New NHS Payment System is Facing Problems -- MEDICA - World Forum for Medicine

In April 2004 the NHS introduced its new "payment by results” system starting with foundation hospitals, whereby providers are paid for each individual case rather than through block contracts.

This new system uses healthcare resource groups (HRGs) as a measure of care based on diagnosis and complexity of treatment, but it has already run into problems. The planned roll-out across all NHS trusts for April 2005 has been restricted, while there is also concern that "gaming” may result, whereby providers reclassify patients into more complex and therefore more expensive HRGs to gain extra revenue.

The research team examined hospital episode statistics to determine whether foundation hospitals showed a change in numbers of emergency admissions and coding patterns compared with those providers still under the old block contracts.

Foundation trusts showed a greater increase in short stay inpatient admissions through accident and emergency departments (24%) than non-foundation trusts (17%). However, average episode costs and HRG codes did not change significantly.

Several countries have introduced case mix prospective payment systems, with varying results, say the authors. However, the payment by results system is no panacea.

This analysis suggests a disproportionate increase of short stay admissions through accident and emergency within foundation trusts. Thus far the English data show no consistent evidence of "HRG drift” but further analysis is needed as more data become available, they conclude.; Source: British Medical Journal (BMJ)