Breaking the chain: How new Medicare changes threaten continuum of care
New rules provide 'perverse incentives' to keep patients longer
Recent actions by the federal Department of Health and Human Services have some experts wondering if the ideal of a seamless continuum of care is dying in the cradle.
Already, the Baltimore-based Health Care Financing Administration (HCFA) has imposed a new rule as of Oct. 1 that effectively penalizes hospitals for discharging some Medicare patients to a postacute care provider, especially skilled nursing and rehabilitation facilities. And a new report from the federal Office of the Inspector General (OIG) implies that hospitals are using home health agencies to inappropriately shave their inpatient lengths of stay. (See related story on the OIG report, p. 192.)
"There are growing concerns as to whether patients are being discharged prematurely and post-hospital services, like home health, are being overutilized," the OIG asserts in its report.
As early as last year, there were rumblings from the OIG about what the agency clearly considered to be inappropriate and possibly illegal discharge planning practices, particularly among hospitals that own a home health agency or other postacute care services. (See related story in Hospital Case Management, November 1997, p.193.)
Now, however, the feds are beginning to put their money where their mouth is by paying hospitals transfer payments rather than full diagnosis-related group (DRG) payments for patients who receive postacute care services for 10 specific DRGs. (See table of DRGs, p. 191.) Discharges from any hospital to a postacute care provider will be considered a transfer.
Until Oct. 1, a discharge from a prospective payment system (PPS) hospital was always paid at the full DRG rate unless the patient was transferred to another PPS hospital. "[The new rule] really penalizes those hospitals that have been most effective in getting their patients out of the acute care setting, usually to the tune of about $1,000 [per case] per day in diminished reimbursement," says Deborah Hale, president of Administrative Consultant Services in Shawnee, OK.
In a financial impact analysis, the Congres sional Budget Office (CBO) estimated that the new rule would create overall hospital losses of $100 million per year. Less conservative estimates put the figure at closer to $600 million. The CBO justified using the lower number by claiming that hospitals would simply begin keeping patients in acute care longer to avoid the need for postacute care services altogether.
HCFA acting to prevent 'double-dipping'
Hale explains that by not sending patients to a skilled nursing facility or other postacute care facility, the hospital gets to keep the full DRG. "By the last day of a hospital stay, the average variable cost is about $287 a day," she says. "When you balance that against $1,000 [in lost reimbursement], not many people can afford to make that trade."
The government claims it's instituting the transfer payment rules to stop the illegal practice of "double-dipping," which HCFA defines as "submitting duplicate payments for care provided during a patient's episode of care." Further, in the July 31 Federal Register, the agency stressed that "the postacute care transfer policy does not create perverse incentives for hospitals to keep patients longer; instead, it addresses current incentives to discharge patients as soon as possible."
However, others strongly disagree. "I think the whole transfer payment concept is an attack on the idea of reducing length of stay," says Patrice Spath, ART, a health care quality consultant with Brown-Spath & Associates in Forest Grove, OR. "Those hospitals that have been cost-efficient and gotten their delivery systems up and running the way they should be are now being penalized."
Spath adds that the transfer payment policy also could endanger patient care. "I think the worst thing you can do to a patient is keep them in the hospital longer than they need to be," she says. "Hospitals aren't safe places, and every day that a patient is in the hospital, there's a greater chance of an untoward event occurring," she says. "But we've also got a lot of hospitals with empty beds that could react to changes in the financial incentives by encouraging patients to stay longer."
Keeping LOS short even if it hurts
Some hospitals, however, might have no recourse but to bite the bullet, take the loss, and discharge the patient to postacute care, Hale says. "If you're competing for contracts, and the only way you're going to get those contracts is to demonstrate that you're a cost-efficient provider of high-quality care, then you may have to go ahead and work to keep the lengths of stay short - even if it hurts financially."
At Elkhart (IN) General Hospital, case managers still aren't sure how much the new transfer rules will affect them, says Shelby Morse, RN, director of case management.
Of particular concern, however, are transfer payments for DRGs 14 (stroke) and 236 (fractured hip and pelvis). "The elective hip and joint replacements typically don't go to a skilled care setting," Morse says. "But the traumatics do, like those with fractured hips. For that population, there may be some impact. It may drive up our length of stay by one day."
Like a lot of hospitals, Elkhart is taking a wait-and-see attitude regarding the transfer payment rule, particularly in light of all the changes that have taken place recently in home care. For example, Morse says, "they've now put the home care Interim Payment System on hold indefinitely. We were just getting prepared for that, and now it has changed. It makes you not want to get too far ahead for these other things."
Hale recommends performing a financial impact analysis to recalculate your reimbursement for each of the 10 DRGs singled out by HCFA. "You want to be able to say, 'if we practice this year exactly like we did last year, how much less will we receive in reimbursement?' Then you want to be able to break that down by DRG so that you can evaluate for yourself what your incentives are, where your costs are in that particular DRG, and make some educated decisions."
In addition, it's important to check the accuracy of your discharge disposition codes, Hale says. She notes that she has seen huge error rates in the assignment of such codes. "If they are inaccurate for any reason, it can result in either over- or underpayment, and it might be considered a fraudulent practice."
It's also crucial for case managers to pay attention to the three-day window for patients who receive home health services. Essentially, if a patient receives home health services within three days of an acute care discharge, the hospital must refile its claims, unless the home health services are unrelated to the reason for the hospitalization.
For example, a patient begins receiving home health services within three days of discharge without the knowledge of a hospital's discharge planners. "It's the hospital's responsibility to find that out and bill their claim correctly so that they have a reduced payment," Hale says. "The hospital's going to have an obligation to make sure they do really thorough discharge planning so they know where patients are going. Because if they're going to get home health services without the hospital's knowledge, the hospital's going to be in a potentially libelous position."
A similar pitfall exists concerning skilled nursing facilities. For example, a patient is discharged to a nursing home for intermediate care. But, at the nursing home, the patient is admitted to a skilled nursing bed. "If that happened, then the hospital would be required to take the reduced payment and report it as a discharge to skilled nursing," Hale says. "But if the nursing home was sneaking around and putting these patients in skilled nursing instead of intermediate care, then when both claims hit the system, it's going to look like the hospital is billing fraudulent claims. So the documentation is going to have to be very exact."
For more information, contact:
Shelby Morse, RN, hospital director of case management, Elkhart General Hospital, Elkhart, IN. Telephone: (219) 294-2621.
Deborah Hale, president, Administrative Consultant Service, Shawnee, OK. Telephone: (405) 878-0118.
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