How do hospitals respond to payment unbundling for diagnostic imaging of suspected cancer patients?

Payments for some diagnostic scans undertaken in outpatient settings were unbundled from Diagnosis Related Group based payments in England in April 2013 to address under-provision. Unbundled scans attracted additional payments of between £45 and £748 directly following the reform. We examined the effect on utilization of these scans for patients with suspected cancer. We also explored whether any detected effects represented real increases in use of scans or better coding of activity. We applied difference-in-differences regression to patient-level data from Hospital Episodes Statistics for 180 NHS hospital Trusts in England, between April 2010 and March 2018. We also explored heterogeneity in recorded use of scans before and after the unbundling at hospital Trust-level. Use of scans increased by 0.137 scans per patient following unbundling, a 134% relative increase. This increased annual national provider payments by £79.2 million. Over 15% of scans recorded after the unbundling were at providers that previously recorded no scans, suggesting some of the observed increase in activity reflected previous under-coding. Hospitals recorded substantial increases in diagnostic imaging for suspected cancer in response to payment unbundling. Results suggest that the reform also encouraged improvements in recording, so the real increase in testing is likely lower than detected.