The Science Journal of the American Association for Respiratory Care

1998 OPEN FORUM Abstracts

Subacute Care Documentation Under the New Prospective Payment System

Patrick J. Dunne, MEd, RRT

With a stroke of the presidential pen, Bill Clinton has unleashed the most sweeping structural and payment changes in Medicare since the implementation of DRGs in 1983. Beginning in July, 1998, and for the next three years, certain provisions of the Balanced Budget Act (BBA) of 1997 will introduce a prospective payment system for skilled nursing facilities, which will be a radical departure from the traditional, fee-for-service payment methodology previously in use under Medicare. The financial impact of this transformation on skilled nursing facilities in general will be nothing short of profound, while the impact on the delivery of respiratory care services to SNF residents remains clouded at best. To be sure, it will not be business as usual, and those who fail to grasp the enormity of the new changes are certain to become causalities, most likely sooner than later.

Prior to passage of the BBA, care provided to Medicare beneficiaries in a skilled nursing facility was reimbursed under three separate payment Methods: capital, routine and ancillary care. Capital was paid at 100% of allowable cost, while routine care was reimbursed under a routine cost limits, or a per-diem based on regional averages. Ancillary services were paid at reasonable costs without limits. However, capital, routine and ancillary care are now combined into one federal per-diem payment, which is being phased in over a three year period. The federal per-diem is based on a payment rate (base rate) that is adjusted by a case mix index when residents are categorized into a Resource Utilization Group, or RUGs III classification. The classification scheme is driven by a minimum data set (MDS), a trans-disciplinary assessment of a resident's condition and needs, (since early 1990, HCFA has mandated that an MDS be completed on all SNF residents). In essence, it is HCFA's intent to use this RUGs/MDS scheme to base a skilled nursing facility's reimbursement on anticipated resource utilization for a particular resident, not on a flat per diem based on a particular illness or prior cost reports filed by the facility.

The challenges facing respiratory therapists under this new mechanism are formidable. Because RUGs is currently more oriented toward rehabilitation, services for medically complex residents such as those requiring ventilator care or other high-tech respiratory care are not properly taken into account. Thus, there will be the need for innovative strategies to address these and other inadequacies if we are to ensure the continued access to and availability of high quality, cost -- effective respiratory care in skilled nursing facilities.

The 44th International Respiratory Congress Abstracts-On-DiskĀ®, November 7 - 10, 1998, Atlanta, Georgia.

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