Clinical Coding Conference 2014 – Melbourne

Patient Costing & Clinical Engagement

It Starts With Coding

Emma Martin Costing Consultant

PowerHealth Solutions

Patient Costing & Clinical Engagement ― It Starts With Coding

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Topics to be covered

National Health Reform

Patient Costing Process

Clinical Coding/CHADx

Patient Costing Results

Q&A

Patient Costing & Clinical Engagement ― It Starts With Coding

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National Health Reform

In 2011, COAG committed to a National Health Reform Agreement to deliver better health care for all Australians & secure the sustainability of health care system into the future

Established 3 Agencies to facilitate: • Independent Hospital Pricing Authority (IHPA) to determine

a national activity-based funding model & efficient price

• National Health Performance Authority to report quarterly on performance of LHNs using an accountability framework & made available publicly

• Australian Commission on Safety & Quality in Health Care to develop, implement & monitor national clinical safety & quality standards.

Patient Costing & Clinical Engagement ― It Starts With Coding

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IHPA – National Efficient Price

Website contains all publications: http://www.ihpa.gov.au/internet/ihpa/publishing.nsf/content/publications-1

IHPA’s key role to determine the annual National Efficient Price (NEP) for health care services.

NEP using an Activity Based Funding (ABF) model forms the basis for calculating the funding provided to Local Health Networks (LHNs) through a single National Health Funding Pool.

2013/14 NEP & weights based on latest National Hospital Cost Data Collection (round 15).

Patient Costing & Clinical Engagement ― It Starts With Coding

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Patient Costing

Key accountability tool to monitor and manage health service costs

Matching hospital general ledger costs to patient encounters

Casemix Classification systems have been developed for different types of patient care

Activity is classified into groups with similar levels of resource utilisation (costs) and similar clinical features

Patient Costing & Clinical Engagement ― It Starts With Coding

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Classification Systems

IHPA defines in-scope public health care services & classification systems:

• Admitted Acute (Inpatient) Services

• AR-DRG v6.x

• Emergency Services

• URG v1.3 (with diagnosis) – SA use

• UDG v1.3 (was v1.2 in 2012/13).

• Non- Admitted (Outpatient) Services

• Tier 2 clinic list v2.0

• Sub-Acute Services

• AN-SNAP v3.0

Patient Costing & Clinical Engagement ― It Starts With Coding

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Inpatient (Admitted Acute) DRGs

AR-DRG classification system

• DRGs determined by ICD diagnoses & procedures

Patient Costing & Clinical Engagement ― It Starts With Coding

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Patient Costing Process

Patient Costing distributes general ledger costs back to patient encounters

3 main stages to Costing Process:

1. Data Load

2. General Ledger Setup overhead and patient care, reorganisation of ledger structures

3. Costing Dataset – Allocation of GL costs to patient encounters

Patient Costing & Clinical Engagement ― It Starts With Coding

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Patient Costing (PPM)

Patient Costing & Clinical Engagement ― It Starts With Coding

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Data Load

To complete patient costing, data is required from numerous health unit source systems

Includes coding data (DRG, Procedure & Diagnosis codes) for each patient encounter, which are a standard classification for both costing & reporting.

Patient Costing & Clinical Engagement ― It Starts With Coding

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PPM Database

Load

PMI

Encounters

Pharmacy

Theatre

Finance

Imaging

Transfers

Source Systems

Data Load

Patient Costing & Clinical Engagement ― It Starts With Coding

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Data Load - Coding

• Coding Diagnosis & Procedure – ICD principal & secondary diagnoses for inpatient encounters

Patient Costing & Clinical Engagement ― It Starts With Coding

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Data Load - Services

• Services ― delivered to patients throughout hospital stay that enables detailed costing (theatre, pathology, imaging, pharmacy, etc)

Patient Costing & Clinical Engagement ― It Starts With Coding

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Costing Dataset Process

Acute Assessment Unit

Allied Health

Day Patient Ward 1

Operating Theatre

Recovery/Anaesthesia

Critical Care Unit

Pharmacy Contract

Patient Care Area Services

2. Map Service Codes to Areas

1. Build Service Codes

AAU-T1

Allied-9555000-4451

OBD-IVF-00111-9440

DRUGS-S334

WardHrs-Ward1

Recovery

OTS-44821-4449DS

Activity Database

Costing Dataset

Built Service Codes

3. Allocate Costs

Patient Care Area $

Patient Care Area Services

+

Costed Services

Patient Costing & Clinical Engagement ― It Starts With Coding

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Coding in the Costing Dataset

The Costing Dataset stage may utilise coding data for 2 of the processes:

Building Service Codes to attach services to patient encounters, using procedure codes

Allocating costs, using DRG service (cost) weights

Patient Costing & Clinical Engagement ― It Starts With Coding

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Service Builder

Procedure codes are used to build services to enable costs to be allocated for areas that don’t have service level data.

Patient Costing & Clinical Engagement ― It Starts With Coding

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DRG Service Weights

Each DRG code can have a service weight for each cost bucket, indicating the relative rate of its resource consumption

Patient Costing & Clinical Engagement ― It Starts With Coding

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Cost Allocation

Relative Value Units (RVU) are used to allocate costs, where the RVU = volume x weight

For example Allied Health (AH) costs allocated to those encounters identified with an AH procedure code & applying AH DRG service weight

Patient Costing & Clinical Engagement ― It Starts With Coding

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Costing Results

Once costs are allocated, can report for both internal health unit & external users (State & Commonwealth Health Depts)

Patient Costing & Clinical Engagement ― It Starts With Coding

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CHADx

Classification of Hospital Acquired Diagnoses

Uses ICD 10 diagnosis codes in combination with condition onset flag

Classifies encounters into 17 different categories including post procedural complications, adverse drug events and accidental injuries

PHS currently developing an add on module for PPM to report on cost and LOS per CHADx encounter

Patient Costing & Clinical Engagement ― It Starts With Coding

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Clinical Coding Role in Funding

Not only does Clinical Coding play a role in determining cost weights, it is used to distribute funding on an activity basis

ABF reforms have put more emphasis on patient costing as basis for future funding.

Medical Record Documentation

Clinical Coding

DRG Assignment

Cost Weights

Funding

Clinicians document conditions and services in the medical record

Documentation extracted, analysed and translated into diagnosis and procedure codes.

Codes/Age/Discharge status used to assign AR-DRGs.

Assigned to each AR-DRG. Average value of treating a patient.

Cost weights used in ABF Model to distribute funds to each LHN

ICD

DRG

Patient Costing & Clinical Engagement ― It Starts With Coding

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Importance of Clinical Coding

Given the impact of clinical coding on the costing & funding process of health units, quality coding is crucial

Clinical coding staff should be educated so that they are aware of the reasons for the importance of their role

Good clinical documentation and a working relationship with clinicians is important.

Patient Costing & Clinical Engagement ― It Starts With Coding

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Case Study What can we do with patient costing?

Quantify operating deficit, comparing patient costing to Casemix funding

Benchmark hospital cost structures

Identify strategies to increase efficiency & financial sustainability

Target audience can be anyone from hospital executive, clinical directors and governing health bodies to hospital staff queries

Patient Costing & Clinical Engagement ― It Starts With Coding

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Cost Analysis

Benchmark hospital inpatient activity using state and national costing studies

Compare LOS, Casemix revenue, all cost buckets and reimbursement rates

Analyse at DRG level to ensure comparability, given different hospital patient profiles.

Patient Costing & Clinical Engagement ― It Starts With Coding

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Cost Analysis

Funding to cost reimbursement rate compared with state and national average

ALOS >> identify top-30 DRGs & associated specialties to find any anomolies

Patient Costing & Clinical Engagement ― It Starts With Coding

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Expensive Cost Buckets

Identify DRGs & associated clinics with higher than average cost structures, which is where further efforts need to be concentrated, eg

Medical S&W – review patient fractions, payroll data (particularly overtime/penalties) & rosters

Nursing S&W – distinguish between LOS (practice) issue and cost/day (skill mix, agency use)

Pathology & Imaging – senior clinicians develop test protocols for common procedures/diagnoses for trainees.

Patient Costing & Clinical Engagement ― It Starts With Coding

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Further Cost Analysis

Prosthesis – further benchmark at a procedure level against sites which record actual use at a patient level

Theatre – further benchmark at procedure level duration and no of clinicians

Hotel – further breakdown to cleaning, orderlies, food, security.

Patient Costing & Clinical Engagement ― It Starts With Coding

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Coding Analysis

Benchmark at DRG group level to check for clinical coding practice differences

Identify top 20 DRGs & clinics, with higher ALOS and lower casemix revenue >> coding or clinical practice issues?

Create Common CC Lists

Patient Costing & Clinical Engagement ― It Starts With Coding

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Educating & Engaging Clinicians

Work together to get costs right & to understand service delivery costs and funding

Critical to educate senior clinicians on basics of patient costing process. We need clinical buy in!

How patient costing contributes to determining cost weights, which are used for future funding

Present the whole picture, show efficiencies as well as outlining areas for improvement

Patient Costing & Clinical Engagement ― It Starts With Coding

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Summary

For patient costing to be useful & comparable across Australia under an ABF framework, it is crucial that health units have quality coding information …

so it starts with clinical coding

Clinical Coding Conference 2014 – Melbourne

Q&A

Emma Martin Costing Consultant

PowerHealth Solutions