Maximizing the Prospective Payment System

in the Long-Term Acute Care Hospital

Maria Wooldridge, MA, RRTKindred Hospital - New Orleans, LA

Objectives

Review the impact of LOS Outliers and weighted distribution

of DRGs under PPS for LTACs Strategies to maximize

reimbursement.

History of PPS Medicare 1965 Tax Equity & Fiscal Responsibility Act

(TEFRA) 1982 Prospective Payment System 1983 Resource-Based Relative Value Scale 1992 Balance Budget Act 1997 SNF PPS 1998 LTAC PPS 2002 Purpose and motivation for the

development of DRG’s was to serve as the basis for utilization review and quality assurance in hospitals by providing a clear definition of a hospital product (Fetter 1985).

LTAC Payment Categories

Short stay outliers - LOS up to 5/6 of LTAC DRG geometric mean LOS

Normal payment - DRG specific weight times payment rate

Normal payment with high cost outlier - high cost outliers exceed a DRG specific threshold

Interrupted stay

Short Stay Outliers

Short stay outliers - LOS up to five/sixths of geometric mean DRG LOS.

Payment based on least of three calculations Normal DRG payment Per diem based on DRG payment times

120 percent Cost of patient care (patient charges time

cost to charge ratio times 120 percent).

LTAC PPS Short Stay Outliers

LTC DRG Per Diem Charges LowestFederal rate $34,956 $34,956Budget Neutrality Factor 0.934 0.934Adjusted Federal Rate $32,649 $32,649LTC DRG 475 Weight 2.0906 2.0906

DRG Reimbursement $68,256 $68,256LTC DRG Geometric Mean LOS 30Per Diem $2,275Times 120% NA 120% 120%

$2,730

Patient Days 12Patient Charges $25,000cost to charge ratio 0.375Reimbursement $68,256 $32,763 $11,250 $11,250

Short Stay Outliers

LTAC PPS Short Stay Outliers

LTC DRG Per Diem Charges LowestFederal rate $34,956 $34,956Budget Neutrality Factor 0.934 0.934Adjusted Federal Rate $32,649 $32,649LTC DRG 475 Weight 2.0906 2.0906

DRG Reimbursement $68,256 $68,256LTC DRG Geometric Mean LOS 30Per Diem $2,275Times 120% NA 120% 120%

$2,730

Patient Days 12Patient Charges $25,000cost to charge ratio 0.375Reimbursement $68,256 $32,763 $11,250 $11,250

Short Stay Outliers

LTAC PPS Short Stay Outliers

LTC DRG Per Diem Charges LowestFederal rate $34,956 $34,956Budget Neutrality Factor 0.934 0.934Adjusted Federal Rate $32,649 $32,649LTC DRG 475 Weight 2.0906 2.0906

DRG Reimbursement $68,256 $68,256LTC DRG Geometric Mean LOS 30Per Diem $2,275Times 120% NA 120% 120%

$2,730

Patient Days 12Patient Charges $25,000cost to charge ratio 0.375Reimbursement $68,256 $32,763 $11,250 $11,250

Short Stay Outliers

LTAC Normal Payment

Normal payment - DRG specific weight times payment rate

Federal Rate $34,956.00Budget Neutrality Factor .939

Adjusted Federal Rate $32,823.68LTAC DRG 475 weight 2.0906

Normal Payment $68,621.19

LTAC High Cost Outliers

Normal payment with high cost outlier - high cost outliers exceed a DRG specific threshold

Estimated patient cost (Patient charges times cost to charge ratio) 172,000DRG 475 specific outlier threshold 90,314Cost in excess of threshold

81,686Marginal cost factor

80%High cost outlier payment

$65,349Normal payment

$68,621Total

$133,970

Interrupted Stay (not a payment

category) Defined as a case in which an LTAC Patient is

discharged to an inpatient acute care hospital, an inpatient rehab facility (IRF) or a skilled nursing facility (SNF). for a period of time less than a threshold defined by CMS

Thresholds are: A. For 3 days or less

B. For acutes, 9 days or less C. For inpatient rehab facilities, 27 days or less

D. For SNF’s 45 days or less    

Patient discharge & readmission will count as one

discharge and receive one DRG payment if threshold is not met.

LTAC Top Ten DRG’s by Payment Categories

NormalTop 10 LTAC DRGs LTC DRG Payment

Short Stay Normal Plus Cost InterruptedLTC DRGs Description Cases Outlier % Payment % Outlier % Stay %

475 Respiratory system diagnosis with ventilator support 4,139 33.8% 49.3% 16.9% 4.4%462 Rehabilitation 1,158 36.2% 57.8% 6.0% 3.2%88 Chronic obstructive pulmonary disease 1,036 47.2% 49.1% 3.7% 2.7%271 Skin ulcers 1,006 39.9% 52.8% 7.3% 4.6%87 Pulmonary edema & respiratory failure 763 53.2% 42.3% 4.5% 4.4%89 Simple pneumonia & pleurisy age >17 w cc 731 48.3% 47.7% 4.0% 1.3%79 Respiratory infections & inflammations age >17 w cc 710 42.5% 52.5% 5.0% 2.2%416 Septicemia age >17 525 41.3% 52.8% 5.9% 2.8%127 Heart failure & shock 512 39.7% 56.3% 4.0% 1.2%430 Psychoses 479 75.0% 24.6% 0.4% 4.0%

Total 17,513 39.0% 51.7% 9.3% 3.6%

OIG Guidance

Reasons for patient encounter History and Physical Progress Notes Treatment Plan Referrals and consultations Patient Education Recommend follow up care Documented rationale for services Documentation supporting medical necessary Test Results Relevant health risk factors Referrals and consultations Prescriptions

Basic Rules for Improving

Documentation The physician documentation is the key

element that supports accurate coding and timely submission of claims

Attending physician is the ultimate determining authority

Provide complete, clear and specific clinical documentation

Document the rationale behind their treatment decisions

Physicians should provide complete documentation

Diagnostic Statements Impacting Coding

AccuracyDiseases and Disorders of the Respiratory System

Existing Documentation(Unable to Code)

Required Documentation(Acceptable to Code)

LUL infiltrate LUL pneumonia

Bronchitis (X-ray report with COPD) Asthma/bronchitis with COPD

ABG 7.22/68/44; will treat accordingly Respiratory failure, acidosis or alkalosis, etc.

Severe respiratory acidosis, respiratory distress; cyanosis, HR, labored respirations

Respiratory failure/acute respiratory failure, RDS

No overt CHF; will continue Lasix and Lanoxin Compensated CHF

Infiltrates on CXR, aspiration precautions; positive swallow study, speech therapy consult

Aspiration pneumonia

Sputum Gram stain with Gram-negative rods; antibiotics changed to Fortaz/Gentamycin

Suspected/probable Gram-negative pneumonia

Bronchoscopy with biopsy Bx of lung or transbrochial lung Bx

Common Procedures & Impact on DRG

Assignment

No Impact PICC Lines Biopsy EGD PEG Swan Ganz PEJ

Impact Excisional

Debridement Vent Cholecystectomy Amputation Tracheostomy

Diseases and Disorders of the Respiratory

System DRG 76/77 - Other Resp System O.R. Procedures w/ CC &

W/O CC DRG 79/80 - Respiratory Infections & Inflammations Age

>17 w/CC (W/O CC) DRG 87 - Pulmonary Edema & Respiratory Failure DRG 88 - Chronic Obstructive Pulmonary Disease DRG 89/90 - Simple Pneumonia & Pleurisy Age >17 w/CC

(W/O CC) DRG 475 - Respiratory System Diagnosis With Ventilator

Support Eliminated)

DRG Progression Timelines for DRG Assignment

On registration Within 3 business days of admission Concurrently Within 6 days of discharge

The goals Timely and accurate DRG assignment Discharge DRG assigned match the final DRG

submitted on the claim How

Quality Documentation Timely Communication Accurate Coding and DRG Assignment

Review of Relevant Literature

Commentary on an examination of winners and losers under Medicare's PPS Qualitative study of 13 matched hospitals. Winners equaled

Strength of Leadership Ability to respond quickly to market / cost-

saving opportunities Productive Physician / administration

relationships Strategies to improve efficiency

PPS Success

Multi-factored approach You play a KEY role

Input - Front Door Management Throughout - Patient Management Output - Back Door Management

Input - Front Door Management

Effect on Referral Sources

Post Acute Referral Continuum

Prior adoption to PPS

Last hope

Educate the referral sources

Input - Front Door Management

Patient Selection What Role do you play in Review of

Patients for admission? Role of Clinical Liaisons (ACM’s)

Knowledge base? Expertise Review their intakes / thoroughness Conflicting motivators

Prevent short stay admissions! Develop quality review / questionnaire

Throughout – Patient Management

Complete drill-down as to why patients are being transferred out

Front door issues? Patient Management issues?

Review clinical capabilities. Advance the skill set of clinicians.

Throughout – Patient Management

Patient care conferences Frequency Attendees Knowledge of staff regarding short-term / long-

term goals / management Operational Silo’s?

Coordination of Care “Theory vs. Practice” Report

Outcome focus Documentation

Throughout – Patient Management

Focus on what is preventable Benchmark reports Nosocomial Infections - Back door Management

VRE C-Diff Pneumonia’s BSI MRSA Nosocomial Wounds

Throughout – Patient Management

Control of Costs (within your domain) Labor

Skill Mix Agency Patient placement and effect on HPPD

Supplies Rental Costs

Throughout – Patient Management

Influence on Physician practice patterns They currently practice in PPS

environments? Admission orders Patient management pathways / Best

Clinical practices Level of awareness of interdisciplinary

recommendations / communication

Output – Backdoor Management

Patient family discharge process Up-front family conference

Discharge planning Discharge options Medicaid application Explanation of benefits Healthcare Proxy Guardianship

Summary

Your Role is key Communicate and educate

“What we know and where we are going?”

Constant evolving process Network Thank You...