AL agency runs trial benchmarking for PPS

Key to staying afloat is attention to efficiency

While waiting for the final rule on the prospective payment system (PPS) for home care agencies, some Alabama agencies took a preliminary benchmarking comparison of how they would fare under PPS as it was set up in the proposed rule, published late last year.

Decatur (AL) General Home Health Services studied PPS reimbursement for all of its patients from October 1999 to February 2000, says Jimmie Galbreath, RN, MSN, director of the rural, hospital-based agency that covers 10 counties in northern Alabama.

Galbreath benchmarked the agency’s findings with the same data from other agencies that were part of a study established by Health Group of Alabama in Madison.

The PPS study proved helpful. It reinforced the agency’s trend of encouraging staff to make the most of each visit while at the same time reducing the overall number of visits, he says.

Strategic wound care

Agency managers also learned that the agency would have some reimbursement problems with certain complicated wound care cases because they were very costly, and PPS reimbursement will not fully cover the cost of supply material, Galbreath says.

Being a public, not-for-profit agency means Decatur General Home Health will continue to see those types of patients and perhaps even be referred more of them in coming years. But the preliminary PPS information will help the agency set up strategies to reduce the costs of those cases, Galbreath says.

"We may not always want to do the newest, most modern way of providing wound care treatment," he adds. "We may want to resort to what’s tried and proven, and what will work with the least costly supplies and still achieve a good outcome."

Galbreath offers these tips on how to run a preliminary PPS reimbursement study and how to use the information:

Use a PPS tool and adapt it. Decatur General Home Health used a standard PPS tool and modified it so the agency could obtain some additional information. "We wanted to break down the information about why we were completing the PPS study, and whether it was for the start of care or research or an intervening event," Galbreath says.

The tool should be tied to the OASIS assessment to make it simpler to collect data. "We took the OASIS questions that were identifiers that affected PPS scoring or the home health-related group [HHRG] and determined what our HHRG would be for each patient," he adds.

Everyone involved with the Health Group of Alabama study used the same tool, which enabled them to determine clinical and functional service utilization. The tool also provided a case mix weight on each patient, which would be combined with the proposed formula for PPS reimbursement in this way: Take the HHRG formula, add case mix weight, multiply by metropolitan statistical area number or rural area code, then factor in wage index weight. This equals total PPS reimbursement.

"We included in our tool the amount of therapy hours because with PPS reimbursement, therapy is not inclusive unless you have eight hours or 10 visits or more," Galbreath explains.

He says they also compared the start-of-care projected number of visits to the actual number, noting differences for specific care plans with both new and ongoing patients.

Compare reimbursement projection with current situation. Once you have the data, it’s simple to see which cases will result in a budget deficit and which will provide ample reimbursement under PPS.

"Overall we came out . . . close to even with what we’re getting reimbursed now and what we would be reimbursed under PPS," Galbreath says. "In some scenarios, we [would receive] less than we receive now, and in others we would receive more."

Galbreath also compared Decatur General Home Health’s results with two other hospital-based home care agencies, and found that Decatur General’s overall average reimbursement per patient was better than the other two agencies.

A detailed reimbursement comparison will highlight which areas are the most costly to an agency. This is how Galbreath found out that certain types of wound care would be financial losers. Knowing these details can help quality managers and administrators make decisions that will improve costs and efficiency.

A penny saved

Some agencies may choose to stop providing certain specialized services because the reimbursement is not adequate. But others may choose to continue to provide the services, but find ways to cut costs, such as using less expensive supplies that have the same outcomes, or improving caregiver/patient education so that nursing visits may be reduced.

Hospital-based agencies may decide to write off the losses on certain home care patients because home care still is less expensive than keeping the patients admitted in the hospital, which may be the only other option at times.

Make staff and protocol changes to reduce costs. One certain change under PPS is that cash flow will change, and this might signal the need for a revamped billing process, Galbreath says.

"It depends on the mechanisms you have in place within your specific agency in order to be able to do timely billing," he says. "I think home care agencies will have to get away from the old hat of monthly billing, and there will have to be some sort of billing at least weekly, if not daily, because of the cash flow."

The sooner an agency bills Medicare, the faster the agency will be reimbursed. It won’t make good fiscal sense to wait until the end of the month to send in a batch of bills, when that means an agency may be short of cash for several weeks of that month. "In our scenario, I’m looking at the option of daily — if not weekly — billing," Galbreath says. "Now, we do billing twice to three times a month."

Also, he plans to make those changes without hiring new staff, sticking to a motto of "reduced reimbursement, increased responsibilities."

The agency also has made a number of other cost-cutting changes, including restructuring its office staff so that each employee has specific, multitask job functions in preparation for PPS. Although there have been no layoffs, the agency has eliminated some positions through attrition, Galbreath says.

Clinical staff have been working on providing only the number of visits that are necessary for any specific patient. For example, some agencies might send a home health aide or personal care attendant to bathe a patient six days a week, Galbreath says. "We have found we’re as effective at bathing a patient three days a week, because this allows the patient and family to take some responsibility and not lose all of their independence."

Jimmie Galbreath, RN, MSN, Director, Decatur General Home Health Services, P.O. Box 2239, Decatur, AL 35609. Telephone: (256) 350-4182. Fax: (256) 341-2656.