Will the new transfer policy reduce home care LOS?
Will the new transfer policy reduce home care LOS?
A change in Medicare’s patient transfer policy mandated by the Balance Budget Act of 1997 (BBA) not only will mean lower diagnosis related group (DRG) rates for hospitals but also could adversely affect home health agencies, experts say, forcing hospitals to hang onto acute cases longer.
Current policy, which changes under the BBA Oct. 1, 1998, defines Medicare patients who are sent from one acute care hospital to another as transfer cases. These cases are paid less than the full DRG rate if the patient had a shorter inpatient stay than average, according to a statement by the American Hospital Association (AHA).
The BBA expanded the definition of a transfer patient to include patients sent from an acute care hospital to any post-acute setting rehab, psychiatric, skilled nursing facility, and home health. The change is limited to 10 DRGs with a high use of post-discharge services known as "qualified discharges."
No one knows yet which DRGs will be selected as qualified discharges, but the AHA says, based on analyses of MEDPAC (formerly PROPAC, the Prospective Payment Assessment Commission), providers can expect to see stroke and hip replacements on the list. (See table of DRGs, p. 13.)
A Health Care Financing Administration (HCFA) spokesman tells Hospital Home Health that "we’re in the process now of identifying them. We expect to have it finished by April 1 in fiscal (FY) 1999," he says. "We probably will follow PROPAC’s top 25 DRGs."
Some industry leaders like Susan Schulmerich, executive director of Montefiore Home Health Agency in Bronx, NY, expect the DRGs to follow closely the current top 10 home care DRGs, which include "congestive heart failure (CHF), diabetes, stroke, and chronic debilitating conditions," she says.
A spokesman for HCFA says the agency is attempting "to change hospital behavior through the provision of the Balanced Budget Act, but there’s no change in payments to the post-acute care provider."
The behavior HCFA wants to modify is what has become known as, "double-dipping" hospitals collecting the full DRG payment and then discharging a patient early to a post-acute setting and getting reimbursed for that as well.
The spokesman concedes the new law could be an incentive for hospitals to keep patients in acute care longer and shorten the stay in home care.
"If the hospital stands to lose its DRG structure," says Schulmerich, "then the hospital would be wise to keep patients in the hospital. The early part of the hospital stay is the most expensive. They would lose money on per diem. We know we have lots of bed capacity. What does the hospital have to lose? Absolutely nothing."
Transfer cases are paid a per-diem rate up to the full prospective payment system (PPS) rate. The AHA explains that because the hospital gets paid twice the per diem rate for the first day, full payment is achieved when the stay is one day less than average. For example, if a patient stayed nine days where the average stay was 10 days, the hospital would receive full payment. However, if a patient stayed four days where the average stay was 10 days, the hospital would receive five-tenths or half the full DRG rate for that case.
Under the BBA, the secretary of the Department of Health and Human Services may modify the payment for qualified discharges for which a substantial portion of the costs of care are incurred in the early days of inpatient stay. Payment for these cases would be 50% of the full DRG rate, plus 50% of the transfer payment.
For instance, if a patient stayed four days where the average stay was 10 days, the hospital would receive 50% of the full DRG plus 25% (50% of five-tenths) of the full DRG for the transfer payment portion. In total, the hospital would receive 75% of the full DRG for that case, the AHA says.
But the new law also may contain good news for hospital-affiliated agencies, says Schulmerich. Citing the often chaotic activity that usually surrounds moving a hospital patient into home care, often with as little time as three days to get a plan of care," says Schulmerich, "we’re on roller skates. If you add two days to that, there’s less pressure, and the patient is not as fragile physically or emotionally."
There is another advantage she sees. "It will reduce length of stays in home care, yes; however, by lowering the average number of visits per episode under PPS, this could turn out to be good, too."
Yet, Schulmerich foresees potential trouble with the new transfer policy. "If the government doesn’t get the savings it wants [from PPS] the transfer policy will be a precursor to bundling. And that will be a nightmare for everybody. The hospitals don’t want to be fiscal intermediaries, and it will be a nightmare for freestanding agencies."
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