Feature / Spending cycle

Continuing our series using HRG4 to analyse key areas of NHS activity, Steve Brown turns the spotlight on chemotherapy.

Nearly 300,000 new cases of cancer are diagnosed each year in the UK. In 2007, according to recent Cancer Research UK figures, more than 155,000 died of the disease. This – and the fact that these deaths accounted for a quarter of all UK deaths in that year – explains why the identification and swift treatment of cancer remain such a high priority for the UK’s health services. Chemotherapy – treating with cytotoxic (cell killing) drugs – remains one of the key weapons in the battle against this killer condition.

The annual reference costs provide a window on both the activity and money being spent on chemotherapy across England. The introduction of the new HRG4 healthcare resource groups (in 2006/07 for reference cost purposes) has made the data collected far more meaningful and is expected to provide the basis for a future national tariff for chemotherapy.

Past HRG confusion

Under version 3.5 HRGs, chemotherapy was collected using an HRG in each relevant chapter (using a ‘98’ suffix code). But this was far from ideal. It included care delivered as part of a primary diagnosis as well as the chemotherapy delivered, and it failed to make any distinction between the different ways chemotherapy could be delivered.

It was also based on whole courses of chemotherapy rather than individual cycles. One patient could receive just one cycle of chemotherapy, another a whole course and yet both would be grouped to the same HRG, providing fairly meaningless average costs and making cost comparisons impossible. Looking ahead a tariff based on HRG 3.5 for chemotherapy would have been impossible.

Fast forward to HRG4 and chemotherapy is unbundled, with chemotherapy HRGs being generated in addition to core HRGs. So, for instance, a patient having a tumour removed would group to a surgical HRG but then may receive additional chemotherapy HRGs to match the treatment delivered.

In fact the HRGs are split into two. Each patient receiving a cycle of chemotherapy would receive an HRG to reflect the regimen – the combination of drugs administered – and another to reflect the method of delivery – taken orally or intravenously, for instance. An HRG for each (regimen and delivery) is added each time a cycle of chemotherapy is administered.

This happens regardless of setting. The only exception is chemotherapy administered as part of an inpatient episode. In this instance, no delivery HRG is generated as all the delivery costs will be considered part of the inpatient activities.

The NHS spent just over 5% of its budget in 2007/08 on cancer treatment – some £5.1bn of the overall £97bn expenditure. Of this, the latest reference costs tells us that £636m was spent on chemotherapy – about 12% of the cancer spend.

This is perhaps best seen as a ball park figure. First of all, the chemotherapy costs, as covered earlier, do not include delivery costs incurred as part of an inpatient episode.

David Allen, senior casemix consultant of the NHS Information Centre, adds that although the figures  will include chemotherapy for children, the HRGs were initially designed to capture adult chemotherapy  – although this is an issue actively being addressed. With these caveats, the figures show that just over 725,000 cycles of chemotherapy were administered that year.

It’s also worth noting that chemotherapy  may be a single drug or a combination of drugs. These may be given all on one day, over consecutive days or at intervals in outpatient visits. The cycle, which includes rest days, is usually defined in monthly intervals.

The drug procurement HRGs divide the different cocktails of chemotherapy drugs or regimens into one of 10 different bands – SB01Z (band 1) to SB10Z (band 10). The decision on which regimen goes into which band is taken by the Network Pharmacists Group and the Oncology Regimen Steering Group, but effectively the regimens are arranged in £200 bands. A regimen costing between £0 and £200 goes into band 1, £200 to £400 equals band 2 and so on.

The reference costs shows a range of interquartile costs for each band. For instance, procurement costs for band 2 regimens undertaken as day cases – the highest volume HRG across all settings – range from £174 to £363, with an average of £343. Different casemixes involving different mixes of regimens prescribed will be the chief reason for the range, although different cancer networks may have different prices arranged for different drugs with suppliers.

In total, £218m of chemotherapy drugs were administered as part of day case sessions, a further £121m during outpatient settings and £104m as part of an inpatient stay. The recording of activity as outpatient or day case may in some cases be linked to historical practice rather than a real difference in setting.

Delivery costs

In terms of delivery costs (not including inpatients), most (£104m out of £166m total) were incurred as day cases. According to the reference costs, there were 347,000 regimen procurements and 455,000 deliveries as day cases in 2008/09.  This shows the HRGs are working as expected, as chemotherapy regimens are procured at the beginning of a cycle – once per cycle – but can be delivered over a number of attendances per cycle.

Chemotherapy HRGs have not yet been used to form a tariff, largely because of concerns about the data. Mr Allen admits there are issues with coding and capturing activity. ‘Getting the pharmacy information can be difficult if you’ve not got e-prescribing,’ he says.

This is a new area for coders and informal enquiries suggest much chemotherapy coding is handled by nursing staff or other clinicians. Not everyone uses the most up-to-date OPCS 4.5 procedure codes. And local regimen names that don’t match with the national list is a common issue. Mr Allen says it is not always straightforward to identify the relevant OPCS procedure code that has a one-to-one link with the relevant HRG (see table overleaf).

This led to new HRGs being added to the 2008/09 reference costs – SB16Z and SB17Z to cover the drug procurement and delivery costs of regimens not on the national list. This provided a way to record the administration of regimens that didn’t match the published list.

People are also encouraged to request additions to the regimens list via a new chemotherapy portal in the payment by results section of the Department of Health’s website. New requests, which could arise as a result of clinical trials, will then be considered as part of the annual refresh of the regimens list.

Mr Allen says this is another area that the NHS Information Centre, working with the Oncology Regimens Steering Group, is keen to address. A more regular refresh of the list is being examined. And paediatric chemotherapy regimens, where these differ from those used for adults, are being actively worked on with a view to expanding the regimens list in time for release to the service in April 2011.

The group is also keen to look at the banding structure. For instance, £200 to £400 is a big leap in percentage terms compared with £1,800 to £2,000. Would a less uniform banding structure make more sense – particularly in the really high volume bands (bands 1 and 2)?

Banding issues

Not everybody agrees with the banding structure as it stands. One finance manager told Healthcare Finance that the local system, involving a monthly download from the pharmacy system to identify the exact drugs used and then these being charged directly to the relevant PCT, already works well. ‘Why would we want to move to using an average charge, when we have the real data?’ he asks. ‘This just appears to complicate the issue.’

But the Department seems keen to move towards the use of the HRGs as a national currency and potentially a national tariff.

Issues need to be fixed if this is to happen. For instance, the structure of HRG4 is such that a core HRG is always generated, even when a day case, outpatient or regular day admission attends solely to receive chemotherapy. In theory this could lead to an overcounting of the core HRGs. Currently the Department says that local health economies should take account of this issue when agreeing the local price for the non-tariff chemotherapy service to avoid overpayment.

The solution has been a new HRG (SB97Z). This ‘same day chemotherapy admission/ attendance’ group has been introduced for reference costs collection covering 2009/10 and will be generated by the grouper logic if chemotherapy has taken place, the activity is less than a day and the core HRG that would have been generated is diagnosis driven (no major procedures have taken place). No costs should be attached to this HRG in cost submissions and the Department has said a zero tariff will be assigned to the group, ensuring no overpayment and no need for manual adjustments.

Costing improvements are also targeted in a project by the National Cancer Action Team set up last September. This aims to look at key costing issues, such as why the cost of delivering chemotherapy orally is so close to the cost of more sophisticated delivery mechanisms – just a £22 difference in day case deliveries (see table, previous page).

No official timescale has been set for the introduction of a national chemotherapy tariff. However, the Department’s recently published Payment by results: chemotherapy and radiotherapy, a simple guide calls for organisations to ‘consider a move away from block contracting by 2012/13’. In addition, the 2009 National Chemotherapy Advisory Group report states that ‘commissioners should work with providers to prepare for the implementation of tariff in 2012/13.’

So while work to improve costing, coding and classifications proceeds, a national tariff for chemotherapy is clearly not far away.