Psychiatric providers guardedly supported the CMS' announcement last week that it would begin paying inpatient psychiatric facilities prospectively, bringing them in line with how other types of healthcare facilities are reimbursed.
Starting April 1, 2004, the CMS will begin phasing in the prospective payment system for such facilities, replacing the current cost-based system that they've been paid under since 1982. With the CMS proposal, the base PPS per-diem rate would be $530 with adjustments to reflect certain patient and facility conditions. The proposal is open to public comment until Jan. 27, 2004.
"Overall, our position is we need to update our payment system. We need to go to a system that other healthcare providers have already gone to that would be more predictable and takes into account" factors that influence the cost of care to facilities, said Mark Covall, executive director of the National Association of Psychiatric Health Systems, a Washington based-organization representing 350 behavioral health systems, including 200 psychiatric facilities.
About 2,000 free-standing psychiatric hospitals and psychiatric units of general acute-care hospitals will be affected by the proposed changes.
Joseph English, past president of the American Psychiatric Association, said his organization was still studying the proposal, but that it seems to provide more appropriate reimbursement rates for facilities because it takes into account more factors that can affect the cost of services at the hospitals.
"That, we believe, is good science and a fair allocation of resources," he said.
In the 20 years since the PPS came into existence, every other type of provider facility has been moved from a cost-based method of payment to the PPS method-designed to control the spending growth and reward providers who deliver care more efficiently-except for psychiatric facilities.
As a result, Covall said, psychiatric facilities have been paid on a system that has become outdated because of changes in treatments for mental health.
Back in the 1980s, he said, patients could stay in a facility for as long as six months. Today, stays are short-term, but the cost-based reimbursement system doesn't take that into account.
In 1999, Congress passed the Balanced Budget Refinement Act, which mandated that the CMS transition such facilities to a PPS. The CMS originally was supposed to have in place PPS rules for psychiatric facilities in October 2002.
"It's an extremely complicated process," a CMS spokesperson said when asked about the delay.
According to the CMS, the cost of psychiatric care is the most expensive during the first few days after admission to a facility, then it declines. One of the CMS proposals is to make changes to the per-diem rate for each day up to and including the eighth day of an inpatient stay to reflect that trend.
In proposing the changes in the reimbursement method, the CMS is seeking to adjust payments to take into account factors such as the age of the patient, the diagnoses and other conditions that may need treatment that affect costs of services.
All the adjustments, however, make it difficult to project how it will affect the industry as a whole, said Larry Goldberg, director of Washington national affairs for the healthcare practice at Deloitte & Touche.
"Each facility is going to have to figure out what it means (to them)," he said, adding that though the CMS has targeted April 1 as the implementation date, it may have to push that back to July 1.
In fiscal 2003, the CMS spent $3.9 billion on inpatient psychiatric services. It estimated that under the proposed changes it would pay facilities $5.3 billion from April 1, 2004, to June 30, 2005. From July 1, 2005, to June 30, 2006, it will pay $4.5 billion, increasing to $5.3 billion from July 1, 2008, to June 30, 2009.