Real-World Case Medicare's payment methods are site specific. Each site has its own payment method. The textbook describes payment systems for...

Real-World Case

Medicare’s payment methods are site specific. Each site has its own payment method. The textbook describes payment systems for inpatient acute care hospital, inpatient psychiatric hospital, physician offices, hospital outpatient departments, ambulatory surgery centers, four different methods of PAC, and others. Experts contend that this structure of site-specific payment systems inappropriately focuses attention on the site of care rather than on the patients’ characteristics and needs (Pruitt 2013, 1; American Health Care Association 2015, n.p.). However, as the textbook shows, existing Medicare payment systems focus on the site of the delivery of healthcare services, rather than on the characteristics or care needs of the Medicare beneficiary. As a result, patients with similar clinical characteristics receiving similar care and therapies may be treated in different settings and at different costs to Medicare. Additionally, Medicare’s distinct payment systems fail “to encourage collaboration and coordination across multiple sites of care and provides few incentives that reward efficient care delivery” (Pruitt 2013, 1). Finally, the Medicare Payment Advisory Commission (MedPAC) proposes that the Medicare “program should not pay more for care in one setting than in another if the care can be safely and efficiently (that is, at low cost and with high quality) provided in a lower cost setting” (MedPAC 2014, 97).

Site-neutral payment has been proposed as a solution to problems that distinct site-specific payment systems present. Site-neutral payment is paying providers the same amount for similar services provided in different settings. Similar terms for site-neutral payment is “equalizing payments” and “harmonizing payments.” MedPAC explains, “if the same service can be safely provided in different settings, a prudent purchaser should not pay more for that service in one setting than in another” (MedPAC 2013, xii). Importantly, site-neutral payment is proposed as a way to save money both for Medicare and for Medicare beneficiaries.

Federal agencies, the Congress, the President, the MedPAC, and other health policy analysts support the development and establishment of site-neutral Medicare payments. Key events in the background of site-neutral payment include:

• Office of Inspector General (OIG) recommended that hospitals performing for ambulatory surgery center-approved procedures in their outpatient surgery departments be paid at the same rate as ambulatory surgery centers (Office of Inspector General 2014, ii).

• Centers for Medicare and Medicaid Services (CMS) as early as 2006 planned to conduct assessments and collect data that would lead to site-neutral payments for PAC services (Centers for Medicare and Medicaid Services 2006, 3).

• Congress passed the Deficit Reduction Act (DRA) of 2005 and President George W. Bush signed it into law in 2006. Section 5008 of the DRA mandated a demonstration project related PAC payment reform. The project was to lead to site-neutral payments (Centers for Medicare and Medicaid Services 2006, 1).

• President Barack Obama’s 2014 and 2016 budgets proposed equalizing payments for certain conditions commonly treated in IRFs and SNFs (2013, 38; 2015, 62).

• MedPAC recommended in its March 2012 report that Medicare payment rates should be equal whether an Evaluation and Management (E&M) office visit is provided in a hospital outpatient department or in a physician’s office (MedPAC 2013, xiii). In its June 2013 report, MedPAC noted that Medicare paid 141 percent more for a level II echocardiogram provided in hospital outpatient department than in a freestanding physician’s office (MedPAC 2013, xii). As a result of these differential payments, healthcare services that could be safely provided in a physician’s office are migrating to hospital outpatient departments (MedPAC 2013, xii). For its June 2014 report, MedPAC’s analysts selected three conditions frequently treated in IRFs and SNF (rehabilitation therapy after a stroke, major joint replacement, and other hip and femur procedures, such as hip fractures). The analysts assessed the feasibility of paying IRFs the same rates as SNFs for these conditions. The analysts found that the patients and outcomes for the orthopedic conditions were similar and represented a “strong starting point for a site-neutral policy.” The analysts concluded that additional work needed to be done “to more narrowly define those cases that could be subject to a site-neutral policy” (MedPAC 2014, 94-95).

• Bipartisan policy analysts of the Moment of Truth Project recommended equalizing payments between rehabilitation services provided in different settings (Bowles and Simpson 2013, 26).

Chapter 8 describes the four different payment systems for the PAC settings. Each PAC setting, SNFs, LTCHS, IRFs, and HHAs, has its own payment system. In 2016, site-neutral payment will be implemented for LTCHs.

Questions:

1. Access the online Federal Register for Friday, August 22, 2014, Vol. 79, No. 163 (Centers for Medicare and Medicaid Services 2014). Read page 49856. What is the Public Law (P.L.) for the Pathway for Sustainable Growth Rate (SGR) Reform Act of 2013?

2. Access the online Federal Register for Friday, August 22, 2014, Vol. 79, No. 163 (Centers for Medicare and Medicaid Services 2014). Read page 50194. How is Pathway for Sustainable Growth Rate (SGR) Reform Act affecting the LTCH PPS?

3. What criteria must a discharge meet for an LTCH to be paid under the LTCH PPS?

4. How will LTCH discharges be paid that do not meet the criteria?

5. Per the Pathway for Sustainable Growth Rate (SGR) Reform Act to law, what happens in 2020?

Application Exercises

1. Assign a resident to a resource utilization group (RUG). To assign the resident to a RUG, use information from the following sources:

Case below

Figure 1 below

Figure 8.6 in textbook

Case

The resident requires isolation because of an infection (extensive service). The resident received 740 minutes of therapy. These minutes were received when the resident had physical therapy on Monday, Tuesday, Wednesday, Thursday, and Friday and had speech therapy on Monday, Wednesday, and Friday. The resident’s ADL score is 9

Medicare Payment Advisory Commission (MedPAC). 2014(October). Payment basics: Skilled nursing facility services payment system. http://www.medpac.gov .

Based on these data, into which RUG is the resident grouped? Is the RUG one of the upper groups?

2. For Decatur, AL (CBSA 19460), use data from tables 8.13, 8.16, and in the textbook to calculate and IRF-PPS payment for HIPPS codes B0110 and D0101.

4. Apply concepts from the home health prospective payment system (HHPPS).

1. Determine a health insurance prospective payment system (HIPPS) code for the HHPPS using key data and information in table 8.29 in the textbook.

Key data:

• Third episode, 16 therapy visits

• Moderate scores in clinical, functional, and service dimensions

• Supply severity level 4

What is the HIPPS code based on these data?

1. For HHAs delivering services in 2015 to patients in Abilene, TX and Anchorage, AK, create an Excel spreadsheet to calculate the payment for the HIPPS code you determined in 4.a. Both submit quality data. Use the following data:

• NRS amount, the HIPPS weight, the national 60-day episode rate (with quality data), labor-related portion, and the nonlabor-related portion from tables 8.28, 8.30, and 8.31 in the textbook.

• Wage index for CBSA 10180 (Abilene, TX) = 0.7440

• Wage index for CBSA 11260 (Anchorage, AK) = 1.2419

1. Review your calculations in the spreadsheet. What is a cause of the difference in the payments between the two agencies?

1. Review your results. If the two HHAs did not submit quality data, what would be the general effect on their payments?

Table 8.3