Following the money can support personalised payment mechanisms: exploring the health payment system

Alternative Guide to the NHS - from the King's Fund
Alternative Guide to the NHS – from The King’s Fund

Most discussion about health and social care is about how much money there is(n’t) in the system. Relatively little attention is given to how the money in health and social care flows through that system.

This post shares some extended thoughts on what we know about the payment system in health, how this has been applied to mental health and how, despite potential perils, we can use current and future payment system changes and extensions into social care to support personalisation.

It is a bit dense in places, but it hopefully gives a useful grounding in the payment system for those who’d like to know a bit more about it and the opportunities (and difficulties) it presents. The post is broken up into 3 parts: (1) How the health payment system works; (2) How the health payment system has been extended into mental health; and (3) The perils and opportunities of moving a health payment system into social care.

I. The health payment system

To understand how a system works a good rule of thumb is to follow the money. In large parts of the health service this is pretty easy to do because of the payment/tariff system (which used to be known as “Payment by Results”[1]).

The core building blocks of the payment system are currencies and tariffs. The currency defines the unit of healthcare for which a payment is made (i.e. the ‘what’, such as a hip replacement or cataract operation) and the tariff defines ‘how much’ for each currency (i.e. what will be paid).

Thus, for any person receiving any treatment in certain settings, the following basic process is followed:

  • Treatment occurs
  • Treatment is coded using separate classification systems for diagnoses and interventions
  • Grouping of treatment – a Healthcare Resource Grouping (HRG) is allocated based on clinical codes and other patient data
  • Tariff – The tariff price depends on HRG and type of admission, and there are a variety of tariff adjustments made
  • Payment – standard monthly payments are made in advance, based on activity plan. Actual activity transmitted from provider to commissioners adjusts these payments up or down

In its introduction to the payment system (from 2013) the Department of Health produced this useful diagram to explain the broad principles of how the payment system applied to Mrs Smith having twins, Mr Jones having an emergency hip replacement and how much their treatment costs.

PbR worked examples
Click to enlarge

To get to this point the payment system in health has evolved a lot since it was first introduced in 2003/4. That year this type of payment system made up around £100m of health spending (some 0.2% of relevant commissioner allocations); by 2011/12 it made up £28.9bn of health spending (32.4% of relevant commissioner allocations).

II. Extending the health payment system into mental health

For things that are relatively well defined (such as giving birth or hip replacements), a currency/tariff system is relatively easy to define. This is partly to do with how well the evidence base is developed: in health, NICE pathways exist http://pathways.nice.org.uk/ which outline exactly what should be done and when. (Here’s the pathway for multiple pregnancies and here’s the one for hip fractures.)

What if, though, we apply similar principles to areas where definitions or boundaries aren’t so easy to come across: mental health and social care?

In mental health, a lot of effort has already been made in this direction. All of the various mental health problems that people can have are divided up into 21 ‘clusters’ – a way of grouping people with mental health problems according to their needs, based on descriptions of characteristics of people who are assumed to have similar mental health support needs, and the level of resource needed to meet these needs. In mental health, these ‘clusters’ are the currency (i.e. the ‘what’, or the equivalent of hip replacements etc.).

If this were to follow the twins / hip replacement example, we would then allocate an amount of money to the treatment of someone in a particular cluster and all would, we hope, be sorted. In mental health, though, there are a whole range of other factors that affect what is or isn’t included in someone’s treatment. These factors include (but are not limited to):

  • Mental health episodes are more difficult to define and diagnoses are less clear-cut
  • There is less clinical consensus on optimal care pathways, making cost variations more pronounced. Even if there was a consensus on pathways, mental health support is not consistently available across the country, including where some types of support simply aren’t available
  • Interrelationships with physical health are complex, with mental health problems having a substantial impact on health conditions
  • Mental health problems typically imposes costs and benefits in non-health sectors
  • There are shortcomings in both the availability and quality of activity data for mental health, which make very difficult the development of robust remuneration
  • The evidence base for mental health interventions is far less developed than for traditional health interventions
  • The money that meets different elements of the support comes from different sources, most notably health and social care pots of money.

What this list of factors means is that the pathway and the payment are much harder to determine in mental health.

Efforts have been underway since 2010/11 to both define the typical pathways associated with each cluster and the prices that might be attached to them. Progress is very mixed, though: clustering people with mental health problems is required by central government, but payment isn’t yet compulsory – local areas can develop their own ways of arranging payment. Furthermore, the extent to which the new payment system in mental health has changed the nature of activity and the differences it has made in people’s lives is a moot point. A recent survey by the Healthcare Financial Management Association (HFMA) (pdf) shared the views of health finance managers on progress regarding the mental health payment system. Findings included:

  • 84% reported commissioner understanding of the mental health payment system to be very poor, poor or fair
  • 60% reported cluster-based activity as having “no” financial impact
  • 70% reported that they still operated under a block contract with commissioners with a shadow tariff.

III. The opportunities and perils of moving a health payment system into social care

As it is in mental health, so the picture would be (even) more complicated in social care.

It isn’t yet the case that formal segmentation of the care population (to create ‘currencies’ and ‘clusters’), associated care pathways and prices have been developed. What we are starting to see, though, is a more concerted effort to define what we might typically expect from a social care pathway; this is mainly been driven through the NICE Collaborating Centre for Social Care (guidelines are being produced, for example, on the topics of home care and reablement). The drive to integration will also bring social care far more, perhaps fundamentally, under the aegis of agencies like Monitor and NHS England, who are jointly responsible for the payment system in health. CQC is, of course, already a joint regulatory body that operates across both health and social care.

In my personal view, and drawing on the experience in mental health, there are both perils and opportunities of bringing a health-type payment system into social care.

The biggest peril is that social care could be the less richer for such a payment system. This lost richness would be made up of a more medical focus in social care, painting a more black and white picture of people than the complexity and range of social care represents. Health is making attempts to shift away from this viewpoint (see, for example, the Coalition for Collaborative Care, Co4CC), but the experience in mental health suggests the practice of anything other than medical thinking related to payment systems is very hard to do.

There are, though, 4 positive opportunities we can take from any current or future attempts to develop currencies and payments in social care.

  1. Such a payment system begins to bridge the gaps (professional, language etc.) people from different professional backgrounds bring. Health and social care professionals start from very different technical positions, though aren’t different in what they seek to do for and with the people they support. Thinking about pathways and payments and trying to put them in place enables people across the piece to come together for a common goal, starting from where they currently respectively are
  2. Building standard national mechanisms won’t, I think, work. But providing a strong requirement to develop a local model, backed up by excellent guidance, support, encouragement and sharing of learning can help areas to create strong local health and social care economies through their common work to develop (if not produce) pathways and payments
  3. Attempts to build the picture will show where evidence is most needed in social care (and health). I am by no means advocating the unrealistic position that we should only spend money on models/interventions/supports backed up by ‘gold-standard’ evidence; but I am saying that knowing where more appropriate evidence is needed will help us to ensure more of what is available through social care is as effective as it can be in supporting people
  4. Perhaps the most exciting opportunity is that developing payments systems like this does much of the heavy lifting in identifying how much money is associated with the care and support of an individual. Even more exciting is the idea that such information would incorporate both health and social care provision. Once the amount is known it is then easier for an individual to take that resource as a Personal Budget / Personal Health Budget, with all the benefits we know are associated with this. After such work, the natural foundations for things like Integrated Personal Commissioning are then in place.

These are 4 reasons I could get behind.

Reforms in health and social care aren’t always renowned for their subtlety. What I’ve therefore endeavoured to do in this post is show how there are always opportunities in reforms – in this case, the payment system, with its currencies and tariffs  – that can be used to support a whole range of ends. Here, following the money provides a chance to bring health and social care people together and do much of the heavy lifting that personalisation through, for example personalised payment mechanisms, requires. Though this isn’t without its perils, as the experience in mental health shows, the opportunities aren’t too bad either.

Notes:

[1] – Back in 2013 I wrote an introductory guide to what was then Payment by Results in mental health. Though some of the technical information has been superseded by development since then (and on which a publication is forthcoming) most of the information in the guide remains useful. You can find it here.

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rich_w

Man of letters & numbers; also occasionally of action. Husband to NTW. Dad of three. Friendly geek.

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