PPS can be the seed of home care growth
Ready or not, it’s coming; but ready is better
By Carol Schaffer, RN, MSN, HD, MBA, President and Chief Executive Officer
Ray Cervenak, Chief Operating Officer
JoAnn Grumbling, RN, Administrator
CCF Health Care Ventures
Cleveland
The way Medicare has reimbursed health care providers for the past decade will come to an end in the very near future.
As evidenced by President Clinton’s Medicare reform proposal, Congress will try again this session to pass a bill to keep the Medicare Trust Fund solvent by reining in costs. One proposed change is the replacement of the present reimbursement system by a pro spective pay system. Its official name is the Revised Unified Prospective Payment Plan, or Prospective Pay System (PPS). The home care industry’s proposed PPS (HR 4229) was introduced into legislation last October by U.S. Rep. Nancy Johnson (R-CT), a strong home care advocate. (See related story on President’s Clinton’s proposal, p. 39.)
PPS proposes prospectively determined per-visit rates that are subject to per-episode limits applied in the aggregate. In other words, there will be a standardized rate for specific home care disciplines, based on a national average. The Secretary of Health and Human Services will be able to establish national average per-visit rates for each of the home health service disciplines covered under Medicare:
• skilled nursing care;
• physical therapy;
• speech pathology;
• occupational therapy;
• medical social services;
• home health aides.
The per-visit rates would be based on amounts paid during cost reporting periods ending June 30, 1994, and updated by the home health market for fiscal years 1995-97.
Lay your foundation now
PPS will have a profound impact on the home care industry, but now is not the time to panic. Preparing your hospital-based organization for PPS by having the systems in place when it is implemented (perhaps as soon as Oct. 1, 1998) will ease the transition from cost reimbursement, and provide a solid foundation on which to build your organization. Unpreparedness will inevitably result in an intense agencywide struggle when PPS arrives. Those agencies that don’t prepare probably will find themselves out of business, or at best, absorbed by companies ready to deal with PPS.
It is important to manage the change before the change manages you. Be proactive. The time to create a strategy supported by an operational model is now. Prospective pay will demand a new mindset of everyone involved. The new focus must be on efficiency and quality in the delivery of all home care services. In addition to providing quality services efficiently, the industry will be forced to find more mechanisms to provide care, as well as ways to educate caregivers and reassure patients.
Being proactive will ensure consistent quality of care under PPS. A clinical outcomes monitoring tool, along with a companywide process reporting mechanism, will gauge patient satisfaction. (The Joint Commission is requiring outcomes data now. See related story, p. 41.)
The concept of delivering endless visits based upon a customized assessment is outdated. In its place, we have enough utilization data to document the care that can be expected to be given a patient with a specific disease state.
Follow these suggestions
Here are some practical steps your agency should take as soon as possible:
• Invest in technology. The money spent now on computers and other innovations will pay big dividends in the future.
• Educate all staff on PPS and its projected impact on home health care. Your staff cannot achieve the agency’s goals if they don’t understand the industry’s demands.
• Evaluate staffing structure and utilization. The use of registered nurses and licensed practical nurses must be reviewed. Under cost reimbursement, there were no incentives to lower costs by using LPNs. In the new world order, however, there will be a focus on reducing the overall cost per visit by having RNs deliver only those visits that require their assessment skills. Routine visits for changing a dressing will be performed by the LPN. The net effect will be to reduce overall costs without hurting the quality of care.
• Educate management to work as a team. Encourage support from one specialty to another.
• Rethink your contractual arrangements. PPS may force you to renegotiate contracts to generate profit. Agencies will have to prepare for contract negotiations similar to those they have experienced with managed care organizations. The key to ensuring capitated contracts are profitable will be in the negotiations of the per-member per-month rate and proper utilization management.
Laptop computers are critical now to gathering patient intake information, replacing costly handwritten documentation. Computers in the field provide instant information and reduce paperwork so staff can spend more time with patients. Taking numerous steps in checking and filing information adds countless costs to the system. Home care agencies need to think about automating their operations to reduce paperwork.
Applications that guide the nurse through each step of patient care also are important technological developments. With automation, an agency can begin to deliver a standardized product.
MSOs can make automation possible
Although automation is desirable, it requires planning and commitment of resources. And the investment will not be the same for all agencies; indeed, some will find it impossible.
In that case, a management services organization (MSO) is one way to share the costs among many users. The natural economies of scale offered by an MSO include more than computer assistance. MSOs also offer policy and procedure packaging and updates, billing services, corporate compliance programs, and service vehicles, such as patient satisfaction surveys and customer research. (See related story, Hospital Home Health, March 1997, p. 25.) Disease state management protocols are another service offered by MSOs. An MSO may keep an agency viable that otherwise might go out of business.
(Editor’s note: CCF Health Care Ventures is a wholly owned subsidiary of The Cleveland Clinic Foundation.)
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