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Editor’s note: Rehab Continuum Report brings you this in-depth look at the inpatient rehab prospective payment system (PPS) for Medicare patients as proposed in the recently published rule in the Federal Register. Look for more coverage of PPS in coming months, as rehab facilities count down to its implementation date of April 1, 2001
The inpatient rehab inpatient prospective payment system (PPS) brought little cheer to the rehab industry when the proposed rule was published in November.
Unless the Health Care Financing Administration (HCFA) in Baltimore, makes major changes to the rule based on input from the rehab industry, inpatient rehab facilities may expect to make costly changes in how they document care and to lose the flexibility of the current payment system.
HCFA is intent on having rehab facilities switch to a new and much more time-consuming documentation system, called the Minimum Data Set for Post Acute Care (MDS-PAC).
"One of the real burdens is the MDS-PAC," says David Good, MD, director of rehabilitation at Wake Forest Baptist Medical Center in Winston-Salem, NC. "The problem is that costs are going to increase dramatically, and the most obvious cost is for the MDS-PAC, which will take professional clinicians to complete," Good says. "Also, there’s a lot of room for reimbursement loss due to coding errors and things like that."
Other rehab experts agree. "We’re extremely concerned about the MDS-PAC, which has over 400 data items," says Carolyn Zollar, JD, vice president for government relations at the American Medical Rehabilitation Providers Association (AMRPA) in Washington, DC.
It’s estimated that it will take a skilled assessor about 70 minutes to complete the MDS-PAC, which is a huge time commitment, says Judy Waterston, chief executive officer and president of Schwab Rehabilitation Hospital & Care Network in Chicago. Schwab has 125 beds, including 20 sub-acute beds, and is affiliated with Sinai Health System of Chicago.
The proposed rule is slated to be effective as of April 1, 2001, which means rehab facilities have little time remaining in order to make all of the necessary preparations and changes. Reimbursement in the first two years under PPS will be based partly on the current payment system under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) law. But this shouldn’t lull rehab providers into thinking they can put off making changes, advises Rajan Patel, an expert on medical reimbursement issues and a director at KPMG in Fort Lauderdale, FL.
"The hospitals that are going to feel less of a pinch under PPS are those that take these regulations very seriously and start getting prepared now within that two-year time frame," Patel says. "If hospitals get a false sense of security and say, Look, I got a transition period, and I really don’t have to worry about it,’ then those are going to be the ones who will be hit hard, and they won’t be ready in time."
Patel and other PPS experts offer these suggestions for how inpatient rehab facilities can prepare for the change to PPS:
• Analyze your assessment process.
The MDS-PAC assessment form will be a new tool for all rehab facilities, and in most cases it will include a scoring system that is mirror-opposite the system therapists and other rehab professionals currently are using.
About 85% of inpatient rehab hospitals now use the functional independence measure (FIM) assessment tool, says Richard Linn, PhD, director of the Uniform Data System for Medical Rehabilitation and the Center for Functional Assessment Research in Buffalo, NY. The Uniform Data System markets the FIM system.
"Interestingly enough, the way the MDS-PAC is structured, the scoring system goes in a way that is opposite of FIM, so therapists will have to reject all previous training to learn the new system," Linn says.
This will not prove easy, Waterston says. "We have bright staff, and they’re professionals, but it’s very confusing when you have two different systems and two different scoring mechanisms," Waterston explains. "And since this is going to determine how we’re going to be paid, it’s absolutely imperative that we get it right."
The first step rehab facilities will have to take, assuming HCFA continues to require the MDS-PAC tool, is to audit their current assessment forms to see how well these tie together with the medical record document, Patel suggests.
"Are we capturing everything we are doing?" Patel asks. "The first thing I would do is take an audit to see how well our scoring system reflects what we did for the patients."
This will give facilities an idea of how extensive staff training will need to be during the transition period. If it appears that therapists have not been assessing patients in a way that captures all information that’s pertinent to reimbursement under PPS, then an agency will have to start teaching staff the new philosophy of how the therapist’s documentation will drive reimbursement. Once staff understand that concept, the next phase is to teach them how to use the MDS-PAC tool.
• Conduct a financial audit using anticipated PPS reimbursement.
It’s important that rehab facilities conduct a financial assessment to see if their reimbursement under the PPS case mix group (CMG) system will be higher or lower than what they have received under TEFRA, Patel says.
"If it’s going to be lower than what TEFRA paid, then you’ve got a two-year-period of transition," Patel says. "So what do you need to do to improve your clinical documentation processes to improve reimbursement?"
AMRPA offers a service in which rehab providers can review their previous year’s cases to gain a general idea of how their reimbursement would have been under PPS.
Schwab Rehabilitation Hospital has discovered through its trial PPS run that it will have a number of outliers because many patients are victims of violence who have additional medical problems. These types of patients are more expensive and have a longer length of stay than the typical rehab patient, Waterston notes.
HCFA has said it will have payment adjustments for outliers, and Schwab Rehabilitation will attempt to find out how those adjustments will affect the bottom line by using the AMRPA service to rerun its financial numbers based on the published proposed rule, Waterston says.
• Adjust data systems to monitor cost and utilization.
Hospitals will need to set up their own data systems to start monitoring cost and utilization based on the CMG categories, Patel says. "I would challenge that hospitals pretty much have very little sophistication to be able to cost out services very well in a rehab facility," Patel says. "They haven’t had to do it."
But that changes with PPS. Hospitals will have to develop a mechanism that allows them to monitor utilization and costs effectively. "So they’re going to have to go back to their data systems, each diagnosis-related group or whatever system they are using and try to manage their reporting systems," Patel adds. "Sometimes hospital information systems don’t allow you to do that, so they’re going to have to make an assessment of the process."
• Prepare for other payers to make similar changes.
Rehab providers should be prepared to see the same thing happen with their PPS that has happened with previous systems: Private insurers and Medicaid probably will jump on the bandwagon.
"Usually what’s good for Medicare is good for the rest of the country," Patel says. "State Medicaid programs will see that they’re paying a lot of money for rehabilitation care, and they’ll tend to look at the new system to see if it will save them money."
Likewise, commercial payers will follow suit. "Commercial payers love it when Medicare creates these systems for them," Patel says. "HCFA does all the work, and now commercial payers can borrow off that work and try to limit payments to facilities."
For this reason, KPMG experts tell their clients not to look at Medicare PPS in a vacuum. "Look at other payers doing this and try to figure out if you can operate your business in this new payment dynamic," Patel advises.