Say goodbye to functional related groups, hello to MDS and RUGS
HCFA moves to unified post-acute reimbursement system
If your facility has pinned its hopes on functional related groups (FRGs) being used as the basis for a prospective payment system (PPS) for rehab, it’s time to stop dreaming. The Health Care Financing Administration is moving full speed ahead to develop a single reimbursement system for post-acute care, warns Thomas Hoyer, director of the chronic care purchasing policy group in HCFA’s Center for Health Plans and Providers.
That means when the PPS system for rehab is implemented Oct. 1, 2000, rehab providers likely will be using a modified version of the Minimum Data Set (MDS) and the Resource Utilization Groups (RUGS) case-mix classification system currently used in nursing homes. (For a look at how RUGS is used in nursing homes, see p. 3.)
"We are working to develop an assessment instrument to assess the needs from whatever perspective, independent of the setting. It is better to tie the payment to the patient and be flexible as to the point of services rather than the payment being determined by setting," Hoyer says. He spoke to the third annual joint conference of the American Hospital Association and the American Rehabilitation Association in Atlanta in November. He assured the 350 rehab providers in the audience that it is not his intention to use RUGS to cut payments to rehab hospitals and units, and that a unified PPS does not mean rehab providers will receive the same rates as nursing homes. "Ultimately, we want to buy what the beneficiary needs so it can be adjusted for settings," he says.
The Balanced Budget Act (BBA) of 1997 mandates that a PPS for rehabilitation hospitals and units go into effect on Oct. 1, 2000. The budget for the PPS-based rehab reimbursement system will be 98% of what HCFA paid under the Tax Equity and Fiscal Responsibility Act (TEFRA). The BBA calls for reimbursement to be based on a case mix using patient classification groups and allows HCFA to choose whether the unit is by discharge, day, or other. Each provider’s rate will be adjusted by the hospital wage index. In the first year, providers will receive 2¼3 of their TEFRA rate and 1¼3 the national rate. The second year, they’ll receive 1¼3 of their TEFRA rate and 2¼3 of the national rate. The third year, the PPS goes into effect 100%.
HCFA is studying the MDS to determine how it should change to reflect the acuity of rehab patients and is conducting staff time and resource studies to devise a methodology to assign a case mix for rehab patients, Hoyer says. (For more on the MDS and RUGS, see Rehabilitation Outcomes Review, p. 7.)
Repeatedly in his speech, Hoyer maintained it is HCFA’s goal to create a single reimbursement system for all post-acute care. The unified reimbursement system would be an interim step to eventually bundling payments for post-acute services, he says. "Our goal is to come up with an approach to payment that is compatible with an integrated system of post-acute care. RUGS will allow us to use the same yardstick across facility lines throughout the continuum of care."
He emphasizes that HCFA officials are leaning toward RUGS instead of the FIM-FRGs because RUGS will allow a post-acute reimbursement system that doesn’t separate facilities. "Times change. It doesn’t mean there are shortcomings with FRGs. We are looking for post-acute payment systems that are consistent," he says.
In the past, HCFA considered prospective payment systems for separate provider types. Now HCFA is looking for an integrated PPS for post-acute care as an interim step to bundling services, Hoyer says. "We can predict the size of the bundle, but under the current system, it is difficult to say who gets what amount of money."
He doesn’t rule out selecting an alternative to the MDS and RUGS, though. "If a better idea comes along, it will be a given a hearing."
When Medicare was enacted, the medical system was not so complex, and individual claims were examined individually impossible in today’s health care environment, Hoyer says. "The problem is that beneficiaries are increasingly divorced from decisions, providers are divorced by types, and the notion of the continuum of care has eroded."
A single post-acute reimbursement system, which can lead to bundled services, is a key to HCFA’s plan to "make the continuum of care work as it is supposed to work," he says.
There is no specific timetable for HCFA to announce its choice for a PPS for rehab, but time is running out. HCFA will need a full year of data by fall 1999 to have a year to make the system operational before the Oct. 1, 2000 implementation date. To stay on target, it will have a system designed and demonstration project under way by the fall of this year, points out Joe W. Fleming II, JD, a Washington, DC, attorney specializing in rehab reimbursement issues.
HCFA plans to set up a case management system for post-acute care and a benchmarking system the agency can use to assess the performance of providers against each other and against organizational standards, Hoyer adds.
You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
- Award-winning Medical Content
- Latest Advances & Development in Medicine
- Unbiased Content