Section for Long Term Section for Long Term Care and RehabilitationCare and Rehabilitation

Dallas, TexasFebruary 27-28, 2001

Brian Ellsworth and Barbara MaroneSenior Associate Directors

American Hospital Association

Washington Report…

Summary of MedPAC’sView of Post-Acute CareDraft Chapter 6 of the March 1, 2001 Report to Congress:”Post-Acute Care Prospective Payment: Current Issues and Longer Term Agenda”

Post-acute Care

• Skilled nursing facilities

• Home health agencies

• Inpatient rehabilitation facilities

• Long-term care hospitals

Context for Post-acute Care:Rapid Growth, Then Cutbacks

• 34% growth in post-acute expenditures per year from 1988-94

• 25% of Medicare inpatient users went to a post-acute setting in 1997

• SNF payments declined from $11 to $9.4 billion during 1997- 99

• Home health payments declined from $17.8 to $9.5 billion during 1997-99

Post-acute: Difficult to Compartmentalize

~ Different conditions of participation

~ Differences in Medicare

coverage criteria

MedPAC Study on Post-acute Substitution: Findings and Recommendation

• Difficult to predict post-acute setting with administrative data

• “Empirical evidence on substitution weak”

• Recommendation: Secretary should conduct empirical study to assess extent of substitution across settings

MedPAC: Need for “Common Core” of Data Elements

• Goal: Improve payment systems and quality monitoring

• Likely elements: Functional status, diagnosis, comorbidities, cognitive status

• Recommendation: While implementing BIPA provision to develop patient assessment instruments with comparable common data elements, the Secretary should minimize reporting burden and unnecessary complexity while assuring that only necessary data are collected for payment and quality monitoring

MedPAC Critique of MDS-PAC

• Overly long: 400+ items

• Complex: inconsistent timeframes, different rating scales

• Does not adequately assess needs of medically complex patients

MedPAC: Medicare Needs to Pay Correctly across Settings

• Access and care delivery should not be driven by financial considerations

• Equal payment for equivalent services

• Recommendations: Secretary should develop for potential implementation a patient classification system that predicts costs within and across post-acute settings; Secretary should conduct demonstrations to test feasibility of including larger scope of services in the payment bundle

Shorter Term Payment Issues

• SNF PPS refinement

• Rehabilitation PPS implementation

• Home health PPS monitoring

Skilled Nursing Facility PPS – Problems

• MDS does not collect variables that account for higher acuity patients

• RUGs uses staff time to measure resource use

• Recommendation: Secretary should develop a new classification system for SNF care while continuing to monitor access and quality

MDS Problems

• Never explicitly tested with skilled patients

• Large intra-group variation in resource use

• Poor accuracy and inter-rater reliability

SNF PPS – Adequacy of Payment (distinct from allocation of payments)

• MedPAC found no evidence of critical need to increase base payments above current law

• Access to SNFs: No widespread problems found

• Exit and entry into SNF market: More SNFs since BBA; decline in number of hospital-based facilities

• Payment and use from 1996 to 1999 indicates overall growth

SNF PPS – Adequacy of Payment (distinct from allocation of payments)

• Number of certified skilled nursing facilities by type and year

  1996 1998 2000

Hospital-based 2,080 2,171 1,897

Freestanding 12,002 12,864 12,938

All facility types 14,082 15,035 14,835

Rehabilitation PPS: Concern about MDS-PAC

• Imposes undue data collection burden and short-term disruption

• MDS-PAC does not accurately measure cognitive status

• Reverse coding of ADLs confusing to longstanding FIM users

• Lengthy form with multiple assessments during an episode

• Recommendation: Until a core set of common data elements for post-acute care is developed, the Secretary should require the Functional Independence Measure as the patient assessment tool for the inpatient rehabilitation PPS

MedPAC: Other PPS Issues

• Rehabilitation PPS Recommendation: Higher outlier percentage of

5% and study whether a different policy is needed

Recommendation: Secretary should re-examine the disproportionate share adjustment

Recommendation: Update the case mix weights over time

• Home Health PPS Recommendation: Secretary should monitor use

of significant change in condition payment adjustments and payments for wound care

AHA View of MedPAC Post-acute Chapter: Overall Comments

• Adequately presents complicated topic

• Is generally consistent with the Commission’s discussions over the last few months

• The AHA appreciates MedPAC’s attention to regulatory burden and system coherence issues

AHA View: Post-acute Chapter

• Not enough specifics on the rationales for standardization of assessment elements, which might include:

Improvement in reliability of the data Reduction of silo effect Increase in ability of providers to cross-

train nurses Increase in efficiency of information

systems

AHA View: Post-acute Chapter

• Looking across settings, more emphasis needs to be placed on:

Patient severity measurement problems Differences in coverage criteria Differences in regulatory requirements

• AHA has significant ongoing concern about adequacy of payment for medically complex patients

SNF, Home Health, Rehabilitation PPS and Regulatory Updates

Skilled Nursing Facility PPS

• BIPA changes to be implemented 4/1/01 16.66% adjustment to nursing component Modification to 20% add-ons (6.7% for rehab) Market basket changes No Part B Consolidated Billing

• Case mix refinement unlikely in 2001, HCFA to issue RFP for more research

• April proposed rule to address swing beds, and may “discuss” market basket and wage index

Skilled Nursing Facilities: Quality Indicators

• Research on 21 new quality indicators for post-acute underway, AHA commented in November: Not adequately risk adjusted Concern about reliability of the data Potential for perverse incentives

• Pilot tested in 2001, implementation timeframe unclear

Home Health PPS

• Ongoing concerns about cash flow due to unforeseen billing system problems & vendor software inadequacies

• BIPA adjustments PIP extension Market basket reduction eliminated for 2001 15% reduction delayed to 2003 Temporary 10% add-on for rural HHAs Homebound definition clarification

Home Health: 2001 agenda

• Legislative Repeal 15% reduction Medical supplies for chronically ill patients

• Promote refinements to PPS to simplify the system and improve payment accuracy

• Adverse event reports OASIS data reliability questions Not risk adjusted

• Advanced beneficiary notices

Rehabilitation PPS: AHA Supports Basic System Goals

• AHA Concerns

HCFA policy decisions System timing Specific technical features

Data Collection for Rehab PPS

AHA recommends that HCFA use FIM

• Field is familiar with FIM

• Validated by HCFA’s researchers

• Smaller number of data items

• Less paperwork burdenMedPAC recommends: Until a core set of common data elements for post-acute care is developed, the Secretary should require the Functional Independence Measure as the patient assessment tool for the inpatient rehabilitation PPS

MDS-PAC Costs

Per Case Expenses Associated with MDS-PAC

HCFA Estimates

AHA Member

Estimates Difference

Data collection—Average cost per case (@ 3x/case)

$ 70.00 $ 122.00 $ 52.00

Data Entry—Average cost per case $ 3.75 $ 9.00 $ 5.25

Sub total $ 57.25

Facility Expenses Associated with MDS-PAC

Training—Clinical (1 person for 16 hrs.) $ 368.00 $ 480.00 $ 112.00

Training—Administrative (1 person for 5.5 hours)

$ 69.00 $ 71.50 $ 2.50

Systems Acquisitions $ 0 $ 6,800.00 $ 6,800.00

Data Storage – 5 year estimate $ 0 $ 2,830.00 $ 2,830.00

Total $ 511.00 $ 10,312.00 $ 9,802.00

Timing of Rehab PPS

• Anticipate October 1, 2001 startup

• Information system changes

• Training

• Field-testing

• Response to comments – refinements of case mix system and payment features

Medical Complexity

• Payment system falls short in recognizing medically complex cases

CMG compression Shortfalls from transfer policy Inadequacy of outlier payment

Inter-relationship of the Key Elements of the Proposed Rehab PPS

PAYMENTFEATURE:

Short staytransfers

(paid as per diem)Patients with short stay twice as likely to have

comorbidities as others.

PAYMENTFEATURE:

Outlier paymentFacility costs are estimated using

routine charges, which do not vary enough by

CMG.

PAYMENT FEATURE:

Case weight compression

Routine costs do not vary enough

by CMG.

OUTCOME:Systematic under-reimbursement for inpatient

rehabilitation facilities with a high proportion of patients with multiple comorbidities.

CORE PROBLEM:

Inadequate recognition of the effect of multiple

comorbiditieson per diem

routine costs.

Rehab PPS: AHA Recommendations

• Remedy compression of the case mix weights

• Eliminate (or narrow the scope of) the transfer policy, particularly with respect to medically complex patients

• Pay 150 percent for the first day’s care under any transfer policy

• Modify the outlier policy for medically complex cases to ensure that facilities with justifiably higher high routine costs are appropriately recognized

Other Policy Concerns

• Disproportionate share hospitals

Represents 40% of payment per case on average No threshold to qualify for adjustment Indirect proxy for case mix...? Impact of DSH on provider behavior

• Indirect Medical Education

Insignificant effects on universe, significant effects on those with sizeable GME programs

MedPAC recommendation: Secretary should re-examine the disproportionate share adjustment for the inpatient rehabilitation prospective payment system

Latest RAND Analysis of Comorbidities

• Effects of comorbidities varies by FRG

• RAND seeking input on recognition of possible preventable conditions

Urinary tract infections Chronic skin ulcers Thrombophlebitis Acute osteomyelitis

Latest RAND Analysis of Comorbidities

• Proposing three payment tiers for comorbidities

• Highest cost comorbidity determines payment tier

Minimizes consequences of upcoding

Lacks explicit recognition of multiple comorbidities

Latest RAND Analysis of Comorbidities: Suggested Three Tier Model

ConditionPercent of

SampleAverage

CoefficientStandard

ErrorVentilator 0.04% 0.2810 0.0612Miscellaneous throat problems 0.02% 0.2203 0.0759Tracheostomy 0.30% 0.2188 0.0208Transfusion and selected anemias 0.05% 0.2183 0.0533Candidasis (selected) 0.07% 0.1903 0.0440Vocal cord paralysis 0.13% 0.1694 0.0314

Malnutrition 0.12% 0.1469 0.0325Thrombophlebitis (selected codes) 1.53% 0.1428 0.0092Transfusion and other anemias 1.46% 0.1409 0.0094Chronic ulcers 3.38% 0.1302 0.0064Intestinal infection clostridium 0.60% 0.1281 0.0147Dialysis 0.55% 0.1186 0.0155Cachexia 0.09% 0.1153 0.0375Meningitis and encephalitis 0.15% 0.1134 0.0293Osteomyelitis 0.34% 0.1103 0.0197Dysphagia 3.95% 0.1075 0.0060Other infections 2.45% 0.1034 0.0074

Hemiplegia 1.01% 0.0993 0.0117Urinary tract infection 12.27% 0.0929 0.0035Complications of diabetes-renal 1.07% 0.0889 0.0115Gangrene 0.11% 0.0805 0.0340Obesity 0.61% 0.0793 0.0146Major' comorbidities 5.47% 0.0682 0.0051Esophagal conditions 0.21% 0.0652 0.0245Pneumonia 1.98% 0.0589 0.0082Pseudonomas 0.51% 0.0583 0.0160Complicaitons of diabetes except renal 3.06% 0.0496 0.0068Amputation of LE 0.57% 0.0440 0.0152

Latest RAND (draft) Analysis of FRGs: Updating Patient Classification

• Incorporated 1998 and 1999 data • Explored different statistical methods

Validated original CART approach

• Examined different specifications of (13 item) motor and (5 item) cognitive scales Considering deleting transfer to tub/shower from

motor scale (inverse relationship to costs)

• Tinkered with group splits 95 group model, downplays age and cognitive

Latest RAND Analysis of FRGs: Initial AHA View

• “Inherent randomness” found at case level – suggests increased role for outliers?

• Analysis did not consider previous or new thinking on comorbidities time to further rethink cognitive scale and age

splits?

• Suggested change to motor scale (delete tub/shower) appears to make sense

• FRG cut points lack stability over time

Next Steps

• Convince HCFA to adopt FIM

Grass roots support Letters from Congress, especially Ways & Means

and Finance committee members

• Monitor HCFA progress of final rule

• Assess if legislation is needed

Medicare Part B Therapy Study:Stephanie Maxwell, PhD, The Urban Institute2100 M Street, NW, Washington, DC 20037(202) 261-5825 Fax (202) 223-1149 smaxwell@ui.urban.org

THE URBAN INSTITUTE:Background: Payment and Coverage Policy

• BBA 1997

1998: Costs minus 10 percent (facilities) 1999+: MFS (all providers) 1999+: $1,500 caps (implemented per facility)

• BBRA 1999

Caps suspended during 2000 and 2001

• BIPA 2000

Caps suspended during 2002

THE URBAN INSTITUTE:Background: Recommendations and Studies

• Coverage/payment policy

• Appropriate utilization

• 1998-2000 utilization comparison

• Focused medical review (emphasis on SNF claims)

THE URBAN INSTITUTE:Study Policy Issues: Alternatives to the Caps

• Fee schedule mechanisms

• Cap mechanisms

• Pre/post-payment medical review

• Case-mix classification methods

THE URBAN INSTITUTE:Study Empirical Questions

• Impact of fee schedule (1998 vs. 2000)

• Impact of caps (1999 vs. 2000)

• Patients over $1,500 thresholds

Payment distributions Patient and provider characteristics

• Prior service use, diagnoses, functional status

THE URBAN INSTITUTE:Study Data Sets

• Medicare final action claims

5 percent national sample Sample size ~ 1.9 million beneficiaries 1998, 1999, 2000

• OSCAR data (certification surveys of facilities)

• Pooled sample of MCBS data

THE URBAN INSTITUTE:Study Deliverable I: Policy Issues Report

• Background

• Private-sector coverage and payment policies

• Alternatives to the $1,500 caps

THE URBAN INSTITUTE:Study Deliverable 2: Utilization Report

• Annual, beneficiary-level analysis

• Comparison across 1998-2000

• Payments relative to $1,500 thresholds

• Therapy type (PT, OT, SLP)

• Provider type (PTIP, MD, RA, CORF, OPD, SNF, HHA)

• Patient characteristics and diagnoses

THE URBAN INSTITUTE:Study Deliverable 3: Episodes of Care Report

• Characteristics of Part B therapy episodes

• Relations to prior Medicare use

• Provider, therapy, and patient characteristics

THE URBAN INSTITUTE:Study Deliverable 4: Explore Medicare Current Beneficiary Survey

• Nationally representative, annual survey

• Annual sample size ~ 10,000 beneficiaries

• ADL/IADL items

• Survey data link to Medicare claims