The National Tariff: How Chemotherapy May Be Funded

The National Tariff: how chemotherapy may be funded

Anne Hines, Lead Pharmacist, Merseyside and Cheshire Cancer Network

Introduction

NHS drug budgets have long been a source of contention and frustration for all involved. Cancer chemotherapy is no exception,¹ and funding decisions will become even more difficult as the number and cost of new regimens increase.

For new treatments, an important step on the road to funding is appraisal by the National Institute for Health and Clinical Excellence (NICE), but there are considerable delays between drug licensing and NICE approval, and some high-cost chemotherapy drugs may never be prioritised for assessment. Furthermore, even when NICE gives the go ahead, mechanisms for funding are still required.

Payment by Results is one method for funding clinical services in the NHS.

Payment by Results

Payment by Results has three components:

• A National Tariff for reimbursement of activity
• A method for describing clinical activity
• A method for counting clinical activity

There are certain advantages to the system. For example:

• Providers are paid for actual activity
• Money should follow the patient, wherever the treatment is given
• The system should drive up quality by facilitating patient choice
• Financial systems should be transparent

One disadvantage of Payment by Results is that payment, and hence income, is driven by activity and is not dependent on outcome measures; however, this policy is under review.²

The Payment by Results system is underpinned by a series of clinical classifications known as healthcare resource groups (HRGs)—standard UK groupings of clinically similar treatments that use a common level of healthcare resource.³ Activity is defined by codes issued by the Office of Population Censuses and Surveys (OPCS), and is recorded by clinical coders. Groups of OPCS codes are clumped together to form an HRG and a tariff is paid every time an activity is performed. OPCS codes have recently been published to support the implementation of Payment by Results in several new clinical areas, including chemotherapy and radiotherapy.³

The chemotherapy HRG

The structure of the new chemotherapy HRG was devised by an expert working group (EWG) of multidisciplinary clinicians and finance representatives.³ Under Payment by Results, chemotherapy will be funded separately to other treatments the patient may be receiving. The different chemotherapy regimens are grouped into bands and allocated OPCS and HRG codes. There are two sets of codes, based on the NHS procurement costs (procurement codes) and the resources needed for delivery (delivery codes). For example, FEC (fluorouracil+epirubicin+cyclo-phosphamide) is a Band 2 regimen, which has procurement OPCS code X702 and procurement HRG code SB027, whereas FEC 100 is in Band 3, and has procurement codes X703 (OPCS) and SB03Z (HRG). The full cost of procurement is assigned to day 1 of any cycle of treatment.

The delivery tariff does not apply to inpatients, since the cost of delivering inpatient chemotherapy is considered to be already included in the bed tariff. It comes into effect wherever outpatient treatment is given. Delivery codes are designated as shown in Table 1.

Where a regimen has multiple attendances per cycle, the first attendance is coded according to resource use as described in the bands, but any subsequent attendance is coded as ‘Deliver subsequent elements of a chemotherapy cycle’, i.e. X731. (OPCS) and SB15Z (HRG). This structure has been designed to strike a balance between reflecting the complexity of chemotherapy delivery and the ability of NHS coding systems to record the data. Some trusts may choose to only record day 1 visits of any particular chemotherapy cycle.

Table 1: Delivery codes for chemotherapy

Examples of the use of procurement and delivery codes for different regimens are shown in Table 2 (please see next page).

Central to the proper functioning of the chemotherapy HRG is the manual Chemotherapy Regimens & and Guidance for Clinical Coders, produced by NHS Connecting for Health (CfH).⁴ It lists common chemotherapies and their associated codes for procurement and delivery. It remains unclear how often and by what method the list will be updated with new regimens.

FEC=fluorouracil+epirubicin+cyclophosphamide; FEC 100=FEC with higher epirubicin dose;
FEC T=FEC+docetaxel; TAC=docetaxel+doxorubicin+cyclophosphamide
Table 2: Delivery codes for chemotherapy

NOTE:

• FEC and FEC 100 are relatively straightforward regimens and should be coded each time the patient attends
• Some sequential treatments, such as FEC T, are not listed as single regimens. In this case, the FEC and docetaxel components can be coded separately
• TAC is not on the regimen list at all and cannot currently be coded. It is not clear if the docetaxel and the doxorubicin+cyclophosphamide components can be coded separately, as they are on the list
• Coders from non-specialist hospitals will not be familiar with chemotherapy and cannot be expected to pick out elements that may be on the current regimen list
• Remember the delivery code does not apply to any regimen given as an inpatient treatment

Financial considerations

The risks and benefits of implementing Payment by Results will vary with the different funding arrangements. Broadly speaking, chemotherapy in most district general hospital settings is funded via block contracts. Trusts receive a sum of money at the beginning of the financial year and are expected to fund all of their chemotherapy requirements out of it—hence some services may find themselves in competition with others for a slice of the drug budget. In exceptional cases, for example if very high-cost drugs are needed, the trust may make a cost-per-case request to an individual primary care trust (PCT).

Cancer centres and some cancer units have a ‘pay as you go’ arrangement, whereby PCTs pay monthly for treatments given. Some chemotherapy providers use a combination of block contracts and ‘pay as you go’.

Whatever the funding method, implementation of Payment by Results will have a profound impact. Services that are labouring under a block contract—perhaps in competition with others for a share of the drug budget—may find that payment triggered by activity provides a welcome opportunity to resolve longstanding funding issues. Services that are already commissioned on a payment for activity basis will have to allow for a change in reimbursement based on the tariff rate for the chemotherapy rather than the actual cost of the drugs. Likewise, patient attendances will be reimbursed at the relevant chemotherapy delivery band tariff and not at a locally agreed rate. It is not clear how patient attendances for treatments other than chemotherapy will be funded.

All services will have to recognise that payment is determined by activity, and that activity is recorded by clinical coding. Few clinical coders are likely to be familiar with chemotherapy and, as the examples in Table 1 show, coding of chemotherapy regimens is highly complex. Coding will be more straightforward for regimens that are easily recognisable from the CfH lists—it is beholden on every chemotherapy service to make sure coders understand how to assign the correct codes to the regimens in use.

Reimbursement and reference costs

NHS trusts are required to submit reference costs every year to the Department of Health Tariff Unit. These costs, collected for each HRG using the guidance in the NHS Costing Manual,⁵ determine the tariff to be reimbursed every time the clinical activity is performed. So, using the FEC 100 example in Table 1, every time a cycle of FEC 100 is coded, the trust will be paid the tariff rate for SB03Z and SB11Z. If FEC 100 is delivered to an inpatient, the trust will be paid the tariff for SB03Z, but not the associated delivery tariff.

It is important to realise that each regimen attracts a payment based on the tariff set for each HRG band, not the actual cost of procuring the drugs. Since the tariff is based on reference cost returns by all NHS trusts, the rate should reflect the average cost of procurement across the whole NHS. Inevitably, an individual trust’s costs will be greater than the tariff rate for some regimens and less for others.

The picture is more complex for chemotherapy delivery (outpatients only). Every time a regimen or part of a regimen is delivered to an outpatient, the trust will attract a payment of the delivery tariff for the band at which the activity is coded. Each part of the internal chemotherapy service—pharmacy, nursing, etc—will need to recoup its costs. The original EWG recommended that pharmacy costs should be included in the delivery HRG. However, the latest NHS Costing Manual makes it clear that pharmacy costs should be included with the procurement HRG.⁵

High-cost specialist services that are available only at certain cancer centres or tertiary referral centres may be particularly vulnerable to the vagaries of Payment by Results. If the tariff payment is consistently lower than the actual cost of procurement or delivery, the trusts may decide they can no longer afford to offer such services.

The timescale

Chemotherapy was initially scheduled to enter the tariff in 2008, but, following a recent review, the Department of Health has postponed any new additions to the tariff until 2009 at the earliest. Chemotherapy will enter the tariff only if the reference cost returns are considered reasonable enough to allow a tariff calculation. If there is too much variation in reference costs then the Department of Health will defer entry by 2 months, to allow an extra year’s reference costs to be included in the tariff calculation.¹

Risks and outstanding issues

There are a myriad of unanswered questions surrounding Payment by Results. Four key issues are:

• Funding for regimens not on the regimen list (or not recognised as such)
• Funding of clinical trial regimens
• Inconsistency in reference costs collection
• Funding the delivery of oral chemotherapy

Regimens not on the regimen list

A particular regimen may simply not be on the regimen list; it may be a local variation that is not recognised by coders or its local name may differ from that on the list.

If coders and clinicians agree that a local regimen is the same as one on the national list, then the regimen may be coded. Very new regimens or new combinations of old drugs may not appear until the list has been updated—and the mechanisms for updating the chemotherapy regimen coding list in a timely manner remain unclear.

Clinical trials

Funding for clinical trials is complex. Currently, standard treatment arms and standard components of the experimental arm are usually funded by the standard chemotherapy budget. However, CfH guidance to coders⁴ states that adult research and clinical trials are outside the remit of Payment by Results, although paediatric chemotherapy trials are funded within the tariff. This leaves a large hole in chemotherapy budgets with no apparent source of funding.

Reference costs collection

There is anecdotal evidence that reference costs for chemotherapy are probably not being collected in a reliable or consistent manner across the NHS. There remains considerable doubt over whether the NHS has the IT infrastructure needed to allow costs to be assigned easily to each HRG band. Conventional pharmacy computer systems can allocate costs for a particular drug, or perhaps to a consultant, but they cannot easily assign costs for a regimen or group of chemotherapy regimens. They do not record patient visits, which means that costs either have to be worked out manually using paper records, or finance departments have to allocate estimated costs based on the drug budget spent proportionally across the bands. It remains to be seen if either of these methods will allow for the calculation of a workable tariff. 

Oral chemotherapy

The original chemotherapy EWG recommended that the delivery of exclusively oral chemotherapy required no additional resources over that of a standard outpatient appointment.⁶ It is not clear what is meant by this. It could mean that every time a delivery of oral chemotherapy is coded it will attract a tariff equivalent to that of a standard outpatient appointment. Alternatively, it could mean that if a patient has an outpatient appointment coded at the same time as the delivery of oral chemotherapy then only one tariff for the outpatient appointment will be paid. If it is the latter, there could be serious repercussions, since most patients receiving oral chemotherapy are allocated the same appointment slot for both oral and IV treatments. Such a ruling could even act as a perverse incentive against oral chemotherapy. Publication of the first tariff for the new chemotherapy HRG should clarify the position.

Conclusions

Payment by Results offers an exciting opportunity to rethink chemotherapy drug funding. It should provide opportunities for patient choice and allow for a much more transparent funding process. However, several fundamental questions remain unanswered. Until these are resolved, the successful implementation of Payment by Results for cancer chemotherapy remains a challenge.

Acknowledgement

This article has previously been published in Breast Cancer Forum, an independent specialist information service that provides succinct, relevant and up-to-date information specifically related to the management of breast cancer. To join Breast Cancer Forum, free of charge, please go to www.breastcancer.org.uk.

References

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2. Department of Health. Options for the future of payment by results: 2008/09 to 2010/11 . Available at: http://www.dh.gov. uk/en/Consultations/Closedconsultations/ DH_073103 (accessed July 07).
3. NHS. Prepare for HRG4. Available at: http://www.ic.nhs.uk/our-services/classificationand- standards/casemix/prepare-for-hrg4 (accessed July 07).
4. NHS Connecting for Health. Chemotherapy regimens & guidance for clinical coders. Available at: http://www.connectingfor health.nhs.uk/systemsandservices/ data/interventionclassification/ downloadsopcs44/opcs-4-4-chemotherapyregimens (accessed July 07).
5. NHS. NHS costing manual: 2006–07. http:// www.dh.gov.uk/en/Publicationsandstatistics /Publications/PublicationsPolicyAnd Guidance/DH_074472 (accessed July 07).
6. NHS Health and Social Care Information Centre. Chemotherapy of solid tumours and haematological malignancies. London: NHS, 2006.