PPS pilot: Good news, bad news for agencies

Visits per patient fall, but paperwork increases

As Phase II of the Health Care Financing Administration’s (HCFA) Medicare Home Health Prospective Payment Demonstration reaches the mid-way point, it appears prospective pay accomplishes what many had hoped for, but not without some unavoidable irritations.

Hospital-based home care agencies involved in the Phase II program, which is nearing the 18-month point of its three-year stint, report reduced visits per patient, yet stable quality of care. The downside? Paperwork, and lots of it. In fact, productivity took a big hit at one agency before staff got accustomed to the new documentation requirements.

The demonstration, sponsored by HCFA’s Office of Research and Demonstration, is testing two prospective methods of paying home health agencies for services provided under Medicare. Phase I tested per-visit prospective payment by visit discipline, while Phase II is testing per-episode prospective payment.

Phase I found that agencies reimbursed via per-visit prospective payment rates were more likely than agencies not reimbursed in that fashion to keep their cost increases below inflation. However, HCFA reports that the differences were fairly small. Similarly, Phase I of the demonstration was found to have no significant effect on the number of visits provided and quality of care. But those findings weren’t necessarily surprising, according to one government official.

"We didn’t know what to expect, but we didn’t want there to be big difference," says Bill Subaski, director, Division of Payment Systems, Office of Research and Demonstration.

Involving more than 90 home health agencies, Phase II is focusing on episodic payment rates. These rates are set for each home health agency reflecting that particular agency’s previous practice and cost experience. The rates are adjusted annually. In addition, safeguards consisting of retroactive adjustments ensure that neither agencies nor HCFA lose money as a result of the project.

Paperwork, paperwork

Among the handful of hospital-based home health agencies taking part in the demonstration, it’s clear that increased paperwork has been the biggest hurdle to overcome. Each time a patient is admitted, a thorough assessment tool must be completed. A similar form must be completed when a patient is discharged, either from the agency or from the prospective pay plan, in addition to numerous other forms. For example, two forms are required each time a patient is transferred to an inpatient facility, but only if transferred for more than 48 hours.

"This is a very complicated system," notes Eleanor Littman, RN, MSN, director of home health, Prime Health at Home, a hospital-based agency in Watsonville, CA. "The cost and complexity of the billing, the accounting, the information needed to support it, and the financial tracking and clinical tracking is tremendous."

Participation in the program required plenty of upfront training for staff. Diane Mintz, RN, BSN, nurse manager, Visiting Nurse and Health Services, a hospital-based agency in Greenfield, MA, notes that her agency provided "enormous amounts of inservice" for its staff, but only after she and her agency’s quality assurance coordinator went to an inservice.

"We had workshops put on by Abt Associates, [a Cambridge, MA, consulting firm assisting HCFA with the project] and our intermediary," says Marna Mucha, RN, MSN, manager for community health services, Mary Lane Hospital Home Health Department, Ware, MA.

But even with staff education, the results of such an increase in paperwork were negative at first.

"We saw a decrease in productivity until the staff became accustomed to the new documentation," says Mintz. "It’s coming back up now that the staff has become used to it, but there is a lot of paperwork that draws on clinical staff time. The tools they gave us to measure between point A [intake] and point B [discharge] are very detailed and very long."

Paperwork wasn’t the only hassle, however. Agencies were required to switch from their intermediary to Palmetto Government Benefit Administrators in Columbia, SC, which is administering the billing portion of the demonstration for HCFA.

"We had to switch all our billing processes and a lot of programs" to be compatible with Palmetto, notes Mintz.

There was no cost in terms of purchasing new software, says Debbie Soucie, biller, Visiting Nurse and Health Services. However, the problem was streamlining the submissions process so all claims were submitted in the proper form.

Also, Soucie adds that with the 120-day timetable, "split bills" sometimes occurred if a patient went from PPS to another form of reimbursement. For example, if a patient’s 120-day episode ended on the 19th of the month, but the patient required additional care on the 20th, two separate bills would be required: one for the PPS period (first through the 19th) and a second for the second method of reimbursement (20th through the end of the month).

"It takes a lot of tracking as far as intake and when patients are discharged," notes Soucie. In the above example, if Palmetto received a split bill but had never received the PPS discharge information from the agency, payment of the second bill would be delayed. Such flip-flopping of patients from one form of reimbursement to another requires careful monitoring of the date and days the patient is under the agency’s care.

Even though the agency was helped by Abt, the intermediary, and HCFA, the brunt of the obligation fell on the agency to come into compliance with the new intermediaries and the additional paperwork. "The bottom line is it is the agency that has to troubleshoot and problem solve," Mintz adds.

Why participate?

Agencies were recruited on a volunteer basis, with many agreeing to take part in the demonstration project in the hope of getting a headstart on what they think is the future of home care.

"We thought it would be beneficial participating because we’re pretty certain the whole country will be on this system," says Mintz. "It was a chance to get involved during a demonstration to see how it will work. We feel that it will put us in a better position when it’s implemented because we’ll be more experienced in it."

In addition, the fact that the project ensured an agency would not lose money through reimbursement helped make the decision to participate easier.

"We saw this as an opportunity to not only have our agency learn about making prospective pay work in a risk-free way but also participate in terms of the creation of that system," says Littman.

Medicare patients admitted to participating home health agencies also are admitted into the prospective payment demonstration. Once a patient is admitted, the home health agency receives a prospective payment and must provide all care to the patient for the next 120 days. The upfront payment anticipates all costs for treating each diagnosis for the 120-day period. Under the demonstration, only patients who have not been seen by the agency for 45 days or more following the initial 120-day episode — in essence, 165 days after first being admitted — may be readmitted. If a patient were to need care on the 130th day, for example, cost would be reimbursed under the current Medicare system.

With just over a year of the demonstration under their belts, it’s too early to measure the specific results of the project. For many, the first half of the three-year project was a matter of on-the-job training.

"In the first half we’ve concentrated on how to manage the billing and financial piece and to make those work efficiently," says Littman. "The next half we’re looking at how to reduce our costs per episode."

While tangible statistics aren’t yet available, the agencies are noticing trends. In addition to staff productivity beginning to return to its pre-demonstration level, benefits of prospective pay already are apparent.

"We found that we had as many admissions, if not more, but we were able to manage them in a more efficient manner with fewer visits," notes Mucha, a development she credits to an increased awareness of how to manage patients, thanks to the increased paperwork.

"Now we have to think ahead," she says. "We know we only have ‘x’ amount of dollars and we need to think, ‘how efficiently can we get the patient through?’"

Mucha adds that many patients are benefiting from the switch. Patient satisfaction has remained high at the agency, even though many of Mary Lane Hospital Home Health’s patients have had to become more self-sufficient in the process.