Talk’s cheap when it comes to PPS, and it’s getting close to high noon
Home care experts look at Medicare’s prospective payment and your future
Everybody talks about the prospective payment system, but nobody does anything about it. That’s because nobody knows for sure what the Health Care Financing Administration (HCFA) will use as a unit of payment.
True, Medicare and PPS are officially partners. The signing of the Balanced Budget Act of 1997 in August cinched it. Cost reimbursement is almost gone. But HCFA still has until 1999 to implement a PPS, and with the government apparently rejecting the home care industry’s per-episode payment model, there’s no telling what the payment system will look like.
But should hospital-affiliated agencies be doing anything now to prepare? Hospital Home Health asked the experts. While none could predict whether HCFA will adopt a per-episode PPS or a per-visit model, all agreed it’s high time to start gathering data on outcomes while learning how to make fewer visits without compromising quality of care.
"Whatever system they decide on," says Lorraine Waters, BSN, C, MA, director of Southern Home Care in Jeffersonville, IN, "one thing is a given we’re going to see fewer visits."
Tony Orlando, senior manager with Ernst and Young’s National Health Care Practice office in Washington, DC, agrees. "The hard part in planning from a tactical standpoint is that the methodology has yet to be developed. You don’t know what the answer is in terms of the math. But our advice to our clients is that under any PPS, the name of the game is efficiency."
The Balanced Budget Act and PPS
The Balanced Budget Act (BBA) calls for HCFA to develop a prospective payment system by by Oct. 1, 1999. In implementing the system, the Secretary of Health and Human Services could provide for a transition period of up to four years. Rates will be based on some unspecified unit of payment to which a case-mix adjuster will be applied. There is no requirement for HCFA to consult the home care industry in any of this, or for congressional approval of the plan.
The act also provides for the elimination of periodic interim payments for home health, effective for cost reporting periods beginning on or after Oct. 1, 1999. (For a more detailed account of the BBA, see the highlights of the act, inserted in this issue.)
Starting Oct. 1, 1997, HCFA is authorized to collect additional data from home health agencies to develop a case-mix adjuster. (A case mix may be defined as the characteristics of patients that influence the cost of care, such as age, functional impairment, and severity of medical condition.) Beginning Oct. 1, 1998, agencies must provide information on the length of visits in increments of 15 minutes.
The BBA states, "In establishing the prospective system, the Secretary would be authorized to consider an appropriate unit of service and the number of visits provided with that unit, potential changes in the mix of services provided within that unit and their cost, and a general system design that provides for continued access to quality services."
Waters predicts PPS will force providers to "learn to do more with less time. Teaching will have to be focused. You’ll need pathways for that. Our software [Delta] that will be installed in October will have that."
Waters says a decrease in the number of visits represents a "change in attitude from what nurses are used to in home care. I think some agencies are going to have trouble with that. There was no incentive to make fewer visits. For the last eight months, we’ve been taking a strong look at our visits, how many we make."
To help with re-educating nurses, Waters’ agency developed a decision tree for determining the need for skilled nursing visits and a homebound status checklist. (See decision tree and checklist for homebound status, pp. 119-120.) "The decision tree and checklist are used with an inservice," she explains, "with lots of examples. We also review reasonable and necessary’ intensely again, with lots of examples."
The first question on the decision tree reads, "Are services reasonable and necessary to the diagnosis and treatment of the patient’s illness or injury?" The decision tree goes on to list five criteria that are associated with skilled care.
The homebound checklist prevents nurses from automatically assuming homebound status. It is used on admission and at recertification time.
"We get real fond of our patients in home care," Waters explains. "That clouds our thinking. We have to face it; we can’t stay in there [in the home] forever. Changing that mindset is so important to deal with PPS."
Southern Home Care, whose staff makes 45,000 visits yearly among a patient population of 275, is working with parent Clark Memorial Hospital on a disease process management plan, says Waters. "They already have COPD [chronic obstructive pulmonary disease] and CHF [congestive heart failure] plans for frequent fliers.’"
Laptop computers are helping Southern Home Care’s nurses gather data for outcomes, Waters says, although the agency still uses paper charts. "Laptops are terrific for statistical gathering," she says, "and for interdisciplinary communication, but I’m not convinced they will improve productivity."
Waters says she thinks activity-based costing is necessary to maintain cost-efficiency. "We need to know how long it takes to do an admission, or how long it takes to see a cardiac patient vs. a wound care patient."
Although Southern Home Care has made progress in preparing for PPS, there is still much to do. "I’m taking a look at the length of visits by acuity level of patients," Waters says, adding that she hopes one day soon to determine length of visits by diagnosis.
Look to managed care for solutions
At Henry Ford Home Health System in Detroit, home health is already in a PPS frame of mind because of managed care. Only 28% of Henry Ford’s patients are on Medicare.
The agency, which makes about 200,000 visits a year, has been finding ways to do more with less since 1990, which is the theme song of Medicare reform. For instance, Henry Ford decided in the early 90s to drastically reduce overtime pay. Home health administrator Greg Solecki says the "paradigm was, nurses worked Monday through Friday, and got comp time or time and a half for working weekends."
Simply scheduling nurses seven days a week and allowing for other days off has "reduced overtime by $500,000 a year," Solecki says. "At 200,000 visits a year, we’re saving $2.50 a visit."
Not everyone was happy with the change, Solecki recalls, "but our nurses came to understand the business realities we have to face. Overtime is not a standard mode of operation; it is not a benefit. It can kill a company."
Because of managed care, Henry Ford opted for an hourly pay model vs. pay per visit, Solecki says. It has served his agency well. "We questioned the wisdom of making that extra visit, and asked ourselves, could we use telephone triage instead? We decided not to change from hourly to pay per visit, which didn’t work with managed care. It’s not going to work for PPS either."
Solecki and his staff began to look hard at workloads and productivity. "It’s not just about making five or six visits," he says, "but also about travel, patient acuity. So we developed a point system that allowed us to account for variables."
Solecki says they were able to establish minimum levels of productivity, which equated to about five billable visits a day.
Tackling problems in descending order
Paperwork also was a hurdle at Henry Ford, as it is in most agencies. By using what Solecki calls "process improvement teams" to develop ways to reduce costs in troublesome areas, Henry Ford has been able to save $50,000 a year with its paperwork reduction initiative, Solecki says.
"We have been dealing with managed care for a long time. We’re used to reducing costs, managing utilization. The most significant tool we have in the whole cost-management initiative is data measurement and analysis. It’s really important to know how you stand through benchmarking with your competitors. I can’t overemphasize the importance of data analysis."
Solecki says process improvement teams can help agencies prepare for PPS. He advises agencies to start by listing in descending order the costly areas of operation. "Start with things that give you the most trouble. For example, classified advertising is not a big piece of our expenses, so we spend more time looking at medical supplies, overtime, and salary and benefits.
Solecki says his agency knows on a monthly basis the "percent each of our line items produces in terms of the total cost. For instance, we know that salaries and benefits account for 90% of our total operating expenses."
Another area at Henry Ford Home Health that needed some control was print shop expenses. Solecki was shocked to learn that home care had more forms printed than the Henry Ford Medical Center medical records department. "And Henry Ford is a 920-bed institution. But we were the print shop’s biggest customer. We were spending $75,000 a year on printed forms. So we assembled a team. We looked at centralizing all our orders. We reduced that cost by 20%, and this year we’ll run about $55,000."
No matter what initiatives agency directors are considering, says Orlando, "They should be thinking about implementing them today, not in 1999."
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