Deja vu: when it comes to prospective payment, home health agencies can learn from the experiences of acute care hospitals with DRGs - Home Healthcare - Diagnostic Related Groups

Health Management Technology, Oct, 2002 by Patricia B. Dray

Almost 20 years ago, the Centers for Medicare and Medicaid Services (CMS) implemented a prospective payment system (PPS) based on Diagnostic Related Groups (DRGs) as the payment system for Medicare patients in acute care U.S. hospitals. This represented a drastic departure from the profitable fee-for-service system under which hospitals previously were reimbursed. Two decades later, home health agencies now struggle with the new world of prospective payment reimbursement.

Under DRGs, many hospitals--especially small, rural hospitals--suffered financially and closed their doors. Others found ways to improve their financial stability and continue their mission. As they re-engineered internal processes, these hospitals discovered that their current information systems were ill-equipped to support a prospective payment system implementation and invested in a variety of IT products for managing inpatient services. This investment has proven successful, as profit margins for inpatient services generally have been greater after DRGs than before.

By looking back at the changes acute care hospitals made to contend with DRGs, it is possible to identify key success factors and IT tools that may be applicable to home health agencies now being reimbursed based on Home Health Resource Groups (HHRGs) since the October 2000 launch of home health prospective payment.

Concurrent Review

Hospitals that were successful under DRGs quickly moved to concurrent review of the medical record. By implementing a concurrent review process, the acute care facility could assign DRGs early in the admission and begin to recognize "high cost" patients early in the stay.

Concurrent review produced a number of important benefits. Hospitals were able to improve cash flow by billing soon after discharge. More accurate data often led to the assignment of a higher paying DRG, thereby improving revenue. Finally, concurrent review made it possible to identify and eliminate barriers to cost effective, high quality care while the patient was still in the hospital.

What would moving to concurrent review mean in the home health setting? Concurrent review would require implementation of real-time editing of the OASIS assessment, assignment of the HIPPS codes upon admission, and the use of this information throughout the current home care episode. To establish true concurrent review, the home health agency would need to consider implementation of an electronic patient record, so data captured in the home can be edited online and corrected while still at the point of core.

Agencies should look for a variety of features and functions when evaluating electronic patient record systems for the home care environment.

"Smart edits" of the OASIS data on the field device. Edits should be available to the clinician at the point of care, making it possible to identify conflicts between primary and secondary diagnoses, between the diagnoses and OASIS questions, and between OASIS questions. This will improve both data integrity and clinician productivity.

Integration of clinical and financial information. Clinical documentation determines reimbursement, since the clinical assessment data (OASIS) generates the HHRG. A single database that collects and integrates both types of data will allow more accurate and timely reporting, and a better understanding of patient populations.

Usability. The field device must be easy to use and readily accepted by the clinician, but at the same time sophisticated enough to support customized documentation to accurately reflect clinical findings. Systems must support both "point and click" and free text, while devices must be small enough for clinicians to carry.

As devices (i.e., laptops and notebooks) become smaller and less costly, the ability to use existing technology to support concurrent HHRG assignment and utilization management becomes a reality. Yet the appeal of a handheld must be balanced with the greater functionality of a laptop. Will the smaller device offer the detail in clinical assessment required to accurately describe a patient, and will it support emerging technologies such as digital imaging?

Automation Benefits

Completing real-time auditing of OASIS data during the assessment process means that the Request for Anticipated Payment, or RAP, can be submitted to Medicare on the day of admission. Moving to a daily billing cycle, especially in agencies with high volumes of Medicare patients, will reduce days with bills outstanding and deliver revenue more quickly after costs are incurred.

Concurrent review of data during the episode of care also allows the agency to develop a proactive approach to patient management. If an agency can identify the most resource-intensive patients/HHRGs upon admission, it can implement discharge planning and case management at the same time. By using software tools to assign the HHRG upon assessment and to compare the expected payment to the ordered services and supplies, agencies can develop prospective win/loss reports and implement utilization management strategies for high cost patients early in the episode.