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

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.

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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Personal Health Budgets and the placebo effect

An idle thought following on from my last post about the evidence base and Personal Health Budgets: what if there’s a placebo effect associated with Personal Health Budgets?

As far as I understand it (as someone who is neither medically trained nor well-versed in the associated literature) there is good evidence that the placebo effect exists: when a patient takes medication or does something they perceive will help their condition to improve, it does (in either their perception or actuality), even if the medication or thing done has no proven effects.

Thus, irrespective of the evidence base of Personal Health Budgets, if people believe having a Personal Health Budget will make them better or contribute to making them better, will the mechanism of a PHB contribute to making them better?

(Note: just to be clear, I find the current evidence base regarding Personal Health Budgets, captured primarily in the PHB Evaluation, persuasive of the benefits of PHBs.)

How many countries are there? On evidence and PHBs

Image via http://damirbecirovic.com/

How many countries are there?

This seems like a straightforward question to answer, doesn’t it? Most primary school children could give you an answer, and even if they couldn’t they could quickly look it up in an Atlas.

But perhaps it’s not as simple a question to answer as we think. Scotland and Wales are countries, aren’t they(?), and yet they don’t appear on the list of countries recognised by the United Nations: the UN reckons there are 193 countries, including “the United Kingdom”. My Times World Atlas from 1986 says there were 173 countries. And football’s governing body, FIFA, currently has a list of 209 countries with football rankings.

So, in order to know how many countries there are we need to ask ourselves at least two prior questions: (1) What do we mean by a “country”?; and (2) Who are we asking?

Maybe the question is a bit complicated, so let’s ask ourselves an easier question by going up a level: how many continents on the world are there?

Erm, well. National Geographic reports: “By convention there are seven continents… [but] some geographers list only six [and] in some parts of the world students learn there are just five continents.” Which means the answer again depends on asking other questions, including: (1) What do we mean by a “continent”?; and (2) Who are we asking?

This “facts” business is tricky, isn’t it?

I share this by way of thinking about what we mean by “evidence” in the context of “evidence-based policy” and the recent example of Personal Health Budgets.

A significant announcement by Simon Stevens, the Chief Executive of NHS England, about Personal Health Budgets gave rise to some teeth-gnashing earlier this month.

The gnashing focused on the evidence base that underpins the effectiveness of Personal Health Budgets. Some folks, especially the well-known Ben Goldacre of Bad Science fame, are not convinced by the current status of the PHBs evidence. They think there should be at least a Randomised Control Trial (RCT) to test whether Personal Health Budgets work. Others, including advocates of personalisation in public services more generally, noted both the results of the existing evaluation of the Personal Health Budgets pilot and the value of all types of evidence, especially including the views of patients/users themselves.

Both groups therefore lay claim to “evidence-based policy”, which leads me to two reflections:

1. It’s hardly an original thought (indeed, there are entire disciplines dedicated to such questions) but we must remember there is value associated with all different types of evidence and research methods. The value derived, and of the associated evidence arrived at, depends on what types of answers you’re hoping to uncover, how questions are framed and what pre-questions and/or assumptions underpin the framing of those questions. Different people have different thresholds for evidence and research methods, quite aside from the fact that one type of evidence or research method that’s a gold standard in one discipline could be next to useless in another.

For me, this is the equivalent of the first pre-question we came to in considering countries and continents: What do we mean by “evidence”?

2. Let’s not even get into the “policy” bit of “evidence-based policy”. For example, when has policy ever been based on evidence anyway? Does policy making happen in a rational, evidence-led vacuum that is protected from the whims of politicians and public opinion which, heaven forfend, may not be evidence based? Notwithstanding questions of what we mean by evidence, it’s safe to say that not all policy is based on what evidence there is. This is therefore the equivalent of the second pre-question we came to in considering countries and continents: Who are we asking what we mean by “evidence”?

The up-shot of this in the context of the evidence base for Personal Health Budgets is that Ben Goldacre and advocates of personalisation are both right, and they’re both wrong. There cannot be a definitive answer to the question of whether Personal Health Budgets are effective until some other, perhaps unanswerable questions, are considered.

Snippets from a study on #personalisation

Yesterday, I cross-posted a blogpost on learning from Personal Budgets for Personal Health Budgets. The learning comes from general experience, as well as from the results of a 3-year study I’ve been involved with looking at the long-term impact of Personal Budgets on users.

I opened my post as follows:

Personalisation – and Personal Budgets in particular – are making a positive difference in the lives of lots of different people of different ages and impairment groups.

I did so deliberately: personalisation seems to have been getting quite a rough deal over the last 18 months, especially since its benefits aren’t being felt equally by all groups and seems to mean less is being spent on people. Personally, I think such views conflate a number of issues, including implementation, budgetary pressures and a lack of appropriate support.

If I had to summarise my feelings, I’d say the following: there is a legitimate debate to be had about how best to ensure personalisation is implemented such that it benefits everyone equally; in my view, that’s a different debate to one that challenges personalisation per se.

Still, it’s not good enough to have these debates in the abstract, or to talk about disrupting or innovating a system to within an inch of its life without really understanding what’s going on, and the 3-year study is one attempt to explore the issues fully over a period of time (rather than a snapshot)

The full report and 5 briefings will be available soon. In the meantime, below are 3 videos which capture the stories of 3 people and the impact Personal Budgets have had for them, now they’ve been receiving them for a long period of time.

You can also see these videos with subtitles and more background / description here:

• Tim’s story
• Nicola’s story
• Simon’s story

Personal Health Budgets Future Forum

My two blogposts on Personal Health Budgets (PHBs) (1, 2) reminded me of a very interesting meeting I attended a couple of weeks ago.

This was part of the broad Future Forum structure that’s been put in place to help guide and shape the current health service reforms, and focused in particular on Personal Health Budgets.

It was the first meeting of 4, so necessarily focused on orientating all the participants in the purpose of the group, the current position from both a policy and practice perspective with regard to PHBs, and setting out on what we hoped the group would achieve.

The intent of the group was highlighted by the presence of both Paul Burstow, the Care Services Minister, and Mike Farrar, the Chief Executive of the NHS Confederation, and it was a privilege to be involved.

It was also a privilege to hear from Stephen and Nicola – a patient/user and his carer – who had direct experience of using a PHB and the difference it made to their lives.

Inevitably, there were a number of challenges when it comes to PHBs that were highlighted throughout the meeting. My personal reflections on what these included covered:

• The perception and reality of PHBs resulting in double running costs
• “The system” when it comes to NHS commissioning and procurement Staff culture within the health system PHBs being seen as an “add on” to the overall health system reforms, especially when current change is already somewhat fatiguing for those involved
• The perceived and actual lack of evidence when it comes to the role of PHBs in improving patient/user outcomes and/or reducing costs.

The NHS Confederation’s own research – which set out five tests with particular regard to PHBs for people with mental health conditions – reflects some of these issues.

This said, there were also many potential opportunities associated with PHBs (again, personal views):

• With the advent of Clinical Commissioning Groups, there is an opportunity to embed PHBs from the start of their work, including ensuring a patient-centred way of thinking (with PHBs essentially represent) in their approach PHBs and the drive towards them will enable the NHS and its staff to be even more person-centred
• Direct Payments could be a means by which some of the difficulties and bureaucracies of regulation can be proportionately managed or circumvented
• There is a huge amount of learning that can be taken from adult social care in particular (both positives and negatives) and applied to PHBs.

On that last point, one of the significant differences between PHBs in health and PBs (and Direct Payments) in adult social care is the following: in the NHS system, a significant proportion of the spend is with NHS providers; in adult social care, the majority of spend is with private or voluntary sector providers, rather than local authorities themselves.

The implications of this are substantial.

Nevertheless, the role that users and user-led organisations have played in the personalisation of adult social care – particularly with regard to providing peer support and in coproducing in system design and delivery – was one made and acknowledged at the meeting.

I’m hopeful, therefore, that users and their organisations will have a key role to play in the development and delivery of PHBs.

As far as possible, I’ll try to keep you up-to-date with the progress of this work around Personal Health Budgets.

Interesting resources on Personal Health Budgets

Having blogged about Personal Health Budgets, here are a few links that have caught my eye on the same topic over the last couple of weeks:

• Andrew Lansley trumpets his market-led patient voucher scheme (Guardian) [Interesting to note the Guardian’s use of “market-led” here. Personal Budgets are many things, but they’re not market-led – they are patient-led]
• Personal Budgets boost for continuing care clients (Community Care) [A better-informed piece about PHBs]
• Personal Health Budgets pilot programme (Dept of Health) [A reminder that PHBs have, in fact, been piloted by DH since 2009]
• Personal Health Budgets learning network (DH)
• Four reports from the PHBs evaluation [An incredibly useful resource]
• My own thoughts on early learning from the PHBs pilot
• News from In Control on the PHBs community (which can be accessed here)
• A video of a PHB user’s story (one of many excellent such videos)

Let me know via the comments or on Twitter if there are any good resources on Personal Health Budgets you’ve come across.

On Personal Health Budgets

Personal Health Budgets are looming large and will form an increasingly significant driver in the health service over the coming months and years.

I’ve often privately reflected on the leading edge that adult social care provides in public service reform. Partly because social care is relatively under the radar, it has room for more creativity and reform than other policy sectors. Thus, Personal Budgets, which have been around for some while (and their precursor, Direct Payments, have been around since 1996) are being transferred across to health, special educational needs and so on.

I have three main reflections at this stage on Personal Budgets in health.

The first is that the drive to PBs in health are likely to have a beneficial impact on the drive to PBs in social care: health very much has its head above the parapet when it comes to reform and public awareness; if PBs can be made to work there, they will be even more attractive in social care.

The second is that there is a significant level of learning from the implementation of PBs in adult social care that can be transferred to health. I hope health professionals and administrators will do the learning.

The third – and most important – is to remember that PBs were only ever one facet of one part of the overall personalisation agenda in adult social care. “Personalisation” as a whole was conceived as being made up of:

• Universal services
• Early intervention and prevention
• Social capital
• Choice and control (of which one part are Personal Budgets).

Naysayers of PBs often take them to be the only thing relating to personalisation. They’re not. Though there are undoubted challenges with PBs themselves, they are a means by which users can achieve greater choice and control. There’s a significant amount of stuff that should happen within the system besides PBs to offer a personalised, person-centred approach.

In the context of Personal Health Budgets, I hope practitioners don’t focus on Personal Budgets alone and forget about the person-centred bit, because its the latter that could drive improvements for everyone.