Off The Chart

The 1997 act requires the use of a perspective payment system

by Jan L. Zacny, R.N.

For individuals 65 years old or older and people with permanent disabilities, Medicare is usually the primary insurance carrier for their health care needs.

With Medicare costs continuing to escalate, President Clinton signed the Balanced Budget Act of 1997 in August 1997 to reduce federal Medicare spending. Health care providers affected by the BBA include hospitals, home health agencies, rehabilitation agencies, subacute units and skilled nursing facilities.

Prospective payment system.

The Balance Budget Act's most dramatic change affects how health care providers are reimbursed for Medicare Part A (hospital insurance) and Part B (supplementary medical insurance) services for beneficiaries.

Skilled nursing facilities currently are changing to a prospective payment system (PPS) that the budget agreement established for Part A services. Ultimately, Part B services will be paid on a fee-screen basis, and no longer will be reimbursed on a cost basis.

Changes for skilled nursing facilities.

Skilled nursing personnel must now complete an in-depth clinical assessment of the medical problems of each patient by using an assessment tool minimum data set (MDS) developed to assign the patient into a Medicare reimbursement category.

Throughout the nation, Medicare skilled nursing facilities and skilled nursing units in hospitals will be required to computerize and electronically transmit the MDS assessment to their respective state office. In turn, the state will be required to transmit this information to the Health Care Financing Administration, which oversees Medicare.

Based on the nursing assessment, the Medicare beneficiary will be classified into one of 44 case-mix groups contained within the resource utilization groups PPS. Each of these groups has a different PPS payment level. The highest reimbursement rates are associated with the patients requiring the greatest amount of skilled nursing staff time and the most intensive rehabilitation services. Accurate and timely collection of the information by skilled nursing facility personnel will be imperative for proper payment.

Under the previous reimbursement system, outside providers billed Medicare Part B the extra costs of providing certain ancillary services such as laboratory, radiology and ambulance trips. Under PPS, a classification group is assigned to each Medicare beneficiary at each level of care that they receive in a skilled nursing facility. This then will establish a Part A reimbursement rate all-inclusive of the above-mentioned services.

The reimbursement changes will require skilled nursing facilities and subacute units to develop different strategies for providing nursing and therapy services, including physical, occupational, speech and respiratory therapy. Radiology and laboratory testing services also will be included. This system will require professional nursing staff to provide more of the bedside services provided previously by professional therapists.

Skilled nursing facility administrators and staff are actively educating themselves on the changes that will take place when their facilities enter the new payment system.

The success of all health care providers will depend on a partnering relationship within the continuum of health care services in their respective service areas. Clinical and rehabilitative staff are preparing to manage the care of Medicare beneficiaries to ensure care is delivered in the most efficient and least costly manner without affecting the quality of patient care.

Medicare PPS represents the greatest change in the method of payment to skilled nursing facilities since Medicare and Medicaid began paying for skilled nursing services.

The impact of this reimbursement system will affect skilled nursing facilities, hospital-based skilled nursing units and subacute care units as much as the diagnoses-related group reimbursement program affected hospitals in 1983.

(Jan Zacny is an R.N. and senior consultant with the Springfield office of Baird, Kurtz & Dobson, certified public accountants.)

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The reimbursement changes will require skilled nursing facilities and subacute units to develop different strategies for providing nursing and therapy services.[[In-content Ad]]