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Written by: Darlene D'Altorio-Jones (1959-2015) on Friday, December 30, 2011 Posted in: Inpatient Rehab

Medicare has various ways to pay for services with more and more levels of care being paid on a Prospective Payment System methodology or PPS. Beware however, PPS systems are not all alike. Inpatient (IPPS) acute care is paid by DRG as are long term care hospital settings. Other payments are paid based on a tool and variations of methods such as skilled (MDS 3.0), inpatient rehab (IRF-PAI) and home health (Haven OASIS). Tool methodologies provide an episode of care payment versus fee for service rates rates. Tools are based on the resources for a set payment period. Inpatient rehab includes an entire stay of an episode whereas skilled and home health are time based within an full episode.

It is very confusing to review a daily rate and predispose a correlation or that one is less expensive than another without reviewing a full episode of care in each venue and its outcomes. What is the cost-based on the start and finish of that level of care? When doing so, it’s easier to determine one factor of comparison (cost of care). To determine what level of care is most appropriate for the patient, generally speaking, how long will it take to meet the expected outcome should also be considered. If you hear a blanket statement that skilled is less expensive than inpatient rehabilitation or an IRF level of care, you must consider the cost of the episode of care and its outcomes. For Medicare, the payment is an all-inclusive episode of care payment rather than a daily paid rate for IRF. A nursing homes daily rate and length of time to complete a care plan must be considered before one can truly determine which level costs more. A full episode of care paid by a daily rate dependent on the resource utilization group (RUG), may out cost an IRF stay.

The other factor that must be reviewed is the cost of the outcomes achieved. What is the better value? One might defend a slightly higher cost if the outcomes are more desirable for the long term.

Don’t be complacent; if you hear comments that may not align with reality, take the opportunity to educate. Value is the next great expectation in health care and blanket statements of one level being more cost-effective over others specifically by third party payers requires education. Education only we can provide. Take note that in the 2012 Skilled regulations, page 14 of 77 (first column), CMS took the time to dispel a blanket statement myth on which level is more costly?

CMS stated,

”We do, however, intend to conduct additional research to update these findings with more recent data. Any changes in utilization patters, length of stay, and/or care outcomes will be addressed during future rule-making.”

Currently there are up to $1 billion that will be rewarded through a Health Care Innovation Challenge to test creative ways to deliver high quality medical care and save money. How creative can you be in demonstrating value and worth? Future rule-making must be guided by outcomes driven with data.

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