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MCoPntRraRcetfNeor.e:nceNo.: 5820406--9141-10062 V1V>OIAATlUXFlT£VJ/.TVLfAl.T1TirW1AV PolicyResearch,Inc. ImplementingPayment ReformintheMidstof theStorm April30,2001 ValerieCheh NancyArchibald BarbaraPhillips ChristopherTrenholm Submittedto: Submittedby: HealthCareFinancingAdministration MathematicaPolicyResearch,Inc. 7500SecurityBlvd,(C-3-21-06) P.O.Box2393 Baltimore,MD 21244-1850 Princeton,NJ 08543-2393 (609)799-3535 ProjectOfficer: ProjectDirector: AnnMeadow ValerieCheh CONTENTS Chapter Pa8e EXECUTIVESUMMARY xiii I MEDICAREHOMEHEALTHANDANALYSISMETHODS 1 A. THEMEDICAREHOMEHEALTHBENEFIT 3 B. BRIEFOVERVIEWOFTHEDEMONSTRATION 5 C. METHODS 8 1. TypesofDataCollected 10 2. AnalyticApproach 17 DEMONSTRATIONDESIGNFEATURESANDHOWTHEY II WEREIMPLEMENTED 19 A. MEDICALREVIEW 19 B. FINANCIALPROCEDURES 21 1. Payment 21 2. ProspectiveRateSetting 22 3. Billing 25 4. ProfitSharing 27 5. LossSharing 28 6. ImplicationsofthePaymentSystem 29 C. WERETHEAGENCIESABLETOIMPLEMENTTHE QUALITYASSURANCE SYSTEM? 30 21.. WHeorweBtuherdAegnesncoimeesWAabslethteoDCaoltlaecCtoltlheectDiaotna?? 3332 3. DWiedrethUesAegfeunl?ciesBelievetheQualityAssuranceReports 34 4. WereThereDifferencesBetweentheTreatmentand ControlAgencies? 37 5. BalancingQualitywithCostReduction 37 6. ImplicationsoftheQualityAssuranceSystemforthe Evaluation 38 iii CONTENTS(continued) Chapter Page m DIDTHEHOMEHEALTHENVIRONMENTCHANGEDURING THEDEMONSTRATION? 39 A. NATIONALCHANGES 39 1. OperationRestoreTrust 40 2. BalancedBudgetAct 42 B. REGIONALANDLOCALCHANGES 43 1. ManagedCare 43 2. ChangesinReferralSources 47 3. StaffAvailability 48 4. PatientMix 51 C. CONCLUSIONS 52 IV AGENCYSTRUCTUREANDSTRATEGY 53 A. AGENCYMISSION 53 B. BUSINESSSTRATEGIES 56 C. MANAGEMENT 61 D. CONCLUSIONS 63 V HOWDIDAGENCIESREDUCETHENUMBEROFVISITS PEREPISODE? 67 A. MOTIVATIONFORREDUCINGVISITS: MORETHAN THEFORMOFPAYMENT 69 1. TheRoleofProspectivePayment 69 2. TheRoleofEnvironmentalFactors 70 B. STRATEGIESTOREDUCESERVICEUSE: WHATWORKED, ANDWHY? 72 • 1. PlannedandImplementedStrategies 73 iv CONTENTS(continued) Chapter Pa8e V C. COUNTERVAILINGFACTORS: CHALLENGESTO (continued) REDUCINGVISITSANDMETHODSTOOVERCOMETHEM 79 1. StaffResistance 79 2. ResourceConstraints 81 3. PatientCharacteristicsandWell-Being 83 D. WHATFACTORSHADTHEGREATESTIMPACTON SUCCESS? 84 E. CONCLUSIONS 86 VI THEPROCESSOFCAREDURINGTHEDEMONSTRATION 89 A. INTAKEPROCEDURES 89 B. ASSESSMENTANDCAREPLANNING 92 1. DCiardePPelra-nEnpiinsgo?dePaymentAffectAssessmentand 9^ 2. TheAdoptionofCriticalPathwaysinCarePlanning 94 C. INVOLVEMENTOFINFORMALCAREGIVERS 97 D. USEOFPORTABLECOMPUTERSBYCLINICIANS 100 E. DISCHARGEPLANNING 103 F. REFERRALSTOCOMMUNITYSERVICES 105 G. CONCLUSIONS 107 VII HOWAGENCIESTRIEDTOHOLDDOWNCOSTS 109 A. WHATDIDAGENCIESDOTOREDUCECOSTS? Ill 21.. SSttrraatteeggiieessttooRReedduucceeVOavreirahbelaedCCoossttss 111174 v CONTENTS(continued) Chapter Page Vn B. DIDTHETREATMENTAGENCIESUSEDIFFERENT (continued) STRATEGIESTOCONTROLCOSTS? 119 C. WHATFACTORSINHIBITEDANAGENCY'SABILITY TOCONTROLCOSTS? 120 D. CONCLUSION 126 Vm CONCLUSIONS 129 A. DIDIMPLEMENTATIONISSUESORTHEENVIRONMENT AFFECTOURINTERPRETATIONOFTHEDEMONSTRATION RESULTS? 129 B. HOWDIDPROSPECTIVELYPAIDAGENCIESREDUCE THEIRVISITSPEREPISODE,ANDWHYDIDTHEIRCOST PERVISITRISE? 131 C. HOWDIDTHEPROSPECTIVELYPAIDAGENCIESCHANGE THEIRBUSINESSMODELSANDCAREPROCESSESIN RESPONSETOTHENEWPAYMENTSYSTEM? 133 D. IMPLICATIONSFORANATIONALPROSPECTIVEPAYMENT SYSTEM 134 REFERENCES 137 APPENDLXA: SITEVISITPROTOCOL 139 APPENDIXB: SUMMARYOFCASE-MLXADJUSTMENT FORPAYMENTSDURINGTHE DEMONSTRATION 173 vi TABLES Table Page LI TOPICSFORTHESITEVISITS,BYTYPEOFRESPONDENT 12 1.2 CASESTUDYAGENCIESANDALLDEMONSTRATION HOMEHEALTHAGENCIES,BYCHARACTERISTICS 16 m.1 AGENCIESREPORTINGHIRINGDIFFICULTY,BYSTAFF TYPEANDSTATE 49 IV.1 MOSTFREQUENTLYPURSUEDSTRATEGICGOALS 58 IV.2 MOSTFREQUENTLYCITEDGOALSFORTRAINING COMPONENTSINTRODUCEDDURINGTHEDEMONSTRATION 64 V.1 STRATEGIESTOREDUCETHENUMBEROFVISITSPERPATIENT 74 VII.1 COMPARISONSOFCOST-REDUCTIONSTRATEGIES USEDBYPROSPECTIVELYPAIDANDCOST-REIMBURSED AGENCIES 113 vii FIGURES Figure Page 1.1 RECENTTRENDSINHOMEHEALTHUSE 6 1.2 FRAMEWORKFORASSESSINGCHANGESINAGENCYOPERATIONS....9 IH.l AGENCY-REPORTEDSOURCESOFREVENUE 46 ix