prospective payment system (PPS)

PPS enacted in hospitals in 1983 via DRGs. Growth in SNFs & postacute care stimulated Congress to enact PPS for postacute care in SNFs which was implemented 01/01/98 (Balanced Budget Act of 1997). Skilled nursing facility (SNF) PPS 1) per diem payment system modified by case mix adjustments 2) per diem covers all routine, ancillary, capital-related costs 3) separate adjustments for urban & rural areas, geographic labor costs & Medicare part B services 4) SNF rate now based on resources used a) based on resident's need as defined by RUGs grouping b) not a price per episode of illness as in DRG c) not based on facility's cost, resident's diagnoses or medical treatment 5) PPS assumes cost of longterm care is driven by: a) functional dependence b) cost of rehabilitation services 6) PPS does NOT account for cost impact of: a) comorbidities b) clinical complexity c) severity of illness 7) Part A Medicare covers about 10% of nursing home residents Excluded services (nursing home is not responsible for cost) 1) ER visits & ambulance transport under HCFA Memo 711 (such visits may trigger an audit by Medicare Part A fiscal intermediaries) 2) CT scans 3) MRI scans 4) ambultory care involving use of an operating room 5) radiation therapy 6) angiography 7) cardiac catherization 8) certain dialysis-related services 9) hospice care related to a terminal condition 10) services provided by MD, NP, or PA, clinical psychologist, psychiatrist, podiatrist, dentist, optomotrist Anaysis of patient care need is based on items from the MDS 1) rehabilitation services 2) clinical requirements 3) cognitive function 4) depressed mood 5) special care needs 6) activities of daily living (ADLs) 7) behavioral symptoms Diagnosis & drug treatment are not used in calculating the RUGs category except for the following diagnoses from sections I & J of the MDS: 1) aphasia 2) burns 3) cerebral palsy 4) pressure ulcers 5) dehydration 6) diabetes mellitus 7) fever 8) hallucinations 9) hemiplegia/hemiparesis 10) internal bleeding 11) multiple sclerosis 12) open lesions other than ulcers 13) pneumonia 14) quadriplegia 15) septicemia 16) vomiting The care plans becomes the basis for defining both the nursing home resources provided & responsibilities. Only what is identified, measured, documented, & care planned gets reimbursed. Patient classification groups 1) rehabilitation therapy 2) extensive services 3) special care 4) clinically complex Rehabilitation therapy - any combination of: 1) physical therapy 2) occupational therapy 3) speech therapy Nursing rehabilitation 1) AROM 2) PROM 3) splint/brace assistance 4) training in dressing/grooming 5) training in eating/swallowing 6) training in locomotion/mobility 7) training in transferring 8) training in communication 9) scheduled toileting program or bowel/bladder retraining Rehabilitation therapy: 1) ultrahigh: a) 720 min/week minimum (12 hours/week) b) at least 2 disciplines c) 1st discipline 5 days/weeks d) 2nd discipline at least 3 days/week 2) very high a) 500 min/week minimum b) 1 discipline at least 5 days/week 3) high a) 325 min/week minimum b) 1 discipline 5 days/week 4) medium a) 150 min/week minimum b) therapies 5 days/week across 3 disciplines 5) low a) 45 min/week minimum b) therapies 3 days/week of nursing rehabilitation of 6 days/week in 2 activities Extensive services: 1) ADL Index of at least 7 & 2) at least 1 of: a) IV meds b) IV feedings c) tracheostomy d) suctioning e) ventilator Special care: 1) ADL Index of at least 7 & 2) at least 1 of: a) multiple sclerosis, cerebral palsy, quadriplegia b) 2 or more pressure ulcers or stasis ulcers c) surgical wound or open lesions d) respiratory therapy 7 days/week e) tube fed & aphasic f) radiation therapy g) fever with: 1] vomiting 2] pneumonia 3] weight loss 4] dehydration 5] tube feedings Clinically complex: -> at least 1 of: a) burns b) dehydration c) pneumonia d) tube feedings e) >= 1 physician vitis with >= 4 order changes, or >= 2 or more visitist with >= 2 order changes in last 14 days f) treatment for foot wounds g) diabetes mellitus with daily injections, & >= 2 order changes with ADL Index of 10 or more h) hemiplegia i) coma j) chemotherapy k) oxygen therapy in last 14 days l) internal bleeding m) septicemia n) dialysis o) transfusions Modifying factors: 1) cognitive impairment -> MDS 2.0 CPS score of 3, 4, or 5 2) behavior (coded on MDS 4 times in last 7 days) a) hallucinations/delusions b) specific behaviors 1] resisting care 2] combativeness 3] physical or verbal abuse 4] wandering 5] socially inappropriate disruptive behavior 3) depression -> 16 specific indicators on MDS (section E - usually completed by social services) As patient improves in the nursing home, the resources used will decreased & be reflected in lower RUGs category & thus lower per diem payment. Implementation issues: 1) begain 07/01/98 with 3 year phase in depending upon SNF status in 1995 2) annual updates for inflation to per diem rates -> these will lag by 1% for 2000-2002, resulting in most of the cost savings under PPS 3) originally projected to save Medicare $9 billion, later projected to savce $4.3 billion 2001-2006 Concerns under SNF PPS 1) creation of a no care zone (patients SNFs will not accept) -> patients not receiving therapies or extensive services but still require extensive medical management & nursing care due to multiple unstable medical conditions 2) facility preferences for certain types of patients will create new referral patterns 3) facilities will precost potential admissions based on PPS reimbursement software to predict RUGs category & medication use a) nursing homes are not allow to refuse admission solely on the basis of cost considerations b) medications account for 11% of nursing home costs 4) SNF revenue loss due to 1% lag in inflation rate increase results in 17-19% less revenue for most SNFs; 34% for hospital-based units due to their higher fixed costs 5) physician orders will have a significant impact on SNF costs -> SNFs may want to manage physician practice patterns & may attempt to bring physicians in house or purchase physician practices 6) HCFA will increase review for medical necessity 7) although case-mix weights for nursing & therapies were established under the demonstration project, other case-mix weights for other ancillary services have not been tested -> this will affect those with high ancillary needs other than therapies 8) hospital based subactute units especially hit hard How will SNFs succeed under PPS ? 1) meticulous cost accounting 2) creative discharge planning for hospitals 3) delivery of care review Cost containment: 1) avoiding overutilization & medically unnecessary services 2) effective therapy strategies 3) prevent ER evaluations via early assessment of treatment 4) consistent internal case management to ensure that therapy minutes & direct costs total at or below reimbursement 5) PPS formulary 6) smart subcontracting with ancillary providers (eg labs, pharmacy) for good per diem rates & built-in safegaurds in contracts 7) institutional drug factors a) route & frequency of dosing; ease of administration b) avoid restriction around administration, eg. interactions with food 8) supplies management 9) documentation of some services received in the hospital a) oxygen therapy b) suctioning c) tracheostomy care d) any treatment received in the hospital within the 14 days preceding the MDS, regardless of where that treatment was received 10) documentation of modifying factors such as depression 11) optimize documentation systems a) all required documentation done b) easy to use c) no duplication d) standardization e) user friendly to other disciplines f) no risk for Medicare denials g) specific appropriate ICD9 coding

Related

activities of daily living (ADL) ADL index Medicare minimum data set (MDS) for nursing home residents rehabilitation

References

Smith, R. Jewish Home for the Aging, Reseda CA, 2001, unpublished