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HCFA continues to move toward its goal of implementing a per-episode prospective payment system for home health care. What is in store for agencies, and how can they be prepared for all of the changes that will come when the shift from the current interim payment system to the new model is complete? If they are to thrive, agencies must understand the background behind IPS and PPS and what the future holds.
To effectively market programs and maximize resources under a prospective payment system, home healthcare agencies need to look closely at standardizing treatment practices to link patient outcomes to the care provided. This article discusses the issues, methods, and processes used to test treatment guidelines and strategies to improve existing guidelines through evidence-based research.
Development of a prospective payment system for physician services under Medicare and Medicaid is still being considered in Washington. The first step will be to "bundle" radiology, anesthesiology and pathology ("RAP") services into existing Medicare DRG schedules. Other hospital-based physician services, including surgery and medical management, may also be included.
The inventors of diagnosis-related groups talk about what's happened to their invention, both in the U.S. and abroad. DRGs were used as the basis for Medicare's prospective payment system, but John D. Thompson and Robert B. Fetter, winners of the 1992 Baxter Foundation Prize for Health Services Research, say things haven't turned out exactly as they'd expected.
The prospective payment system has created a new regulatory environment that has significantly affected the hospital industry. Because the patient's medical record is the primary source for assigning diagnosis related groups, much of this attention is focused on the medical record department.
Competition and prospective payment have been widely used to control health care costs but may together provide incentives to selectively reduce expenditures on high-cost relative to low-cost patients. We use patient discharge and hospital financial data from California to examine the effects of competition on costs for high- and low-cost admissions in the 12 largest Diagnosis-Related Groups before and after the Medicare Prospective Payment System (PPS). We find that competition increased costs before PPS, but that this effect decreased afterward, especially inpatients with the highest costs. We conclude that competition and PPS selectively reduced spending among the most expensive patients and that careful assessment of these patients' outcomes is important.
How does a skilled nursing facility survive and thrive under the prospective payment system (PPS)? To begin, PPS risks must be fully understood and managed in terms of the Resource Utilization Groups Version III (RUGS III) and the Minimum Data Set (MDS) 2.0. Second, strategies for change within the organization must be developed and implemented. Third, managing costs under the PPS must become the priority.
The challenges the prospective payment system (PPS) pose to managers in postacute care are enormous. Managers need to learn not only how to prepare their facilities and staff for PPS but also, and more important, how to provide the leadership to carry out a strategic plan for survival. In effect, this new reimbursement system, based on 44 resource utilization groups (RUGS III)--each with a distinct payment level--will necessitate a reexamination of managerial competencies.
Extensive research was conducted to develop the proposed Prospective Payment System (PPS) and to ensure that it will adequately cover the costs of care for Medicare beneficiaries receiving the home health benefit. However, there is tremendous variation among the patients served by agencies, meaning that the system will impact each agency somewhat differently. Using the methods outlined in this article, agencies can determine potential problem areas under PPS, enabling them to develop and implement solutions before October 1, 2000.
This paper analyzes the role of interhospital nonprice competition in Medicare's Prospective Payment System. Competition can play an important role both by increasing quality and reducing managerial slack. The quality-enhancing aspect of competition can be amplified through reimbursement of a proportion of incurred cost. As competition intensifies, the optimal degree of cost sharing (subsidy) falls.
This article provides a synopsis of the available evidence on the impact of the Medicare prospective payment system (PPS) for hospitals over the first 3 years of its implementation. The impact of PPS on hospitals, Medicare beneficiaries, post-hospital care, other payers for inpatient hospital services, other health care providers, and Medicare program operations and expenditures is examined.
OBJECTIVE: For a proposed Medicare prospective payment system for inpatient psychiatric facility treatment, the authors developed a casemix classification to capture differences in patients' real daily resource use. METHOD: Primary data on patient characteristics and daily time spent in various activities were collected in a survey of 696 patients from 40 inpatient psychiatric facilities. Survey data were combined with Medicare claims data to estimate intensity-adjusted daily cost. Classification and Regression Trees (CART) analysis of average daily routine and ancillary costs yielded several hierarchical classification groupings. Regression analysis was used to control for facility and day-of-stay effects in order to compare hierarchical models with models based on the recently proposed payment system of the Centers for Medicare & Medicaid Services. RESULTS: CART analysis identified a small set of patient characteristics strongly associated with higher daily costs, including age, psychiatric diagnosis, deficits in daily living activities, and detox or ECT use. A parsimonious, 16-group, fully interactive model that used five major DSM-IV categories and stratified by age, illness severity, deficits in daily living activities, dangerousness, and use of ECT explained 40% (out of a possible 76%) of daily cost variation not attributable to idiosyncratic daily changes within patients. A noninteractive model based on diagnosis-related groups, age, and medical comorbidity had explanatory power of only 32%. CONCLUSIONS: A regression model with 16 casemix groups restricted to using "appropriate" payment variables (i.e., those with clinical face validity and low administrative burden that are easily validated and provide proper care incentives) produced more efficient and equitable payments than did a noninteractive system based on diagnosis-related groups.
One of the most important strategies for operating successfully under the outpatient prospective payment system is to establish an effective charging process. Achieving control of the process begins with a thorough assessment of chargemaster coding, how charges are structured in the chargemaster, and how hospital departments use the charges. Once problems are identified and corrected, the next step is to develop a system to maintain and monitor both the chargemaster and the charging process. Perhaps the most important component of the monitoring system is to include a mechanism to provide the necessary feedback to departments regarding errors related to the charge process.
An analysis was made of the pre- and post-patterns of Medicare Part A service use using the samples of the 1982 and 1984 National Long-Term Care Surveys linked to the Medicare Part A bill files and mortality reports. The analysis was conducted both for the total elderly Medicare beneficiary population and for the community resident disabled population--a group felt to be particularly vulnerable to any adverse effect of the prospective payment system's induced change in service use. The expected changes in Medicare service patterns were identified, but there was no evidence of adverse changes in outcome--even for select vulnerable populations.
After one year of the Health Care Financing Administration's per-episode prospective payment system (PPS) demonstration, participating agencies have learned valuable lessons on what it will take to implement an ongoing PPS programs. Home care providers can use these lessons to plan for the future.
Complex national factors went into the development of key policies of the federal prospective payment system, and the effects of these policies varied in different parts of the country. One state particularly affected by these changes, and for the most part in a positive way, was New York. This paper focuses on the Medicare PPS policy changes and their impact nationally. An analysis of the experience of New York state, which had been under a stringent hospital cost containment system before PPS, provides a laboratory to understand how key federal policies affected different types of hospitals in that state as well as nationally.
Since implementation of the outpatient prospective payment system (PPS) in August 2000, HCFA has used an inadequate communication process to inform providers about billing and coding requirements. Numerous program memorandums have been issued to communicate changes to the outpatient PPS and even to correct information that was provided in previous program memorandums. Providers need to monitor changes in outpatient PPS policy by reading the program memorandums posted on HCFA's Web site (www.hcfa.org) and through reviewing other informal communications posted to the HCFA Web site. In addition, the outpatient code editor (OCE) contains information about quarterly APC classification updates. In fact, the OCE is the only source of this information in many cases. Because the outpatient PPS differs from any other PPS implemented by HCFA, providers should ensure that they have all the current information they need to comply with the system's billing and coding requirements.
This self-directed learning module highlights recent research in assessment of stroke outcomes and management of the psychosocial consequences of stroke. It is a part of the chapter on stroke rehabilitation in the Self-Directed Physiatric Education Program for practitioners and trainees in physical medicine and rehabilitation. This article discusses predictive factors for mortality and functional recovery; proposed case mix adjustment and prospective payment systems for stroke rehabilitation; continuum of care and utilization of acute, nursing home, outpatient and home health rehabilitation programs; reintegration and socialization after stroke; vocational rehabilitation of stroke patients; and management of the psychosocial effects of stroke on patients and families.