The BHF was tasked with developing an Alternative Reimbursement Model for Covid-19 hospital admissions in order to assist member schemes with the management of the risk associated with Covid-19 claims – this report focuses exclusively on hospital costs. The BHF invited the industry to participate on the task group for this purpose.
A literature review was undertaken to identify methodologies that have been applied to this problem statement in the past. The findings were used to inform the methodology applied.
Data was requested from the industry and data was received from schemes that account for approximately 37% of the industry. Some modifications were necessary to ensure that the data was reflective of the claims being considered.
Following some initial modelling, it was identified that a global fee structure was unlikely to yield results given the volatility in total hospital admission costs and so the approach was changed to look at create per diem rates (fixed rates per day).
Initially there was the view that these could be created based on ward type. However, as a result of how the data was collected, it was only possible to obtain consistent results for general ward admissions. This was in part due to the mix of costs in cases where someone was in general ward, high care and ICU over the course of their treatment.
Based on the modelling, it appears possible to establish per-diem rates for Covid-19 hospital admissions. The modelled per-diem rates quite closely match the observed daily rates for Covid-19 hospital admissions.
Given the modelling outcomes, the daily rates would be varied by level of care, hospital group and existence of a relevant pre-existing condition.
There are a number of limitations to the process and learnings for future exercises such as improving the data specification to allow length of stay to be determined more accurately by level of care.