CIHR Policy Round: Hospital Activity-Based Funding

A few notes on today’s webinar from the Canadian Institutes of Health Research’s (CIHR)¬†Institute of Health Services and Policy Research (IHSPR)’s Policy Round on Hospital Activity-Based Funding.

  • Activity-based funding: hospitals paid pre-determined fixed fee per episode of care, to fund bundle of services to each patient with a particular diagnosis, regardless of actual resources used on particular patient. Hospitals received a fixed amount for each episode of care. Replaces other funding (such as global budget).
  • Pay for Performance (P4P): Reward for meeting pre-established targets on quality or efficiency. Supplements other fundings.
  • Fee for service (FFS): Hospital funding for each reported activity.
  • Patient-focused funding (PFF): a BC system, combo of ABF & P4P.

Effects of ABF (from meta-analysis):

  • no effect on acute care mortality (long-term), but early on there was an increse in mortality
  • no effect on post-acute care mortality
  • no difference on volume of care (but high variability)
  • no effect on readmission, but high variability (meaning that there’s uncertainty as to whether a single jurisdiction will see an effect or not).
  • increase in discharge to post-acute care
  • severity of illness was increased in ABF (but was this because ABF increased with increased severity, so people “up code” to a higher severity to get more funding?)

Take home message of the meta-analysis: huge amount of uncertainty in predicting the the impact of ABF.

Canadian Medicare only required to fund hospitals and physician services – not home care. Since ABF –> increase in need for post-acute care – who will pay for it? This raises equity issues, as post-acute care is a mix of publicly funded and privately funded.

Policy perspective from Steven Lewis:

  • not surprised by the variability – ABF is still just a way of funding activities (bundled instead of unbundled like FFS)
  • theoretically, ABF makes you think about efficiency (i.e., if another site is treating similar patients (and getting same outcomes) more cheaply than you, you’d ask “what activities are they doing differently than us?”
  • but healthcare should be thinking about efficiency anyway
  • reducing length of stay –> unloading cost of care (e.g., home care) to people doesn’t mean we should not try to reduce length of stay – we should make our publicly funded healthcare system truly “comprehensive”
  • we should be focusing on the “appropriateness” of care – are we giving the best care (and not giving care that isn’t appropriate)?

Update (2014-Dec-15): A recording of the session, plus the slide presentation, can be viewed here.

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