is to be based on ABF principles. ABF means exactly what it says – providers are funded based on the activity they undertake. Because most hospital activity involves treating patients – or cases – the term ‘casemix funding’ is also used.

18. “Nationally Efficient Price” Different classifications for different streams and different prices for ‘activities’ within streams acute admitted emergency department subacute & outpatient services No special provisions for mental health

19. National ABF – the IHPA approach • Acute - AR-DRG • Subacute and non-acute - AN-SNAP • ED - Urgency Related Groups - URGs or Urgency Disposition Groups - UDGs • Outpatients - Tier 2 clinic list • Mental health – new mental health classification to be developed • Current project is the first step in the process and needs to ‘fit’ into this broader context

20. What to do with Mental Health? A prerequisite for ABF is that ‘activity’ is classified and counted But MH services are complex and don’t neatly fit the kinds of care models used in other health sectors Moreover, technically, MH casemix models are “modest”

21. Steps in developing a Mental Health ABF model • Define the scope of ‘activity’ for ABF purposes • Agree on how to count that activity • Develop a classification framework • Determine the Nationally Efficient Price for MH 2013 2014

22. Steps in developing an ABF model • Define the scope of the ‘activity’ for ABF purposes • Boundaries with other IHPA classifications • Agree on how to count activity • What is a mental health ‘activity’ for ABF purposes? • Develop a classification framework • A classification not just for IHPA pricing purposes but more broadly (states, territories, private hospital sector) • There may be classes in the classification that are deemed to be out of scope for IHPA pricing purposes • But pricing is a separate issue

23. IHPA: Stage A Defining the scope of mental health services for classification purposes

24. Mental Health Care Type 5. Mental health care is care in which the primary clinical purpose or treatment goal is improvement in the symptoms and/or psychosocial, environmental and physical functioning related to a patient’s mental disorder. • Mental health care is always: • delivered under the management of, or regularly informed by, a clinician with specialised expertise in mental health; and • evidenced by an individualised formal mental health assessment and the implementation of a documented mental health plan.

25. IHPA: Stage B Identifying Cost Drivers in Mental Health & Developing a Classification Framework

26. Proposed mental health information architecture Branching Out: The 4th Australasian Mental Health Outcomes and Information Conference 2013

27. Illness B Acuity of Symptoms D A C Service Contacts 1 2 3 4 Episode of Care Inpatient Community Residential Ambulatory CO3 CO4 CO1 CO2 Why a phase? A B COR

28. Development pathway • What unit of counting? • Same level for the whole classification or • Different levels for different branches? • What data items to collect and analyse? • How to develop the classification? • via a one-off study (as MH-CASC was in the 1990s) or • A series of one-off studies or • through analysis of routinely collected data (as AR-DRGs are developed)? • Implementation issues?

29. One important implementation issue • In practice, the scope of the mental health classification will be determined by the information that is collected. A patient episode can only be assigned to a class in the mental health classification if: • The episode is classified to the Mental Health Care Type AND • The information required to assign a patient episode to a class is both collected and reported • No information, no class • Have a class for ‘Mental health not further specified’?

30. One important implementation issue • What to do about episodes assigned to the Mental Health Care Type without the required clinical information? • Default to the next relevant Care Type in the algorithm OR • Have a class for ‘Mental health not further specified’?