Introductory Concepts

Public policy develops from legislation at the federal and state levels and represents society’s values. (MacClain, 1996, personal communication) For example, the Medicare Act, which resulted in a national health insurance plan for elders, was enacted in 1965. Medicaid, a combined federal and state insurance program that addresses the health care needs of the indigent, was enacted in 1966. Both measures were enacted at a time when civil rights was valued by society and was reflected in many government acts that passed around that time such as the Developmental Disabilities Act and the Vocational Rehabilitation Act. The language of public policies is meant to be general. The specifics about each public policy are in its regulations, which COTAs need to comprehend because they directly impact OT practice. COTAs working in an SNF should understand the Omnibus Budget Reconciliation Act (OBRA) of 1987 and the prospective payment system (PPS) resulting from the Balanced Budget Act (BBA) of 1997 to provide appropriate care and be effective treatment team members. COTAs also must have a direct understanding of how Medicare and Medicaid is regulated in any setting to ensure that intervention they provide is reimbursed by third-party payers.

In this chapter, COTAs will overview key payment sources and related public policies that they will work with in practice settings. Medicare, Medicaid, OBRA, and the Older Americans Act (OAA) are examples of such public policies. The intent of this chapter is to provide an introduction and overview of these key public policies that influence therapy practice and how they are regulated. New policies are enacted, such as for health reform, and policies can also change with amendments and regulations. Therefore, not every specific detail of changes will be or can be included. For example, in 2010 a new Minimum Data Set (MDS) 3.0 and Resource Utilization Groups (RUG-IV) in SNFs was instituted and newer versions will come out in the future. With each version there are changes. One change with the MDS 3.0 was making it more client centered.¹ With the chapter readers will get a strong foundation for practice and then will need to keep updated with changes through resources provided in the chapter. The chapter begins by discussing health care trends in the United States and then goes into specifics about federal public policies that influence OT practice and overviews health reform and Medicare. The chapter concludes with suggestions for COTAs on ways to keep up with public policy trends as well as promote changes with public policy through advocacy.

Health Care Trends in the United States

Health care in the United States is transforming rapidly as a result of a quickly changing society. A knowledge of these health care trends helps with understanding policies that develop. Previously, the family physician was the sole provider of health care. The physician knew individuals throughout their lives and treated them as whole people rather than as illnesses or diseases. Recently, the health care industry has undergone an extensive period of fragmented approaches to service delivery. The current trend, especially for elders, is toward comprehensive, cost-effective health care. Consumers want simplified access to a range of services with predictable costs. This has led to the emergence and growth of various public and private sources of health coverage. With health care reform systems will become even more integrated, and there will be a strong focus on quality, cost-efficient care. Electronic records as a result of public policy (e.g., the HITECH Act [P.L.111-5]²) will become a reality. Because health care is a large part of the gross national product and costs have been consistently increasing along with a growing aged population, ways to monitor costs with the major programs such as Medicare, Medicaid, and Social Security will be continually evaluated and discussed on the national agenda. The following sections describe public regulated sources.

Public Regulated Sources

Public regulated sources include Medicare, Medicaid, federal and state employee health plans, the military, and the Veterans Administration. Medicare and Medicaid are often accessed by the elder clients whom COTAs treat and are discussed in the following sections. Please refer to Table 6-1 for an overview of the Medicare system that COTAs may work with.

TABLE 6-1 Overview of the Medicare System

Medicare

Medicare, or Title 18 of the Social Security Act, was first implemented in 1966. As part of the Social Security Amendment of 1965, the Medicare program was created to establish a health insurance program to supplement retirement, survivors, and disability insurance benefits. Originally, Medicare covered most people age 65 years and older. However, since then the program policy has expanded to cover other groups of people, including those entitled to disability benefits for at least 24 months, those with end-stage renal disease, and those who elect to buy into the program.³ Medicare is the largest entitlement program in the United States, and other insurance companies often follow the same standards as set up by Medicare.

Parts of the medicare program and occupational therapy practice

Medicare is divided into four parts (A, B, C, and D).³ Parts A, B, and C directly influence OT practice. Part A refers to hospital insurance. It covers “inpatient care in hospitals, including critical access hospitals, and skilled nursing facilities (not custodial or long-term care). It also helps cover hospice care and some home health care. Beneficiaries must meet certain conditions to get these benefits.”⁴ OT practitioners (registered occupational therapists [OTRs] and COTAs) follow Medicare beneficiaries under Part A in many settings both inpatient and outpatient (see Table 6-1). In most settings, therapy is reimbursed under a PPS. PPS are rates established in advance, based on the anticipated resource usage by the Medicare beneficiary and are “a pre-determined fixed amount.”⁵ These rates can be based by time, such as a per diem amount provided per case or per episode. Rates can also be established by a patient classification system such as with the diagnostic-related groups (DRGs) used in inpatient hospitals or the resource utilization groups (RUGs) used in SNFs.⁶

Medicare Reimbursement under Part A as a PPS system was first instituted in inpatient acute hospital settings in 1983 based on a DRG patient classification system, and this system continues today.⁷ PPS in each system (e.g., hospital, home health, SNF) is instituted differently, so COTAS will need to understand the specific system they work in. For example, in inpatient hospitals costs are bundled into the PPS rate. Some of the systems have a specific screening tool, such as the minimum data set (MDS) in SNFs. For an overview of screening tools and payment systems for Part A in home health, inpatient rehabilitation facilities, and SNFs, refer to Table 6-2.

TABLE 6-2 Screening Tools and Payment Specifics for Home Health, Inpatient Rehabilitation Facilities, and Skilled Nursing Facilities (Medicare Part A)

Medicare Part B is the medical insurance that covers “doctors’ services and outpatient care. It also covers some other medical services that Part A doesn’t cover, such as some of the services of physical and occupational therapists, and some home health care.”⁸ Part B is a voluntary benefit, which is paid for by monthly premiums. The cost of this premium continues to increase. It is important for COTAs to be aware that Medicare beneficiaries pay 20% of their Part B costs unless they have purchased supplemental insurance.

Therapists can provide therapy and bill under Part B in many outpatient settings, including physicians’ offices, outpatient, home health services, assisted living, SNFs, and comprehensive outpatient rehabilitation.⁷ Certain regulations are required to be followed with Part B, such as getting physician certification and a plan for therapy that is approved by the physician. Therapy services are billed under a physician’s fee schedule using the Physician’s Current Procedural Terminology (CPT) codes. CPT codes are revised annually, and the amount of reimbursement is calculated on the basis of a number of factors. COTAs in collaboration with the OTR decide how to code delivered intervention. Codes describe outcomes. They may be service codes that are billed only once per day regardless of the amount of time spent in delivering the procedure. Service codes include evaluation, reevaluation, splint application, and most modalities. Timed codes are the majority of the codes applicable to intervention provided by the COTA. Multiple units of timed codes can be delivered during a day of intervention. They are based on 15-minute units, and Medicare regulations guide how to calculate the units. For example, to count as 1 unit therapists follow a client between 8 and 22 minutes. This is also known as the 8-minute rule, and Medicare requires that time be accurately recorded for timed codes. (Please refer to CMS Internet manual 100.4, Chapter 5, Section 20.2. for more information.)

HCPCS Level II are another type of coding used for “products, supplies, and services not included in the CPT codes, such as ambulance services and durable medical equipment, prosthetics, orthotics, and supplies.”⁹ CMS has also instituted for Part B claims national coding methodologies to avoid misuse of billing procedures based on a policy called the Correct Coding Initiative (CCI).^10,11 The purpose of these edits is “to prevent improper payment when incorrect code combinations are reported.”¹⁰

Currently Medicare beneficiaries who purchase Part B coverage have a therapy cap, or set financial amount, per year that they can use for all of their outpatient rehabilitation costs (occupational therapy, physical therapy, and speech therapy), except for hospital outpatient costs, which is exempt from the therapy cap. Over the years, the American Occupational Therapy Association (AOTA)¹² has advocated for adding an exception process to extend coverage for certain conditions that may warrant more therapy, and AOTA is working on a permanent fix for the therapy cap. (More information on therapy caps can be found in IOM 100-04, Chapter 5, Section 10.2.)

Part C “are health plans offered by private companies approved by Medicare.”¹³ Part C includes the basic services covered by parts A and B and is covered by a variety of payment types such as managed care, fee for service, and medical savings accounts. Some plans have offered more benefits than the traditional Medicare plans. Medicare Part D is the outpatient prescription drug coverage, an optional benefit. Although this part of the law does not directly influence occupational therapy practice, therapists may want to read more about it on the CMS website.

General Guidelines for OT Payment and Intervention

Table 6-3 overviews examples of justifiable therapy service. Professional therapy intervention should be developed according to client needs relative to the complexity and intensity of required intervention. Intervention plans should be based on function and must integrate the plan of care. Intervention should be reinforced by other disciplines, such as skilled nursing. The client’s prior level of function, mobility, and safety in addition to self-care deficits are primary and essential indicators for professional intervention and must be reflected in assessments.¹⁴ COTAs should understand and follow specific guidelines to receive payment and not have a claim denied, such as receiving a denial for not having the physician sign off on the plan of care.

TABLE 6-3 Justification for Professional Therapy Service

ADL, activities of daily living; COTA, certified occupational therapy assistant; OT, occupational therapy; SNF, skilled nursing facility.

Refer to the Medicare Benefit Policy Manual 100-02¹⁵ for specifics about occupational therapy coverage. Also refer to the personnel qualifications for occupational therapy assistants, which are discussed in the 2008 Physician Fee Schedule.¹⁶ See the Federal Register of November 27, 2007,¹⁷ for the full text. See also the correction notice for this rule, published in the Federal Register on January 15, 2008.¹⁸

Skilled and Unskilled Therapy

The concept of skilled and unskilled therapy must be understood to obtain reimbursement from Medicare for OT intervention. Skilled care involves specific guidelines. For example, in SNFs care is covered if performed under the supervision of a professional and ordered by a physician and provided on a daily basis. Care “must be reasonable and necessary for the treatment of a patient’s illness or injury” and “reasonable in terms of duration and quality.”¹⁹ Examples of unskilled services would be exercises that are repetitive in nature, or passive exercises to maintain range of motion or strength that do not require the involvement of skilled rehabilitation. Usage of heat as a “palliative and comfort measure” and routine assistance in dressing, eating, or going to the toilet, and positioning in bed should be considered as unskilled services (Table 6-4).¹⁹

TABLE 6-4 Skilled Occupational Therapy Services

ADL, activities of daily living; COTA, certified occupational therapy assistant; OT, occupational therapy; ROM, range of motion.

Although a client’s diagnosis is a valid factor in deciding the need for skilled services, it should never be the only factor considered. The key issue is whether the skills of a therapist are needed for the required services. Skilled therapy services cannot be denied on the basis of diagnosis. This was clarified in a CMS Program Memorandum as it relates to therapy services needed by individuals with a diagnosis of Alzheimer’s disease or other dementias.²⁰ Before this memorandum, there had been many denials on the basis of having the diagnosis of Alzheimer’s disease. (Refer to the Internet Medicare Benefit Policy Manual¹⁹ for more information about skilled and unskilled services.)

Medicare Administrative Contractures

Since the inception of Medicare, the Centers for Medicare and Medicaid Services (CMS) has contracted out vital program operational functions (claims processing, provider and beneficiary services, appeals, etc.) to a set of contractors known as Medicare Fiscal Intermediaries (FIs) and Carriers. Currently, with contract reform throughout the United States, Medicare claim review and payment are monitored by Medicare Administrative Contractors (MACs). MACs determine local coverage determinations (LCDs). “An LCD is a decision by a Medicare administrative contractor (MAC) whether to cover a particular service.”²¹ Payment coverage from each MAC can vary, so it is important for COTAs to become familiar with their area MAC and pay attention to LCDs. COTAs can go to their MAC website to determine claims processing information, educational options, and any regulation changes.

Working with Medicare and Related Regulations in Different Payment Systems

COTAs work with Medicare beneficiaries in many different systems, including SNFs, home health, inpatient rehabilitation facility, hospital outpatient, comprehensive outpatient rehabilitation facility (CORF), rehabilitation agency, occupational therapy private practice, partial hospitalization programs, inpatient psychiatric facilities, and physician’s offices. In each setting therapy coverage will be different and “therapists need to conform to the requirements of the PPS” if that is part of the system.²² In this section COTAs will be provided with resources to help them best understand the systems that they end up working in. In addition, some key aspects of a few of the systems that they may practice in (SNFs, home health, and inpatient rehabilitation) will be overviewed.

The best resources for COTAs to understand practice in different systems reimbursed by Medicare is to overview the Internet resources on the CMS website. As stated earlier, regulations change and COTAs need to stay current. The online CMS Manual System is organized by functional areas (e.g., eligibility, entitlement, claims processing, benefit policy, program integrity). The Internet-only manuals address coverage in many systems and are most up to date. It is especially helpful to refer to The CMS, Benefit Policy Manual, Publication, 100-02, Chapter 15 (Covered Medical and other Health Services), Sections 220-230.²² The outpatient regulations in this manual form the basis of coverage for all therapy services. Specific policies may differ by setting. Different policies concerning therapy services are found in other manuals. When a therapy service policy is specific to a setting, it takes precedence over these general outpatient policies. Finally, keep in mind that all Medicare regulations are periodically reviewed and updated. The most current Medicare regulations will always prevail.²² Table 6-5 overviews Medicare resources that COTAS can go to understand different systems they may work in.

TABLE 6-5 Medicare Resources Online

Working in Skilled Nursing Facilities

As of 2006 the largest employer of COTAs has been in SNFs.¹² Practice in SNFs is primarily influenced by the public policies of OBRA, Medicare, and Medicaid.

OBRA, a landmark act of Congress, is not influenced by budgetary concerns. This act focuses on elders’ rights, quality of care, and quality of life in the nursing home setting. OBRA went into effect in October 1990 and was revised with final rules published in 1995.^23,24 Compliance with the OBRA regulation is necessary for a nursing facility to receive reimbursement from Medicare or Medicaid. This discrepancy between what is required for good care, rehabilitation, and dignity and what is funded can cause ethical and moral dilemmas for COTAs. Knowledge of the regulations that govern care can help the COTA advocate for the services the patients need.

Minimum Data Set

The OBRA law was the impetus for developing the screening tool of the MDS, as it “called for the development of a comprehensive assessment tool to provide the foundation for planning and delivering care to nursing home residents.”²⁵ Working in SNFs, COTAS need to be aware of the MDS because this screening tool identifies strengths and deficits that are recognized for further assessment. Many sections of the MDS address areas within the scope of OT practice. For example, COTAs might be able to add input to the cognitive patterns section among others. Data from OT practitioners contribute to the section on physical functioning (Figure 6-1). The MDS has been revised, and, with the MDS 3.0, the resident is involved in the assessment process and changes have been made in how data are collected for therapy.^26,27

FIGURE 6-1 Example of the Physical Functioning and Structural Problems Section G of the Minimum Data Set 3.0.

Under the regulations for the PPS, a system that regulates Part A payments in SNFs, the MDS is also used to determine Medicare payment for those residents who meet the eligibility qualifications. OT intervention influences that payment system, and COTAs may be responsible for tracking minutes of intervention for sections of the MDS. Even if no intervention has taken place, the data collection and resident interview may help COTAs give the necessary information to others on the interdisciplinary team. If COTAs complete any portion of the MDS assessment, they must certify accuracy of the section(s) they complete by noting their credentials and the date and indicating the portion of the assessment completed. The signature of a registered nurse is required to certify completion of the assessment.

The Prospective Payment System in Skilled Nursing Facilities

COTAs need to be aware of the PPS in SNFs. The PPS was established by the Balanced Budget Act (BBA) of 1997.²⁸ These regulations were created to control the increasing costs of health care with Medicare A in SNFs. Reimbursement occurs prospectively on the basis of a level of care or an anticipated level of care rather than retrospectively on the basis of what was charged. The final rule governing PPS was published in July 1999.²⁹ Under this rule there were significant reimbursement changes in SNFs, and the impact on the delivery of therapy services was monumental. One of the big changes impacting practice was the organization of patients into RUGs. RUGs are determined by the number of therapies providing intervention (physical occupational or speech), therapy minutes that the Medicare beneficiary has used in the first 7-day reference period or is expected to use, need for services (e.g., respiratory therapy), specific medical conditions (e.g., pneumonia), and ADL score based on an index.³⁰ RUGs categories for therapy vary from a low to ultra high categories and can be combined with extensive services (refer to the RAI manual listed in Table 6-5). As regulations change and to learn more about the specifics, COTAs need to refer to the aforementioned Medicare coverage manuals in Table 6-5. Box 6-1 provides some hints for operating in an SNF under a PPS system.

Trends with Federal Health Care Policies: Health Care Reform

As of this writing the Patient Protection and Affordable Care Act,⁴¹ as amended by the Health Care Education Reconciliation Act of 2010,⁴² will result in sweeping changes in our health care system as it is gradually instituted between 2010 and 2020. Parts of the law related to Medicare directly influence the provision of health care of elders. With health care reform the basic benefit package of Medicare will remain unchanged. Medicare beneficiaries will continue to receive their health insurance and physicians and hospitals will continue to be reimbursed per procedure.⁴³ However, new changes with the law involve adding provisions to help elders manage their health care. Examples of these changes are gradually closing up in Medicare Part D, the voluntary prescription drug program that was known as the “donut hole.” The donut hole referred to a coverage gap in which elders had to pay out of pocket for their prescription medications. Another change with health reform is that subsidies will be offered for people with low income for Part D (prescription drug coverage). Preventive services in medical areas, such as Medicare financing annual physicals and regular colon screens will become covered benefits. With Medicare Part C (Medicare Advantage plans), reforms include restructuring and reducing payments and providing bonuses for quality programs. There will be many other cost savings provisions, which are predicted to save the Medicare program billions of dollars. Delivery reforms such as reducing hospital payments linked with needless readmissions or hospital-acquired infections⁴⁴ will hopefully improve quality of care and decrease unnecessary spending. It is believed that the changes to Medicare will extend the solvency of the Hospital Insurance Trust Fund for Part A in the next 10 years.⁴⁴

A voluntary long-term care insurance program, or the Community Living and Assistance Services and Support Program (CLASS), will help citizens finance long-term care services and supports.⁴⁵ It is also important to be aware of pilot programs because they may eventually influence practice. One such pilot program is bundling the costs for delivery of post-acute care for Medicare beneficiaries. Finally this historical legislation is yet to be settled and more changes may occur as the makeup of Congress fluctuates.

Advocacy for Elders

Health care is always in a state of flux that directly affects OT practice. To deal with constant changes advocacy is important to any profession. Eleanor Roosevelt once stated, “Every person owes a portion of his time and talent to the up building of a profession to which he/she belongs.”⁴⁶

Involvement of COTAs in advocacy for elders and the OT profession can make a difference. Advocacy is clearly discussed in the Occupational Therapy Code of Ethics and Ethics Standards.⁴⁷ As stated in Principle 4 Part D of the Occupational Therapy Code of Ethics, therapists should “advocate for just and fair intervention for all patients, clients, employees, and colleagues, and encourage employers and colleagues to abide by the highest standards of social justice and the ethical standards set forth by the occupational therapy profession.”⁴⁷ Part E states that therapists should “make efforts to advocate for recipients of occupational therapy services to obtain needed services through available means.”⁴⁷

Every COTA and OTR must encourage the benefits of OT and establish the role of the profession within society. COTAs must stay informed about all government decisions regarding health care (Table 6-6). The rapidly changing face of today’s health care economy demands innovative and progressive responses from individuals. OTRs and COTAs must be strong advocates for their profession and the clients that benefit from OT intervention by adjusting to change and adapting to new ways to deliver intervention. An example of a direct benefit of advocacy with CMS was the successful effort to get clarification of coverage for patients with the diagnosis of Alzheimer’s disease.⁴⁸ Box 6-2 provides suggestions for ways that COTAs can become more involved with public policy and advocacy.

TABLE 6-6 Nonskilled Occupational Therapy Services

ADL, activities of daily living; COTA, certified occupational therapy assistant; OT, occupational therapy; ROM, range of motion.

Keeping Up with Changes

Let us return to Susan the COTA discussed in the opening scenario. On the first day of her job she meets with her boss Sonya. After reviewing some of the documentation and billing aspects of the job, Sonya asks Susan how she will keep updated with the frequent changes in regulations related to payment provision. Sonya challenges Susan to research that question and come up with ideas the next day when they meet. That evening Susan researches the CMS website and the AOTA website. She learns about and plans to follow postings on the CMS website called transmittals, which are used “to communicate new or changed policies, and/or procedures that are being incorporated into specific Centers for Medicare & Medicaid Services (CMS) program manual.”⁴⁹ She finds manuals on the site that overview different Medicare regulations. Then she goes to the AOTA website. There in the Issues and Advocacy section she finds many resources to keep abreast with policy trends as well as practical suggestions for advocacy. She also finds the MAC site for her area and reads about regulation changes and looks at the LCDs. She searches further on the Internet and finds the AARP website that overviews extensive background related to public policy and advocacy. The next day when they meet again Sonya is pleased to learn about Susan’s efforts and states, “I hope that you make initiative to keep current from now on at least about this area of practice. In this rapidly changing health care environment I expect all my employees to be pro-active. I like to have monthly meetings where along with our practice discussions we educate and share about current health care changes and public policy.”