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PPS's $1,500 cap: hope for the best...plan for the worst.

Interview with Larry P. Fronheiser, PT, President, National Association of Rehabilitation Agencies

Not the least among the laundry list of changes providers of skilled nursing care face in coming months, directly affecting their post-acute care delivery of services and bottom line, is the $1,500 per year cap on payments for Medicare Part B services and supplies for a patient receiving rehabilitation therapy. Not surprisingly, a coalition of provider groups is preparing to press Congress for its repeal, with uncertain result as of press time (early March). Besides viewing the cap with alarm, Larry Fronheiser, PT, president of both the National Association of Rehabilitation Agencies (NARA) and of the private practice section of the American Physical Therapy Association (APTA), offered suggestions for coping with this restrictive - potentially over-restrictive? - measure, in an interview with Nursing Homes Associate Editor Linda Zinn.

Let's say that the law mandating the Medicare Part B cap for rehabilitative services is not repealed. What are some of the implications, in terms of delivery of service, that long-term care facilities should be bracing themselves for?

Fronheiser: Generally speaking, SNFs first need to assess exactly what impact prospective payments will have on their facility because the Prospective Payment System (PPS) primarily deals with Part A patients. If, for example, a large facility has a small Part A population, you could make a case that the prospective payment won't be of great concern. Or, for a SNF with a high-acuity population of residents who stay on Part A for most of their time in the facility, the Part B cap isn't too problematic - most of their patients will have received most of their therapy by the time they move from the PPS/Part A situation on to Part B. But if most of a facility's residents require Part B services, the cap becomes singularly important in terms of its effect on therapy delivery.

Aside from the implications of these various case-mix scenarios, what do you foresee the magnitude of the impact of the Part B cap to be for SNFs?

Fronheiser: The main thrust of the problem involves the number of episodes requiring therapy that any given Medicare patient is likely to experience in a year. I don't believe we have sufficient information to predict that. Furthermore, additional data are needed to determine what percentage of Medicare recipients will need therapy services costing in excess of the $1,500 cap.

What makes this hard to predict is patients with multiple episodes in a year. A facility could have a patient, for example, who undergoes total knee replacement in January, has an arthritic flare-up in April breaks a wrist in the summer and suffers a stroke in November. Each of these events might require at least one type of outpatient therapy - PT, OT or ST. Compiling data representative of such patients into a database for the purpose of making projections is extremely difficult. How can anyone predict how many injuries or illnesses even one patient might experience in a year, much less how many of these episodes will occur across the entire Medicare population?

The consensus among many therapy providers is that for a single episode, the cap won't be a problem, because the average cost per patient of therapy per episode is well below the cap. In the company I'm associated with, the average cost of a Medicare therapy episode is about $800; that being the case, the patient could conceivably even have a second episode within a year and not reach the cap. Residents of SNFs, however, by definition, usually have more than one problem, making predictions about the impact of the $1,500 limit difficult. The bottom line is that no one historically tracked the average number of incidents per patient over the years because no one foresaw that we would be facing this cap today.

How difficult will it be to determine whether Medicare beneficiaries have reached their Part B cap for the year, especially when they first arrive at a SNF?

Fronheiser: This is a significant problem. Consider this possibility: A hospital calls your facility to refer a patient and it's November. That patient needs OT and perhaps some speech therapy. Let's just say this patient isn't even a Medicare Part A beneficiary; he simply wants to come to your facility because he's heard you provide good therapy. What are the options for your social worker or admissions clerk? Will he or she have to ask, "Did you have any other therapy this year?" You're immediately in an adversarial relationship with the patients you're trying to serve, who have chosen your facility, because you're asking numerous questions about whether they had therapy, who paid for it, were they on Medicare Part A or B, were they in another nursing home or at an outpatient clinic, etc.

HCFA clearly admits that there is no easy way to find out this information. There's no Medicare database and no number to dial to find out someone's status in the $1,500 scheme of things at that point in time; so what some facilities will do is simply provide the treatment and submit the bill. If the patient is over the cap, the facility loses. Or some facilities might just decide not to treat patients whose part B status is unclear. That involves both ethical and business questions, and it will be up to each facility to determine its policy.

What about residents known to have reached their $1,500 cap? What options will there be if they require further therapy services?

Fronheiser. It's possible that some SNFs will enter into a relationship with a hospital outpatient clinic in the area and send that patient there for therapy once the cap is exceeded. I'm sure, in fact, that some hospitals will aggressively market such arrangements to SNFs. Some facilities already have established relationships with hospital outpatient clinics, but some have none nearby. What will they do? I don't know.

Here's a hypothetical question: A 75-year-old man suffers a stroke and is transferred from a hospital to a $NF and is no longer eligible for nor requires Part A services. It is determined that he has already exceeded his yearly Medicare Part B cap. Where will the money come from for his therapy, if there are no alternatives such as the one you've just described?

Fronheiser: The question has arisen as to whether providers may bill patients directly for services received after the cap has been reached. The answer to that question is yet not found in any regulation; however, I was present at a meeting at HCFA late last year in which it was asked. We were told, verbally, by HCFA that it is their interpretation that when a patient is over the cap and the treatment is ongoing, it can be categorized as a "non-covered service" and in such cases the provider clearly has the option to bill the patient - as long as he or she has been provided adequate notice.

That leads to another question. Will you notify the patient up front, at the time of admission, that "outpatient physical or speech or occupational therapy is limited to $1,500, and if you exceed that, we're going to bill you for it," and then provide the patient with a rate sheet? Because it's not Medicare's domain after the cap is reached; it's between the facility and the patient or the patient's family. If the patient can't pay, you're back to the ethical question of whether you will provide therapy.

We've looked at how the Medicare Part B cap will affect SNFs. What impact will it have on providers who contract with them to provide therapy to their residents?

Fronheiser: If a contractor in a facility is being paid on an hourly fee-for-service basis - that contractor's therapist is treating X number of patients in an hour - then in theory, the cap would mean nothing; nor would it matter to the contractor if the patients being treated were private-pay, covered under managed care, on Medicare or whatever. The contractor expects to be paid for delivering the service for that hour, regardless. However, contractors would want to keep their customers happy, so outcomes would really come into play. The contractor would want to help the patient achieve a good outcome in order to keep that patient under the cap.

Of course if a patient needs three or four sessions to become better, the contractor should only see that patient for three or four visits, not eight or nine. So there is a natural partnership that develops between the rehab contracting provider and the SNF's nursing department in making sure the patient is getting what he or she needs, but in such a way that the SNF is assured of appropriate outcomes. That's good practice in any case, but it's enhanced by the fact that there's an incentive to keep patients from reaching the Medicare cap whenever possible.

If the law is not repealed, what can long-term care providers do to "soften its blow" once they've assessed the overall impact the $1,500 cap will most likely have on their facilities?

Fronheiser: First and foremost, they should plan for the cap to remain in place. I've heard many administrators who - because they've heard or read rumors and speculation - are convinced the law will be reversed before the cap goes into effect. My recommendation to our members is always, "Don't plan on this to change. Plan on the implementation." If the law changes, that would be nice, but some administrators seem to be banking on its reversal. I wouldn't count on it. (see "The Repeal Campaign" below)

Having said that, there are some steps facilities should be taking. First, they should meet with their rehab provider - whether that's an in-house employee or an outsourcing contractor - and make sure everyone understands the rules. Communication is vitally important. They should also negotiate or renegotiate contracts with their therapy providers - contracts that take the Medicare Part B cap into account.

I think it is also important that SNF administrators become more actively involved in understanding the delivery of therapy and become keenly aware of what outcomes are reasonable to expect. They must begin to consider what kind of requests they are making of their therapy staff - whether in-house or contracted - with regard to non-treatment time. There are still a tremendous number of demands placed on therapists in skilled facilities that don't necessarily relate to direct patient care, such as paperwork, attendance of meetings, program orientation sessions, etc. Their time for those activities will not be able to be recouped by the SNF under PPS, so a happy medium will have to be reached between the administration of the facility and the therapy providers as to where their time is best spent. The efficiencies of scale would tell you that it's best spent treating patients and getting them well as fast as possible. The days of volume, volume, volume - treat as many patients as you possibly can because you're on a cost-based system and you'll get more - are over.

The Repeal Campaign

Though it was just beginning to gear up at the time Larry Fronheiser offered his comments for this interview, there was a remote possibility that the campaign to repeal the $1,500 cap would have gained significant ground by this issue's April publication time. To provide some idea of how the organizers sized up the effort and its prospects, though, Associate Editor Linda Zinn asked Fronheiser to outline the strategies and obstacles involved.

Is NARA continuing its efforts to convince legislators that the $1,500 Medicare Part B cap might have been a big, and potentially costly, mistake?

Fronheiser: Yes, NARA, along with several other professional care-related associations, is participating in a broad-based coalition that was formed with the objective of getting the $1,500 cap repealed. The legislative strategies being formulated are a result of the combined efforts of all the various lobbyists and legislative counsels. These efforts are working reasonably well, and this is certainly the highest priority of all the associations involved in this coalition.

How would you characterize lawmakers' response to these efforts?

Fronheiser: The responses that individual association members have been getting from individual members of Congress, when they've contacted them as constituents, have been relatively sympathetic to the problem. I don't think, however, that the level of contact has reached the point where one could say that Congress in general, or even a certain percentage, would vote for the cap's repeal. That would be premature.

Despite the absence of a clear consensus among legislators one way or another on this issue, do you think repeal is remotely possible?

Fronheiser: I think we have a shot, but there are so many obstacles in the way - political, demographic and monetary - that it's probably a long shot. The number one obstacle is that Congress isn't terribly interested in revisiting the whole Medicare issue less than a year after they passed the BBA.

In order to prompt Congress to change this law, we really need to have some sort of plan or alternative to suggest. If Congress eliminates the cap, that will cost money. Where will that money be derived from? We as a group aren't clear yet on the best options. We're still in the study and data-collection phase. We're working diligently to formulate alternatives and to make sure our members can live with whatever suggestions the coalition comes up with.

Can you project when those data might be compiled?

Fronheiser: Some data have been generated, but they are extremely difficult to obtain regarding the implications of the $1,500 cap. One reason for this difficulty is that the fee schedule, which will be in effect for skilled nursing facilities July 1, 1998, and rehab agencies as of Jan. 1, 1999, has not yet been released. If we knew that it would be the same as the existing Medicare fee schedule, our task would be easier, but the regulations have not yet been written. Therefore, it's very hard for us to propose a plan.

We simply can't formulate a plan without having all the pieces needed to put the puzzle together, even though we know what we want the picture to look like in the end.

The fee schedule is supposed to be issued in May, but the Health Care Financing Administration (HCFA) has a ton of regulations to issue. They may or may not be on time, so every day brings on a new set of discussions and questions that remain unanswered because of the lack of regulations.

Larry P. Fronheiser, PT, is president of the National Association of Rehabilitation Agencies and president of the private practice section of the American Physical Therapy Association. For more information about NARA, phone (703) 437-4377.
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Title Annotation:prospective payment system; interview with National Assn of Rehabilitation Agencies Pres Larry P. Fronheiser
Author:Zinn, Linda
Publication:Nursing Homes
Article Type:Interview
Date:Apr 1, 1998
Previous Article:An update on Medicare consolidated billing.
Next Article:Compliance restores trust.

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