Maureen Cronin

Healthcare Pricing Office

March 2015

MFTP, ABF, DRGs

What does it all mean ?

So many terms …..

MFTP or “Money Follows the Patient”

ABF or “Activity-Based Funding”

DRGs or “Diagnosis-Related Groups”

Linking patients with money

MFTP

Itemised Payments

MFTP is ‘linking’ money with patients - not

‘following’ them

MFTP is simply Activity-Based Funding (ABF)

Breaking up block grants into itemised

payments

ABF stands alone – does not need UHI

Price and Volume

Currently a hospital has a block budget of

€200m

Number of “cases” is specified

Not linked to “complexity” – is it toenails or

liver transplants

We will remove this budget and create a price

and volume relationship

Pay for episodes of care (ABF)

Current Assessment Model

Blue Hospital Green Hospital

Budget €100,000,000 €100,000,000

Expenditure €101,000,000 €99,000,000

Variance -€1,000,000 €1,000,000

Patients 10,000 20,000

Cost per patient €10,100 €4,950

New Model Example

Blue Hospital Green Hospital

Type of work Complex Simple

Measure of

complexity 2.5 0.75

Weighted units of

activity 25,000 15,000

Cost per weighted

unit €4,040 €6,600

Trend in Cost

Inpatient cost

per weighted

Unit

Daycase cost

per weighted

unit

2008 €5,042 €706

2013 €4,309 €564

change -733 -142

% change -15% -20%

Determining price

Inpatient and day-case treatments are

recorded at hospital level

1.5 million treatments per annum

We use the International Classification of

Diseases – Australian Modified (ICD10-AM 8th

Edition)

16,000 diagnoses

These merge into 1,048 “diagnosis-related

groups” - DRGs

Health System ‘Products’

DRGs measure complexity of care

“Weighted units of care” – not cases

Effectively 1,048 “products” delivered by the

health system

We have €4.8 billion to spend in our hospitals

this year

We should be able to list products adding

back to that amount

Product Listing

DRG

Measure of

Complexity

Inpatient

Cases

Inpatient

Weighted

Units of

Activity

I03B-Hip Replacement without

Catastrophic Complications or

Comorbidities 2.42 2,721 6,415

I04B-Knee Replacement without

Catastrophic or Severe Complications

or Comorbidities 2.53 1,576 3,868

D11Z-Tonsillectomy and/or

Adenoidectomy 0.73 4,677 3,452

8A06A-Tracheostomy with Ventilation

>95 hours with Catastrophic

Complications or Comorbidities 24.9 88 2,779

Cost Collection

Each year we collect hospital expenditure

data via the audited accounts from 38 of the

50 Irish hospitals

Merge cost and activity data to create a price

for each DRG

Cost data is 2 years old – what about

innovation ?

Determining Volume

Need assessment gives the health system a

sense of the volume of work which can be

anticipated

Demographic trends, chronic conditions,

acceptable wait times

Negotiate with funders for resource

Model how much work can fit within the

‘envelope’ of funding

Weighted units linked with money

Key considerations

Not a ‘race to the bottom’

Zero harm to patients

Prices must reflect the appropriate staffing

levels to deliver safe care

Must support reducing length of stay,

increasing output, improving outcomes

Must enable innovation and new

developments in medicine