Check out this preview of what to expect under PPS
Experts outline potential problem areas
The prospective payment system likely will force home care agencies to change many of their clinical and operational practices, and give quality managers the never-ending job of making sure that cutting costs does not translate to poor quality.
Although the Health Care Financing Administration (HCFA) has not yet published the proposed PPS regulations, several home care experts predict there will be several major problem areas with PPS.
Homecare Quality Management asked the experts to explain where they think those problem areas will be, and what, if anything, home care agencies can do about them. Here’s their advice:
• Beware of consolidated billing problems. HCFA has indicated its plan to require any durable medical equipment (DME) used by a patient be billed through the home care agency. Since most home health agencies do not provide their own DME service, this could have a horrendous effect on DME suppliers, and will create a documentation nightmare for home care agencies, says Mary St. Pierre, RN, BSN, director of regulatory affairs at the National Association for Home Care (NAHC) in Washington, DC.
"DME suppliers will have to send their bill to the home health agency, who will send it to Medicare, and then the payment will come from Medicare to the home health agency," she explains.
Control or confusion?
HCFA is expected to set it up this way as a means to control fraud and abuse. But it is more likely to create confusion among home care agencies, DME suppliers, and patients.
For example, this scenario could be the result of such a regulation: A patient is discharged from the hospital and issued a special bed while recovering from surgery. A week post-discharge, the patient has complications and the physician refers the patient to a home care agency. If the home care agency has no contract with the DME company that provided the bed, then that DME company will have to take out its bed, and the agency will have to call another DME supplier to bring out a new bed for the patient.
"It’s like taking two separate companies and making them codependent when they do different and separate things," St. Pierre adds.
Such an arrangement creates a spider web in which a home care agency could be caught. For instance, St. Pierre asks, what if the DME supply ends up not being covered by Medicare? Who pays for it? How will the DME supplier be paid? Will the money be bundled into the home care agency’s PPS payment rate, or will it be paid separately?
• Will the proposed case mix work for your agency? NAHC’s main criticism of the case mix methodology is that it does not take into account whether or not a patient has an able caregiver. The absence of a caregiver in the home can greatly increase the amount of resources a home care agency needs to provide a patient.
However, the case mix methodology apparently will encompass many other issues that could cause one patient to have higher costs than a similar case.
Abt Associates Inc. in Cambridge, MA, is developing the case mix model for HCFA. Abt’s job has been to collect data from agencies about their patients and the services they provide them and to come up with a system that will classify patients according to the services they require, based on their characteristics at admission as described by OASIS data, explains Henry Goldberg, senior associate with Abt Associates.
This process began in 1996 with 90 agencies collecting data from October 1997 through April 1999. The total number of case mix categories has not yet been disclosed, but in March HCFA reported 80.
The case mix adjustment theoretically will ensure that agencies are not penalized for serving patients who have higher care needs, and will eliminate incentives for agencies to reject patients with high care needs, according to HCFA’s presentation in March.
Its chief components include these factors:
— Clinical factors that note the presence or absence of specific conditions, such as pain, ulcers, wounds, dyspnea, incontinence, ostomy, infusion therapy, nutrition problems, and other selected diagnoses and impairments.
— Functional status factors, assessed by six activities of daily living: dressing upper body, dressing lower body, bathing, toileting, transferring, and locomotion.
— Utilization factors based on whether a patient was in a nursing, hospital, or rehabilitation facility within the preceding 14 days, and whether a patient was required to have at least eight hours of physical, occupational, or speech therapy during the episode.
Within each component, patients are assigned to levels based on scores on the individual components. For example, suggested score intervals and levels for functional component will include a scale in which 0-4 = minimal level; 5-10 = low level; 11-19 = moderate level; 20-26 = high level; and more than 27 = maximum level.
According to Goldberg, the end result of Abt’s project will be similar to the relative value scale used for doctors, where a patient may be described as needing more extensive resources than average or less extensive than average.
The new case mix methodology will require major changes in medical reviews of each case. Agencies will need to focus on qualifying criteria, the accuracy of the OASIS assessment, additional episodes, outlier issues, therapy services, and underutilization.
• HCFA’s expected to propose a 60-day episode period. The industry buzz says HCFA will select a 60-day episode period for payments. This means that any care a patient receives within the first 60 days of being admitted are included in one payment rate.
After the first 60-day period is complete, the patient can be renewed for a second 60-day period.
The big question everyone wants to know is how much HCFA will pay for the 60-day episodes that are renewed.
"The expectation is the first 60 days will contain the majority of home care visits to get a person stabilized," says health care financial consultant John Gaynor, CPA, president of John Gaynor Associates in Chicago.
"The next 60 days might have a preset rate attached to it that says, Instead of you getting $2,400 for this 60-day period, you will now get $1,200 for the next 60-day period,’" he says.
St. Pierre says the 60-day episode appears to be a reasonable period of time, since it is renewable.
"Every time it’s renewed it will be based on the patient’s assessed needs," she explains. "So if an agency does an OASIS assessment and determines that there are therapy needs, looking at what happened in the previous 14 days, then HCFA will come up with a rate for the second 60 days."
NAHC officials expect there will be adjustments for exceptionally costly patients and adjustments for patients who require fewer than typical visits.
The prospective payment demonstration project had similar payment period, only it was for 120 days and it had an outlier provision for any patients who still needed home care after the 120-day period, says H. Kenneth McNulty, vice president for finance with the Visiting Nurse Association (VNA) of Boston, which was involved in the prospective payment demonstration project for four years.
• Changing technology and documentation could involve much time, money. The VNA of Boston had to revamp its management information system in response to the prospective payment demonstration project, and many home care agencies likely will have to do the same under PPS.
"We track visits three ways," McNulty says. "One is the nursing visit is still a nursing visit, and that’s like the old way where we count the number of nursing visits per month, and the same with all the other disciplines."
But now the agency also counts the visits according to prospective pay classification, such as whether a visit counts as an episode visit or an outlier visit. And, third, the agency keeps track of visits according to the 120-day episode period, which almost never falls exactly at the end of a month, he adds.
Quality managers: Refocus
If HCFA decides in favor of a 60-episode period, the same will be true. Those 60 days will never fall neatly within a two-month period, because there are no two consecutive months with 30 days each.
Agencies also will want to track the following under a per-episode PPS:
— episode days from admission, regardless of certification dates, discharge, and readmission;
— splitting bills when the episode ends and ignoring calendar months;
— tracking patients when they are transferred in or out of the agency, including transfers to hospice.
Home care agencies that have reasonably sophisticated information systems and accounting staffs should be able to make those changes with little difficulty, McNulty says.
Quality improvement projects should be a part of those changes. For example, it’s going to be important for agencies to know a lot more about each patient from the very start so they can more accurately predict the number of visits the patient will need within a 60-day episode.
"You will have to know how you’re doing vs. the amount of money Medicare is going to pay you so that your operations people can know how well you’re doing," McNulty says.
Quality managers will again need to focus on maintaining or improving quality while cutting visits, because the only way the agency will come out ahead financially is if it can provide fewer visits than what Medicare predicts for a particular case.
The VNA of Boston, for instance, modified its information systems to track visits per nurse and nursing team. "One thing we discovered was there was a fairly wide divergence of practice patterns," McNulty recalls. One team might be doing 30 nursing visits in 120 days and another team averages 40. Or one team authorizes 14 home health aide hours a week, and another authorizes 25 hours per week.
"We found the practice patterns when we broke them down in gory detail was much wider than we thought," he adds.
After pointing this out to the staff, the agency quickly found that the practice patterns became more consistent.
• Everyone will be paid about the same amount per case. What HCFA is expected to propose for reimbursement methodology could pose problems for agencies located in the more expensive areas of the country. Also, some experts question whether HCFA’s cost data are valid.
HCFA has said it will use federal fiscal year 1997 data, which includes 1996 calendar year information. And HCFA officials have reviewed cost reports from 600 agencies, which NAHC says is too small of a sample size.
Another problem with FY ’97 data is this was before IPS, so agencies had a lower cost per visit during that time period because they had no caps on the number of visits they could provide. Since IPS, the cost per visit has risen. If HCFA bases rates on FY ’97 data, this could unfairly give agencies a lower reimbursement rate per visit than what they need to meet their expenses.
However, HCFA has said it will use FY ’97 data only to determine ratios, and not actual costs per episode. The actual costs will be derived from a formula that takes into account how much money Congress appropriates for home health services during any particular year, McNulty says.
Then HCFA is expected to give agencies one rate per case with a wage index adjustment. This means that rural agencies will be paid about the same as urban agencies, despite differences in home health service patterns.
"The only exception will be they will go through the normal wage adjustment that they do now, but that doesn’t change the number of visits or types of visits," McNulty says. "So an episode for a person who has had a heart attack may be worth $1,500 in Massachusetts, Alabama, and California, with the only exception being we might get $1,550 because of the labor index adjustment."
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