Reimbursement surviving prospective payment as a recreational therapist
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Reimbursement: Surviving Prospective Payment as a Recreational Therapist. Chapter 19 HPR 453. Challenges of Healthcare. Increasing challenges and pressures regarding financing services CTRSs must be competent in financial management and accountability of their treatment services

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Reimbursement: Surviving Prospective Payment as a Recreational Therapist

Chapter 19

HPR 453

Challenges of Healthcare

  • Increasing challenges and pressures regarding financing services

  • CTRSs must be competent in financial management and accountability of their treatment services

  • Demand for validation of tx effectiveness and efficiency is vital as healthcare $$ become more precious

Windows of Opportunity

  • RT not included as a rehab service in the Social Security Act

  • In 1990s the language the outdated language was simply updated so access to RT was still limited

  • DRGs in 1994 by American Rehabilitation Association and 1997 Balanced Budget Act prospective payment system (PPS) bundled services for more flexibility

  • Move from provider-based specific to outcome-driven bundling

  • Recognizes offering the most effective mix of tx based on medical judgment of client needs

  • Medical and rehab services must demonstrate effectiveness and efficiency to be viable under the changes

  • Identification and coding systems have created opportunities for RT

  • 3-hr screening criteria (3-Hour Rule)

  • Partial Hospitalization incremental billing

  • Skilled Nursing (MDS 2.0 then 3.0)

  • Rehab PPS

  • Measuring value of RT is solely on benefits delivered to patients

  • Must enhance value of services at reasonable cost

  • Labor, resources, technology are primary cost components of any service

  • Lower average salaries under a capitated reimbursement system are a marketing advantage

  • Durable and nondurable resources are nominal in cost

  • High-touch, low tech caring profession does not routinely rely on expensive technology for facilitating effective outcomes

Balanced Budget Act of 1997

  • Goal- Reduce the spending of healthcare $

  • Mandated reduced federal healthcare $

  • Tied payment rates to cost in

    • Skilled nursing

    • Outpatient hospital

    • Home health

    • Comprehensive rehab

    • Specifics on pgs 309-310

Overview of Prospective Payment

  • Payment for med/rehab services at predetermined price calculated prior to service delivery

  • Based on statistically determined price or historical costs

    • Price-based system

    • Rates are set in advance

    • Price is inclusive of all services provided

    • No additional payment or settlement will occur

    • Current year’s actual costs do not impact price established

  • PPS is based on 4 principles

    • Cost containment – hospitals must closely manage both revenue and costs

    • Quality – safeguards include audits and surveys are 2 methods

    • Access – maintain access to medically necessary healthcare services

    • Beneficiary Centered – based on specific resident needs based on resources used daily (RUGs)

Price-Based vs. Cost-Based Payment

  • HC facilities no longer establish price for services

  • Now the buyer arbitrarily sets the price

  • A more balanced system is needed for the future

  • PPS comes in 2 different designs

    • Per diem – skilled nursing – how much per day (day to day service cost)

    • Per episode – hospital and rehab – discharge, admission or diagnosis


  • Reimbursement – recovering the costs of resources used

  • Coverage – Identification and inclusion as a tx service within terms of a managed care contract/plan

  • Prospective Payment – payment for tx services at a predetermined price calculated prior to delivery

  • Retrospective payment – cost is submitted after service delivery

  • Routine service – services required by all patients – predictable and manageable

  • Ancillary services – services specific to patient need – differ in scope, duration, and intensity for each patient

Evolution of Payment and Coverage

  • Fee for service

    • Provider controls price – bartering for services in “old days”

    • Boom time for hospitals and healthcare

    • Less frequent today – managed care has replaced to cut costs

  • Implications for RT

    • Manager must understand system to account for every $

    • Tx and services must show outcomes

  • Examples in RT can be found but vary across the country due to lack of knowledge, misinterpretations of guidelines or resistance to change

  • Discounted Fee for Service

    • Negotiating price-setting process between provider and payer

    • Can be accomplished as identification of a provider and assurance of increased business

  • Implications for RT

    • Must have fee-for-service system in place

    • RT has traditionally lower direct cost so can maintain a reasonable net margin

    • Using group procedures with reasonable expectation of improving patient’s condition using a group design

    • Example – Aquatic Therapy for a school district

      • # of pts, duration of tx, Frequency of tx, school personnel assistance with pre and post-pool functions, presence of school personnel in pool

  • Per Diem

    • Daily charge vs. charge per procedure

    • Fee for service is ordering from menu…Per Diem is eating the buffet

  • Implications for RT

    • Increased emphasis on interdisciplinary team

    • Coordination to avoid duplication of services

    • Cost-effective mix of tx services

    • Education for inclusion of RT as covered service is critical for service manager

    • Licensed skilled nursing settings are driven by Medicare and Medicade per diem reimbursement

  • Capitated Per Diem

    • Under per diem if you couldn’t charge more per day then increase the days

    • Capitated per diem maintains daily charge with limit on number of days

  • Implications for RT

    • Quicker results to move patient to next level of care are valued

  • RT examples

    • Medicare partial hospitalization

    • Long-Term care (100 skilled nursing facility days)

    • If RT is employed in these 2 settings, cost assumed under per diem amount

  • Prospective Payment of Care

    • Predetermined amount of payment calculated on historical or statistical costs

    • First occurred with DPGs

    • Expanded version of per diem (per day) to per episode (acute care stay or comprehensive rehab discharge)

    • Classifies pts into groups for payment

  • Implications for RT

    • Expanded access for RT because it is bundled care for rehab svcs – RT is a primary rehab svc

  • Examples of RT Payment

    • Under FPP leadership of ATRA, the profession has received special recognition as a qualified service to satisfy 3-hr rule in comprehensive rehab

    • RT in acute care setting also covered under PPS based on statistical cost for each DPG

  • Prospective Payment for Continuum of Care

    • Next generation of payment – delivered under a larger system or network – Cradle to Grave services

    • Assuring svcs through a continuum

PPS Application and Recreational Therapy Across the Spectrum of Care

  • Acute Care Hospital Inpatient – per episode DPG payment

  • Inpatient Rehb Facilities (IRF) – per episode payment in case-mix groups made on per discharge basis

  • Partial Hospitalization – RT is one of several “Activity Therapy” svcs – per diem basis

  • Outpatient – RT not covered for outpt Medicare at this time based on outdated Soc Sec language

  • SNFs – RT covered under Medicare Part A – per diem PPS – must be medically necessary and appropriate

Strategies for Success

  • 6 strategies for recognition and coverage

    • Assure Active Tx – 1.)individualized plan of Tx or diagnosis 2.)reasonable expectation to improve condition 3.)be for diagnostic purposes 4.)supervised periodically 5.)evaluated by a physician

    • Specific Physician Orders – Key indicator of medical necessity – scope, intensity and duration

    • Clear distinction between RT and Activities – RT in addition to mandated activity services in LTC – Some RTs provide both but must be distinct regarding the difference

    • Cost Analysis and Accountability – be knowledgeable about cost and revenue – from annual to 15-min or every minute

  • Staffing and productivity – personnel costs are primary expense – ratio of staff hours to tx volume – can vary based on organization mission, patient acuity, and complexity

  • Compliance with Regulatory Mandates – CMS, JC, CARF – Mgr must be aware of applicable state or local health regulations

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