Feature / Introduction to……payment by results (4)

THE TARIFF IS modified to take account of longer or shorter than expected lengths of stay, more specialist – and thus more costly – casemix and higher local costs. The tariff is based on average price, but the cost of treating some patients is much more than the average.

To adjust for patients who for clinical reasons stay in hospital longer than expected for their healthcare resource group (HRG) , providers can receive a long stay (or excess bed day) payment. This is made at daily rates where the length of stay exceeds a trim point.

Elective and non-elective trim points are different – though the price per day is the same, the trim point is usually shorter for elective activity.

Tariffs are also reduced for short stay emergency spells of less than two days for HRGs where longer stays would generally be expected. The lower payment relates to the average length of stay for the HRG – the higher the average, the lower the short-stay emergency tariff.

The tariffs for specialised services have been modified since 2005/06 with top-ups set as a proportion of the tariff price. Trusts that have an unusual casemix can have much higher costs than the average.

In 2010/11, top-ups were paid for children’s (78% of tariff) and orthopaedic (30%) services. In 2011/12 the list has widened to include spinal surgery (32%) and neurosciences (28%). In addition the children’s top-up has fallen to 60% and orthopaedics to 24%.

Payments are triggered when a patient spell includes an ICD-10 or OPCS-4 code on a list based on the Specialised Services National Definition Sets.

To compensate for unavoidable differences in local costs, the Department of Health introduced the market forces factor (MFF).

The tariff, including adjustments, is multiplied by the MFF for each organisation. MFF tends to be highest in London and the South East. In 2010/11 Guy’s and St Thomas’ in London had an MFF of 1.24058 (it receives a 25% top-up to published tariff prices); Leeds Teaching Hospital’s was 1.0541.

Overall, the Department says MFF adds about 8% to the value of the tariff.

MFF is made up of several components – the largest is for the cost differences in using nonmedical staff. It also adjusts for different land and building costs and, in London, for medical and dental staffing.