Do italian regions effectively use DRG funding to steer provider behaviours?

In the 1990s, the Italian National Health Service (SSN) underwent a major reform introducing quasi markets, regionalisation and managerialism. Quasi-market mechanisms require money to "follow patients". Regionalisation implies that each of Italy's 21 Regional Governments has now the opportunity to design its own funding arrangements, experimenting with different organisational and funding models to achieve an acceptable combination of equity, efficiency, freedom of choice and cost containment. At least in principle, funding arrangements are based on capitation and activity-based reimbursement. More specifically: * each ASL (Local Health Authority) is directly responsible for the provision of comprehensive care to its entire resident population; * to this end, ASLs are funded by the relevant Regional Government on a capitation basis; * to fulfil its mission, each ASL can variously combine two options: (i) provide care directly with its own personnel and facilities; or (ii) reimburse other ASLs, Aziende Ospedaliere (SSN Independent Hospitals) and accredited private providers for care given to its residents. In fact, patients are virtually free to seek care from other providers even without their ASLs' approval; * reimbursements to other providers are "activity-based", that is, related to the type and quantity of services provided. For hospitalisations, for instance, reimbursements are based on DRGs (fees are set at a Regional level). DRG funding can be a powerful tool for Italian Regional Governments to steer the behaviour of public and private providers. For instance, it can be used to encourage the supply of given services, to favour the shift from inpatient to outpatient settings, to offset some undesired effects of quasi-markets. Although to very different degrees, Italian Regions have been using DRG funding for about ten years. It thus seems appropriate to verify the extent to which they have consciously used it to affect provider behaviours. Such is the purpose of this paper. To this end, we plan to build a checklist of indicators through which to express how much each Region has "invested" on its DRG funding system. The checklist will be built along the following dimensions: * Relative weight of DRG funding compared to other funding criteria (e.g. capitation); * Difference between Regional and National DRG schedules in terms of fees assigned to each DRG; * Frequency of revisions and update to Regional DRG schedules; * Presence of cost-based supplements to DRG tariffs; * Presence of sanctions (eg. reduced reimbursement for inappropriate/undesired behaviour and services). The checklist will then be applied to the following data sources: * National and Regional DRG schedules * Regional laws, resolutions and guidelines on funding * Providers' financial statements. We would then correlate these dimensions with the degree of purchaser-provider split in the Region in order to assess whether the Regions that have "invested" the most on the DRG system are also those that use it to the largest extent to fund their providers. Finally we would try to assess the impact of DRG funding policies in a few selected Regions in terms of modifications of volume and mix of services provided.