Lecture 10 - DRGs

Question 1

What are DRGs?

Answer 1

Groups of hospital patients expected to consume similar amounts of healthcare resources
1. Same diagnosis
2. Resource homogenous (consume same type and amount of resources)
3. Relatively few per specialty/department

Question 2

DRG assignment depends on…

Answer 2

Data accuracy

1. Clinician records info about patient
2. Medical records staff code information into electronic form (grouper software)
3. Patients allocated to DRGs based on info

Question 3

What are the data fields for England’s DRG system?

Answer 3

• Office of Population Census and Surveys (OPCS) used to determine whether someone is a medical or surgical patient
• International Classification of Disease (ICDIO) to identify primary and secondary diagnoses
• co-morbidities and complicatios
• age
• gender
• discharge method
• length of stay

Question 4

What are some things that can differ in DRGs in different countries?

Answer 4

• different ways to defining resource homogeneity
• different number of DRGs
• different information used to group

Question 5

What is the optimal DRG price?

Answer 5

One that is close to what it would be under perfect competition

Question 6

Why are healthcare markets not perfect competition?

Answer 6

1. consumers are insured, so not responsive to price, don’t know MC or MC either
2. producers are insulated against competition because there are barriers to entry and exit and consumers don’t shop around

Question 7

England Reference Cost collection

Answer 7

• each year NHS hospitals report volume of patients and average cost by HRG
• 3 year delay in converting to price
• HRG price reflects AC in England

Question 8

France and Poland DRG

Answer 8

• only collect data from hospitals with a good costing system in place and there are few of these
• prices are hence based on a small, non-representative sample
• hospitals that are not in this sample can’t complain about DRG prices since they don’t have the data to negotiate with

Question 9

What do DRGs incentivise?

Answer 9

• investment in better costing systems
• data collection
• investing in clinical coding systems
• improve efficiency to decrease costs over time

Question 10

When is it common for MR < MC?

Answer 10

When hospital is operating under DRS

Question 11

Why don’t hospitals know if they are operating under DRS, CRS or IRS?

Answer 11

Because they may not know what their MC is

Question 12

What are trim points?

Answer 12

• calculated as the upper quartile LoS for that HRG and 1.5x inter-quartile range of LoS
• used because some patients stay exceptionally long

Question 13

What is marginal pricing?

Answer 13

• once hospital hits a certain quantity the price goes down
• used to control expenditure
• incentivises activity while controlling costs

Question 14

Street et al (2011)

Answer 14

US
- When DRGs were implemented activity and ALoS went down
- They moved from FFS to DRG which caused different results than countries that moved from BC to DRG

Australia
- Moving to DRGs increased activity

Sweden/Germany/England
- Moving to DRGs increased activity and decreased ALoS

Question 15

Why can casemix payments increase efficiency?

Answer 15

Because equal pay for equal work and hospitals can infleuence prices

Question 16

What are the challenges with casemix funding?

Answer 16

• designing
• setting prices
• controlling costs