Medical Day Programs: Remedy for an Ailing Bottom Line

For post acute providers feeling the impact of the severe cuts in The Balanced Budget Act of 1997, the medical day program promises a welcome relief to the bottom line. Offering a new venue of care, it targets the moderate to higher risk acute care patients who have "fallen through the cracks" caused by Medicare cuts.

These patients, who have become unprofitable at the home health and subacute/skilled care level, typically have respiratory/pulmonary conditions, post-surgical needs, neurological conditions (strokes, neuropathies, MS, etc.) and other medical rehabilitation needs. Good nursing management is critical to medical stabilization, or patients will either reenter the system sicker, or never achieve their optional functional levels.

Medical day programs can ensure that such patients reach and maintain a reasonable functional outcome post discharge. At the same time, if properly implemented, the program presents providers, payors, and physicians with the following benefits:

• Reimbursement for nursing and respiratory therapy in an outpatient setting. This is the only venue whereby Medicare reimburses for nursing services and those services will not be subject to a cap.
• Infusion of $1 to $3 million in new revenue for the organization. In addition to fees, the program provides cost-based reimbursement for durable medical equipment, biologicals, home supplies, etc.
• An additional service line to home health, which can improve the financial status of faltering home health programs.
• Reduction of readmit rate for acute care; thereby increasing profitability overall. The program particularly assists with readmits that have a relatively short average length of stay the second time around.
• Accommodation of a broad array of medical and surgical conditions. Because coverage is not diagnosis specific, patients can qualify for the medical day program, regardless of condition, if they can show functional gain throughout the course of the program and are able to use at least one rehabilitation modality.
• A value-added adjunct to primary care physician services and senior programs. The program allows for effective flow and management of seniors cross the continuum of care.
• An attractive option for managed care organizations. Per diems in a medical day program run approximately 33% less than that of skilled care, making the site viable as an alternative to skilled or extensive home care.

REIMBURSEMENT

Medicare reimbursement under the Balanced Budget Act makes medical day programs attractive for targeted seniors. The optimal structure is the comprehensive outpatient rehabilitation facility (CORF). This distinct designation allows for reimbursement of the two key elements in the program - nursing and respiratory therapy. While many of the services of the medical day program could be reimbursed by Medicare on a traditional outpatient basis under the physician fee schedule, the CORF certification allows for direct billing of nursing services under cost-based reimbursement (specific fee schedule amounts are still under tabulation).

Reimbursed nursing services are those that may only be performed safely and/or effectively under the supervision of licensed nurses. Examples include the administration of IV feedings and IM injections; the insertion of catheters, applications of dressings and treatment of decubitus ulcers with prescription medication and aseptic techniques, and early postoperative colostomy care. Reimbursement is also provided for the teaching and training of these activities which result in the patient managing his/her own treatment regimen. In addition, reimbursement for respiratory therapy services is specifically included in CORF reimbursement under the physician fee schedule.

The following services are specifically covered (as per the CORF Manual and Medicare Intermediary Manual, Part 3):

• Physicians' services related to administrative functions (physicians can also treat on-site and bill their own provider number).
• Physical therapy, occupational therapy, speech pathology services, and respiratory therapy;
• Social and psychological services
• Nursing care provided by or under the supervision of a registered professional nurse
• Prosthetic and orthotic devices, including testing, fitting, or training in the use of such devises
• Drugs and biologicals which cannot be self-administered
• Supplies, appliances, and equipment, including the purchase or rental of DME
• A single home visit to evaluate the potential impact of the home environment on the rehabilitation goals

KEY REGULATORY ISSUES

The breadth of services available allows for comprehensive programming for a targeted population. In developing the CORF guidelines, Medicare recognized the need to provide for "diagnostic, therapeutic and restorative services to outpatients for the rehabilitation of injured, disable or sick persons, at a single fixed location, by or under the supervision of a physician." (42 CFR 485.52). In order for medical day programs to:

• Licensing. If the state or local law provides for licensing, the facility must first comply with these requirements (including certificate of need, if necessary), in addition to appropriate licensing of professional personnel.
• Governance/Administration. The facility must have a governing body that is responsible for the facility (if provider-based, it can be the same governing body). Also required are an administrator for the facility and a group of professional personnel that develops and revises the policies and procedures. This group consists of at least one physician and one professional from each discipline offered at the facility.
• Policies and Procedures. Written care policies that govern the services furnished must be developed, including utilization review and infection control.
• Budget. an operating budget and three-year capital expenditure plan (if expenditures are in excess of $100,000 over that period) must be prepared by a committee, and approved by the governing body.
• Services. The facility must have available, at a minimum, physician services, physical therapy, and social or psychological services, although every patient my not receive all services.
• Admissions. All patients accepted to the program must be under the care of a physician (referral), and a plan of treatment must be established for each patient, either by the referring physician, or the program medical director.
• Space. While there are no minimum square footage requirements for the program, space and equipment used by the CORF/MDP cannot be used by other programs during the hours of operation. Typically needed is a minimum of 3,000 square feet.

The medical day program can be either freestanding or provider based. Outside of fee-schedule reimbursement, no limits or caps exist on services. Over the next two years, HCFA will study outpatient therapy utilization for the purposes of developing anew reimbursement mechanism effective January1, 2002. The new system will factor in diagnostic categories, functional status, and prior use of therapy services (inpatient and outpatient).

The requirements are numerous, but fairly straightforward. Once surveyed and certified by Medicare (and also, if desired, accredited by JCAHO), the program offers significant benefits to health systems and the community.

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This article is Part I of a two-part series the Indigent Care Trust Fund (ICTF). Part I of the series discusses participation criteria. Part II of the series will discuss the preferred methodology of accounting for transactions resulting from participation in the ICTF.

Section 1923 of the Social Security Act requires that states must find, among other things, that at least once per year or whenever payment methods and standards change, that methods and standards for determining rates account for hospitals serving a disproportionate share of low-income patients with special needs. Georgia's Medicaid intermediary, the Division of Medical Assistance (DMA), has chosen to provide such payment through the Indigent Care Trust Fund (ICTF).

The ICTF is in effect Medicaid Disproportionate Share (DSH), not to be confused with Medicare DSH. While qualification for Medicare DSH is based on the percentage of Medicaid and SSI patients served, qualification for participation in the ICTF is based on nine separate criteria. The nine criteria as defined in the Policies and Procedures Manual for Hospital Services are as follows:

1. A hospital whose Medicaid inpatient utilization is at least one standard deviation above the mean Medicaid inpatient utilization rate for hospitals receiving Medicaid payments; or
2. A hospital which has a low-income inpatient utilization rate exceeding 25 percent of total revenue; or
3. A hospital with total covered Medicaid charges for paid claims, inpatient and outpatient, exceeding 15 percent of total revenue; or
4. A non-state hospital with the largest number of Medicaid admissions in its metropolitan statistical area; or
5. A children's hospital; or
6. A hospital that has been designated a regional perinatal center by the DMA of Human Resources; or
7. A Georgia hospital that has been designated a Medicare rural referral center and a Medicare disproportionate share hospital provider by its fiscal intermediary or a Georgia hospital which is a Medicare rural referral center and which has 10% or more Medicaid patient days and 30% or more Medicaid deliveries; or
8. A state-owned and operated hospital administered by the Board of Regents.
9. Effective with payment adjustments made on and after December 1, 1999, a public hospital with less than 250 beds located in a non-metropolitan statistical are (non-MSA) with an inpatient Medicaid utilization of at least 1%. Inpatient utilization is defined as the ratio of at least 1% of Medicaid inpatient days to total inpatient days.

One of the above criteria must be met for a hospital to be designated a Medicaid DSH hospital. In addition to the above criteria, no hospital may be designated as a Medicaid DSH hospital unless the hospital has at least two obstetricians on staff that have agreed to provide obstetrical services to Medicaid patients and the hospital has at least a 1% Medicaid utilization rate.

The DMA has historically used data obtained from the Medicaid cost report and the Disproportionate Share Hospital Survey for the purposes of determining a provider's qualification under the nine criteria. The Disproportionate Share Hospital Survey is required to be filed annually with the DMA. Recently, the DMA has expressed interest in modifying certain components of the data gathering process.

The above criteria are based on the most recent ICTF qualifying process. Accounting for the ICTF will be discussed in a future article.

About the author: Jeff Wright, a healthcare manager with Draffin & Tucker, LLP, is responsible for auditing, preparation of program reimbursement forms, and provider representation with state and federal intermediaries.

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CALENDAR

The Physician Practice Management Forum, Featuring Speakers from Blue Cross & Blue Shield of Georgia

Lunch & Learn
11:00 am - 2:00 pm
$25.00 per person
(includes lunch)

JANUARY

25 Dalton - Hamilton Medical Ctr.

26 South Atlanta - Rockdale Hospital

27 North Atlanta - Children's Healthcare of Atlanta

28 Macon - Medical Center of Central Georgia

FEBRUARY

1 Augusta - University Hospital

2 Savannah - Memorial Medical Ctr.

3 Waycross - Satilla Regional Medical Center

15 Columbus - Hughston Orthopedic Clinic

16 Albany - Draffin and Tucker

17 Valdosta - South Georgia Medical Center

TARGET AUDIENCE:

Physician Practice Administrators/Managers; Hospital Based Practice Administrators/Managers; Business Office Managers; Patient Account Representatives; Physician Office Staff

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Carmen V. Sessoms, CHFP

As we end the 1999 year, we look forward to the new millennium. CPAR will complete its eighteenth year adding 166 new graduates. This brings the number of CPAR graduates to 2082. In addition to honoring the high scorer, a special award will be presented to the 2000th graduate at the upcoming Winter Institute. Awards will also be presented to provider and nonprovider organizations in appreciation for their continued support of the CPAR program.

We look forward to seeing all the 1999-2000 CPAR graduates, guests, and organizational representatives at the first CPAR banquet of the new millennium. The CPAR banquet will be held at The Marriott Gwinnett on Thursday, February 10, 2000. Michelle Lee, GA HFMA member, will present an educational session titled "Getting the Message Across" targeting effective communication. A reception will be held in honor of the graduates prior to the banquet. After the banquet, music will be provided by Dan Blankowski of Star 94 / Magical Music Machine.

The schedule for February 10, 2000 is:

2:00 CPAR registration starts
2:45-4:30 Session 17 for CPAR graduates
4:30-6:30 CPAR and HFMA Reception
6:30-11:30 Banquet

Make reservations with the CPAR committee to attend the banquet to support your associates!  Send us an email at our new address gacpar@yahoo.com.

See you at the banquet!

Arthur Andersen LLP
Crisp Hughes Evans LLP
Ernst & Young LLP
Draffin & Tucker, CPA's
FPIC
KPMG Peat Marwick LLP
PriceWaterhouseCoopers LLP
SMS

Chamberlin Edmonds & Associates, Inc. / Vista Financial Services
Deloitte & Touche LLP/Deloitte & Touche Consulting Group
Harkins & Henry
McKesson HBOC
MAG Mutual Insurance Company
Meridian Healthcare Staffing LLC
National Data Corporation

Advanced Receivables Strategy
Alston & Bird LLP
Arnall Golden & Gregory
BC/BS of Georgia
DATAMATX
DDS Staffing Resources, Inc.
Diversified Account Systems
GA Credit & Collections Bureau
Health Care Insurance Resources
Heathcare Management Advisors
Hollis Cobb Associates, Inc.
HSI Financial Services
Hyatt, Imler, Ott & Blount, PC
King & Spalding
Marsh, Inc.
NCO Financial Systems, Inc.
OSI Collection Services
Pershing, Yoakley & Associates
Powell, Goldstein, Frazier & Murphy
Protocol Receivables Management
Receivable Solutions, Inc.
RGL Associates, Inc.
Shared Services Healthcare, Inc.
Standard Register
SunTrust Bank
The Capital Planning Group
The North Highland Company
Thomas, Thomas & Walsh
 

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Advisory Committee Chairperson - Pat Hamby

Awards Committee Chairperson - Judy King Williams, FHFMA

Database Committee Chairperson - Susan Singleton

Financial Advisory/Audit Committee Chairperson - Cynthia Perley, FHFMA, CPA

Nominating Committee Chairperson - Lee Evins, FHFMA

Parliamentarian - Charles Mann, CPA

Photo Journalist - Tom Morris

Policy/Procedure Committee Chairperson - Lloyd Feiler

Registration Committee Chairperson - Pat Tewalt

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