MedPAC backs off previous call for a PPS transition from HCFA
By MATTHEW HAY
HHBR Washington Correspondent
WASHINGTON The Medicare Payment Advisory Commission (MedPAC) has backed off its earlier concerns about the Health Care Financing Administration’s (HCFA; Baltimore) decision to move to a prospective payment system (PPS) without a transition period. In a Dec. 27 letter to HCFA Administrator Nancy Ann DeParle, MedPAC Chair Gail Wilensky said MedPAC supports the PPS and opted not to recommend a transition period as it had discussed at its last regular meeting.
MedPAC said the home health PPS is a crucial step in carrying out the post acute care payment reforms mandated by the Balanced Budget Act of 1997 (BBA). The commission said the PPS described in the proposed rule appears to be consistent with requirements established by the BBA, but expressed concerns that the PPS HCFA proposed will give home health agencies incentives to increase their revenues by manipulating the payment system.
Specifically, MedPAC said the low utilization episode threshold creates an incentive for home health agencies to provide a small number of visits above the threshold to generate a payment for the entire episode. At the other end of the episode, MedPAC said, agencies will have an incentive to "stint on services" to reduce their costs while maintaining their revenues.
To remedy that, the commission suggested establishing a PPS that blends fixed-episode payments with per-visit payments using a standardized rate per visit by discipline. MedPAC said it recognizes that doing so might require a statutory change, but added that revising the PPS will take time and encouraged HCFA to implement the proposed 60-day episode payment system while pursuing revisions as quickly as possible.
The commission also expressed its concern about issues that will arise in operating and maintaining PPS as proposed, as well as the long-term direction of post acute payment policies. MedPAC cited three issues that are likely to become important immediately. First, the commission said limitations in the available data raise concerns about the accuracy of the initial payment rates for the home health resource groups, the case-mix weights, and the wage index, all of which it said will strongly influence the distribution of payments among agencies.
The commission noted that home health agencies have been submitting OASIS data since August 1999 and strongly encouraged the agency to use these data to refine the case-mix adjustment as soon as possible, preferably before the final rule is established.
In addition, MedPAC said that to ensure that relative payments are correct, case-mix weights should change over time in response to changes in practice patterns and technology that affect the efficient level of resources required to furnish home health services to different types of payments. According to the commission, one option would entail routine data collection to update the case-mix weights, while another might be similar to that used in the hospital inpatient PPS in which diagnosis related group weights are recalibrated annually based on the average charges per discharge.
Finally, the commission said that periodically updating the wage index to reflect changes in home health agency wage rates "may or may not be easily accomplished." MedPAC said much of that depends on the quality of the wage and hour data agencies submit on their annual cost reports. "If home health agencies could supply accurate data, the wage index could be updated for fiscal year 2002," said MedPAC. "If not, it will be important for HCFA to focus on resolving reporting problems as quickly as possible to eliminate this source of inaccuracy in the payment rates."
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