Elsevier

Health Policy

Volume 115, Issues 2–3, April 2014, Pages 152-156
Health Policy

The effect of performance-volume limit on the DRG based acute care hospital financing in Hungary

https://doi.org/10.1016/j.healthpol.2013.12.005Get rights and content

Abstract

Objectives

The aim of our paper is to analyse the effect of the so-called performance volume limit (PVL) financing method on acute hospital care.

Data and methods

The data were derived from the nationwide administrative dataset of the National Health Insurance Fund Administration (OEP) covering the period 2003–2008. We analysed the trends in the DRG cost-weights, number of cases, case-mix, and average length of stay. We calculated the average annual reimbursement rate per DRG cost-weight with and without the application of PVL degression according to the hospital type and medical professions.

Results

Our results showed that although the national case mix (i.e., the sum of all of the DRG cost-weights produced in one year) did not change between 2003–2006, the trend of the annual number of cases increased, and the average length of stay decreased. During 2007–2008, a significant decline was found in each indicator. The introduction of the PVL resulted in a health insurance budget saving of 1.9% in 2004, 2.6% in 2005, 3.4% in 2006, 5.6% in 2007, and 3.2% in 2008. We found the lowest reimbursement rate per DRG cost-weight at the university medical schools (HUF 138,200 or € 550) and children's hospitals (HUF 132,547 or € 528), whereas the highest was at the county hospitals (HUF 143,451 or € 571) and city hospitals (HUF 142, 082 or € 565).

Conclusions

The implementation of the PVL reduced the acute care hospital activity and reimbursement. The effect of the PVL was different on the different types of hospitals, and it had a serious disadvantageous effect on the university medical schools and children's hospitals.

Introduction

Hungary was among the first European countries to introduce DRG-based hospital financing. The preparation for the introduction began at the end of the 1980s, and in 1993, it was introduced as a financing method for acute hospital care in every hospital in the country. Whereas the German DRG system relies on the Australian Refined DRGs (AR-DRGs), the Hungarian DRG system is a result of an independent developmental process. It was initiated with the development of a minimal dataset in which the data were collected from sample hospitals. Subsequently, from 1987 to 1991, more detailed data were gathered from approximately 10% of Hungarian hospitals. The cost assessments and analyses and the Hungarian grouping algorithm were completed. The International Code of Diseases (ICD) and the International Code of Procedures in Medicine (ICPM) coding systems issued by the WHO for the classification of diseases and medical interventions were implemented directly into the Hungarian DRG system.

In many countries, in addition to the typical hospital financing techniques (including DRG, fees for service, and daily fees), a financial ceiling or upper limit is applied to maintain the health care budget at the national or regional level [1], [2], [3], [4], [5].

During the application of the DRG system in Hungary, to moderate the prompting effect of the activity based financing of the DRG, in 2004 an upper financial ceiling was introduced, namely the performance volume limit (PVL). The essence of the PVL was to implement an upper limit or ceiling on the annual activity of the hospitals, defined in the DRG cost-weight. The National Health Insurance Fund Administration (NHIFA) will not reimburse at all or will reimburse only partially the patient care costs exceeding this limit.

Quentin et al. defined the DRG cost-weight as the average costs of the DRGs divided by a reference value that is conceptually related to the average cost of treating all of the cases in Germany [6]. According to the Hungarian definition of the DRG cost-weight, it is “usually calculated from information about average treatment costs of patients falling within a specific DRG in at least a sample of other hospitals in the past” [7]. The Hungarian National Health Insurance Fund Administration establishes the DRG cost-weights. The reimbursement of the DRG cost-weight is calculated by the following method: the cost-weight of the individual DRG group is multiplied by the DRG base reimbursement rate. For example, the cost-weight of the DRG “344D Cholecystectomia” is 1.62885, the DRG base rate is 150,000 Hungarian Forints (HUF), and the reimbursement is 244,327 HUFs. The Hungarian PVL regulation did not change the cost-weight of the individual DRG groups; however, an upper ceiling was established at the hospital level as the total number of annual DRG cost-weights.

From 2004 to 2006, the patient turnover above the limit was financed in a so-called degressive way in the Hungarian PVL system. In this period, the base for the PVL was 98% of the activity of the previous year, which indicates a 2% decrease in the total hospital budget. The performance above the PVL ceiling was partially financed as follows: by 60% in cases of a 0–5% increase over the PVL, by 30% in cases of a 5–10% increase over the PVL and by 10% in cases of a higher than 10% increase over the PVL. Between 2006 and 2008, the base for the PVL was further reduced to 95% of the activity of the previous year. The patient turnover above the limit was not reimbursed. A more detailed description of the Hungarian health care system can be found elsewhere [8], [9], [10], [11], [12], [13], [14], [15]. Information in the international scientific literature on the effect of cost-containment tools on hospital financing does not exist or is limited.

The objective of our paper is to analyse the effect on the DRG-based reimbursement of acute inpatient care in Hungary by the PVL as a cost-containment tool.

Section snippets

Material and methods

The data in this analysis are derived from the reports submitted by institutions to the National Health Insurance Fund Administration and refers to acute inpatient care.

We explored the data on the acute inpatient care cost-weights and the number of cases for reimbursement between 2003 and 2008. The DRG cost-weights and the number of cases are nationwide figures, including all of the data from the entire country (Fig. 1, Fig. 2). For assessing the changes in hospital days, we calculated the

Results

Fig. 1 shows the annual total acute inpatient care cost-weights between 2003 and 2008. The annual total cost-weights in the first three years of the survey period (2004–2006) did not increase, which indicates that the PVL limited the increase of the homogenous disease group cost-weights. During 2007 and 2008, we observed that all of the cost-weight values significantly decreased.

Fig. 2 shows the annual number of cases to be reimbursed for acute inpatient care between 2003 and 2008. The trend of

Discussion

The objective of our analysis was to demonstrate the numerical effects of the PVL on acute inpatient care. The annual total cost-weight values did not change between 2003 and 2006; however, in 2007 and 2008, they appreciably decreased. The introduction of the PVL resulted in a health insurance budget saving of 1.9% in 2004, 2.6% in 2005, 3.4% in 2006, 5.6% in 2007, and 3.2% in 2008. This finding indicates that the PVL method has achieved its aim, i.e., the performance index (cost-weights) that

Conclusion

The implementation of the PVL as a mechanical and solely fiscal tool reduced the acute care hospital activity and the reimbursement for acute care hospital activity by 1.9–5.6% between 2004 and 2008. The effect of the PVL was not identical on the different types of hospitals and had a serious disadvantageous effect on the university medical schools because of the increased number of patients they treated (Fig. 4). The university clinics were not able to refer patients to other hospitals;

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