GAO: Home health PPS needs refinement, risk sharing
GAO: Home health PPS needs refinement, risk sharing
By MATTHEW HAY
HHBR Washington Correspondent
WASHINGTON The General Accounting Office (GAO; Washington) last week concluded that while the Health Care Financing Administration’s (HCFA; Baltimore) research and demonstration projects for the home health prospective payment system (PPS) have been useful in helping to design a new system, significant information gaps remain.
"Those gaps, coupled with the variation in the way home health care services are delivered and the lack of what constitutes appropriate care, mean that the PPS could cause unintended consequences for some beneficiaries, some home health agencies, or the level of Medicare spending," the GAO concluded in a report released to Congress.
Specifically, the GAO concluded, the proposed 60-day episode is likely to be too long for many beneficiaries and could result in unnecessary expenditures if payments are not adequately adjusted for patient needs.
Moreover, basing the level of payments per episode on national average costs could result in sharp revenue increases for some agencies and large declines in others. "Concerns remain about whether the case-mix adjustment method will adequately group patients with like resource needs and then appropriately adjust payments for beneficiaries in each group," the report added.
The GAO also pointed out that how a patient is classified and how much the agency is paid is very dependent on the services provided, which is something that is directly controlled by home health agencies. Without adequate design features, the GAO said, Medicare could wind up overpaying for unneeded services or underpaying for required care.
The GAO noted that HCFA has sponsored a number of research and demonstration projects on payment design and home healthcare service delivery dating back to 1987 at a cost of almost $27 million. But according to the GAO, important features of a PPS were never evaluated as part of these efforts, and that limits their ability to adequately gauge the effects of certain payment policies on home health delivery and spending.
According to the GAO, HCFA’s major demonstration project offered evidence that home health agencies would reduce their costs when providing home health visits under a PPS model that tightly limited their profits and their losses. But the demonstration did not examine alternative levels of payments, the agency points out. Moreover, it failed to develop a case-mix adjustment method to alter payments for differences in resource use across groups of patients, according to the GAO.
While other HCFA-sponsored research projects have documented the variation in home healthcare service delivery, the GAO says they have also demonstrated that methods for quality measurement and monitoring are not well developed and that, in turn, impairs their ability to evaluate the effect of payment changes.
The GAO concluded that even though the shift from cost-based payments to prospective payments is intended to help Medicare control its spending, how costs and services are impacted by the PPS is yet to be seen. The GAO recommended that HCFA closely monitor service delivery for various types of beneficiaries and home health agencies so that inadequate or medically inappropriate care can be identified.
The GAO also recommended that as more information becomes available about what services are delivered within an episode and how long visits last, efforts should be made to develop criteria for service adequacy and appropriateness, as well as to identify patient outcomes.
In the interim, the GAO argued that a risk-sharing arrangement, in which aggregate Medicare payments are adjusted at year-end to reflect a provider’s actual costs, could mitigate any unintended consequences of the payment change. According to the GAO, limiting a home health agency’s gains or losses would help protect the industry, the Medicare program, and beneficiaries from possible negative effects of the PPS until more is known about how best to structure the PPS and the most appropriate home health treatment patterns.
Finally, the GAO recommended that as new data are available and experience is gained with the PPS, HCFA should study practice patterns and provider responses to the PPS and make ant needed modifications to the PPS design and implementation.
HCFA responds
HCFA agreed with the GAO’s overall findings, including the difficulties inherent in changing Medicare’s payment method and that careful monitoring of the new system will be required. The agency said it is absolutely essential to monitor payment and conduct utilization review under the new payment system.
In response to the latter concern, HCFA outlined its plan to ensure that patient classification and billing data are accurate and that payments are appropriate and also to provide quick feedback on beneficiary outcomes for use in future PPS refinements.
One important part of that plan will be to use the Outcome and Assessment and Information Set (OASIS) to gather information. HCFA reported that it has contracted with Abt Associates to develop protocols that can help assess the accuracy of these data.
While survey agencies will be able to apply these protocols in conducting surveys of home health agencies, HCFA said that an ongoing, system-wide monitoring effort is also required. To meet that need, the agency said it is developing a task order for a contractor to conduct random assessments of OASIS reporting to ensure the accuracy of reported data. The contractor will also be tasked with performing assessments for selected home health agencies identified for medical review by fiscal intermediaries.
According to HCFA, the program will be dubbed the Home Health Outcome Based Quality Improvement System and will be in implemented as a pilot project in five states through a Peer Review Organization program.
However, the agency raised two major concerns with the GAO’s recommendation to incorporate risk sharing into the PPS design. HCFA argued that such a policy is not needed given the adjustments included in PPS, including a case-mix measurement system to calibrate payments on the basis of patient needs, unlimited payment episodes to account for long term patients and outlier payments for extraordinarily high-cost episodes.
HCFA’s second concern was that implementing a risk-sharing arrangement would be difficult operationally and could delay implementation of the new payment system. The agency also argued that such an arrangement would be more costly for both home health agencies and HCFA to administer because it would require comparisons of payments and provider-specific costs. It would also require auditing of home health agency costs to determine allowable costs and make it more difficult to estimate payment levels to achieve budget neutrality, according to HCFA.
The GAO countered that while the four payment adjustments included in the proposed PPS are all important to calibrate payments for individual episodes, given the incentives under PPS and the historically substantial variation in use of the benefit, they are insufficient by themselves.
"Though HCFA may need to proceed with its plans so that it can expedite replacing the IPS," the GAO concluded, "we believe it should consider incorporating a risk-sharing arrangement in the future."
Subscribe Now for Access
You have reached your article limit for the month. We hope you found our articles both enjoyable and insightful. For information on new subscriptions, product trials, alternative billing arrangements or group and site discounts please call 800-688-2421. We look forward to having you as a long-term member of the Relias Media community.