Medicare Compliance & Reimbursement

Financial incentives could lead providers to compromise quality of care.

Steady hospital readmission rates and emergency department visits indicate that the home health prospective payment system has had no significant effects on the quality of care for Medicare beneficiaries. But that's not a good enough reason to step back on quality-of-care monitoring for home health agencies, says the HHS Office of Inspector General.

The home health PPS went into effect in 2000 to stave off rising Medicare home health care spending. Under the former cost-based payment system, financial incentives allowed HHAs to increase their Medicare revenue by providing excessive services. Although the new PPS eliminates this financial incentive, the Centers for Medicare & Medicaid Services, the OIG and the Medicare Payment Advisory Commission have all pointed out it may create a disincentive that compromises benes' quality of care by discouraging patient visits.

The PPS reimburses HHAs using a base payment rate (plus applicable adjustments) for each 60-day episode of care. Ideally, this payment system should reflect the clinical and functional severity of a bene's actual condition. This episode-based payment structure could lead providers to visit patients less often, bringing their conditions into question, the agencies argue.

The OIG report studies hospital readmission rates and ED visits as indicators of changes in care quality. For Medicare benes with at-risk diagnoses, overall hospital readmission rates are holding steady at 47 percent--the same level they held under the previous payment system, the OIG reports. On a more granular level, readmission rates due to preventable adverse events remain low, but hospital readmissions for benes with renal failure, multiple sclerosis and pulmonary disease show a 4- to 5-percent increase that's worth monitoring further, notes the OIG.

Visits to the ED increased minimally under the new PPS, up from 29 percent in 2000 to 30 percent in 2003. Emergency care for benes with at-risk diagnoses such as renal failure and heart failure rose 4 percent, but visits due to preventable adverse events were less than 1 percent, commends OIG.

CMS agrees with the OIG's findings and shares the OIG's concern about rising readmissions for certain at-risk conditions. "CMS remains concerned about improving patient safety and preventing adverse events in the home," says CMS Administrator Mark McClellan in a comment letter to the OIG. "Increased focus on patient transitions and coordination of care between care settings are priorities of post-acute care as a whole."