Old system pre Medicare

·         Private insurance uncommon

·         No government insurance

·         Health care was a function of what patient could pay

·         Health care costs < 6% of GNP               

1965--Medicare passed

·         Fee for service system and also increase of private fee-for-service employer insurance systems

·         Health care reimbursed for reasonable costs for all services

·         Glut of money led to advances of technology because they would be paid for

·         Respiratory Care exploded--everybody got respiratory care (IPPB) and hospitals loved us because we would bring in profits

·         Health Care Costs increased to 12% of GNP

1980-1--beginning of DRG’s

·         Diagnostic Related Groups--Implemented by Medicare

·         Paid a flat fee per diagnosis--(i.e. $3900 for COPD acute exacerbation) led to lots of admissions but shorter stays to reduce costs and maximize profits.

·         System relatively unsuccessful in curtailing costs--Medical Care still increasing much faster than the general cost of living 

Managed care

·         Systems that either would negotiate a discount for the services to their subscribers while controlling utilization (medical necessity guidelines).

·         Capitated systems which provide negotiation of a set price at a set rate for a health care provider to provide for all the medical needs of a patient. (Like an HMO--health maintenance organization)

·         Employer negotiated Preferred Provider Organizations (PPO’s)

·         These plans initially successful in decreasing increases in costs--however medical care now 14% of GNP

·         Average cost of health care in U.S. about $4400/per capita per annum (About $2200 in Canada and $1400 in Britain (these countries have universal health insurance). 

Medicare, while curbing costs to acute hospitals, allowed for fee-for service ancillary services in the Skilled Nursing Facilities

·         This policy led to premature dumping of patients and increased overall Medicare costs by 30% per year since 1986 in ancillary services.

·         Respiratory Therapy services grew exponentially as well and therapists were leaving the acute hospitals to make more money in the sub-acute setting

·         Balanced budget act of 1997--an effort to reign in these costs and suggested a prospective payment system (PPS) 

Prospective Payment System in Skilled Nursing Facilities

·         Phased in over 3 periods beginning July 1st 1998

·         Patients evaluated by category.  Many respiratory care patients will be in a Rugs III category

·         End of transfer agreements (RCP in SNF) which required that RCP’s needed to be an employee of a hospital. Now RCP’s can be directly employed by SNF, or companies or individual RCP’s can contract with SNF to perform RCP services.

·         Patients will be classified via an MDS (Minimum data set) done within 7 days of admission that will put them in a RUGS category.  Reimbursement will be a per diem rate based on the RUGS category.  Rehab Categories (of which RT is not included) will pay the most.  Medically complex, which will include the trached, ventilated patients will be paid less.

·         No longer will the service have to be done by an RCP, as in the fee-for-service system.  The AARC wants to get RT defined as being done by an RCP in order for eligibility for payment under a RUG category which requires RT for a better per diem reimbursement

·         SNF will no longer be required to pay some prevailing rate for RCP’s, but will negotiate to find the cheapest service.  

·         Anticipate that RCP’s working in the SNF’s will decrease in the short term. (Estimates are that RCP have decreased by 75% in SNF’s nationwide over the last 12 month period.)  

·         Hope that there will be legislation requiring RCP’s to perform respiratory care in order to get the higher reimbursement

·         AARC has succeeded in having the Federal Government considers regulations that the RT services must be skilled (provided by RT’s) in order to allow for better reimbursement.

·         Commissioned the Muse  study that argues that RT services in SNF cuts down both on costs and mortality in the SNF’s 

Future trends

·         With Graying of America costs if left unchecked will grow to well over 17% of GNP over next 6 years

·         Percentage of uninsured now 12% and projected to go up to about 15% of US population unless legislation is passed

·         Other industrialized nations have universal coverage but spend less than 10% of GNP for health care.

·         Great pressures of fiscal conservatives to reduce costs to level on par with other countries to compete in global economy

·         However, political clout of baby boomers will fight to limit these decreases in costs

·         Proposed drug inclusion plans in Medicare will cut money available to pay other medical costs by Feds 

 

Impact on Respiratory Care

·         Definitely fewer jobs in the short term in the SNF’s, even with legislative success it is doubtful that numbers of RT’s in the SNF’s will be what it was before PPS implementation.

·         Capitated plans should put greater emphasis of cost cutting and preventive medicines.

·         Therapists needed to implement plans to reduce utilization of respiratory services (Therapist driven protocols)

·         Need to be more concerned with patient education

·         Assume that you will have to work more independently

·         Need to be concerned with outcomes measurement

·         Probably need to leave yourself open for cross-training

·         Probably fewer acute care RCP’s

·         Probably more home care jobs and therapists employed by physicians

·         Possibility that RCP’s will become case managers for those with cardiopulmonary disease