The Casemix Companion

To understand how today’s Casemix Classification works, it’s useful to recognise how – and why - the classification has evolved since its inception in the early 1990s.

Vital to every Casemix Healthcare Resource Group (HRG) iteration was, and has been ever since, the support of our clinically-led expert working groups, (EWGs) who work with the National Casemix Office (NCO) to design HRGs that effectively represent clinical care, within the boundaries of available, nationally mandated data.

Although the first versions of the Casemix Classification were developed in the early 1990s, it was not until the creation of Version 3 HRGs that the resource use associated with clinical care could be reliably quantified at a national level, ensuring that NHS spend from public monies had a defined and measurable output for comparison.

Version 3 HRGs were collected in the national Reference Costs collection, established as a result of the 1996 white paper, The new NHS, which stipulated that “the Government will develop a national schedule of 'reference costs' which will itemise what individual treatments across the NHS cost. By requiring NHS Trusts to publish and benchmark their own costs on the same basis, the new arrangements will give Health Authorities, Primary Care Groups and the NHS Executive a strong lever with which to tackle inefficiency”.

The Reference Costs collection utilised version 3.1 HRGs until the 2001/02 financial year, before the move to collecting version 3.5 HRG costs and activity in the 2002/03 financial year. A notable exception to this was the collection of the version 3.2 HRGs for accident and emergency services, which prevailed until the introduction of HRG4 for costing in 2006/07.

The version 3.5 HRGs were used as part of the newly-introduced Payment by Results (PbR) funding policy for the English NHS, with national tariffs for 15 HRGs in 2003/04 and 48 HRGs in 2004/05. The first NHS foundation trust applicants moved to a full PbR system in 2005/06, with other NHS trusts following suit in 2006/07. National tariffs were based on HRGv3.5 for admitted patient care until the end of March 2009, and version 3.2 for accident and emergency services until the end of March 2010. 

With the introduction of PbR, funding policy moved beyond the admitted patient care confines of the HRG version 3 Casemix Classifications, and in the 2006/07 financial year, HRG4 was collected in Reference Costs for the first time. HRG4 was designed in concert with funding policy and extended the scope beyond (primarily) admitted patient care into other care delivery arenas.

The notable differences between HRG4 and HRGv3.5 included:

An extended scope:

To cover outpatient and critical care services activity, as well as specialist service areas such as diagnostic imaging, chemotherapy, radiotherapy, renal dialysis, rehabilitation and specialist palliative care.

Spell-level and Unbundled Grouping processes:

So that the HRG4 Grouper generated HRGs at both Finished Consultant Episode (FCE) and spell level, rather than the episode-only level of v3.5, and unbundled some elements of care from the core HRG, such as High cost drugs, Diagnostic Imaging and Chemotherapy. This meant that a single patient record could generate more than one HRG, rather than the single HRG per episode of version 3.5. As a result, the concept of an HRG hierarchy was removed from the grouping process, and the HRG of the spell could be different to those of the episodes within it. To facilitate the new grouping process, procedure and diagnosis hierarchies were introduced to determine the key resource drivers of care.

HRG4 grouping processes stated that:

• for surgical HRGs, the dominant procedure used to derive the spell HRG was determined by reviewing all procedures recorded in the spell against a hierarchy of procedures - the primary diagnosis for a surgical spell was the primary diagnosis of the FCE that contained the dominant procedure
• where a spell contained no procedure, and where a patient had more than one primary diagnosis in a spell (because that patient spell contained more than a single FCE), and the primary diagnoses of the FCEs within that spell differed, the dominant primary diagnosis (as determined by the diagnosis hierarchy) was used to derive the spell HRG
• for both surgical and non-surgical spells, secondary diagnoses were considered as complications and comorbidities (CCs) - for multiple FCE spells, valid primary diagnoses from individual FCEs other than that determined to contain the spell primary diagnosis were also considered as CCs for HRG derivation
• for multiple FCE spells, all data was considered to create the spell HRG, therefore the spell HRG was not necessarily the same as one of the FCE HRGs within it

Improved recognition of clinical care and patient characteristics:

Relating to multiple procedures, patient age and complications and comorbidities.

The HRG4 design better reflected:

• multiple procedures, taking account of bilateral procedures, introducing subchapter specific escalation logic and introducing the concept of the Multiple Trauma patient
• patient age as an indicator of expected resource use, introducing age splits to many HRGs to reflect the cost differences between treating adult and paediatric patients, and establishing the 'standard' adult/child age splits based on the definitions in the National Service Framework for Children and Young People
• patient-level Complications and Comorbidities, introducing subchapter-specific CC lists rather than the standard CC list used across the entire HRGv3.5 design, and expanding the ‘with CC’ and ‘without CC’ HRGs in v3.5 to a maximum of three levels that differentiated between not significant, intermediate and major diagnoses

Extended validation of data quality:

Such that all mandatory fields required for grouping were required to contain valid content, irrespective of whether that field was itself used in HRG generation. Previously, HRG v3.5 grouping would generate an HRG where the fields required for the generation of the specific HRG were valid, irrespective of whether any of the other required fields in the Grouper input failed validation.

HRG4 was first used for the 2009/10 national tariff under PbR policy, although the HRG version 3.2 HRGs continued to be used for accident and emergency services funding until the 2010/11 financial year, which utilised HRG4 proper, across all services within scope.

HRG4 established many of the basic principles still utilised in HRG grouping today, such as the scope of the Casemix Classification, the establishment of procedure and diagnosis hierarchies to facilitate spell-level grouping and unbundling, and the notion of 'harsh' validation on mandated grouping fields.

Due to an increase in the breadth of coding (in part instigated by the introduction of HRG4 for national funding from April 2009), the HRG4+ classification was introduced in Reference Costs for the 2012/13 financial year. Full implementation took until 2014/15, when the third and final phase of HRG4+ was completed.

Whilst the introduction of HRG4+ did not increase the scope of the HRG Casemix Classification, clinical input and experience allowed the HRG4+ classification to acknowledge the additional resource use required when treating patients: who have multiple complications and comorbidities or require multiple procedures within the same admission; who require surgery at a very young age or which utilises new devices; or who require more complex, often specialist (rather than routine) care.

Important changes introduced in HRG4+ included the improved recognition of clinical care, including specialised care, and patient characteristics relating to lower-resource procedures and diagnoses, intervention splits, complications and comorbidities, and patient age.

The HRG4+ design better reflects:

The expected resource use of procedures across all subchapters, particularly when differentiating between low-cost high-volume procedures, enabled by the expansion of the range of procedure hierarchy (PH) values.

The expected resource use associated with specific diagnoses across all subchapters, enabled by the expansion of diagnosis hierarchy (DH) values.

The concept that Intervention Splits, for a number of diagnosis-driven HRGs in various subchapters, can reflect that HRGs not only include the additional cost/resources associated with performing relatively minor procedures, but may also provide an indication that the patient’s condition is more severe, often resulting in more resource-intensive treatment. The design includes 'with Multiple Interventions' and 'with Single Intervention' HRGs to more appropriately capture the additional resource use of patients who have multiple minor interventions during their episode or spell.

The complications (of treatment) and comorbidities (existing conditions) of patients, by the introduction of interactive complication and comorbidity splits in the majority of HRG4+ subchapters, replacing standardised subchapter-specific complication and comorbidity splits.

An expanded concept of age splits, introducing paediatric age splits that enable the creation of HRGs specific to a given subset of patients within the child population.

HRG4+ was first used for the 2017/18 national tariff under PbR policy and continues to be used for the national prices in the 2022/23 financial year. It supports the Elective Recovery Programme, designed to reduce the waiting lists that have built up over the course of the COVID-19 pandemic.

The remainder of this document provides some rudimentary information on the definitional aspects of Casemix and the uses of HRGs in general, before focusing on how the HRG4+ Casemix Classification works, in terms, of design intent, logic and HRG outputs.

This guide is therefore intended to provide a starting point and general reference for the HRG4+ Casemix classification system that is widely used by the NHS in England to understand the healthcare activities they provide to the patient populations they serve.