IHPA has summarised the options using the assessment criteria outlined on page 38. Criteria Option 1 Option 2 Option 3 Preventability Partially meets Not Potential to meet Potential to meet – – – all episodes change With appropriate clinical With appropriate clinical DRG, but those that do advice, preventability advice, preventability change DRG may not could be addressed in could be addressed in have been preventable. this option. this option. Equitable risk Does not meet Potential to meet A Potential to meet A – – – adjustment Difficult to risk adjust comprehensive risk comprehensive risk this approach, however adjustment approach is adjustment approach is as only one in seven possible, though possible. episodes move DRG, coding risk adjustment may not practices are a be a necessary. significant challenge for this option. Proportionality Partially meets Potential to meet Partially meets Good – – – Funding reductions for Allows funding alignment between HACs assigned to a reductions to be HACs and their costs; lower DRG are targeted at hospitals the NSW model proportionate; the with higher HAC rates, increases the price of remaining episodes with so there is a direct and non-HAC episodes a HAC do not receive a proportionate which significantly proportionate funding relationship between breaches the adjustment as costs are incidence of HACs and proportionality criterion already higher than the funding penalties. as the price of non-HAC NEP. episodes would exceed their actual costs. Transparency Partially transparent Potential to meet Transparent Clear – – – Price signal is This option supports prospective price signal inconsistent (as only transparent reporting of linking a funding 16% of episodes HAC rates across reduction to the change DRG) and has hospitals and creates a occurrence of each and the potential to be clear link between every HAC. viewed as a hospital performance “black box” approach. Also and funding reductions. retrospective as the impact on DRG assignment is unknown until coding is completed following patient discharge. Ease of Simple Requires Moderate Requires Moderate Requires – – – Implementation relatively minor changes development of risk development of risk to grouper software. No adjustment adjustment impact on the methodology and methodology but no changes to the changes to the Administrator’s reconciliation process. Administrator’s Administrator’s reconciliation process. reconciliation process.
IHPA has summarised the options using the assessment criteria outlined on page 38. Criteria Option 1 Option 2 Option 3 Preventability Partially meets – Not all episodes change DRG, but those that do change DRG may not have been preventable. Potential to meet – With appropriate clinical advice, preventability could be addressed in this option. Potential to meet – With appropriate clinical advice, preventability could be addressed in this option. Equitable risk adjustment Does not meet – Difficult to risk adjust this approach, however as only one in seven episodes move DRG, risk adjustment may not be a necessary. Potential to meet – A comprehensive risk adjustment approach is possible, though coding practices are a significant challenge for this option. Potential to meet – A comprehensive risk adjustment approach is possible. Proportionality Partially meets – Funding reductions for HACs assigned to a lower DRG are proportionate; the remaining episodes with a HAC do not receive a proportionate funding adjustment as costs are already higher than the NEP. Potential to meet – Allows funding reductions to be targeted at hospitals with higher HAC rates, so there is a direct and proportionate relationship between incidence of HACs and funding penalties. Partially meets – Good alignment between HACs and their costs; the NSW model increases the price of non-HAC episodes which significantly breaches the proportionality criterion as the price of non-HAC episodes would exceed their actual costs. Transparency Partially transparent – Price signal is inconsistent (as only 16% of episodes change DRG) and has the potential to be viewed as a “black box” approach. Also retrospective as the impact on DRG assignment is unknown until coding is completed following patient discharge. Potential to meet – This option supports transparent reporting of HAC rates across hospitals and creates a clear link between hospital performance and funding reductions. Transparent – Clear prospective price signal linking a funding reduction to the occurrence of each and every HAC. Ease of Implementation Simple – Requires relatively minor changes to grouper software. No impact on the Administrator’s reconciliation process. Moderate – Requires development of risk adjustment methodology and changes to the Administrator’s reconciliation process. Moderate – Requires development of risk adjustment methodology but no changes to the Administrator’s reconciliation process.
final_pricing_framework_for_australian_public_hospital_services_2017-18.docx