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Follow-Up: Real Impacts of Poor Quality and Lax Compliance

About ten days ago, I wrote a piece regarding the negative impacts providers can expect (and receive) when quality of care and service combined with vigilance on compliance are not primary in and across their organizations.  All too often, I hear companies and organizations that I work with, say they are committed to quality but by deeds, the evidence is lacking.  In fact, I have never heard a failed organization say that they weren’t (always) committed to quality patient care, etc.  I have also never heard a failing organization or poorly rated one say that “while we will talk about quality, that’s all we do – talk”.  No organization ever says that quality is “lip service more than substance” just like no restaurant ever says their food is “marginal or poor”.  Yet with health care, the peril of poor performance is all over the news and the news is quite sobering.

Below are two news stories that colleagues and readers have sent. I think each in its own right, helps frame this issue in “real terms”.

Here is the first regarding the care fall-out associated with the story/saga of HCP and HCR ManorCare.  I have written on this subject extensively, with many articles available on this site.

https://www.washingtonpost.com/business/economy/opioid-overdoses-bedsores-and-broken-bones-what-happened-when-a-private-equity-firm-sought-profits-in-caring-for-societys-most-vulnerable/2018/11/25/09089a4a-ed14-11e8-baac-2a674e91502b_story.html?utm_term=.5eda486f989c

The second story concerns SNF Value-Based Purchasing and how the industry performed in the first phase.  Again, I have written articles on VBP which can be found on this site and just conducted a webinar for HCPro on this subject.  The article is fascinating in two regards. First, the limited number of facilities/providers that performed above the benchmark – only 27%.  Fully 73% of the SNFs performed poor enough in terms of avoidable rehospitalization rates that they are receiving reduced Medicare reimbursement rates as a penalty.  For an industry hardly flush with cash, it is incongruous how any organization can perform below standard and take payment cuts.  Quality, as I have written and lectured on consistently, rewards and punishes depending on how it is provided (good vs. bad).  The article is below.

https://www.mcknights.com/news/cms-drops-value-based-purchasing-data-showing-27-of-nursing-homes-got-bonus-pay/

I hope readers enjoy both articles as they illustrate far better, the implications of poor quality, than I can via my words.

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November 29, 2018 Posted by | Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , , | Leave a comment

The Real Impacts of Poor Quality, Inadequate Compliance and Weak Risk Management

A number of interesting information drops occurred this past week or so reminding me that from time to time, the obvious isn’t always so obvious.  The seniors housing and skilled care industry today is going through a rocky patch.  A solid half of the SNF industry is severely hurting or struggling mightily due to Med Advantage, softer demand, pervasive reliance on Medicaid for census, labor shortages, rising wage pressure, tight Medicare reimbursement, new regulations, etc. (I could elaborate for a stand-alone article).  While not as pervasive in its struggles as the SNF industry, Assisted Living is facing challenges due to softer census, too much capacity, rising resident acuity, labor costs and shortages and gradually increasing regulatory scrutiny.  The relative strength in the overall seniors housing and post-acute sector is home health and independent housing.  Notice, I did say relative as home health demand is good but regulatory over-burden is still present along with tight reimbursement.  Home health is also experiencing labor challenges, the same as SNFs and ALFs.  The relative strength that is found in independent housing tends to be more on the market and sub-market rent side.  Many, many high-end providers are still struggling with census challenges and soft demand in certain markets.

As I have written and counseled many times to investors and clients alike, there is something to learn from the national trends but health care and seniors housing is still, a local reality.  What this means is that in spite of some rocky water for the industry, there are providers that do well and are bullish about their fortune in their respective industry segments.  Not to seem too convoluted, the national trends matter but as I like to think, in the context of what they truly mean.  In this regard, what they truly mean is how the trends impact providers on a macro basis as well as on a micro, behavioral basis.

As I started, this past week or so included some interesting information drops.  The first and not too surprising, is another alarm from a major, publicly traded provider organization that it was on the narrow ledge to failure.  Five Star Senior Living provided notice that given its financial condition now and as forecasted, it would not be able to meet its continuing obligations in the form of debt or timely payment of operating expenses.  When I say half the SNF industry is in battle to survive, I’m not kidding.

In unrelated drops, CNA (the major national commercial insurance provider) released its 2018 Claims Report for Long-Term Care/Senior Living.  The claims in this case are liability related.  Following CNA’s release, Willis Towers Perrin (major insurance brokerage and consultancy firm) provided their outlook for liability insurance noting that Long-Term Care and Seniors Housing should expect liability premium increases of 5% to 30%.  Anecdotally and unrelated, we are seeing steep property/casualty increases in the industry as well due to extreme weather losses over the last twelve to eighteen months.

While not absolute but substantial in nature, there is a direct correlation between providers that are struggling and the quality of care and service they provide to their patients.  The core competencies required to provide superb care are tied directly to compliance and risk management.  I have never seen an organization that delivers excellent care have poor compliance trends (billing, survey, other) and weak risk management leading to high levels of worker’s comp cases, lawsuits, liability insurance claims, etc.  Lately, there is the same correlation developing between quality and financial results.  As more quality payer source referrals and higher reimbursement with incentive payments connect to patient care outcomes, a gap is evident between the providers that are thriving and those that are dying.  That gap is the quality divide.

There is a spiral effect that is visible today in the SNF industry.  This effect has been visible for some time in hospitals.  It occurs as follows.

  • Care delivery is inconsistent and in most cases, not great.  Service is the same.
  • Complaints and survey results demonstrate the same and are reflected in star ratings.
  • Consumers and referral sources catch wind that care is not good.
  • Staff turnover accelerates, including key personnel that take with them, a disparaging message regarding care.
  • Quality mix erodes slightly.  Medicaid census increases as the “next best” alternative to an empty bed.
  • Financial results start eroding and losses occur or come into view.  Cash margins are getting tighter.
  • Expenses become an issue and cuts are necessary.  The cuts are incongruous to improving care.
  • With limited resources, quality suffers even more.  No money is available for capital and equipment upgrades.  Staff morale suffers and staffing levels are lower.  Productivity wanes as morale is poor and patient care follows.
  • Survey results are very poor and fines now happen.  The fines are expensive, removing more resources away from patient care.
  • Costs are growing rapidly related to higher insurance premiums, poor worker’s comp experience, unemployment costs, turnover, and legal costs to defend the facility.  These costs are removing resources away from patient care.
  •  Finally, because the resources are too depleted to make the necessary changes to rebuild quality, staff levels, etc. and no lender is available to front any more capital, the enterprise collapses.  The names are becoming familiar….Signature, ManorCare, Five Star, Genesis, Kindred are all SNF providers whose future is extinction or “almost”.

Arguably it takes money to have and deliver quality.  Equally as arguable today is that without quality, money won’t be made sufficient enough to stave-off failure due to…poor quality.  When quality isn’t the primary objective, compliance and risk management work as dead weights that the organization must carry; and the weight increases over time.  Why this isn’t obvious yet in the post-acute and seniors housing industry is beyond me.  An analogy that  I have used time and time again is the restaurant analogy.  Successful restaurants are laser-focused on their products – food and service.  They know that poor marks in either category or an outbreak of food borne illness can be death to their livelihood. In a crowded market of diners, price or value ties to quality and experience across a myriad of options.  What is common among the restaurants that succeed is their quality meets and exceeds, the customer’s realization of value (getting equal to or more satisfaction for the price paid).  When this occurs, money flows in increments sufficient to reward investors, pay employees, invest in equipment, and to reinvest in the products and services that customers buy.  Simple.

Seniors housing and post-acute care aren’t too different or disparate from the restaurant analogy.  The market is crowded with options…too many actually. Yes, the customer relationships are a bit different but the mechanics and economic levers and realities identical.  Providers that give great care, equal to or higher than the price points/reimbursement levels are GAINING customers via referrals.  The customers they are gaining are coming with good payment sources.  Money in the form of cash flow is strong enough to invest in plant, property, equipment and staff.  Doing so reinforces quality and service and allows the referral cycle to optimize.  As the market continues to shrink in terms of number of providers due to failure, the few that are exceptional continue to see their future and fortune improve.  Again, simple.

What we know is the following and the message should be clear today for those who still can control how they approach and manage their quality and customer experience.

  • Poor quality costs money disproportionately more than the dollars required to deliver “high quality”.  The costs are erosive and ongoing.
    • Higher insurance premiums
    • Poor compliance results with fines (the federal fines today are steep and immediate for SNFs)
    • Higher capital costs (yes lenders are now looking at quality measures as a measure of credit risk)
    • Increased litigation risks which when realized, contribute to higher insurance premiums.
  • All of the reimbursement incentives today and going forward are only available to providers that can deliver high quality, efficient patient outcomes.  Value-based purchasing rewards good care (limited rehospitalizations) and punishes poor care.  The impact is just being seen today and in the years forward, the impact is greater – both ways (reward and punishment).   The same is true under the new and forthcoming, case-mix payment models.  The high quality, adept providers will be able to provide the care rewarded highest, under these new payment models (PDPM, PDGM).  Those that don’t have the clinical infrastructure will languish.
  • Referrals today are more and more, skewed toward quality providers.  With hospitals and narrow networks looking for select post-acute providers that won’t increase their risks in value-based purchasing or bundles/ACOs, poor providers in terms of quality are increasingly seeing diminished referrals.
  • The Plaintiff’s Bar is watching the SNF and seniors housing industry carefully and with optimism.  The CNA report I referenced includes these snippets.
    • 22.6% of closed claims relate to pressure injuries (an almost entirely avoidable negative outcome).
    • Death from or related to pressure injuries is the highest average claim by cost.
    • 14 out of the 15 highest cost claims occurred in for-profit facilities.
    • Assisted Living claims cost more on average than SNF claims.
    • Falls continue to represent the lion share of liability claims – 40+%.  The vast majority tie to SNF care.
    • The frequency of claims is increasing.
    • Independent Living is not immune.  The report contains claim data on fall and pressure injury cases from Independent Living.

While no organization is immune from a law suit, the reality remains that organizations with exemplary quality history, high satisfaction levels, and processes that focus uniquely on the elements of great care and service (staffing levels, staff competency, good management, proper equipment, IT infrastructure, etc.) provide less of a target, if any.  No matter where, negative outcomes still occur but in “quality” organizations, they are an exception.  Because care is primary and service right behind, there is far less of a motivation for patients and families to litigate as by reason, the organization wasn’t negligent.  Again, the connections are rather ‘simple’.

November 16, 2018 Posted by | Assisted Living, Home Health, Senior Housing, Skilled Nursing | , , , , , , , , , , , | Leave a comment

Home Health Final Rule: Rate Increases plus PDGM

While I was in Philadelphia speaking at LeadingAge’s annual conference, CMS released its 2019 Home Health Final Rule.  As I wrote in an earlier post regarding the proposed rule, the topic of interest was/is a new payment model – PDGM.  As has been the case across the post-acute industry, CMS is advancing case-mix models crafted around a simplified patient assessment, less therapy oriented more nursing/medically balanced.  The industry lobbied for modification or delay in PDGM, primarily due to some underlying behavioral assumptions CMS embedded in the proposal (more on this in later paragraphs).

The most relevant, immediate impact of the final rule is rate increases (finally) for the industry – 2.2% or $420 million.  The industry has experienced rate cuts and rebasing consistently since 2010 as a response to fast growth and high profit margins exhibited by companies like Amedysis (the center of a Congressional hearing in 2011).

PDGM is slated to take effect “on or after January 1, 2020”.  The ambiguity in this language is worth noting as there are some that believe modification, even delay is possible.  Compared to the proposed rule, the final rule includes 216 more Home Health Resource Groups due to bifurcating Medication Management Teaching and Assessment from previous group alignments. The following key changes are a result of PDGM.

  1. As with PDPM on the SNF side, PDGM removes the therapy weight/influence separately from the assessment and payment element weights for HHAs.  The clinical indications or nursing considerations are given more weight along with patient comorbidities.
  2. Coding becomes a key factor in payment mechanics, particularly diagnoses and co-morbidity.
  3. Functional status is given a higher weight, as is the case today with all post-acute payment model reforms.
  4. Episode lengths are halved – down from 60 days (current) to 30 days.
  5. PDGM is budget neutral meaning that when fully implemented,, the cost to the Federal government for Medicare HHA payments in the aggregate is no greater than current (inflation adjusted for time).  To get to budget neutrality, certain behavioral assumptions about provide reactions to the changes are used.  As one would suspect, this is a subject of concern and debate by the HHA industry.

The behavioral assumption issue referenced in #5 above is an imputed reality in all payment model changes.  In fact, it is an economic model necessity when attempting to address “how” certain changes in reward (payment) will move activity or behavior toward those places where reward or payment is maximized.  It is a key economic behavioral axiom: What get’s rewarded, get’s done.

In effect, CMS is saying that budget neutrality is achieved for a 30 day episode when payments for the episode equal $1,753.68.  Getting to this number, CMS assumed that agencies would react or respond quickly to payment changes (areas where increases are found) in co-morbidity coding, clinical group assignment and reduction in LUPA cases.  However, if CMS models slower reactions or limited reactions by the industry (operating norms as current persist), the payment impact is an increase of 6.42% or $1,873.91.  Because budget neutrality is mandated concurrent with PDGM, the concerns providers are raising relates to how payments will ultimately be determined and when if necessary, will adjustments be made IF the anticipated behavioral changes don’t manifest as factored.  Simply stated, this collective concern(s) is the reason the industry continues to lobby for delay, more analysis and further definitional clarity with the PDGM funding and payment assumptions prior to implementation.

One final note with respect to PDGM dynamics.  Readers of my articles and attendees at lectures, webinars, other presentations have heard me discuss overall post-acute payment simplification and the movement within Medicare reimbursement to site neutrality.  PDGM is an interesting payment model from the standpoint that it parallels in many ways, the PDPM movement for SNFs.  It is diagnosis based, more clinically/nursing driven than the previous system and more holistic in capturing additional patient characteristics (co-morbidities) than before in order to address payment relevance. With assessment simplification and a growing focus on patient functional status at various points across a post-acute global episode (from hospital discharge to care completion), an overall framework is becoming more visible.  Expect continued work from CMS on payment simplification, more calls from MedPac for site neutral payments for post-acute care. The policy discussions are those that reinforce payment that follows the patient, based on patient clinical needs, unattached to any site dynamics or locations, save perhaps a coding modifier when inpatient care is warranted to account for the capital and equipment elements in the cost of care.  When looking globally at the overall health care payment and policy trend that is occurring sector by sector, the future of payment simplification and movement to site neutrality is certain.  One question remains: By when?

November 6, 2018 Posted by | Home Health, Policy and Politics - Federal | , , , , , , , , , , , , | Leave a comment

Site Neutral Payment Update

In early October, I wrote an article regarding CMS 2019 OPPS (outpatient PPS) proposed rule, specifically regarding site neutral payments.  The purpose of the article was to address the site neutrality trend that CMS is on, streamlining payments to reduced location of care disparities for the same care services.  Succinctly, if the care provided is technically the same but the costs by location are different due to operating and capital requirements, should payments vary?

Yesterday, CMS pushed forward the OPPS final rule, maintaining the concept of site neutrality despite heavy hospital lobbying.  The gist of the rule is as follows.

  • Hospital off-campus outpatient facilities will now be paid the same as physician-owned or independently owned/operated outpatient facilities for clinic visits.  No longer will there be a hospital place-of-care premium attached to the payment.
  • Off campus is defined as 250 yards or more “away” from the hospital campus or a remote location.
  • For CY 2019, the phase-in/transition is a payment reduction equal to 50% of the net difference between the physician fee schedule payment for a clinic visit and the same payment for a hospital locus clinic or outpatient setting.  The amount is equal to 70% of the OPPS (hospital outpatient PPS rate).
  • For CY 2020, the amount paid will be the physician fee schedule amount or 40% of OPPS rate, regardless of location.
  • Final Rule text is here: 2019 OPPS Final Rule

What CMS noted originally as the need stemmed from a Medpac report where a Level 2 echocardiogram cost 141% more in a hospital outpatient setting than in a physician office/clinic setting. This final rule is part of an expected and continuing trend to simplify and streamline payments among provider locations.  Similarly, CMS is following a path or theme laid forth by Medpac concerning payments tied to care services and patient needs rather than settings or places of care.  The 2019 OPPS payment change is a $760 million savings in 2019 expenditures.

Finalization of the OPPS rule with site neutral payments cannot be overlooked in significance. As I wrote in the October article, this is a harbinger of where CMS and Medicare policy makers are heading.  Hospitals lobbied hard and heavy against this implementation claiming a distinction in payment was not only required by dictated by patient care discrepancies.  Alas, there appeared to be no common ground found within that argument.

I suspect now that the door is opened just a touch wider for site neutral post-acute payment proposals to advance.  Under certain case-mix categories, there truly is very little difference in care delivered and no difference in outcomes (adversely so) between SNFs, IRFs, and LTAcHs yet there is wide payment difference.  With lengths of stay declining and occupancy rates the same (declining) among these provider groups, CMS will no doubt (my opinion) push forward a streamlined proposal on site neutral payments in the next three years.  I anticipate the first proposal to concentrate almost exclusively, on SNFs, IRFs and perhaps, some home health case mix categories.  If hospitals can’t budge CMS away from the site neutral path, there is zero likelihood that IRFs and LTAcHs can divert CMS from site neutral proposals in the near future.

 

November 2, 2018 Posted by | Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , | Leave a comment

Don’t Miss Event: Webinar on Reducing Rehospitalizations

A week from today, I am conducting a webinar on reducing/avoiding unnecessary rehospitalizations.  With SNFs just experiencing the VBP impact (Medicare incentive or reduction) starting October 1, this event is extremely timely.  I’ll cover the health policy and reimbursement implications regarding rehospitalizations plus new QRP and QM updates.  I’ll also touch on PDPM implications.  Some great tools are available for attendees as well.

Register here at a super price – $59 for the session and the tools!

http://hcmarketplace.com/reducing-readmissions

 

November 1, 2018 Posted by | Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , | Leave a comment

SNF QRP and What the Data Means

Yesterday, CMS began posting the first elements from the Quality Reporting Program.  There are five elements that contain data, compared to the national average.

  1. Percent of residents developing new or worsening pressure injuries
  2. Percent of residents experiencing one or more falls with major injury
  3. Percent of residents who had a functional assessment on admission and the outcomes incorporated on the careplan and assessed at discharge
  4. Medicare spending per beneficiary
  5. Percent of successful return to home or community

A sixth measure regarding avoidable, 30 day hospital readmission was not reported as CMS is still trying to determine how to best present the data.

The above data is available for each SNF on Nursing Home Compare.  To view, go to the website, choose a facility and then delve into the “Quality of Resident Care” tab.  At the bottom of the screen, expand the sections on short-stay and long-stay to view all Quality Measures including this latest set.

As in most cases, data is only as valuable as it is meaningful and communicates a story.  In this case, I would caution that these new measures still bear a touch of skepticism for current interpretation.

  • The data in most cases, is more than nine months to a year old (observations between 2016 and 2017).
  • The context of some of the measures may be incongruous to others more recently reported.  For example, there is a long-stay QM on falls with a major injury where the data set/accumulation period is 7/1/17 to 6/30/18.  The comparable new QRP data point on falls is illustrative of data between 1/1/17 and 12/31/17.  My point is that no data for any measurement, including the new QRP measures, should be viewed separately without a common review of all QM data current (or at least as current as is available).
  • The famed quote of former British Prime Minister Benjamin Disraeli (appropriated by Mark Twain and others) harkens: “There are three types of lies; lies, damn lies, and statistics”. There are 15,000 plus SNFs and as I have experienced, clear uniformity in data reporting exists in form as much as spotted Zebras.  And, I am not calling any SNF a liar.  Claims-based measures are a touch more reliable but remember; inaccurate claims and upcoding per CMS OIG is rampant in the industry.  Garbage in, garage out?

So a question I have already been asked dozens of times today: Is this data meaningful, useful and if so, how so?  Being a true Trinitarian: Yes, No and Maybe.  Here’s how I see the QRP impact now.

  • It will have virtually no impact or should I say, absolutely no impact, for consumers.  It is simply too arcane to digest without a better context for consumers.
  • The data is old so now, its reliability on a face-value basis is questionable (kindly stated).  Much changes in the SNF environment, good and bad.  Changes in leadership, ownership, MDS Coordinators can “funk-up” data results quickly.
  • As I indicated, it must be viewed in complete context against all other QMs.
  • Those facilities that are good, consistent performers will exhibit the same outcomes with their QRP results.
  • Facilities that are poor performers will have their poor results magnified or validated via the QRP data.
  • There will be a small set of facilities for which the QRP data is not relevant at all.  They are the facilities that have undergone some sort of cataclysmic change since the data measurement started in 2016, likely in 2017.  This could represent a good or negative trend.

Finally, if there is some use it will be in the form of strategy within narrow networks, ACOs, etc.  The Medicare spend per beneficiary number, if it is below 1, could be of value.  Again, one needs caution as that result is more than one year old.  What I do know from the Managed Care/Med Advantage folks is that this data set will have ZERO implications for them.  As I have written before, these plans are buyers in a universe of sellers.  There are too many beds available, even among good providers, in most markets.  Frankly, SNF supply exceeds demand by a TON.  A Med Advantage plan has no need to pay-up for access nor be horribly concerned that a bed will not be available, even at the best 5 Star providers.  Until supply ratchets down to meet actual demand, it will be a Buyer’s market for Med Advantage plans with no need to negotiate/pay more for access.

October 26, 2018 Posted by | Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , | Leave a comment

Leading Age Annual Meeting

I will be in Philadelphia for the annual meeting and conference of Leading Age.  For readers that plan on attending, I will also be speaking on Wednesday, October 31st.  Session information is below.

126-H: A Compliance Tale: The Journey from Citation to IDR

The session covers a complete review of an actual case/event our compliance folks dealt with regarding a citation and the steps/processes up to and through, an IDR hearing.  The audience will judge the final outcome of the IDR process.  Attendees will have access after the conference to some great tools/forms that are used and discussed during the session.  Hope to see you there!

October 19, 2018 Posted by | Uncategorized | Leave a comment

Post-Acute, Site Neutral Payment Upcoming?

In the 2019 OPPS (outpatient PPS) proposed rule, CMS included a site neutral payment provision.  With the comment period closed, the lobbying (against) fierce, it will be interesting to see where CMS lands in terms of the final OPPS rule – maintain, change, or abate.  The one thing that is for certain, regardless of the fate of this provision, site neutral proposals/provisions are advancing.

CMS has advanced a series of conceptually similar approaches to payment reform.  Site neutral approaches are a twist on value-based care as they seek to reward the efficiency of care by de-emphasizing a setting value.  This is loosely an approach to “payment follows the patient” rather than the payment is dictated by the locus of care.  Assuming, which isn’t always in evidence, that for many if not most outpatient procedures, the care required is the same such that one setting vs. another isn’t impactful to the outcome, then a site neutral payment seems logical.  Managed care companies have been using this approach overtly, attaching higher cost-share to certain sites or eliminating payment altogether for procedures done in higher cost settings. In the OPPS proposal, the savings is rather substantial – $760 million spread between provider payments and patient savings (deductibles).  To most policy watchers, there is a watershed moment possible with this proposal and its fate.  The fundamental question yet resolved is whether hospitals will continue to have a favorable payment nuance over physician practices and free-standing outpatient providers.  Hospitals arguing that their administrative burden and infrastructure required overhead, combined with patient differences (sicker, older patients trend hospital vs. younger, less debilitated patients trending free-standing locations), necessitates a site different payment model (such as current).

In the post-acute space, payment site neutrality has been bandied about by MedPAC for some time.  Up to now, the concept of payment site neutrality has languished due to disparate payment systems in provider niches’.  SNFs and their RUGs markedly different from Home Health and its OASIS and no similarity with LTACHs in the least. Now, with post-acute payments narrowing conceptually on “patient-driven” models (PDPM and PDGM) that use diagnoses and case-mix as payment levers, its possible CMS is setting a framework to site neutral payments in post-acute settings.

In its March 2015 report to Congress, MedPAC called for CMS to create site neutrality for certain patient types between SNFs and IRFs (Inpatient Rehab Facilities).   While both have separate PPS systems for payment, the IRF payment is typically more generous than the SNF payment, though care may look very similar in certain cases.  For IRFs, payment is based on the need/extent of rehab services then modified by the presence or lack of co-morbidities.  IRFs however, have payment enhancements/ additions for high-cost outliers and treating low-income patients; neither applies in the SNF setting.

The lines of care distinction between the two providers today, certainly between the post-acute focused SNFs and an IRF, can be difficult to discern.  For example, both typically staff a full complement of therapists (PT, OT, Speech), care oversight by an RN 24 hours per day, physician engagement daily or up to three times per week, etc.  Where IRFs used to distinguish themselves by providing three hours (or more) of therapy, SNFs today can and do, provide the same level.  As a good percentage of seniors are unable to tolerate the IRF therapy service levels, SNFs offer enhanced flexibility in care delivery as their payment is not predicated (directly) on care intensity.  What is known is that the payment amounts for comparable patient encounters are quite different.  For example, a stroke patient treated in an IRF vs. an SNF runs $5,000 plus higher.  An orthopedic case involving joint replacement differs by $4,000 or more.  Per MedPAC the difference in outcomes is negligible, if at all.  From the MedPac perspective, equalized payments for strokes, major joint replacements and hip/femur related surgical conditions (e.g., fracture) between IRFs and SNFs made sense, at least on a “beta” basis.  With no rule making authority, MedPac’s recommendation stalled and today, may be somewhat sidelined by other value-based concepts such as bundled payments (CJR for example).

So the question that begs is whether site neutral payments are near or far on the horizon for post-acute providers.  While this will sound like “bet-hedging”, I’ll claim the mid-term area, identifying sooner rather than later.  Consider the following.

  • Post-acute care is the fastest growing, reimbursed segment of health care by Medicare.
  • The landscape is changing dramatically as Medicare Advantage plans have shifted historic utilization patterns (shorter stays, avoidance of inpatient stays for certain procedures, etc.).
  • Medicare Advantage days as a percentage of total reimbursed days under Medicare are growing. One-third of all Medicare beneficiaries were enrolled in a Medicare Advantage plan in 2017.  Executives at United Healthcare believe that Medicare Advantage penetration will eclipse 50% in the next 5 to 10 years.  As more Boomers enter Medicare eligibility age, their familiarity with managed care and the companies thereto plus general favorability with the product makes them quick converts to Medicare Advantage.
  • Managed care has to a certain extent, created site preference and site based value payment approaches already.  There is market familiarity for steering beneficiaries to certain sites and/or away from higher cost locations.  The market has come to accept a certain amount of inherent rationing and price-induced controls.
  • At the floor of recent payment system changes forthcoming is an underlying common-thread: Diagnoses driven, case-mix coordinated payments.  PDPM and PDGM are more alike in approach than different.  IRFs already embrace a modified case-mix, diagnoses sensitive payment system. Can homogenization among these be all that far away?
  • There are no supply shortage or access problems for patients.  In fact, the SNF industry could and should shrink by about a third over the next five years, just to rationalize supply to demand and improve occupancy fortunes.  There is no home health shortage, save that which is temporary due to staffing issues in certain regions (growth limited by available labor rather than bricks and mortar or outlets). Per MedPac, the average IRF occupancy rate pre-2017 was 65%.  It has not grown since.  In fact, the Medicare utilization of IRFs for certain conditions such as other neurologic and stroke (the highest utilization category) has declined. (Note: In 2004 CMS heightened enforcement of compliance thresholds for IRFs and as a result, utilization under Medicare has shrunk).
  • Despite payment reductions, Home Health has grown steadily as has other non-Medicare outlets for post-acute care (e.g., Assisted Living and non-medical/non-Medicare home health services).  Though the growth in non-Medicare post-acute services has caused some alarm due to lax regulations, CMS sees this trend favorably as it is non-reimbursed and generally, patient preferred.
  • Demonstration projects that are value-based and evidence of payment following the patient or “episode based” rather than “site based” are showing favorable results.  In general, utilization of higher cost sites is down, costs are down, and patient outcomes and satisfaction are as good if not better, than the current fee-for-service market.  Granted, there are patient exceptions by diagnoses and co-morbidity but as a general rule, leaving certain patients as outliers, the results suggest a flatter, site neutral payment is feasible.

If there is somewhat of  a “crystal ball” preview, it just may be in the fate of the OPPS site neutral proposal.  I think the direction is unequivocal but timing is everything.  My prediction: Site neutral payments certainly, between IRFs and SNFs are on the near horizon (within three years) and overall movement toward payments that follow the patient by case-mix category and diagnoses are within the next five to seven years.

October 2, 2018 Posted by | Home Health, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , , , , , , , | Leave a comment

Upcoming Webinar: Reducing Hospitalizations and SNF Reimbursement Implications

I am conducting a webinar on Thursday, November 8 regarding the strategies SNFs can and should employ to reduce unnecessary hospital transfers/hospitalizations (E.R. visits and inpatient admissions).  Value-based purchasing has just taken hold in the SNF realm with facilities about to experience their first outcome October 1, 2018 (incentive or reduction).  I’ll cover the policy implications but moreover, review upcoming reimbursement issues beyond just VBP, delving into the care transition (hospitalization) implications that are woven in PDPM.  For example, with PDPM instilling a critical focus on length of stay via imbedded payment reductions after day 20, facilities will naturally look to shorten lengths of stay perhaps at the peril of VBP (Value-Based Purchasing) implications.

During the hour-long session, I’ll address;

  • Reimbursement and policy related implications associated with unnecessary care transitions/hospitalizations under VBP but also, tangential to QRP, PDPM, Five Star QMs, survey and relative to the IMPACT Act.
  • Proven strategies with tools to identify transition risk, monitor performance and benchmark an SNF against its peers.
  • How to leverage good performance in a competitive market and to gain market share in a bundled payment, Medicare Advantage, pay-for-performance environment.

More information and registration information is available at this link.

http://hcmarketplace.com/reducing-readmissions

 

September 13, 2018 Posted by | Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , , | Leave a comment

SNF Final Rule 2019: Key Points and Provisions

Beginning yesterday, I’ve been following the news regarding CMS’ annual issuance of Final PPS rules for providers.  Of greatest interest is the SNF Final Rule as it includes a completely new payment system, departing from the RUGS IV, therapy-centric system currently in-place.  I’ve read through the Final Rule (all 424 mind-numbing pages) and summarized what SNFs need to know right now. I will undoubtedly expand upon the PDPM model as more is known and I’ve modeled claims via provider experience data.

RATE: The Final Rule includes a 2.4% increase to SNFs via adjustments to the RUGS IV categories/CMIs.  NOTE:  Providers that have not met their QRP (Quality Reporting) requirements/data submissions will receive a .04% increase – net of the 2% penalty.

SNF QRP: There were no changes made to the SNF QRPs in this rule.  The Claims-Based Measures of, 1) Community/Post-Acute discharge; 2) Preventable re-hospitalizations (30 days post discharge), and; 3) Spending per Medicare beneficiary (SNF) remain.  The Assessment-Based Measures of , 1) Falls with injury; 2) New or worsening pressure injuries post-admission, and; 3) Percent of patients with functional admission and discharge assessments and care plans.  CMS did indicate that it will adopt a “burden” or return on investment test for adoption or removal of future measures.

SNF VBP: The impact of Value-Based Purchasing begins Oct. 1, 2018. This incorporates an incentive payment or penalty reduction for the lone applicable quality measure: 30 day re-hospitalization rates post SNF discharge.  The Final Rule includes notably, an extraordinary circumstances exception policy plus discussion on future baseline periods for measurement, scoring changes, etc.

PDPM: This new payment system (Patient Driven Payment Model) is set to go into effect on October 1, 2019 (FY 2020). It will replace the RUGS IV system.  It is case-mix driven, utilizing the MDS assessment tool to categorize resident care needs via five case-mix categories: Physical Therapy, Occupational Therapy, Speech Therapy, Nursing, and Non-Therapy Ancillary requirements.  The base non-clinical case-mix category remains which captures the room and board and capital costs for SNFs (technical stuff here so no need for detail). As part of PDPM, only three assessments (MDS) are needed/required. The first is correlated to admission, the second to discharge and the third is related to change in condition/change in need.  Payment, regardless of service utilization, is assessment driven via each case-mix category.  Also gone from this system is any intensity measure of therapy services (no minute requirements or frequency). Added to the therapy requirements is a provision that as much as 25% (aggregate) of therapy treatment time can be group or concurrent.  Based on data provided, the unadjusted Federal Urban PDPM rate (10/1/2019) would be $410.85 (before labor/wage adjustments). The Unadjusted Rural PDPM rate would be $425.37.

As in the Proposed Rule, PDPM incorporates a variable rate concept.  The Final Rule maintained this concept unaltered.  After day 20, rates begin to decline at a pace equal to 2% every 7 days, starting at day 21.  The decline correlates to reductions in PT and OT rates (.03 per day) and a reduction in NTA (Non-Therapy Ancillary).  More below on Non-Therapy Ancillary inclusions.

Under PDPM, residents are classified/coded via ICD 10 into one (only one) of ten clinical categories corresponding to the primary reason for the inpatient stay. CMS intends to map ICD-10 codes into the clinical categories for providers.

  1. Major Joint Replacement or Spinal Surgery
  2. Cancer
  3. Non-Surgical Orthopedic/Musculoskeletal
  4. Pulmonary
  5. Orthopedic (that doesn’t fall into #1)
  6. Cardiovascular and Coagulations
  7. Acute Infections
  8. Acute Neurologic
  9. Medical Management
  10. Non-Orthopedic Surgery

To accommodate higher-cost, sicker patients in the SNF setting, PDPM implements a Non-Therapy Ancillary case-mix. The NTA categories are below.  Other than the first category of HIV/AIDS, each NTA is picked-up from a corresponding MDS item. Sorry for the length but I think the list is informative for providers.

HIV/AIDS 

Parenteral IV Feeding: Level High

Special Treatments/Programs: Intravenous Medication Post-admit

Special Treatments/Programs: Ventilator or Respirator Post-admit

Parenteral IV feeding: Level Low

Lung Transplant Status

Special Treatments/Programs: Transfusion Post-admit

Major Organ Transplant Status, Except Lung

Active Diagnoses: Multiple Sclerosis Code

Opportunistic Infections

Active Diagnoses: Asthma COPD Chronic Lung Disease Code

Bone/Joint/Muscle Infections/Necrosis – Except Aseptic Necrosis of Bone

Chronic Myeloid Leukemia

Wound Infection

Active Diagnoses: Diabetes Mellitus (DM)

Endocarditis

Immune Disorders

End-Stage Liver Disease

Other Foot Skin Problems: Diabetic Foot Ulcer

Narcolepsy and Cataplexy

Cystic Fibrosis

Special Treatments/Programs: Tracheostomy Care Post-admit

Active Diagnoses: Multi-Drug Resistant Organism (MDRO)

Special Treatments/Programs: Isolation Post-admit

Specified Hereditary Metabolic/Immune Disorders

Morbid Obesity

Special Treatments/Programs: Radiation Post-admit

Highest Stage of Unhealed Pressure Ulcer – Stage 4

Psoriatic Arthropathy and Systemic Sclerosis

Chronic Pancreatitis

Proliferative Diabetic Retinopathy and Vitreous Hemorrhage

Other Foot Skin Problems: Foot Infection Code, Other Open Lesion on Foot

Complications of Specified Implanted Device or Graft

Bladder and Bowel Appliances: Intermittent Catheterization

Inflammatory Bowel Disease

Aseptic Necrosis of Bone

Special Treatments/Programs: Suctioning Post-admit

Cardio-Respiratory Failure and Shock

Myelodysplastic Syndromes and Myelofibrosis

Systemic Lupus Erythematosus, Other Connective Tissue Disorders, and Inflammatory Spondylopathies

Diabetic Retinopathy – Except Proliferative Diabetic Retinopathy and Vitreous Hemorrhage

Nutritional Approaches While a Resident: Feeding Tube

Severe Skin Burn or Condition

Intractable Epilepsy

Active Diagnoses: Malnutrition

Disorders of Immunity – Except : RxCC97: Immune Disorders

Cirrhosis of Liver 

Bladder and Bowel Appliances: Ostomy

Respiratory Arrest

Pulmonary Fibrosis and Other Chronic Lung Disorders

Summary: Ten clinical categories essentially begin the coding process (reason for admit).  From this point, each case-mix category is developed (PT, OT, SLP, Nursing and NTA). This is done via the admission MDS.  The rate is constant for days 1-20 of the stay.  Beginning on day 21, the rate reduces equal to 2% every additional 7 days.  A change of condition MDS can occur, altering the rate variability (reduction) by change in patient need.  One more assessment (MDS) is completed to recap the stay at discharge and capture QRP data.  In the meantime, stay tuned for additional information and strategic tips on how to prepare for PDPM and what specifically, to know in interpreting the “best path/best-practices” at the facility level.

 

August 1, 2018 Posted by | Skilled Nursing | , , , , , , , , , , , | 2 Comments