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Prospective Payment System Case Study

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According to the Centers form Medicare & Medicaid Services a Prospective Payment System (PPS) is a "method of reimbursement in which Medicare payment is based on a predetermined, fixed amount." There are different amounts for the different types of care settings including: home health agencies, hospice, acute inpatient hospitals, inpatient psychiatric facilities, skilled nursing facilities, long-term care hospitals, and inpatient rehabilitation facilities. The two facility types I chose to look at are home health agencies and skilled nursing facilities. For home health the PPS payment is based on a 60 day episode of care. The agency gets half of this payment when the claim is filed and half at the end of the 60 day period. At a skilled …show more content…

In home health care, the patient is assessed to determine what types of services are needed such as skilled nursing care, therapy, home health aide services, and medical social services. The case mix adjustment is based on this assessment along with the patient's current condition. There are 153 case-mix groups that the patient can be classified under. In a skilled nursing facility the case-mix adjustment is assigned based on the resident's assessment along with the relative weights staff time data associated with their care. In a skilled nursing facility the PPS also allows for a geographical adjustment based on the hospital wage index for the facility's location. There is also a three-year transition adjustment that is part of the PPS for skilled nursing facilities. This a blend of the facility-specific payment rate and the federal case mix adjusted rate. Home health care PPS does not allow for this transition adjustment or the geographical adjustment. Instead there are adjustments for outlier payments, beneficiaries who only need a few visits, and beneficiaries who are readmitted within the 60-day episode. If a beneficiary only requires four or fewer visits during the 60-day episode, the PPS will be based on a standardized, service-specific per-visit amount that is multiplied by the number of

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