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The inpatient rehabilitation prospective payment system (PPS) will leave little dry ground when it sweeps in.
Rehab industry experts predict PPS will result in a decline in salaries and cutbacks in highly skilled staff. They say rehab facilities will need to rely more heavily on care plans or maps, standardized care, and strategies that control the exorbitant expenses of outlying patients. Even pharmacy costs will need to be re-evaluated and controlled.
"Obviously there will be winners and losers under PPS, and it’ll be mostly losers, I’m afraid," says David Good, MD, director of rehabilitation for Wake Forest Baptist Medical Center in Winston-Salem, NC.
For most inpatient rehabilitation hospitals, payment under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) was higher than what it will be under PPS, Good notes. "There will be some facilities that had a very low TEFRA rate and they may do all right under PPS," he adds. "These are facilities that have been around for a long time."
Likewise, when PPS was introduced for acute care hospitals, some actually did better financially, for a time, Good says.
The PPS losers could be comforted from the fact that there will be a two-year transition period in which their payments will be determined partly by TEFRA methodology. Then the PPS will be paid at 98% of the rate paid nationally under the current system. However, the PPS payment will not take into account the additional costs that rehab facilities will incur in order to implement the new system. Costs for the Minimum Data Set for Post Acute Care (MDS-PAC) are expected to be considerable.
Good and other rehab industry experts discuss some of the other challenges that inpatient rehabilitation facilities will face:
• Documentation: "Medicare’s whole movement is toward documentation, documentation, documentation," says Rajan Patel, director at KPMG in Fort Lauderdale, FL. "The documentation level that really drives and justifies medical care is more significant now under PPS."
Clinical staff will need to fill out documentation forms appropriately, or else a facility will not receive the right level of reimbursement.
Under the old system, rehab facilities were paid the TEFRA rate, which was based on a certain base year, divided by Medicare discharges. The reimbursement had nothing to do with the level of clinical documentation, Patel explains. "So if you had poor documentation it really didn’t affect your TEFRA rate," he says. "It was non-documentation-driven."
Rehab facilities could enhance net income by increasing their costs and lowering their discharges. This gave them a higher cost-per-discharge rate, and the clinicians were not involved.
Under PPS, it’s what clinicians document in the submissions to the Health Care Financing Administration (HCFA) in Baltimore, that will drive the payment. "If clinicians have poor documentation that doesn’t really support what they’re doing, then HCFA will not know any better and will pay you less," Patel says.
• Patient shifting: One result of PPS in other post-acute care settings and Medicare’s reimbursement changes in acute care hospitals has been a trend toward facilities shifting patients to a different medical setting, according to reimbursement.
"The acute cares have tried to transition patients to rehab and post-acute entities, and we’ve taken patients who are sicker, who have medical comorbidities and complications," says Judy Waterston, chief executive officer and president of Schwab Rehabilitation Hospital & Care Network in Chicago.
But now that rehab PPS greatly decreases payment for Medicare patients who stay longer than average, it will be more costly for inpatient rehab facilities to admit patients who have comorbidities and who are sicker upon rehab admission, Waterston says.
"We are going to have to look closely at our admission process and make sure we are taking patients who we are fairly certain will be able to complete their rehab program," Waterston adds. "We get our referrals from a variety of community hospitals, and I think this means we’ll have to educate our referral sources about what are the most appropriate rehab patients."
There also is the possibility that some rehab facilities will stop taking patients with certain rehab problems, just as the home care PPS has resulted in some home care agencies turning away patients with diagnoses that require lengthier, more costly care.
"There’s definitely a concern that [PPS] is going to back up patients in acute care or shift those patients to other types of care," Waterston says.
Good also anticipates rehab facilities changing their relationship with referral sources. "It’s going to be especially true for freestanding rehab facilities," Good predicts. "They’re going to be a lot less willing to accept high-cost cases."
Even rehab facilities contained within an acute care health system will need to pay close attention to every clinical decision. For example, Good says, rehab facilities may decide that they will no longer provide swallowing tests and PEG (feeding) tubes to patients because that minor surgical procedure is moderately expensive. If a patient needs that procedure, the rehab facility might insist that it’s taken care of in the acute care setting.
"Some real tough decisions need to be made," Good adds.
For instance, some rehab facilities might decide that they can no longer afford to admit certain types of orthopedic patients because the PPS payment is so low, he says. "So unless they can make it up on volume or if they need to distribute their overhead and are willing to take a loss on these patients, they won’t take them," Good says.
• Staff salaries/cuts: "I think we’ll see a downward trend on salaries of therapists, and that’s going on for the acute rehab side as well," Good says. "This will make the job market tighter for graduate level therapists."
Physical therapists have already seen a decline in wages and job demand. In some places the decline has been so pronounced that physical therapy assistants are paid only slightly less than physical therapists, Good says. "You’ll see a downward pressure on graduate PT and occupational therapy salaries in a tighter job market, and there will be more mushrooming training programs for PT and OT assistants to fill that need," he adds.
Some clinical positions likely will be reduced or cut under PPS because unlike TEFRA, the new payment system doesn’t have a cushion that makes it feasible to hire extra psychologists, social workers, or recreational therapists. "If you aren’t generating any margin by your case mix group, then those extra types of services you may want to provide in your rehabilitation unit you may not be able to do so anymore," Patel says.
Under the old system, rehab facilities could hire more disciplines. Now they should take a "wait and see" approach, he advises. "You will have to do a profitability assessment by each case mix group that accounts for your volume and see where your margin is."
• Educating staff: This may be the greatest challenge under PPS. "The assumption that HCFA makes is that rehabilitation facilities have been filling out data sets on patient acuity, but the reality is that none of these clinicians have been filling this out with the mindset that it drives the revenue," Patel says. "So they don’t necessarily include everything they do."
Therapists and other clinicians have not had the time to document care that precisely. Now they’ll have to make the time, and this will cost rehab facilities thousands of dollars that will not be reimbursed by Medicare.
Rehab facilities will need to teach staff how to capture every essential detail in assessing patient care. If a therapist forgets to document one small item, it could adversely affect reimbursement. "This is a long educational process that needs to be undertaken, to educate all of these clinical people how to fill in certain items," Patel says. "It’s almost like filling out a tax form correctly."