There are many changes taking place in the Irish Health sector at the moment, focusing primarily on the current health system model. Let’s take some time to review these changes, focusing pre-dominantly on the Department of Health draft paper for consultation – Money follows the Patient.

www.dohc.ie/publications/MoneyFollowsthePatient_HFPP.html

Background

The Irish Public Hospital system currently treats both public patients and private patients. The Public system is two-tiered with significant advantages for private patients.

Public Hospitals utilise a direct payment system with Insurers to recompense the hospital for treatment provided to insured private patients. This is based upon the bed occupancy of private patients, and recent changes to legislation have introduced additional regulation regarding the admission of such patients. 

The vast amount of the remainder of public hospital funding coming as block funding from the Health Service Executive (HSE). As part of the current Government’s plan to move towards Universal Health Insurance (UHI), this will require a different funding model to what is currently in place. ‘Money follows the patient’ forms one of the main elements to facilitate a UHI model. 

The purpose of ‘Money follows the patient’ is the following:

• Ensure a fairer system of resource allocation where hospitals are paid for the quality of care they deliver.
• Drive Efficiency in provision of high quality hospital services.
• Increase transparency in the provision of hospital services. 
• Ultimately support the move to an equitable, single–tier Universal Health Insurance (UHI) where every patient is insured and their care financed on the same basis.

Approach

There are a number of options for implementing ‘Money  follows the Patient’ ranging from a daily patient rate (per diem), to procedure based pricing (‘fee  for service’) to prospective case-based payment. 

International evidence shows the case-based system as the best possible financing solution. The case based system known as Diagnosis Related Group System (DRG’s) is the method to be used to meet the purpose of ‘Money follows the Patient’.

The DRG approach classifies episodes into a number of manageable categories based on clinical condition and resource consumption. 

Defining the Service Scope

Inpatient and Daycase services are to a significant extent an interchangeable product, evident in the fact that inpatient and daycase services share the same legal status. Emergency care, by contrast constitutes a distinct product which provides an unplanned rapid response service for the general population, would therefore fall outside of the ‘money follows the patient’ system. The same would apply to long-term care & outreach and teaching services. 

Outpatient Services – which fundamentally fall under two types of services 

1. Assessment Services (Consultation or diagnostic testing)
2. Services which represent a response to a particular diagnosis or assessment.

The response services will essentially be considered interchangeable with inpatient services and therefore be incorporated in a DRG approach. However assessment services would be financed separately from the main episode of care. 

In essence Money follows the patient payment system must encompass inpatient, daycase and certain comparable outpatient services. 

It is proposed that in order to gain efficiency and quality for the money follows the patient system, it would be that services should not be defined by reference to the setting, but be defined by the reference to the episode of care provided.  

This would be underpinned by national clinical guidelines as set by the National Clinical Effectiveness Committee (NCEC), and the formation of hospital groups to move away from the current hospital categorisation models. 

Designing the Price 

In terms of designing the price, ‘Best practice’ prices using, normative patient level costs is identified as the best approach to delivering quality care in the most appropriate setting. It was felt this approach had advantages over prices based on average costs, and below average pricing. 

However, difficulties surround implementing this approach quickly, so it is more feasible to begin with setting prices by reference to average costs but with a view to implementing best practice prices on an incremental basis. 

Governance Structures

The Governance structures surrounding the money follows the patient approach is one that is significant, and must operate within a clear and coherent regulatory framework. 

It has to be stated that implementation of ‘Money follows the patient’ represents a radical move away from grant allocation, and is being implemented against a backdrop of major financial constraint, and that considerable challenges lie ahead.