Get ready for PPS, no matter what form it takes
Industry plan is not practical,’ HCFA official says
Everybody talks about a prospective payment system, but nobody seems to be able to do anything about it at least not yet. But as the details of the budget debate are hammered out on Capitol Hill in the next few weeks, some form of PPS will emerge, experts say.
And the implications for hospital-affiliated home health agencies are enormous. Even if PPS doesn’t get enacted until 1999 or later, home care providers must face the reality that Medicare cost reimbursement as it has been known is gone. The budget agreement will see to that.
The agreement reached in May between the White House and congressional Republicans would provide $135 billion in tax breaks over five years. It reduces spending for Medicare by $115 billion and Medicaid by $16 billion, and provides additional domestic spending of $60 billion for initiatives favored by President Clinton, such as health care coverage for low-income children. All of this will theoretically balance the budget by 2002. The agreement includes the transfer of the home health benefit to Part B of Medicare, and some sort of home health reimbursement, widely assumed to be a prospective payment system.
The debate is not over whether there will be a PPS, which the government steadfastly believes will check Medicare’s rising home health expenditures; it’s over what PPS will look like. That’s why the industry PPS model, known as the Revised Unified Plan for PPS, has run into delays in the House Ways and Means and Senate Finance committees. Committee members are unwilling to approve the PPS plan as is, although it has been endorsed by the National Association for Home Care (NAHC).
Republicans favor the industry PPS model, which is based on Rep. Nancy Johnson’s (R-CT) bill HR 4229 from the 104th Congress.
HCFA doesn’t trust the industry model
The Clinton administration and the Health Care Financing Administration oppose the bill, claiming that parts of the proposal cannot be implemented. "The PPS industry model is not practical," says Thomas Hoyer, director of the Office of Chronic Care and Insurance Policy for the Health Care Financing Administration. "The case-mix tool from our demonstration shows it doesn’t work, but it’s not all bad, though."
HCFA rejects the industry’s untested 18-category case-mix adjuster, saying it only measures changes in "resource intensity" from one year to another in a single agency, not among all agencies across the country. HCFA says the case-mix adjuster only accounts for 10% of an agency’s variation in cost.
Hoyer says what HCFA wants and what congressional committees are trying to find, apparently is "a PPS system in which A: the payments are big enough to cover all services, and B: agencies will have the ability to profit or lose on patients."
Hoyer stresses that he thinks the industry "needs to go back to the 1994 levels of reimbursement where the profits may be smaller, but if you run an efficient shop, you’ll live to fight again another day. PPS reimbursement [formulas] need to be accurate."
In testimony earlier this year before the Subcommittee on Health and Environment of the House Commerce Committee, William Scanlon, director of Health Financing and Systems Issues at the Department of Health and Human Services, stated, "The goal of designing a PPS is to ensure that providers have incentives to control costs and that, at the same time, payments are adequate for efficient providers to at least recover their costs. If payments are set too high, Medicare will not save money and cost-control incentives will be weak. If payments are set too low, access to and quality of care can suffer."
At issue here is whether to define the so-called "unit of service for payment purposes" by the visit, or by the episode.
"Either would have implications for both cost control and quality of care," Scanlon says.
Despite the arm wrestling, Hoyer predicts that "PPS will happen this year, by summer or fall. It will be challenging to get it implemented."
It is still uncertain how all this will work. Implementation likely will take several more years, some experts say.
Yet Hoyer is clear about one thing: "We plan to have a full PPS system as soon as we can."
You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
- Award-winning Medical Content
- Latest Advances & Development in Medicine
- Unbiased Content