Reimbursement: Surviving Prospective Payment as a

Recreational Therapist

Chapter 19HPR 453

Challenges of Healthcare Increasing challenges and pressures

regarding financing services CTRSs must be competent in financial

management and accountability of their treatment services

Demand for validation of tx effectiveness and efficiency is vital as healthcare $$ become more precious

Windows of Opportunity RT not included as a rehab service in the Social Security Act In 1990s the language the outdated language was simply

updated so access to RT was still limited DRGs in 1994 by American Rehabilitation Association and

1997 Balanced Budget Act prospective payment system (PPS) bundled services for more flexibility

Move from provider-based specific to outcome-driven bundling

Recognizes offering the most effective mix of tx based on medical judgment of client needs

Medical and rehab services must demonstrate effectiveness and efficiency to be viable under the changes

Identification and coding systems have created opportunities for RT

3-hr screening criteria (3-Hour Rule) Partial Hospitalization incremental billing Skilled Nursing (MDS 2.0 then 3.0) Rehab PPS

Measuring value of RT is solely on benefits delivered to patients

Must enhance value of services at reasonable cost

Labor, resources, technology are primary cost components of any service

Lower average salaries under a capitated reimbursement system are a marketing advantage

Durable and nondurable resources are nominal in cost

High-touch, low tech caring profession does not routinely rely on expensive technology for facilitating effective outcomes

Balanced Budget Act of 1997 Goal- Reduce the spending of healthcare $ Mandated reduced federal healthcare $ Tied payment rates to cost in

Skilled nursing Outpatient hospital Home health Comprehensive rehab Specifics on pgs 309-310

Overview of Prospective Payment Payment for med/rehab services at

predetermined price calculated prior to service delivery

Based on statistically determined price or historical costs Price-based system Rates are set in advance Price is inclusive of all services provided No additional payment or settlement will occur Current year’s actual costs do not impact price

established

PPS is based on 4 principles Cost containment – hospitals must closely

manage both revenue and costs Quality – safeguards include audits and

surveys are 2 methods Access – maintain access to medically

necessary healthcare services Beneficiary Centered – based on specific

resident needs based on resources used daily (RUGs)

Price-Based vs. Cost-Based Payment HC facilities no longer establish price for

services Now the buyer arbitrarily sets the price A more balanced system is needed for the

future PPS comes in 2 different designs

Per diem – skilled nursing – how much per day (day to day service cost)

Per episode – hospital and rehab – discharge, admission or diagnosis

Definitions Reimbursement – recovering the costs of

resources used Coverage – Identification and inclusion as

a tx service within terms of a managed care contract/plan

Prospective Payment – payment for tx services at a predetermined price calculated prior to delivery

Retrospective payment – cost is submitted after service delivery

Routine service – services required by all patients – predictable and manageable

Ancillary services – services specific to patient need – differ in scope, duration, and intensity for each patient

Evolution of Payment and Coverage Fee for service

Provider controls price – bartering for services in “old days”

Boom time for hospitals and healthcare Less frequent today – managed care has

replaced to cut costs Implications for RT

Manager must understand system to account for every $

Tx and services must show outcomes

Examples in RT can be found but vary across the country due to lack of knowledge, misinterpretations of guidelines or resistance to change

Discounted Fee for Service Negotiating price-setting process between

provider and payer Can be accomplished as identification of a

provider and assurance of increased business

Implications for RT Must have fee-for-service system in place RT has traditionally lower direct cost so can

maintain a reasonable net margin Using group procedures with reasonable

expectation of improving patient’s condition using a group design

Example – Aquatic Therapy for a school district # of pts, duration of tx, Frequency of tx, school

personnel assistance with pre and post-pool functions, presence of school personnel in pool

Per Diem Daily charge vs. charge per procedure Fee for service is ordering from menu…Per Diem is

eating the buffet Implications for RT

Increased emphasis on interdisciplinary team Coordination to avoid duplication of services Cost-effective mix of tx services Education for inclusion of RT as covered service is

critical for service manager Licensed skilled nursing settings are driven by Medicare

and Medicade per diem reimbursement

Capitated Per Diem Under per diem if you couldn’t charge more per day

then increase the days Capitated per diem maintains daily charge with limit on

number of days Implications for RT

Quicker results to move patient to next level of care are valued

RT examples Medicare partial hospitalization Long-Term care (100 skilled nursing facility days) If RT is employed in these 2 settings, cost assumed

under per diem amount

Prospective Payment of Care Predetermined amount of payment calculated

on historical or statistical costs First occurred with DPGs Expanded version of per diem (per day) to per

episode (acute care stay or comprehensive rehab discharge)

Classifies pts into groups for payment Implications for RT

Expanded access for RT because it is bundled care for rehab svcs – RT is a primary rehab svc

Examples of RT Payment Under FPP leadership of ATRA, the profession

has received special recognition as a qualified service to satisfy 3-hr rule in comprehensive rehab

RT in acute care setting also covered under PPS based on statistical cost for each DPG

Prospective Payment for Continuum of Care Next generation of payment – delivered under a larger

system or network – Cradle to Grave services Assuring svcs through a continuum

PPS Application and Recreational Therapy Across the Spectrum of Care Acute Care Hospital Inpatient – per episode DPG

payment Inpatient Rehb Facilities (IRF) – per episode

payment in case-mix groups made on per discharge basis

Partial Hospitalization – RT is one of several “Activity Therapy” svcs – per diem basis

Outpatient – RT not covered for outpt Medicare at this time based on outdated Soc Sec language

SNFs – RT covered under Medicare Part A – per diem PPS – must be medically necessary and appropriate

Strategies for Success 6 strategies for recognition and coverage

Assure Active Tx – 1.)individualized plan of Tx or diagnosis 2.)reasonable expectation to improve condition 3.)be for diagnostic purposes 4.)supervised periodically 5.)evaluated by a physician

Specific Physician Orders – Key indicator of medical necessity – scope, intensity and duration

Clear distinction between RT and Activities – RT in addition to mandated activity services in LTC – Some RTs provide both but must be distinct regarding the difference

Cost Analysis and Accountability – be knowledgeable about cost and revenue – from annual to 15-min or every minute

Staffing and productivity – personnel costs are primary expense – ratio of staff hours to tx volume – can vary based on organization mission, patient acuity, and complexity

Compliance with Regulatory Mandates – CMS, JC, CARF – Mgr must be aware of applicable state or local health regulations