The Road to PPS Success

Reporting innovations make PPS manageable

Innovative quality monitoring system helps

Many rehab units have found that the inpatient prospective payment system (PPS) has either improved their bottom line or left it alone. But such programs tend to have a case mix that runs toward the average. For The Institute of Rehabilitation and Research (TIRR) in Houston, which has an unusual case mix, PPS has resulted in less reimbursement — and even the discontinuation of one of the services the hospital was known for.

Jean Herzog, PhD, executive vice president and chief operating officer, says TIRR received better reimbursement under the old TEFRA system. TIRR, a 116-bed not-for-profit hospital in the Texas Medical Center, focuses on catastrophic rehab and tends to have younger patients. The hospital also has a large stroke population and does not have as many orthopedic patients as other rehab facilities. "We have an unusual Medicare population, so PPS is not as straightforward for us," Herzog says. "The system was designed for the average, and we have a much higher case-mix index. We are looking at how to continue our mission as a provider for catastrophic rehab. It’s difficult under PPS."

TIRR was forced to make a heart-breaking decision to eliminate a specialty service that had made a name for the hospital, Herzog says. TIRR is unusual in that it has two operating rooms where surgeons have implanted Baclofen pumps for patients with spasticity of cerebral and spinal origin. "We had a very good protocol here where we did the surgery, and then the patients came back for rehab once they had healed and could tolerate therapy," Herzog says. "But under PPS, if a patient stays three days or less, we are paid approximately $2,200. The surgery, pump, and nursing care cost about $18,000, with the pump itself making up a major portion of that cost. We had to stop doing it. We also cannot treat patients differently based on payer, so that eliminated the protocol for our non-Medicare patients as well."

Because TIRR’s patients tend to have such complex problems, there often isn’t a lot of change in the functional independence measure (FIM) scores required for PPS, Herzog says. "The key is showing progress, but if the patient is paralyzed from the chin down, you’re just not going to see that in the scores," she says. For patients who are minimally responsive, a large part of the care includes educating family members. That won’t show up on the FIM score either.

Because of the PPS challenges, TIRR has had to make a special effort to examine its costs. The hospital put together a team with managers from physical therapy, occupational therapy, neuropsychology, nursing, medical records, social work, administration, nursing education, and case management. "It was quite the crowd," Herzog says. "We had representation from anyone who touches the IRF-PAI [inpatient rehabilitation facilities patient assessment instrument]."

The team decided not to hire a separate IRF-PAI coordinator. They did hire one administrative assistant who collects and submits IRF-PAI data. The assistant also sends out a weekly e-mail report that tells staff members when IRF-PAI scores are overdue. (Click here to see excerpt of the IRF-PAI report) But on the whole, the case managers serve as IRF-PAI coordinators for each of their patients. "We thought it would help to keep the coordination as close as possible to the people who are dealing with the patients on a daily basis," Herzog says. "Our case managers know each individual situation as it is occurring, they know the nurses, they know the patients. They all know how to do the FIM scores so they can monitor them for accuracy. One case manager caught the fact that a clinician had accidentally flipped the scoring system. She caught it because she knew the patient and knew the score couldn’t be right."

The decision not to hire a separate coordinator also made financial sense, says Mary Ann Beachler, RN, MS, executive director for patient, clinical, and support services. "PPS means we are paid less, so how can we afford another body to pay? We already had a good system in place, and we knew we could pull it off as a team," she says.

With the help of the hospital’s information technology department, the team came up with a system that prevents clinicians from entering a charge into the computer system without also entering the initial FIM score. The system also allows for a detailed report to be completed on each patient about every two weeks. "We can look at how we are managing all of our patients from several angles, such as cost, length of stay, and use of outside tests," Beachler says. "We use that to retrospectively look at what we could do better."

The hospital is developing another tool that will allow this reporting to be done concurrently. "When it’s ready, all of our case managers and physicians will be able to see the cost per day per patient in each category and compare that to the larger population of patients with that diagnosis," Beachler says. "They’ll be able to see things that are outside the norm immediately."

Other ways TIRR has worked to improve under PPS include:

  • Looking at how admissions are staged. Would the patient do better coming from acute care to long-term acute care and then to acute rehab?
  • Appointing a quality monitor in each department who looks at the FIM scores and the underlying documentation to ensure accuracy. Beachler also does a final review to make sure the scores are consistent.
  • Starting a reporting system that makes case managers responsible for notifying their team members once the initial IRF-PAI is done on a patient. The case managers let the team know what case-mix group has been assigned, what the average length of stay would look like, and what kinds of resources are available.
  • Looking for better prices on outside diagnostic tests.

"PPS is really pushing the envelope with us," Beachler says. "I don’t know that we would have had the data collection we have now that allows us to make these comparisons. It appears that even though our patients are at the extreme in terms of their injuries, our outcomes are actually better than the average. We knew we were doing a good job, but now we can prove it." n

Need More Information?

  • Jean Herzog, PhD, Executive Vice President and Chief Operating Officer, The Institute of Rehabilitation and Research, 1333 Moursund, Houston, TX 77030. Telephone: (713) 797-5278. E-mail:
  • Mary Ann Beachler, RN, MS, Executive Director for Patient, Clinical, and Support Services, The Institute of Rehabilitation and Research, 1333 Moursund, Houston, TX 77030. Telephone: (713) 797-7568. E-mail: