How PPS affects nursing home reimbursement
December 1, 1999 3 minutes read
How PPS affects nursing home reimbursement
By Joel Mattison, MD, FACS
Physician Advisor
Department of Clinical Resource Management
St. Joseph’s Hospital
Tampa, FL
The prospective payment system (PPS) for nursing homes became effective January 1999. This system uses resource utilization groups (RUGs) instead of diagnosis related groups (DRGs) used in hospitals, and it represents a dramatic change for nursing home reimbursement that will impact hospitals, in turn.
Here are some details on the reimbursement:
r Hospitals will receive only a partial DRG payment for 10 selected DRGs if a patient is discharged to a post-acute setting prior to the designated DRG length of stay (LOS). The list of 10 will probably be expanded later.
This regulation is intended to ensure that patients remain in the acute care hospitals for the entire duration of the specified DRG LOS, or at least that is the predictable effect. The 10 "transfer DRGs," representing "transfer discharges" are:
• DRG 014 — specific cerebrovascular disorders, except transient ischemia attack;
• DRG 113 — amputation for circulatory disorders, excluding upper limb and toe;
• DRG 209 — major joint and limb reattachment procedures of lower extremity;
• DRG 210 — hip and femur procedures, except major joint with complication or comorbidity (CC);
• DRG 211 — hip and femur procedures, except major joint without CC;
• DRG 236 — fractures of hip and pelvis;
• DRG 263 — skin graft and/or debridement for skin ulcer or cellulitis with CC;
• DRG 264 — skin graft and/or debridement for skin ulcer or cellulitis without CC;
• DRG 429 — organic disturbances and mental retardation;
• DRG 483 — tracheostomy except for face, mouth and neck diagnoses.
- This includes discharges to freestanding or hospital-based skilled nursing units (SNUs), rehabilitation hospitals (or units), home health agencies, or other long-term acute hospitals.
- It is intended that other DRGs will be selected, based on high rates of discharge to these post-acute settings.
Everybody will get identical pay rates
Hospital-based skilled units and freestanding skilled facilities will receive the same payment, whereas currently hospitals receive a higher rate, based upon their higher costs.
- Payment is no longer cost-based but is determined by RUGs, which are established based on the minimum data set assessment and industry norms.
- The RUGs payment rate is much lower than the current hospital-based SNF rate.
- RUGs are assigned, based upon the amount of resources required to provide care, not by the patient’s diagnosis or actual costs of care.
- The RUGs payment rate is a fixed per diem that includes:
• routine care;
• rehabilitation care;
• non-therapy ancillaries;
• capital expenditures;
• overhead.
Not only will nursing homes be taking fewer patients, but they will be insisting upon having the patients transferred early in the day so that they can document appropriately to receive compensation for that first day. If, for example, physical therapy was ordered, and the physical therapist has already left when the patient arrives by transfer at 4:30 p.m., then the nursing home loses the payment for that first day.
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