SNFs: Its All About Quality Now

Across a recent engagement that spanned a large system, wide geography and about a year’s worth of work, I had the chance to reflect numerous times on “what” has changed in the post-acute arena, particularly applicable to SNFs, over my 30 years.  Below I’ve organized my thoughts in “eras” or periods of time.

• Cost Based/The Good Old Days: A fond period of time pre-OBRA 1987 where reimbursement was cost-based (the more you spent on bricks and mortar, the higher you could drive your Med A rate), regulations at the Federal level were simple and cost-reports mattered, financially.
• PPS: The Early Years: No more cost-based payments and worse, a whole slew of new federal regulations involving nurse aide training, assessments, care plans, resident rights, etc.  Thus began the dawn of “subacute” and the end of distinct part units for reimbursement purposes.  This period also included the passage of the Medicare Catastrophic Coverage Act including repeal of the three-day qualifying hospital stay, expanded benefit levels and the introduction of a new outpatient prescription drug benefit.  A year later, this Act was repealed.
• PPS: Generation II: I think of this period as a time when health care reform discussions became a political priority and awareness of the expanding entitlement spending under Medicare and Medicaid heightened.  I also think of this time as the period of system growth and the start of a formation of a true post-acute awareness encompassing LTAcHs, Home Health and Hospice.  While SNFs stayed the course and the industry contracted in terms of bed numbers, health systems began to emerge in earnest with hospitals morphing into mult-tiered provider organizations, incorporating as many provider components as possible.  In this period, bigger was better. At the close of this period, the Medicare Prescription Drug Act arrived.
• PPS: Here We Grow: After sorting and sifting and balancing and restructuring, Medicare as a payment source is viewed by the post-acute industry as a really, really good payer and in all reality, one that should be mined.  SNFs focused on building therapy services and targeting certain patient types.  Home Health began doing the same.  SNF prices per bed paid during transactions were strong and growing, valuations the same and providers were investing in plant and equipment designed to take advantage of opportunities to attract Medicare patients.  Home Health agencies increased in number and the profit margins for home health driven by a high Medicare payer census pushed into the 20% area.  Hospice also grew in numbers and profitability, targeting terminally-ill Medicare beneficiaries, many residing in nursing facilities.  Hospitals came to the full realization that post-acute was fraught with regulatory and reimbursement land mines and this period began the earnest push among hospital systems to divest post-acute holdings.
• Health Care Reform: A unique combination of principally two events created the period current: The Passage fo the Affordable Care Act (health care reform) and the crash of the economy.  The economic crash brough forth with vigor, a policy debate and focus on U.S. debt levels and moreover, the solvency of entitlement programs such as Medicare, Medicaid and Social Security.  Into this mix occurred the creation and passage of the Affordable Care Act, federal health policy designed to rein in health care spending, improve access, drive quality and expand coverages.  Arguably, the legislation once vetted and analyzed, is less of a solution than perhaps, an expansion of entitlement spending. Time will tell as to whether the Act even remains intact and the outcomes fully known (success, failure or some levels of both).

Coming forward and today arriving in the early phase of the Reform period, clarity is possible in terms of devising strategy and coming to grip with new paradigms.  For SNFs (and frankly, all other post-acute providers), and I’ve touched on this before, this period is principally about quality.  Reimbursement in terms of rate and harvesting as a strategy is secondary or tertiary in terms of success and growth.  The primary focal point must be on quality and quality that is tied to current policy initiatives, including those embedded with the Affordable Care Act (regardless of its future).  Whereas in the period before, reimbursement was the principle driver for SNF care provision and strategy (e.g., therapies), today reimbursement is being driven and tied to clinical outcomes and clinical competency, inclusive and exclusive of therapy services.  Briefly, like it or not, the following is the “new” and further developing paradigm.

• SNFs will still see strong margins on Medicare cases but not as strong as before.  The bigger issue here is that the best payer mix will only be accessible by providers that can deliver a high standard of clinical competence and resulting, care outcomes.
• The point above is directly tied to the focus on unnecessary hospitalizations, avoidable re-admissions and provisions within the Accountable Care Act that roll-out in October (reimbursement penalties to hospitals for re-admits across three common DRGs of pneumonia, heart failure and MI).  An SNF that cannot deliver high quality, comprehensive care and eliminate or significantly contain re-hospitalizations or frankly, any avoidable hospitalization, will witness a swift and painful reduction in Medicare referrals and solid case-mix (those patients that come with higher RUG scores and payments).
• The issue around re-hospitalizations encompass a plethora of issues spanning the total perspective of hospitalization (for specific DRGs) through discharge to the SNF, into admission at the SNF, post-discharge from the SNF if the discharge is within 30 days of the original hospital discharge.  Briefly;
  • The SNF must be prepared to coordinate the discharge from the hospital, prior to the actual discharge. It is critical that the SNF be a partner to the hospital, on-site and engaged in the process.  The SNF must “know” what it is getting into with the discharged patient and be prepared to deliver the care that the patient requires – anything less opens up a risk area for potential re-admission risk if things go “south” within 30 days.
  • It is imperative that the SNF adopt a “care completion” approach rather than a discharge when Medicare coverage ends approach. Regardless of payment source on admission and then throughout the stay, the SNF must focus its work entirely on completing the required care of the patient, nothing less.  An SNF that discharges a patient too quickly runs the risk of the patient going home too soon, ill-prepared to do so, and then returning to the hospital.  If such a return occurs within 30 days of the original hospitalization, regardless of location of the patient (SNF, home, other), and results in the patient being re-admitted the subsequent hospital stay is considered a re-admission and penalties apply.
  • Discharge coordination on behalf of the SNF to other providers is imperative if the SNF wishes to avoid being embroilled in a hospital re-admission issue.  If care is being ceded to another provider such as a home health agency or hospice, the SNF needs to be as certain as possible that the other provider is capable of delivering the requisite care, including staffing.  Knowing that some patients will request discharge prior to care completion at the SNF, the discharge risk belongs to the SNF and thus, it is incumbent on the SNF to coordinate the discharge with other providers as “completely” as possible.
• The biggest risk areas that I commonly see for SNFs in terms of inappropriate referrals of patients back to a hospital are;
  • Falls – failure to have an integrated falls prevention program.  Falls with injury, particularly fractures are the number one cause of discharge from an SNF to a hospital.
  • Medications – failure to completely manage pain or other symptoms through effective pharmacotherapy is the number two reason for discharge from an SNF to a hospital.
  • Inadequate staff levels across weekends and later shifts – insufficient staff numbers or inadequate clinical competency on weekends and nights particularly leads to hospital discharges.  Remember, residents are within the facility twenty-four hours per day, seven days per week.  Staffing levels in terms of numbers and competency should match resident acuity and care needs, regardless of the shift or day.
  • Lack of diagnostic and procedural tools in the facility – SNFs need to have adequate tools and diagnostics available in-house to avoid a discharge to the hospital for issues that can and should be triaged and managed at the SNF.

My five key recommendations for an SNF to get up-to-speed now on where quality levels need to be, are;

• Get in the hospital with a qualified clinician, preferably an RN and work directly with hospital discharge staff, medical staff, and the hospital care leadership.  Develop a true partnership.
• Analyze pre-admission, drugs, care needs, resident discharge goals, etc.  Know the risks pre-admission.
• Develop care pathways and protocols that are evidenced based for a whole host of key “discharge” risk areas such as infections, pain, falls, pneumonia, etc.  The pathways/protocols should encompass diagnostics, drugs, other proven interventions.
• QA now every hospitalization to know where your current risk areas are.  Regardless of the original hospital DRG, SNFs should be all over their discharges to a hospital, even if the same doesn’t result in an inpatient admission.  Understand why patients get discharged and then, address the reasons with action plans that provide interception and keep the patient within the SNF to the greatest extent clinically possible.
• Develop a care-completion “only” practice for discharge.  Likewise, circle your referral partners such as home health and hospice to assure that these providers are fully capable and committed to mitigating hospital transfers. Don’t assume that these organizations understand the gravity of an inappropriate hospital transfer at the same level.

The final take-away is while the focus today shifts to a monitoring of certain hospitalizations by DRG (heart failure, MI, etc.) and their subsequent discharge/re-admission patterns, SNFs need to be prepared as if every hospital discharge fits into one of the identified DRGs.  The future for SNFs that want to continue to garner high quality referrals, particularly those with Medicare as a payer source, requires the SNF to have the clinical competence to manage these referrals and avoid unnecessary hospitalizations and re-admissions; regardless of the admitting DRG.