So many prospective payment systems, so little time.
And with a new set of HCFA payment rules expected out by late May, the timing couldn't be better for Gordon Davis' HFMA presentation, "PPS: Rehabilitation is Next." The session is set for 10: 30 a.m. to 12: 30 p.m. Monday, June 26.
Since the passage of the Balanced Budget Act of 1997, new Medicare payment methods have hit healthcare providers fast and furious.
In October 1997, home health agencies went on a transitional payment system, a precursor to the prospective payment system that will be implemented in October 2000. July 1998 brought a PPS to skilled-nursing facilities. July 2000 marks the start of the outpatient PPS. And in April 2001, inpatient rehabilitation is set to go online with its new PPS.
"Post-acute-care services were the last vestiges of cost-based reimbursement," says Davis, who was director of finance at several large hospitals in the Dallas/Fort Worth area before joining CampbellWilson, a Dallas-based consulting firm, as a healthcare consultant in 1998.
Last year, hospitals around the country cut their home health and skilled-nursing programs in response to reduced reimbursement. But with only the broadest outlines of the new rehabilitation payment system known, it's unclear whether cuts in rehab might be next.
What is known is that Medicare will no longer reimburse hospitals for the cost of each unit of treatment. Instead, HCFA will devise fixed payments that will cover the entire course of treatment for specified categories of physical conditions, called function-related groups.
The upshot, Davis says, is that hospitals can expect an average 20% to 30% drop in payment per discharge under the new system.
Under that system, patient mix, not hospital cost, will drive reimbursement. Orthopedic cases will be reimbursed at a lower rate than spinal cord injuries, for instance. If a hospital can provide treatment for one of these function-related groups at less than what HCFA is paying, it can keep the difference.
The ramifications of this new system will be large, Davis says.