1. Reference Costs 2006-07 Afternoon Workshop Richard Russell, DH Ali Connell, DH PbR – Finance and Costing Team

2. Purpose of Reference Costs Organisational Roles and Responsibilities Key changes since 2005-06 – HRG4 – FCE and Spells – Unbundling – Data Definitions – Collection System Known areas of difficulty Timetable Resources Patient Level Costing Contents

3. Annual national benchmark exercise of average unit costs from providers in England Also serves to inform – Payment by Results: Tariff Development – Programme Budgeting – Efficiency measures – Organisational Performance Management So whilst some changes are to inform an improved benchmark we also need to take account of its other uses Purpose of Reference Costs

4. DH, Policy and Strategy, PbR, Operations – Responsible for developing reference costs guidance, costing manual, collection system – Secretariat for the National Costing Development Group who are responsible for quality of costing in the NHS – Responsible for producing, national schedules and RCIs Information Centre for Health and Social Care (IC) – DH commission trim points, OPCS/ICD10 to HRG mapping, HRG grouper Roles and Responsibilities (1)

5. Roles and Responsibilities (2) Connecting for Health (CfH) – Data Dictionary – Coding Guidance Strategic Health Authorities –Coordinating the exercise locally and answers queries from Trusts and PCTs (with support from DH as required) Your own Finance Department – First source of advice on reference costs

6. Reference Costs 2006-07 Communications SHA Reference Costs Leads IC Roadshows FAQs Website Mailbox –(Diagram – next slide)

7. What does the query relate to? What organisation?Where should I send? PbR technical guidance PbR development / policy Reference Costs collection guidance Reference Costs data returns/results Costing manual If query is a mixture of PbR and Reference Costs questions then should go to pbrcomms@dh.gsi.gov.uk pbrcomms@dh.gsi.gov.uk NHS Trusts PCT FT SHA DH (Including specific subject header) (If SHA cannot answer) pbrcomms@dh.gsi.gov.uk NHS Trusts PCT FT SHA DH (If SHA cannot answer) pbrdatacollection@dh.gsi.gov.uk

8. HRG4 (note no word “version” or “vn” or “v”) – Designed by clinicians – Increased number of lines from approx 560 to over 1200 – Setting independent ( APC, Outpatients, A&E, Adult Critical Care, Paediatric Critical Care, Neonatal Critical Care) – Apply equally to Admitted Patient Care and Outpatients i.e. Outpatients grouped by HRG Key changes since 2005-06 HRG4

9. Providers are paid on a Spells basis and need to measure their costs on the same basis HRG4 is designed to be Iso-Resource at Spell level, not FCE level So the future of Reference Costs is Spells level costs by HRG For year on year comparability need a collection of both FCE and Spell costs Key changes since 2005-06 FCE and Spells (1)

10. DH issued guidance on how to get from FCE costs to Spell based costs Point to note: – FCE collection – count FCE’s that are part of a Spell that finishes in the 2006-07 financial year – Spell level collection, group Spells that finish in the year HRG4 Grouper assigns each FCE record the relevant FCE HRG and subsequent Spell HRG on same output file Key changes since 2005-06 FCE and Spells (2)

11. For reference cost purposes this means services separately identified (by HRG4 Grouper) from FCE: –Chemotherapy –High Cost Drugs –Diagnostic Imaging (Radiology) –Interventianal Radiology –Renal Dialysis –Radiotherapy –Specialist Palliative Care –Rehabilitation Services At a Spell level grouper also separately identifies these activities and does not group them within the main Spell Key changes since 2005-06 Unbundling

12. Incorrect Trimpoints used will now ‘fail’ loading process - Vital to use correct ones Workbook structures have been made more consistent with Guidance Software providers Mid May – Live testing week Key changes since 2005-06 Collection System

13. The reference cost guidance now links to the data dictionary wherever possible Biggest change is Outpatients, it is now a “pre-booked appointment at a clinic” i.e. setting independent – NB possibly big impact for PCTs? Other key changes are: – Outpatients by Staff Type – Observation wards/assessment units clarification – Critical Care counting, Periods and ACP – Renal – now HRG4 – Digital Hearing Aids – Mental Health – Mental Health Specialist Teams (Child/Adult/Elderly) – Pre-processing of data - Annex 1 – Accounts reconciliation in reconciliation statement Key changes since 2005-06 Data Definitions and Collection structures

14. With the new definition PCTs are now doing Outpatients, but generally do not using OPCS/ICD10 coding A number of organisations have not collected OPCS 4.3 since the start of the year (1 April 2006) Collection files are larger due to HRG4 introduction Data Collection issues for some of the areas of unbundling Known areas of difficulty (1)

15. Known areas of difficulty (2) Updated definitions in line with data dictionary and PbR requirements may require more local solutions than normal PAS systems not able to fully utilise all HRG groups at this time PCT’s post reconfiguration need to include activity and costs relating to pre configuration organisations

16. Tools…… Ref Costs Final guidance available – 16 th Feb (DH) Costing Manual updates – March Final Collection Files - March ICD10/OPCS to HRG code to HRG mapping available Feb (IC) Toolkit documentation available March (IC) Grouper available end April (IC) Trim Points available early May (IC) Deadlines….. First submission to DH – 29 th June, Noon Final submission to DH – 31 st July, Noon RCIs produced before end 2007 (DH) Timetable

17. Reference Cost Guidance: www.dh.gov.uk/refcostswww.dh.gov.uk/refcosts NHS Costing Manual: www.dh.gov.uk/refcostswww.dh.gov.uk/refcosts HRG4 Toolkit: www.ic.nhs.uk/casemixwww.ic.nhs.uk/casemix HRG4 Documentation: www.ic.nhs.uk/casemixwww.ic.nhs.uk/casemix OPCS/ICD10 to HRG Mapping (code to group in excel): www.ic.nhs.uk/casemix www.ic.nhs.uk/casemix SHA leads contacts (details In pack and at www.dh.gov.uk/refcosts)www.dh.gov.uk/refcosts Reference Cost Discussion Forum (this is a users resource and whilst promoted by DH it is not used by the DH as a way of receiving queries – the route for queries is via SHA Reference Cost Leads) Resources and useful links

18. The Future of Costing Response to Lawlor Review National Costing Development Group Support Patient Level Costing

19. Historically reference costs tend to be calculated by finance, on a top down basis, with little clinical validation – one hospital provided 1526 Diabetic Adult Face to Face Contacts for a total cost of £1,678 (avg of £1.10 each) – another provided 16 Intermediate Pain Procedures for a total cost of 80 pence - 5 pence each As reference costs have been used to calculate tariff then this undermines the credibility of the tariff Patient Level Costing (PLC) 1

20. PLC is a change in costing methodology to a bottom up approach. Will allow for improved clinical engagement as discuss actual patients rather than averages Will allow for better understanding of costs as will be able to compare cost buckets rather than just average costs Will better support tariff development as allows for greater level of detail to be collected Will support any future classification changes as simply sum up patient costs into whatever classification the organisation is using Patient Level Costing (PLC) 2

21. There are already 5 sites implementing PLC Up to a years implementation time and then a further year to properly bed in Makes better use of the existing investment in place to support PbR implementation Will be supported by Updated costing definitions and standards will be written by NHS experts Process of peer review of quality of costing data in providers Patient Level Costing (PLC) 3

22. PLC is a forward looking medium to long term solution. There is plenty that can be done now: – Service level costing – Clinical validation of costing results – Benchmarking groups – Other ideas? The short term

23. Large scale change for 2006-07 to support HRG4 tariff and costing development – FCEs and Spells – Unbundling – OPCS4.3 Organisations need to start planning for the reference cost collection now Any Questions? WRAP UP