The Government is considering radical changes to the way public hospitals are paid by health insurance companies, writes MARTIN WALL
THE PROVISION of about 2,000 beds in public hospitals designated specifically for the use of private patients is often criticised as one of the more clear-cut examples of the two-tier health system in operation. However, this same arrangement is a considerable generator of cash for the public hospital system. The VHI, for example, paid more than €300 million last year to public hospitals.
The way in which public hospitals, however, are reimbursed by insurance companies is very different than the system in place for those operating in the private sector, and the Government believes it may not be the most efficient.
At the moment, public hospitals are paid by insurers on the basis of a bed charge per night which is set by the Department of Health. In private hospitals the insurers negotiate a price for a procedure.
However, the Minister for Health, Mary Harney, told the Dáil a fortnight ago that a new review established by the Government was looking at whether public hospitals should move to procedure-based costing. This would mean that public hospitals would be paid on the basis of procedures carried out at a price negotiated with the insurance companies.
At present, public hospitals have no role in negotiating the rates charged to insurers which are set periodically by the Department of Health for various types of hospital. There is no incentive or allowance in the system for public hospitals to compete with each other on price.
The Government currently charges insurance companies €910 per day for a private bed in a HSE regional or voluntary teaching hospital, in addition to the €75 daily statutory inpatient charge. Over the past decade or so the Government has moved towards charging insurance companies the full economic cost of private treatment in public hospitals.
The interim report of a review group on economic charging, obtained by The Irish Times recently, shows that in respect of HSE regional or voluntary teaching hospitals, the charges currently applied, including the daily statutory charge, is 97 per cent of the actual cost for private beds and 77 per cent for semi-private facilities.
However, questions have been asked as to whether charging insurance companies on the basis of a bed charge per night is the most efficient system. Other questions arise separately as to whether it is promoting the most cost-effective way of treating patients such as day-case procedures.
As Ms Harney pointed out in the Dáil a fortnight ago, a patient who requires more nursing care and support, because of the complexity of the illness and the necessary treatment, will cost more than one who does not require the same level of care.
A procedures-based charging system could allow hospitals to bill insurance companies for the costs of particular treatments rather than having them paid on an average cost per bed-day.
Government sources also argue that it would remove any incentive that could exist for insurance companies to concentrate complex and costly procedures for their subscribers in public centres. Government sources also maintain that such a procedure-based system could also encourage greater use of day-case treatments.
At present across the public hospital system overall, there is a wide variation of the level of treatment provided on a day-case basis for the same procedure.
Ms Harney told the Dáil that many procedures that could be carried out on a day-case basis were currently being performed on an inpatient basis.
“For example, 37 per cent of hernia repairs happen on a day-case basis. It varies from Tallaght where 84 per cent of them happen on a day-case basis to Mayo where only 16 per cent happen on a day-case basis. The length of stay in Mayo is on average three days.”
The introduction of procedure-based pricing could encourage the take-up of day-case procedures across the hospital system, its supporters believe.
In the interim, the recent review group of economic charging recommended to the Government that the current bed-night system of payment should be tweaked. It said the Cabinet could consider increasing the charges for private beds in public regional and teaching hospitals by up to 15 per cent to meet new estimates for the economic cost of providing such facilities.
The cost of private facilities in HSE county hospitals could rise by up to 38 per cent.
The report says such an increase would generate an additional €50.8 million in revenue, however, it could add up to 5 per cent to the cost of health insurance premia.
The issue of the private bed charges is not expected to be addressed by the Government until the autumn when it examines spending plans for next year. It is unclear as to whether the report on the possible introduction of procedure-based costing will be available by then.
VHI said last week that it would welcome any move towards procedure-based pricing in the public hospital system. However, it said that could take some time to implement as it would involve legislative and contractual changes.