Department of Health proposes blueprint for new “money follows the patient” system
New pricing and commissioning bodies urged as part of reform plans
‘Money follows the patient” was one of the buzz terms of the last general election campaign as the then Fine Gael opposition announced again and again that the concept would play a central role as part of its overall healthcare reform plans.
However, just like Fine Gael’s other key proposal – “universal health insurance” – there was a lot of uncertainty about how this would actually work in practice in the health service.
As seems obvious, the “money-follows-the-patient” model would involve hospitals receiving payment for specific treatments provided rather than being financed by an overall State allocation. However, in introducing such a system the key issues are which hospital services would be funded on a money-follows-the-patient basis and how would the price for these services be determined.
A draft Department of Health consultation paper seeks to answer these questions. However, it also makes clear that the money-follows-the-patient system will have to operate within a clear and coherent regulatory framework that would need further reforms to governance arrangements in the health service.
Central to these proposed new interim structures (which would be in place in advance of the introduction of an overall universal health insurance system) is the establishment of a new national information and pricing office and a separate healthcare commissioning agency.
At present public hospitals are funded primarily by means of a central block grant provided by the Exchequer through the HSE.
Block grant arrangement
The departmental paper states there are a number of alternative options available to fulfil the Government’s commitment to replace the block grant arrangement with the money-follows-the-patient system. However, it recommends adopting a prospective diagnostic-related group case-based payment system.
In essence, hospitals would be paid for each episode of care provided to a patient in locations such as an inpatient or day ward, a medical assessment unit, an acute medical assessment unit, an acute medical unit or a clinical decision unit. Payments would also apply to care delivered in a side-room or on an outpatient basis.
However, the draft consultative paper argues that the cost of care provided in emergency departments and minor injury units, as well as outreach services and teaching and research costs, should fall outside of the proposed system.
It says in line with Government policy, mental healthcare should also be funded on a money-follows-the-patient basis.
The departmental paper proposes that the new system should start off with prices being set by reference to average costs. It suggests it should later move towards “best practice” pricing although it acknowledges that it can take time to achieve consensus on what constitutes best practice and to develop robust guidelines.
The paper recommends that the price set for specific episodes of care under the new funding model should encompass pay costs for staff including doctors, nurses, paramedics, support and administration personnel as well as caterers, porters and maintenance staff.