PPS.

INTERVIEW WITH REG WARREN, PHD, VICE-PRESIDENT OF OUTCOMES RESEARCH, THE POLARIS GROUP

The Medicare Prospective Payment System (PPS) is doing the opposite of what Congress intended - that's the preliminary conclusion arising from a series of studies conducted by the New England-based consulting firm, The Polaris Group. Last fall, using a unique and extensive database of 100,000 Medicare rehabilitation cases dating back several yea rs and comparing pre- and post-PPS patients, Polaris Group researchers identified increasing lengths of stay, decreasing treatment hours and worsening outcomes under PPS. There was also an implication that, if treatment hours increased sufficiently to restore outcomes to pre-PPS levels, costs could escalate.

"PPS is a flawed system," concludes Polaris Outcomes Research Vice-President Reg Warren, PhD - a conclusion, he says, that has only been reinforced by more recent data covering an expanded number of PPS patients, all of whom had been carefully age-, diagnosis- and FIM-score-matched with a cohort of pre-PPS patients. Recently Nursing Homes/Long Term Care Management Editor Richard L. Peck asked Warren to comment on these findings and their implications for skilled nursing facilities.

Peck: Have the PPS trends that you identified last fall persisted or changed in any way?

Warren: We now have data on 1,300 PPS patients, compared with 500 last fall, and have found that length of stay has pretty much leveled off to pre-PPS cost-based levels, which I don't think will last. Patients are now being admitted later, in part because of the hospital transfer rule, but I think a large part of this also has to do with facilities' not realizing how length-of-stay can be manipulated in a perdiem reimbursement system. There also continues to be a certain amount of unreimbursed care and unreported care, both characteristic of an immature capitated market. As I said, I think much of this will change within the next several months, and then the question will be, will the added days improve therapy outcomes?

Peck: Would you elaborate?

Warren: The data are actually showing different effects for different diagnoses. For orthopedic rehabilitation, there has been a clear reduction in patients' functional gains. For stroke, the impact of PPS seems to have been neutral. For cardiopulmonary groups (which is a huge population), the loss of functional gain has been significant.

Peck: Wouldn't the clinical guidelines of the Minimum Data Set (MDS), which guides PPS reimbursement, serve to modify or control these reductions?

Warren: Not really. The problem is, there is no control over how people are trained or credentialed for appropriate use of the MDS. There is very little of what the research community calls "inter-rater reliability." To aggregate MDS scores and expect this to reflect actual outcomes can't be done under current circumstances. What really are needed are random chart audits compared with MDS scores to check for level of agreement.

Peck: What seems to be driving these quality reductions?

Warren: Rehabilitation patients were historically averaging 763 minutes a week of rehab therapy prior to PPS. Today, under the RUGs "ultra-high" category, a minimum of 720 minutes is required. Unfortunately, the operating incentive is to treat the patient in this or any other RUG category with a utilization total close to the minimum. Utilization, historically, was 30 to 40% higher than under the RUGs system. Thus, the fact that functional gains were reduced is not surprising - at least this shows that treatment was doing something. The question now is, what level of treatment is needed - I how many minutes, how many days - to produce the best outcomes? Just what is the "gold standard?" My position is, we ought to be getting patients back to the best functional levels possible, as we did under the cost-based system, when we treated them extensively. We probably don't need all of the utilization we had back then, but we need more than RUGs are now allowing.