2. Basics of Clinical Coding and HRGs
Ensuring accurate coding
Cost vs Price
How Tariffs are worked out (Reference Costs)

3. Officially:
Costing is the quantification, in financial terms, of the value of resources consumed in carrying out a particular activity or producing a certain unit of output.

4. Essentially:
Costing is the way we work out how much the healthcare services we provide cost.

5. Help understand why and where costs are incurred
Develop patient pathways
Setting prices
Improving value

6. Medical Records are sent to Clinical Coding
Staffing
Investigations
Drugs
(baseline budget may be calculated based on any of above methods)
Must get budget holder/operational/clinical buy in and engagement – ownership
Patient attends Hospital
Outpatient Appt
Admission
Planned
Elective
On Discharge
Medical Records are sent to Clinical Coding

7. Elective care, Emergency care, Outpatient care, A&E care.
Treatment
Elective care, Emergency care, Outpatient care, A&E care.
Coding
Clinical coders classify the range of interventions and diagnoses associated with the treatment received. Source of info: patient notes and hospital patient administration system.
Grouping
Coded data is submitted to a national Secondary User Service (SUS) where Healthcare Resource Groups (HRGs) are assigned to the care delivered.
Tariff
The national tariff for the relevant HRG is assigned to the care delivered. The tariff depends on the type of setting where care was delivered, how long it took and is subject to a range of “business rules”.
Payment
The national tariff price is paid to the Provider by the Commissioner of care (e.g. Clinical Commissioning Group or NHS England) and in accordance with NHS Standard Contract terms.
Drawn from DH (2012)

8. Diagnosis
Procedures
Co-morbidities
HRG grouper
Tariff

9. Definition: A Healthcare Resource Group is a set of diagnoses or procedures which are similar in terms of care delivered and the resource use.
HRG chapter e.g. H - Musculoskeletal system
HRG sub-chapter e.g. HA - Orthopaedic Trauma Procedures; HB - Orthopaedic Non-Trauma Procedures; HC - Spinal Surgery and Disorders; HD - Musculoskeletal Disorders; HR - Orthopaedic Reconstruction Procedures
HRG – 196 split across the five HRG sub-chapter types
Example: HB12B - Major Hip Interventions for non trauma category 1 with CC
HB12B
Musculoskeletal System
Orthopaedic non-trauma interventions
B represents with complications
Chapter and sub-chapter
Number
Complexity split
(baseline budget may be calculated based on any of above methods)
Must get budget holder/operational/clinical buy in and engagement – ownership
In order to reflect the complexity of care delivered, HRGs capture: (i) comorbidities (ii) complications (iii) age (d) length of stay.

10. HRG grouper Tariff £768 Diagnosis Procedures Co-morbidities
Cauterisation of Internal Nose
E05.1
Epistaxis
R04.0
No Co-Morbidities
(baseline budget may be calculated based on any of above methods)
Must get budget holder/operational/clinical buy in and engagement – ownership
Minor Nose Procedures 19 years and over without CC
CA24A
£768
HRG grouper
Tariff

11. Who? NHS Improvement and NHS England construct the tariff for the NHS
Developing the tariff relies on 3 main building blocks…
Cost: National tariffs are based on the average cost of services submitted by NHS organisations in the annual NHS reference costs collection.
Tariff
Cost
Currency
Efficiency factor
Efficiency factor: An adjuster within the tariff to quantify expected efficiency gains. This represents the gap between commissioner funding allocation and the cost of supplying care within the provider sector.
Currency: A set of clinically meaningful “units” upon which to base a price on e.g. HRGs.
Who? NHS Improvement and NHS England construct the tariff for the NHS

13. Can Code Can’t Code Diagnosis Query Probable Likely Treat as Possible
Presumed ?
Write down all procedures carried out and remember Coders can’t interpret data

14. HRG grouper Tariff £768 Diagnosis Procedures Co-morbidities
Cauterisation of Internal Nose
E05.1
Epistaxis
R04.0
No Co-Morbidities
(baseline budget may be calculated based on any of above methods)
Must get budget holder/operational/clinical buy in and engagement – ownership
Minor Nose Procedures 19 years and over without CC
CA24A
£768
HRG grouper
Tariff

15. HRG grouper Tariff £1687 Diagnosis Procedures Co-morbidities
Ligation of Internal artery of nose
E05.2
Epistaxis
R04.0
No Co-Morbidities
(baseline budget may be calculated based on any of above methods)
Must get budget holder/operational/clinical buy in and engagement – ownership
Complex Nose Procedures 19 years and over without CC
CA20Z
£1687
HRG grouper
Tariff

16. Alcohol abuse/alcoholism Epilepsy Alzheimer’s disease/dementia
Hemiplegia
Anxiety/anxiety disorders
Hypertension
Asthma
Ischaemic heart disease
Autism
Mitral valve disease/disorders
Cerebrovascular disease
Multiple sclerosis
Chronic bronchitis
History of anti-coagulant therapy
Chronic obstructive airway disease
Personal history of self-harm
Heart failure
Presence of cardiac pacemaker
Dementia (any type or unknown type)
Psychosis/psychotic disorders)
Depression disorders
Registered blind
Developmental delay
Renal failure/disease
Diabetes (need specific type)
Rheumatoid arthritis
Drug abuse/addiction
Severe or profound hearing loss
Eating disorders
Living alone (if increases length of stay
Emphysema
Repeated audits of coding show that the biggest source of error in Coding is in relation to Co-morbidities

17. ‘Cost’
‘Price’
The amount spent by a provider organisation to perform an activity; their expenditure.
The amount that a provider receives from commissioners to perform an activity; their income.
1 2015/16 Reference Cost main schedule
2 2016/17 National Tariff (no MFF)

18. Each year, every provider organisation must report their cost of every HRG they perform
This makes up the Reference Costs and the average cost is the starting point for setting the National Tariff. 1

19. Limitations of Reference Costs:
Only includes cost and activity, does not reflect quality
Accuracy is only as good as the data fed in from finance ledger and information activity counts
Uses of Reference Costs:
Benchmark efficiency against local peers and the national average
Create prices / the national tariff and income rates

20. It is clear that the NHS has limited resource
It is clear that the NHS has limited resource. How do we decide if new ways of working will deliver good value.
The denominator in the determining value is Cost.
How can we determine how much a pathway costs? Or if new ways of working would cost more or less than the current way.
Currently, we use reference costs – but they are not very sophisticated and can be arbitrary in nature.
Patient Level Costing identifies all the resources consumed by an individual patient through the care setting and the associated costs of these resources.
Once this data is accurately compiled – it can play a significant role in improving patient care. By comparing the costs with the income received – you will be able to identify pathways which require improvement.
PLICS allows organisations to identify variation against standardised bundles or pathways of care, between clinical teams, or between different groups of patients. When PLICS is analysed alongside other performance and quality information, it becomes even more powerful in understanding the delivery and performance of services

21. NHS Digital Casemix Companion: http://content. digital. nhs
Department of Health Reference Costs guidance:
NHS Improvement National Tariff: