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Health Systems, Hospitals and Post-Acute Providers: Making Integration Work

Early into the Trump presidency and health care/health policy is front and center.  The first “Obamacare repeal and replace” attempt crashed and burned.  The upcoming roll-out of the next round of bundled payments (cardiac and femur fracture) is delayed to October from the end-of-March target date.  Logically, one can question is a landscape shift forming? Doubtful.  Too many current realities such as the need to slow spending growth plus find new and innovative population health and payment models are still looming. These policy realities beget other realities. One such reality is that hospitals and health systems must find ways to partner with and integrate with, the post-acute provider industry.

In late 2016, Premier, Inc. (the national health care improvement organization) released the results of a study indicating that 85% of health system leaders were interested in creating expanded affiliations with post-acute providers.  Interestingly, 90% of the same group said they believed challenges to do so would exist (Premier conducted the survey in summer of 2016 via 52 C-suite, health system executives).  Most of the challenges?  The gaps that exist “known and unknown” between both provider segments (acute and post-acute) and the lack of efficient communication interfaces (software) between the segments.

On the surface, bundled payments notwithstanding, the push for enhanced integration is driven by a number of subtle but tactile market and economic shifts.

  1. Inpatient hospital lengths of stay are dropping, driven by an increasing number of patients covered by managed care.  Today, the largest payer source contributor of inpatient days, Medicare, is 30.6% “managed”…and growing.  Medicaid is 62.7% and commercial, nearly 100% (99%). Source: http://www.mcol.com/managed_care_penetration
  2. Payment at the hospital end is increasingly tied to discharge experience – what happens after the inpatient stay.  The onus today is on the hospital (and growing) for increasing numbers of patient types (DRG correlated) to discharge the patient properly such that the same does not beget a readmission to the hospital.  Too many readmissions equal payment reductions.
  3. Population health, focused-care models such as ACOs are evolving.  Their evolution is all about finding the lowest cost, highest quality centers of care.  Other BPCI (bundled payment) initiative projects such as Model 3, focus directly on the post-acute segment of care.  Unlike CJR (and the recently delayed cardiac bundles), the BPCI demonstration that began in 2013 covers 48 episodes of care (DRG based) and has participating providers (voluntarily) operating programs in all four model phases, nationwide.
  4. Patient preference continues to demand more care opportunities at-home.  Never mind the increased risk of complication with longer inpatient hospital stays (the risk of infection, pressure injuries, weight loss, delirium, etc. increases as stays increase), it is patient preference to discharge quickly and preferably, to home with services (aka home care).

Regardless the fate of Obamacare now or in the near future, these trends are unlikely to change as they have been moving separate from Obamacare.  Arguably, the ACA/Obamacare accelerated some of them.  Nonetheless, the baked-in market forces that have emanated from ACOs and care episode payments illustrate that even in infancy, these different models produce (generally) more efficient care, lower costs and improved patient satisfaction and outcomes.

As with any integration approach such as a merger for example, cultural differences are key.  The culture of post-acute care is markedly different from that of acute/hospital care.  For hospitals to appreciate this difference, look no farther than the two key determinants of post-acute culture: regulation and payment.  The depth and breadth plus the scope of survey and enforcement activity is substantially greater on the post-acute side than the acute side.  As an example, observe the SNF industry and how enforcement occurs.  Hospitals are surveyed for re-accreditation once every three years.  The typical SNF is visited no less than four times annually: annual certification and three complaint surveys.

In terms of payment, the scope is drastically different.  While hospitals struggle to manage far more payers than a post-acute provider, the amount that is paid to a hospital is substantially larger than that paid to a post-acute provider.  At one point years back, the differences were substantiated largely by acuity differences across patients.  While a gap still exists, it has narrowed substantially with the post-acute provider world seeing an increase in acuity yet lacking a concomitant payment that matches this increase.

Given this cultural framework, post-acute providers can struggle with translating hospital expectations and of course, vice-versa.  Point-of-fact, there is no real regulatory framework in an SNF under federal law for “post-acute” patients.  The rules are identical for a patient admitted for a short-stay or for the rest of his/her life.  Despite the fact that the bulk of SNF admissions today are of the post-acute variety, the regulations create conformity for residency, presumptively for the long-term.  Taking the following into consideration, a challenge such as minimizing a post-acute SNF stay to eight days for a knee replacement (given by a hospital to an SNF) is logical but potentially fraught with the peril presented by the federal SNF Conditions of Participation.  The SNF cannot dictate discharge.  A patient/resident that wishes to remain has rights under the law and a series of appeal opportunities, etc. that can slow the process to a crawl.  At minimum, a dozen or more such landmines exist in analogous scenarios.

Making integration work between post-acute and acute providers is a process of identifying the “gaps” between the two worlds and then developing systems and education that bridge such gaps. Below is my list (experiential) of the gaps and some brief notes/comments on what to do bridge the same.  NOTE: This list is generally applicable regardless of provider type (e.g., SNF, HHA, etc.).

  • Information Tech/Compatibility: True interoperability does not yet exist.  Sharing information can be daunting, especially at the level required between the provider segments for good care coordination.  The simple facts are that the two worlds are quite different in terms of paper work, billing requirements, documentation, etc.  Focus on the stuff that truly matters such as assessments, diagnoses, physician notes, plans of care, treatment records, medications, diagnostics, patient advance directives and demographics.  Most critical is to tie information for treating physicians so that duplication is avoided, if possible.
  • Regulatory Frameworks: This is most critical, hospital/physician side to the post-acute side, less so the other way.  Earlier I mentioned just one element regarding an SNF and discharge.  There are literally, dozens more.  I often hear hospitals frustrated by HHAs and SNFs regarding the “rules” for accepting patients and what can/cannot be done in terms of physician orders, how fast, etc. For example, it might be OK in the hospital to provide “Seroquel for sleep or inpatient delirium” but it is not OK in the SNF.  HHAs need physician face-to-face encounters just to begin to get care moving, including orders for DME, etc.  There is no short-cut.  Creating a pathway for the discharging hospital and the physician components to and through the post-acute realm is critical to keep stays short and outcomes high… as well as minimize delays in care and readmissions.
  • Resource Differences: Understanding the resource capacities of post-acute, including payment, is necessary for smooth integration.  What this means is that the acute and physician world needs to recognize that stay minimization is important but so is overall care minimization or better, simplification.  Unnecessary care via duplicative or unnecessary medications, tests, etc. can easily eat away at the meager margins that are operative for SNFs and HHAs.  For example, I have seen all too many times where a patient has an infection and is discharged to an SNF on a Vancomycin IV with orders for continued treatment for four more days.  Those four days are likely negative margin for the SNF.  A better alternative?  If possible, a less expensive antibiotic or send the remaining Vancomycin doses to the SNF.  Too many tests, too many medications, too much redundancy erodes post-acute margin quickly.  Finding common ground between providers with shared resource opportunities is important for both segments to achieve efficiency and still provide optimal care.
  • Language Differences: In this case, I don’t mean dialect.  Industry jargon and references are different.  I often recommend cheat-sheets between providers just to make sure that everyone can have a “hospital to SNF to HHA” dictionary.  Trust me, there is enough difference to make a simple working dictionary worth the effort.
  • Education/Knowledge: The gap between staff working in different environments can be wide, particularly as the same relates to how and why things are done the way they are.  For example, therapy.  Physical therapy in a hospital for the acute stay is markedly different than the physical therapy in a home health setting or a SNF setting.  Care planning is different, treatments similar but session length and documentation requirements are vastly different.  The clinical elements are surprisingly similar but the implementation elements, markedly different.  The notion that one staff level is clinically superior to another is long dispelled.  SNF nurses can face as many clinical challenges and perhaps more due to no/minimal immediate physician coverage, as a hospital nurse.  True, there are specialty differences (CCU, Neuro ICU, Trauma, etc.) but at the level where patients flow through acute to post-acute, the clinical elements are very similar.  The aspect of care differences and the how and why certain things are done in certain settings is where interpretation and education is required.
  • System and Care Delivery: While the diagnosis may follow, assuring proper integration among the various levels or elements of care requires systematic care delivery. The best language: clinical pathways and algorithms.  Developing these across settings for an episode of care creates a recipe or roadmap that minimizes redundancy, misinterpretation, and lack of preparation (all of which create bad outcomes).  With these in-place, common acute admissions that beget post-acute discharges, places every care aspect within the same “playbook”.

 

March 28, 2017 Posted by | Home Health, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , , , | 1 Comment

SNF M&A: The Provider Number Trap

Over my career, I have done a fair amount of M&A work….CCRCs, SNFs, HHAs, Physician practices, hospice, etc. While each “deal” has lots of nuances, issues, etc. none can be as confusing or as tricky to navigate as the federal payer issues; specifically, the provider number.  For SNFs, HHAs, and hospices, an acquisition not properly vetted and structured can bite extremely hard post-closing, if provider liabilities existed pre-close and were unknown and/or unknowable.  Even the best due diligence cannot ferret out certain provider number related liabilities.

The Medicare provider number is the unique reference number assigned to each participating provider.  When initially originating as a provider, the organization must apply for provider status, await some form of accreditation (for SNFs it is via a state survey and for HHAs and hospice, via private accreditation) and then ultimate approval by Medicare/DHHS.  As long as the provider that has obtained the number, remains in good standing with CMS (hasn’t had its provider status/agreement revoked), the provider may participate in and bill, Medicare and Medicaid (as applicable).

Provider numbers are assignable under change of control, providing the assuming party is eligible to participate in the Medicare program (not banned, etc.).  Change of control requires change of ownership or control at the PROVIDER level, not the facility or building level.  The building in the case of an SNF, is not the PROVIDER – the operator of the SNF is.  For example, if Acme SNF is owned and operated by Acme, Inc., then Acme, Inc. is the Provider so long as the SNF license in Acme’s state is to Acme, Inc.  Say Acme decides to sell the SNF property to Beta REIT and in turn, Beta leases the facility back to Acme.  Acme no longer owns the building but remains the Provider as it continues to hold the license, etc. consistent with the operations of the SNF.  Carrying this one step further.  Acme decides it no longer wants to run the SNF but wishes to keep the building.  It finds Zeta, LLC, an SNF management/operating company, to operate the SNF and leases the operations to Zeta.  Zeta receives a license from the state for the SNF and now Zeta is the PROVIDER, even though Acme, Inc. continues to own the building.

In the example above regarding Zeta, the typical process in such a change of control involving the operations of a SNF is for Zeta to assume the provider number of Acme.  The paperwork filed with CMS is minimal and occurs concurrent to the closing creating change of control (sale, lease, etc.).  What Zeta has done is avoid a lengthier, more arduous process of obtaining a new provider number, leaving Acme’s number with Acme and applying as a new provider at the Acme SNF location. While taking this route seems appealing and quick, doing so comes with potential peril and today, the peril is expansive and perhaps, business altering.

When a provider assumes the provider number of another entity at change of control, the new provider assumes all of the former provider’s related liabilities, etc. attached to the number.  CMS does not remove history or “cleanse” the former provider’s history. The etc. today is the most often overlooked;

  • Star ratings
  • Quality measures including readmission history
  • Claim error rate
  • MDS data (submitted)
  • Federal survey history
  • Open ADRs
  • Open or pending, probes and RAC audits

The above is in addition to, any payments owed to the Federal government and any fines, forfeitures, penalties, etc.  The largest liability is or relates to, the False Claims Act and/or allegations of fraud.  These events likely preceded the change of control by quite a distance and are either impossible to know at change of control or discoverable with only great, thorough due diligence.  The former in my experience such as whistleblower claims may not arise or be known until many months after the whistleblower’s allegation.  During the interim, silence is all that is heard.  Under Medicare and federal law, no statute of limitation exists for fraud or False Claims.  While it is possible via indemnification language in the deal, to arrest a False Claims Act charge and ultimately unravel the “tape” to source the locus of origin and control at the time of the provider number, the same is not quick and not without legal cost.  Assuming the former provider is even around or can be found (I have seen cases where no such trail exists), winning an argument with CMS that the new provider is blameless/not at fault is akin to winning the Battle of Gettysburg – the losses incalculable.  Remember, the entity that a provider is dealing with is the Federal government and as such, responsive and quick aren’t going to happen.  Check the current status of the administrative appeal backlog as a reference for responsive and quick.

Assuming no payment irregularities occur, the list preceding is daunting enough for pause.  Assuming an existing provider number means assuming all that goes with it.  On the Federal side, that is a bunch.  The assuming party gets the compliance history of the former provider, including the Star rating (no, the rating is not on the SNF facility but on the provider operating the SNF).  As I have written before, Star ratings matter today.  Inheriting a two Star rating means inheriting a “dog that doesn’t hunt” in today’s competitive landscape.  It also means that any work that is planned to increase the Star rating will take time especially if the main “drag” is survey history.  The survey history comes with the provider number.  That history is where RAC auditors visit and surveyors start whenever complaints arise and/or annual certification surveys commence.

The Quality Measures of the former provider beget those of the assuming provider.  This starts the baseline for Value Based Purchasing.  It also sets the bar for readmission risk expectations, network negotiations and referral pattern preference under programs such as Bundled Payments.   Similarly, all of the previous MDS data submissions come with that same provider number, including those that impact case-mix rates under Medicaid (if applicable).  And, not exhaustively last but sufficient for now, all claims experience transfers.  This includes the precious error rate that if perilously close to the limit, can trip with one more error to a pre-payment probe owned, by the assuming provider.  Only extreme due diligence can discover the current error rate – perhaps.

Avoiding the peril of all of the above and rendering the pursuit or enforcement of indemnification (at the new provider’s expense) a moot issue is simple: Obtain a new provider number.  It is a bit time-consuming and does come with a modicum of “brain damage” (it is a government process) but in comparison to what can (and does) happen, a very, very fractional price to pay.  In every transaction I have been directly involved with, I have obtained a new provider number.  In more than one, it has saved a fair amount of go-forward headache and hassle, particularly on the compliance end.  Today, I’d shudder to proceed without a new provider number as the risks of doing so are enormous, particularly in light of the impact of Star ratings, quality measures and survey history.  Additionally, the government has never been more vigilant in scrutinizing claims and generating ADRs.  Inheriting someone else’s documentation and billing risks genuinely isn’t smart today.

While inappropriate for this post, I could list a plethora of examples and events where failure to obtain a new provider number and status has left the assuming provider with an absolute mess.  These stories are now, all too common.  Even the best due diligence (I know because my firm does it), cannot glean enough information to justify such a sweeping assumption of risk. Too much cannot be known and even that which can, should be rendered inconsequential by changing provider status.  Reliance on a definitive agreement and litigation to sort responsibilities and liabilities is not a prudent tactic. Time and resources are (always) better spent, applying for and receiving, a new provider number and provider status.

February 1, 2017 Posted by | Home Health, Hospice, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , | 3 Comments

Post Acute Resolutions for 2017

With a new year upon us and (perhaps) the most amount of free-flowing health policy changes happening or about to happen in decades, it seems appropriate to create some simple resolutions for the year ahead.  Similar to the personal resolutions most people make (get healthy, lose weight, clean closets, etc.), the following are about “improvements” in the business/operating environments.  They are not revolutionary; more evolutionary. Importantly, these are about doing things different as the environment we are in and moving toward is all about different.

First, a quick overview or framework for where health care is and where it is going.  A political shift in Washington from one party to another foretells of differences forthcoming.  It also tells us that much will not change and what will is likely less radical than most think.  Trump and the Republicans can’t create system upheaval as most of what the industry is facing is begat by policy and law well settled.  Similarly, no political operatus can change organically or structurally, the economic realities present – namely an aging society, a burgeoning public health care/entitlement bill, and a system today, built on a fee-for-service paradigm.  Movement toward a different direction, an insight of a paradigmatic shift, is barely visible and growing, while slow, more tangible.  In short: where we left 2016 begins the path through 2017 and beyond.

The road ahead has certain new “realities” and potholes abundant of former realities decaying.  The new realities are about quality, economic efficiency and patient satisfaction/patient focus.  The former realities are about fee-for-service, Medicare maximization, and more is better or warranted. The signs of peril and beware for the former is evident via today’s RAC activity and False Claim Act violations pursuit.  Ala Scrooge, this is the Ghost of Christmas Future – scary and a harbinger to change one’s behavior or face the certainty of the landscape portrayed by the Specter.

So, resolution time.  Time to think ahead, heed the warnings, realize the future portrayal and make plans for a different 2017.

Resolution 1: The future is about measurable, discernible quality.  No post-acute provider, home health or SNF, can survive (much) longer without having 4 or higher Star ratings and a full-blown, operational focus on continuous quality improvement.  The deliverable must be open, clear and transparent, visible in quality measures and compliance history.  FOCUS ON QUALITY AND IN SPECIFICS INCLUDING HAVING A FULL-BLOWN, FULLY INTEGRATED QAPI PROGRAM.

Resolution 2: The future is about patient preference and satisfaction.  For too many decades, patients have gotten farther detached from what health care providers did and how they (providers) did it.  No longer.  Compliance and new Conditions of Participation will require providers to stop paying lip-service to patient centered-care and start now, to deliver it.  The new environment is no longer just what the provider thinks the patient wants or should have but WHAT the patient thinks he/she wants and should have.  TIP: Brush-up on the Informed Consent protocols! FOCUS ON PATIENT PREFERENCES IN HOW CARE IS DELIVERED, WHAT PATIENT GOALS ARE, AND THEIR FEEDBACK/SATISFACTION WITH SERVICE. 

Resolution 3: Efficiency matters going forward.  This isn’t about cost.  It is about tying quality to cost and to a better outcome that is more economically efficient.  The measurement here is multi-faceted.  The first facet is utilization oriented meaning length-of-stay matters.  The quicker providers can efficiently, effectively and safely move patients from higher cost settings to lower costs settings, is the new yardstick.  The second facet is reductions in non-necessary or avoidable expenditures such as via Emergency Room transfers and hospitalizations/rehospitalizations.  NOTE: This ties back to the first resolution about quality. MANAGE EACH ENCOUNTER TO MAKE CERTAIN THAT EACH OF LENGTH OF STAY IS OPTIMAL, AT EACH LEVEL, FOR THE NEEDS OF THE PATIENT AND THAT ANY COMPLICATIONS AND AVOIDABLE ISSUES (FALLS, INFECTIONS, CARE TRANSITIONS) IS MINIMIZED.

Resolution 4: The new world going forward demands that we begin to transition from a fee-for-service mindset to a global payment reality.  This transition period will represent some heretical demands. While fee-for-service dies slowly as we know it, its death will include interstitial periods of pay-for-performance aka Value-Based Purchasing.  Similarly and simultaneously, new models such as bundled payments will enter the landscape.  Our revenue reality is moving and thus, a whole new set of skills and ideas about revenue capture and management must evolve. RESOLVE TO STOP LOOKING AT HOW TO EXPAND AND MAXIMIZE EACH MEDICARE ENCOUNTER.  THE NEW REALITY IS TO LOOK AT EACH PATIENT ENCOUNTER IN TERMS OF QUALITY AND EFFICIENCY FIRST, THEN TIE THE SAME BACK TO THE PAYMENT SYSTEM.  REVENUE TODAY WILL FOLLOW AND BE TIED TO PATIENT OUTCOMES, ETC.

Resolution 5: To effectuate any kind of permanent change, new competencies need development.  Simultaneous, old habits non-effective or harmful, need abandoning.  The new competencies required are care management, care coordination, disease management, and advanced care planning.  Reward going forward will require providers to be good at each of these.  Each ties to risk management, outcome/quality production, and transition efficiency.  Remember, our rewards in the future are tied to efficiency and quality outcomes.  Advanced Care Planning for example, covers both.  Done well, it minimizes hospitalizations while focusing on moving patients through and across higher cost settings to lower cost settings. THIS IS THE YEAR OF BUILDING.  RESOLVE TO CREATE CORE COMPETENCIES IN ADVANCE CARE PLANNING, CARE COORDINATION AND THE DEVELOPMENT AND IMPLEMENTATION OF BEST-PRACTICE, DISEASE MANAGEMENT ALGORITHMS AND CARE ALGORITHMS IN AND ACROSS COMMON DIAGNOSES AND RISK AREAS (e.g., falls, skin/wound, heart failure, pneumonia, infections, etc.).

Resolutions 6: The world of post-acute is changing.  To change or adapt with it requires first and foremost, knowledge.  Too many providers and often, leadership within don’t understand the dynamics of the environment and what is shifting, how and when.  Denial cannot be operative and as Pasteur was famed to say, “chance favors the prepared mind”.  Opportunity is abundant for those providers and organizations that are up-to-speed, forward thinking and understand how to use the information available to them.  RESOLVE TO EDUCATE YOURSELF AND THE ORGANIZATION.  KNOW HOW THE 5-STAR SYSTEM WORKS.  KNOW WHAT VALUE-BASED PURCHASING IS ALL ABOUT.  KNOW THE MARKET AREA YOUR ORGANIZATION IS IN AND HOW YOUR ORGANIZATION COMPARES FROM A QUALITY PERSPECTIVE (MEASURED) TO OTHERS.  KNOW THE HOSPITAL PLAYERS AND THE NETWORKS.  KNOW YOUR ORGANIZATION’S STRENGTHS AND WHAT IMPROVEMENTS NEED TO BE MADE.

Happy 2017!  The beauty of a New Year is that somehow, we get a re-start; a chance to do and be different than what we were in the prior year.  For me, I like the CQI approach best which is more about constant evolution than a wholesale, got to change now, approach.  Success is about doing things different as realities and paradigms shift.  We are certainly, from a health care and post-acute industry perspective, in a paradigm shift.  Take 2017 and brand it as the Year to Become Different!  The Year of Metamorphosis!

January 4, 2017 Posted by | Home Health, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , | Leave a comment

The Election is Over….Now What?

We knew that sooner or later, the first Tuesday in November would arrive and with that, a new President and changes (many or few) to Congress. The outcome certain, we move to uncertainty again concerning “what next”?…or as applicable here, what next from a health policy perspective.

With Donald Trump the incoming President-Elect, only so much from a policy perspective is known.  Hillary Clinton’s path was easier to divine from a “what next” perspective as fundamentally, status quo was the overall direction. Trump’s likely direction and thus, changes to current policy, etc. are hazy at best.  Thematically, there are points offered throughout the campaign that give some guidance.  Unfortunately, much that drives current reality for providers is more regulatory begat by legislative policy than policy de novo.

Without divining too much from rhetoric, here’s what I think, from a health policy perspective, is what to expect from a Trump Administration.

  1. ObamaCare: Trump ran on a theme of “repeal and replace” ObamaCare aka the Affordable Care Act. This concept however, needs trimming.  Repealing in total, existing federal law the magnitude of the ACA is difficult if not nearly impossible, especially since implementation of various provisions is well down the road.  The ACA and its step-child regulations are tens of thousands of pages.  Additionally, even with a Republican White House and Republican-majority Congress, the Congressional numbers (seats held) are not enough to avoid Democratic Senate maneuvers including filibuster(s). This means that the real targets for “repeal and replace” are the insurance aspects namely the individual mandate, Medicaid expansion, certain insurance mandates, the insurance exchanges, a likely the current subsidy structure(s).  The other elements in the law, found in Title III – Improving the Quality and Efficiency of Health Care, will remain (my prediction) – too difficult to unwind and not really germane to the “campaign” promise.  This Section (though not exclusively) contains a slew of provisions to “modernize” Medicare (e.g., value-based purchasing, physician quality reporting, hospice, rehab hospital and LTACH quality reporting, various payment adjustments, etc.).  Similarly, I see little change made, if any to, large sections of Title II involving Medicaid and Title IV involving Chronic Disease.  Bottom line: The ACA is enormous today, nearly fully intertwined in the U.S. health care landscape and as such, too complex to “wholesale” eliminate and replace. For readers interested in exploring these sections (and others) of the ACA, a link to the ObamaCare website is here http://obamacarefacts.com/summary-of-provisions-patient-protection-and-affordable-care-act/
  2. Medicaid: The implications for Medicaid are a bit fuzzier as Trump’s goals or pledges span two distinct elements of the program.  First, Trump’s plan to re-shape ObamaCare (repeal, etc.) would eliminate Medicaid expansion.  As mentioned in number 1 prior, this is a small part of the ACA but a lipid test for Republican governors, especially in states that did not embrace expansion (e.g, Wisconsin, Kansas, etc.).  Second, Trump has said that he embraces Medicaid block-grant funding and greater state autonomy for Medicaid programmatic changes (less reliance on the need for states to gain waivers for coverage design, program expansion, etc.).  It is this element that is vague.  A series of questions arise pertaining to “policy” at the federal level versus funding as block grants are the latter.  The dominant concern is that in all scenarios, the amount of money “granted” to the states will be less than current allocations and won’t come with any matching incentives.  With elimination of the expansion elements, how a transition plan of coverage and care will occur is a mystery – federal assistance? state funding mostly?  What I do predict is that Medicaid will only suffer the setback of a restructure and replacement of the Medicaid expansion elements under the ACA.  I don’t see block grants happening any time soon as even Republican governors are opposed without a plan for wholesale Medicaid programmatic reform.  Regardless of the approach, some initial Medicaid changes are in the offing, separate from the Block Grant issue.  The Medicaid Expansion issue is no doubt, a target in the “repeal and replace Obama Care”.  The trick however is to account for the large number of individuals that gained coverage via expansion (via eligibility increases due to increased poverty limits) – approximately 8 million impacted.  This is less about “repeal” and more about “replace” to offset coverage lapse(s) for this group.
  3. Related Health Policy/ACA Issues: As I mentioned earlier, the ACA/ObamaCare is an enormous law with tentacles now woven throughout the health care industry.  The Repeal and Replace issues aren’t as “clean” as one would think.  The focus is the insurance mandate, the subsidies, the mandated coverage issues and to a lesser extent, Medicaid.  That leaves fully 80% of the ACA intact including a series of policy changes and initiatives that providers wrestle with daily. These issues are unlikely to change in any substantive form.  Republicans support alternative delivery projects, value based purchasing, etc. as much if not more than Democrats.  Additionally, to repeal is to open a Pandora’s Box of agency regulations that tie to reimbursement, tie to other regulations, etc.  For SNFs alone, there exists all sorts of overlap between Value Based Purchasing, Bundled Payments, new Quality Measures and quality reporting (see my post/presentation on this site regarding Post-Acute Regulatory Changes).  The list below is not exhaustive but representative.
    • Value Based Purchasing
    • CMS Center for Innovation/Alternative Delivery Models/Bundled Payments
    • Additional Quality Measures and Quality Reporting
    • Inter-Program and Payment Reform – Rate Equalization for Post-Acute Providers
    • IMPACT Act
    • ACO Expansion

As providers watch the inauguration approach and a new Congress settle in, the wonder is around change. Specifically, what will change.  My answer – bet on nothing substantive in the short-run.  While Mr. Trump ran partially on a platform that included regulatory reduction/simplification, the lack of overall specifics regarding “which or what” regulations on the health care front are targets leaves us guessing.  My guess is none, anytime soon.

The Trump focus will be on campaign specific agenda first: ObamaCare, Immigration, Taxation, Foreign Trade, Energy, etc. – not health policy per se.  There is some flow-through gains providers can anticipate down-the-road that can be gleaned from the Trump campaign but these are a year or more off.  If Trump does deal with some simplification on drug and research regulation (faster, cheaper, quicker approvals), funding for disease management and tele-medicine and a fast-track of some Republican policy “likes” such as Medicare simplification, Medicaid reform at the program level, and corporate tax reduction (will help for-profit providers), then gains will occur or opportunities for gains will occur.

From a strategic and preparatory perspective, stay the course.  Providers should be working on improved quality outcomes, reducing avoidable care transitions/readmissions, looking at narrow networks and network contracting/development opportunities and finding ways to reduce cost and improve care outcomes.  Regardless of what a Trump Administration does first, the aforementioned work is necessary as payment for value, bundles/episodes of care, and focus on quality measures and outcomes is here to stay and to stay for the foreseeable future.

November 18, 2016 Posted by | Home Health, Hospice, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , , | Leave a comment

Post-Acute Providers and Narrow Networks: Join, Form or Wait

As alternative payment models expand and the options clarify, the post-acute segment of the health care spectrum faces a series of strategic questions, primarily;

  1. Join a network that exists or is forming be it part of an ACO, a SNP, a preferred provider organization in a Managed Medicaid state, or part of a bundled payment initiative
  2. Form one de novo – a SNP, a PACE, etc.
  3. Wait and see what evolves as certainly, much will change over the next two to four years.

One consideration that cannot be overlooked is that CMS plans on aggressively pursuing additional “value-based payments” at the expense of fee-for-service arrangements presently in-place.  The process, if consistent with what has occurred in terms of roll-out/roll-forward, suggests a pace that will include new initiatives (e.g., bundled payments) every 12 months. Simultaneous or parallel to this movement, states continue to push forward on various hybrid Medicaid options including managed Medicaid plans, hybrid plans for dual eligible individuals, and the encouragement of more SNP and PACE options with some states offering incentives for formation (PACE Innovation Act allows for different program options with different benefit structures across more population categories.  Also provides program opportunities for for-profit organizations).

The question oft asked these days is given the above, where to next for an SNF, a HHA, or even an ALF or Hospice? The answer starts with the market area and the dynamics within the market.  The trends I see are truly unique and different region to region, market to market, state to state. For example, in certain states and regions, ACOs exist, are up and running, and have experience under their “belt”.  In other states, ACOs are just forming or in some cases, re-forming post a distasteful experience and opportunities are fresh.  In still other states, ACOs don’t exist and perhaps trial balloons have floated but nothing has persisted to conclusion.

The market factors that drive (majority of) network formation and thus, the maturity of the formation, the opportunities and the palate for additional or new ventures are;

  • How much “managed” Medicare and Medicaid exists in the state, region, etc. and for how long.  In markets with a large penetration of Medicare Choice plans, narrow networks and the experience and acceptance between providers is greater.
  • Are ACOs up and running and/or forming.  The more they are or are developing, the greater the interest in and opportunity for, network enhancement and development
  • The market experience with early-phase, bundled payments via BPCI – the precursor to the current bundled payment initiatives.  Similarly, whether the region is participating in the CCJR initiative or will in the new cardiac bundled payments.

No matter the dynamics of the market however, certainty does exist that post-acute providers must move to adapt to a value- based payment paradigm.  How much risk a provider can and will accept depends on the provider, its existing care management acumen, its infrastructure maturity and its financial/capital position.  Similarly, the evolution period that predominates the post-acute world now requires balance.  This period is still fee-for-service heavy yet, transitioning (depending on regions, markets) to value-based payments.  Providers must manage and excel at both though strategies to succeed in  both are not mutually exclusive.  Additionally, while payments are evolving, the compliance requirements are not.  Oddly enough, the forthcoming revised Federal Conditions of Participation for SNFs will not in any way, provide accommodation for providers that work heavily in a transitional, post-acute world.  The regulations are long-term care driven and heavily so in some cases wholly anathema to the transitional care world that is evolving.

Assumptively, this episode of care, value-based payment world is not going away.  What this means is that survival in such a world for any post-acute provider is to avoid reactive strategy (defensive), instead applying resources and energy in the direction of the change.  What I advise, before I answer the questions posed in the title, is as follows;

  • Know your market and critically evaluate the landscape.  What is going on in terms of Medicare Advantage plans, ACOs, etc.?  If not done, have an in-depth conversation with hospital and physician referral partners regarding their approaches, strategies, etc. to  bundled payments.  Don’t  be surprised however, if a level of vapor-lock exists.   Be willing to forebear the task and direct some additional dialogue.
  • Assess your organization critically.  Where are your quality ratings and measures (stars, etc.)?  How does your organization manage its lengths of stay, key quality measures (falls, hospitalizations, wounds, patient satisfaction, etc.)?  Where is your HIS/MIS at?  Can you communicate with other providers, provide physicians access, etc.?
  • Can your organization make investments financially in infrastructure and staff realignment while still caring for a payer mix that is predominantly fee-for-service?  Can you survive lower margins perhaps even losses while you transition?  You may have extra staff temporarily, different staff, and more capital investment than typical.
  • Can you laterally partner or downstream?  For example, an SNF needs to find a HHA partner.  What synergies in the market exist?  Can (or will or already is) the SNF be in the HHA  business?  How about outpatient?  How about physicians?  Partner?  Employ? Joint venture (careful here)?

Concluding: To the questions(s) posed in the title.  Join?  Yes, particularly if the provider is single site or limited sites in a region.  Again, I am assuming the provider is prepared to join (I’ll summarize at the end).  Source complimentary networks and get in and watch for opportunities in the market and within the network to develop additional product/service lines.

Form?  Not unless the provider has mass, expertise and enough geographic span and parallel partner alignment to manage a population of at-risk individuals for capitated payments.  This is a step that requires significant infrastructure and capital.  A provider must have enough outlets and partners to manage population risk across a group exceeding normally, 10,000 lives (ideally larger).  The common network models applicable for post-acute providers looking to form their own network are SNPs and PACE programs.

Wait?  I can’t recommend waiting as doing so will leave any provider at peril of being left-out as networks continue to evolve.  This said, a play cautiously strategy is fine provided that the provider or group is diligent and active in gauging networks and negotiating.  A wholesale “wait and see what happens” is an ill-advised strategy.

Final Note: By prepared to join a network I mean minimally, having the following pieces with experience and data as applicable.

  • Ratings at 3 Stars or better – ideally 4 or higher particularly in markets where multiple 4 star or better providers exist.
  • A great QAPI program that monitors outcomes and tracks and trends quality data and quality measures plus patient satisfaction.  Minimally, the provider should have data and analysis on infections, falls, wounds, hospitalizations, response times, other care transitions, length of stay, etc.
  • A procedure and personnel to care manage referrals through a full episode of care.
  • A process of sharing quality data and communication on patient care and service issues across provider segments.
  • HIS/MIS at a level that allows certain functional connectivity between providers such as lab/diagnostics, hospital, physicians, pharmacy, etc. such that patient information can be communicated and acted upon.
  • Parallel service partners (either owned or contracted with) across, up and down stream – physicians, hospitals, pharmacy, HHA, hospice, outpatient, etc.
  • Care algorithms to support best practices for outcomes on key patient profiles (minimally, bundled payments) plus supportive protocols for key co-morbidities such as COPD, CHF, diabetes, peripheral vascular disease, depression, and other source acquired pressure injuries and infections.  The latter are necessary to minimize re-hospitalization risk.
  • Care staff trained and using INTERACT tools and versed in physician communication protocols, ideally from a source such as AMDA.

September 14, 2016 Posted by | Home Health, Skilled Nursing | , , , , , , , , , , , , , | Leave a comment

CMS Proposes Additional Bundled Payments: The Post-Acute Implications

On July 25, CMS released a proposed rule to create additional bundled payments/DRG focused EPMs, targeted for July 1, 2017.  The announcement/proposed rule is consistent with CMS’ and the Administration’s goal to migrate up to 50% of all traditional FFS (fee-for-service) payments to alternative models by 2018.  As with the CJR (bundled payments for hip and knee replacements), the comment period is relatively short.  Similarly, the likelihood of CMS deviating much in terms of timelines and methodology (payment) from the proposed rule is slim.  The view is that CMS has foretold providers of these initiatives, created a pathway or road map via analogous alternative models (BPIC and ACOs), and developed a systematic approach to the operational elements of the initiatives sufficient for providers to adapt and move forward.

Bundled Payments for Coordinated Cardiac and Hip-Fracture Care

As in the CJR initiative/rule, CMS has identified certain DRGs that it believes via evidence and study,  present opportunities for cost reduction and improved quality outcomes emanating from initial hospitalization through an episode of care equaling 90 days.  Following a near identical road map or path used with CJR (hip and knee replacement), CMS will provide the originating hospital with a target payment goal based on a regionally weighted average  with a small, statistically smoothed reduction.  This targeted value is the cost benchmark for the applicable DRG plus all related costs for a period totaling 90 days, encompassing the hospital originating stay.  Functionally, the payment equals the hospital inpatient stay, post-acute services, outpatient services, certain physician and supply components, etc. (aka the Episode Payment or “bundled payment”).  Below is a summary of the DRGs that make up the new “bundles” and the methodology in terms of how this initiative is set to work.

  • Includes cardiac care elements/DRGs for myocardial infarction and coronary artery bypass graft procedures (MI and CABG) plus an orthopedic element for hip/femur fractures and surgeries that is an addition or augment to the CJR.  The cardiac elements are mandated for hospitals in 98 MSAs (anyone who wants the list or wants to know about a particular region, contact me as provided on this site).  The hip/femur element is only applicable in the CJR regions; the original 67.
  • The related DRGs are:
    • Myocardial Infarction (MI): DRGs 280-282
    • Coronary Artery Bypass (CABG): DRGs 231-236
    • Surgical Hip Femur Fracture Treatment (SHFFT): DRGs 480-482
  • The Hospital is paid a calculated amount based on a regional target by applicable DRG
  • The amount is equal to the cost of the care at the hospital and the target, reflects the total expected cost for the complete episode of care (hospital, physician, post-acute).  The actual payment to the hospital is the target amount minus a quality measures discount equal to 1.5 to 3%.  Based on actual performance, savings can be returned as an incentive or recouped.
  • Post-acute providers bill per fee schedule.
  • In year 1, CMS reviews the costs per episode, the applicable quality indicators and patient satisfaction results. The review is against expected costs and quality standards.
  • In year 2, CMS reviews the same data and if the costs and quality are equal to or better than expected, the hospital can receive an incentive payment. If worse, the hospital will see a payment reduction (capped at 5% in year 2, moves to 10% in year 3 and 20% in following years).
  • Hospitals after year 1, can contract with post-acute providers to share risk (gains and losses) if the post-acute providers meet certain quality standards (3 star or better).
  • The whole initiative is slated for a 5 year period after which, CMS will review.

(The above is a cliff-note version covering the major highlights.  I have a client-based, in-depth summary that I can provide to readers.  Contact me via email at hislop3@msn.com or via a comment to this post.  Please provide a current, working email address and I will forward the summary, free of charge)

Within the proposed rule, CMS introduced two additional initiatives;

  • Cardiac Rehab Incentive Payments: A series of incentive payments to get hospitals under the Cardiac initiative to aggressively push patients into cardiac rehab programs during the 90 day Episode. These payments would be made to participants in 45 regions not selected and 45 additional regions selected within the bundled payment program.
    • First 11 cardiac rehab services will include a $25 per service bonus.
    • Services after 11 will include an incentive payment of $175 per service, up through the 90 day episode window.
    • Sessions are limited to 36 one hour periods over 36 weeks with a possible extension of an additional 36 sessions over a longer period if authorized by the MAC (Medicare Administrative Contractor). Intensive sessions are limited to 72 one hour sessions, up to 6 sessions per day, for 18 weeks.
  • A pathway for physicians that participate in bundled payments to qualify for financial rewards under the Quality Payment Program (CHIP and MACRA). Essentially, the methodology creates incentives for physicians that choose to be at a certain level of financial risk for payment loss, to gain incentive payments for meeting certain quality standards and adopting Electronic Health Record Technology.

Post-Acute Implications and Strategies

Unlike CJR, the implications for post-acute providers under the cardiac components are fairly minimal. The typical down-stream referrals (post-acute hospitalization services) for the cardiac components in the rule are minimal.  Most cardiac patients utilize after-care services through the hospital directly; principally for cardiac rehab.  When post-hospitalization discharges include care services, the bulk are through and coordinated with home health.  If more intense periods of inpatient care are required after acute hospitalization, the typical path is discharge to LTAcH or IRF.  This component however, can provide some strategic opportunities for SNFs that want to embrace a cardiac program with proper staffing, technology investments (telemetry), etc.

The SHHFT (hip/femur fracture) initiative is similar in opportunity to the CJR.  It presents SNFs and HHAs with numerous opportunities to partner with orthopedic groups, hospitals, and surgery centers to develop lower cost, high quality, coordinated care programs.  As with CJR, this phase of the bundled payment programs includes regulatory waivers for high quality providers (start ratings 3 and above).  These waivers include the three-day qualifying hospital stay for SNF coverage and the relaxation (requirements) of direct referral relationships that include incentive dollars.

For certain post-acute providers, there may be some opportunity to advance into the cardiac rehab arena.  While the incentive payments are targeted to the hospital, the hospital can pass these along and many may want do to just that.  Hospital cost structures are often too high to reap a modest incentive reward such as provided in the rule, necessitating a partner-type relationship to deliver the actual programming.

Strategically, post-acute providers need to consider the following and position accordingly;

  • As with CJR, star ratings matter.  SNFs and HHAs that want to succeed, garner partner opportunities and referrals should rate/rank 4 or 5 stars.  While three stars can play, the same will be market constricted by the 4 and 5 star programs.
  • Quality matters.  Post-acute providers need to aggressively monitor their outcomes and their patient satisfaction.  I recommend the following at a minimum.
    • QA and reduce as much as possible, any rehospitalization.  To do this, staff need training, tools such as INTERACT, service depth expanded and reviewed, and proper support tools and equipment available.
    • Employ or develop a Care Navigator within your organization (more than one if need be).  I recommend that this position is tasked with handling all critical elements of the initial referral and intake, coordinating all care during the post-acute stay, coordinating discharge including referrals downstream (e.g., SNF to home care), coordinating return physician visits, patient teaching, and all follow-ups on status and questions.  This role should include watching lengths of stay and gathering critical quality measures such as weight loss, wound/skin, falls, infections, etc.
    • Develop and utilize pathways and protocols that correlate to the bundled payment DRGs for the post-acute components.  In other words, if your organization is a SNF, it should have a post-surgical pathway for a femur fracture that covers from admission, pain management, therapies, skin and wound, length of stay, patient teaching, discharge, etc. all laid out in a pathway/decision matrix married to care plans.  Not only are these necessary to assure effective, efficient care; they are great marketing tools.  Collaborate with the hospital, with physician partners and discharge partners to gain a complete perspective.
    • Train and develop staff skills to coincide with the types of patients encompassed by the bundled payment models.  Your SNF or HHA should have expertise in every care element plus ideally, staff that have advanced training and certifications in key disciplines.  For example, an SNF that seeks to take post CABG patients needs RNs with ALS certification and telemetry experience/training.
    • Develop a post-acute continuum.  Playing in the bundled payment arena now and going forward as a post-acute provider will necessitate having a continuum of services.  Bundled payments and being at risk are anathema to truncated, one-off providers.  In other words, an SNF that doesn’t have a HHA component and outpatient component won’t be a referral magnet as the EPMs (episodic payment models) move forward.  I recommend providers that can, acquire or develop their own programs and those that cannot, partner accordingly.  Quality and efficiency are key so if for example an SNF chooses to partner with a HHA, the SNF is warned to find such an agency that will match quality, monitor all elements of outcome data and satisfaction, collaborate on program development, QA, etc.  The same is true for outpatient relationships.

As with CJR, the focus in this next phase is to re-shape how the post-acute provider world interacts with the acute hospital and physician world.  Providers need to re-organize thematically on quality, efficiency and collaboration. The winners (if you will) are the providers that manage the most services, in a coordinate delivery model, that can demonstrate quality with the ability to manage and coordinate care across a myriad of delivery points; seamlessly.

 

August 5, 2016 Posted by | Home Health, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , | Leave a comment

The Supreme Court, False Claims Act, and Implications for Providers

Nearing the end of the Supreme Court session, the Court issued an important clarification ruling concerning the False Claims Act in cases of alleged fraud.  In the Universal Health Services case, the Court addressed the issue of whether a claim could be determined as fraudulent if the underlying cause for fraud was a lack of professional certification or licensing of a provider that rendered care related to the subsequent bill for services.  In the Universal case, the provider submitted claims to Medicaid and received payment for services.  The services as coded and billed implied that the care was provided by a licensed and/or qualified professional when in fact, the care was provided by persons not properly qualified.  In this case, the patient ultimately suffered harm and death, due to the negligent care.

The False Claims Act statute imposes liability on anyone who “(a) knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval; or (b) knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.” It defines “material” as “having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.” And it defines “knowingly” as “actual knowledge; … deliberate ignorance; … or reckless disregard of the truth or falsity of the information; and … no proof of specific intent to defraud is required.” The last element is key – no proof of intent to defraud is required.

Though providers sought a different outcome, the initial review suggests the decision is not all that bold or inconsistent with other analogous applications.  The provider community hope was that the Court would draw a line in terms of the expanse or breadth of False Claims Act “potential” liabilities.  The line sought was on the technical issue of “implied certification”; the notion that a claim for services ‘customarily’ provided by a professional of certain qualifications under a certain level of supervision doesn’t constitute fraud when the services are provided by someone of lesser professional stature or without customary supervision, assuming the care was in all other ways, properly provided.  The decision reinforces a narrow but common interpretation of the False Claims Act: An action that would constitute a violation of a federal condition of participation within a program creating a condition where the service provided is not compliant creates a violation if the service was billed to Medicare or Medicaid. Providers are expected to know at all times, the level of professional qualifications and supervision required under the applicable Conditions of Participation.

The implications for providers as a result of this decision are many.  The Court concretized the breadth of application of the False Claims Act maintaining an expansive view that any service billed to Medicare and/or Medicaid must be professionally relevant, consistent with common and known professional standards, within the purview of the licensed provider, and properly structured and supervised as required by the applicable Conditions of Participation.  Below are a few select operational reminders and strategies for providers in light of the Court’s decision and as proven best-practices to mitigate False Claims Act pitfalls.

  • One of the largest risk areas involves sub-contractors providing services under the umbrella and auspices of a provider whereby, the provider is submitting Medicaid or Medicare claims.  In these instances the provider that is using contractors must vet each contractor via proper credentialing and then, provide appropriate and adequate supervision of the services.  For example, in SNFs that use therapy contractors the SNF must assure that each staff member is properly licensed (as applicable), trained to provide the care required, and the services SUPERVISED by the SNF.  Supervision means actually reviewed for professional standards, provided as required by law (conditions of participation), properly documented, and properly billed.  The SNF cannot leave the supervision aspect solely to the therapy contractor.
  • Providers must routinely audit the services provided, independently and in a structured program.  Audits include an actual review of the documentation for care provided against the claim submitted, observations of care provided, and interviews/surveys of patients and/or significant others with respect to care and treatment and satisfaction.
  • Establish a communication vehicle or vehicles that elicits reactions to suspicious activity or inadequate care.  I recommend a series of feedback tools such as surveys, focus groups, hotlines and random calls to patients and staff.  The intent is to provide multiple opportunities for individuals, patients, families and staff to provide information regarding potential break-downs in care or regarding outright instances of fraud.
  • Conduct staff training on orientation and periodically, particularly at the professional level and supervisory level.  The training should cover organizational policy, the legal and regulatory framework that the organization operates within, and case examples to illustrate violations plus remedy steps.

July 24, 2016 Posted by | Home Health, Hospice, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , , , | Leave a comment

Health Care Leadership: Why its Hard, Why Many Fail and What it Takes to Succeed

The bulk of my work centers around gathering data, analyzing trends and working with the leadership of various organizations to implement strategy or more centered, strategies.  The process is iterative, interactive and always fascinating.  Throughout my career, I’ve worked within (virtually) every health care industry segment and seniors housing segment. I also counsel and have worked with entities that buy, sell, invest in, consult with, account for, finance, and research health care and seniors housing businesses. Its my work with the latter that is the genesis of this post and my decades of work with the former that is the “content”.

There are two fundamental reasons why health care leadership is hard and different from leadership duties in other industries: 24/7 demands and the immediacy of the customer to the enterprise.  Health care and seniors housing (regardless of the segment specific) never closes, has no true seasonality, and demand can increase and decrease with equal force and equal pace, almost entirely related to external factors and forces.  Pricing for the most part, other than seniors housing, is almost immaterial and unrelated to revenue.  No other, non-governmental, business is as regulated and scrutinized and mandated transparent than health care.  Likewise, no other business has the mandate that the full array and intensity of all services must be available 24/7, on immediate demand, with no ability to defer, fallow, or limit.  Even a 24 hour PDQ won’t have all services available constantly (if the hot dogs run out, they are gone!).

While other industries will have close customer contact, health care has a unique, and intimate relationship with its customers.  In SNFs, Assisted Living Facilities, Seniors Housing, etc. the customer is present for long-periods (years).  In hospitals, the customer is present for hours, days, up to weeks at a time (the latter rare unless we are talking LTAcH).  In the health care setting, the enterprise has total responsibility for all needs of the customer – great to small.  The quality of care and service to all needs matters and is measured, reported and today in many regards, tied to compensation. Back to the PDQ, the over-done hot dog costs the same and there is no governmental entity that maintains a hotline for customer reports and investigations regarding the quality of the hot dog.

In health care, there is a very unique and in many ways, perverted twist concerning the customer relationship.  The customer today is a Dr. Jekyll/Mr. Hyde manifestation.  No other industry has customers that are bifurcated as such – the payer being a consumer unique and separate from the actual present being.  Health care entities, to be successful, must satisfy both and manage the expectations of both, seamless and fluid to each party.  I know of no other industry where on any given day in a hospital for example, where it is likely that of 300 individual inpatients there are dozens more of the payer/insurer consumers requiring unique attention, simultaneously.  Miss a step, miss a form, etc. and the payer consumer refuses to pay for the human consumer that is receiving or received the care.

Because of the “constant” nature and customer relationships (coupled with many other reasons of course), health care leadership is hard.  It is hard because these two fundamental components are nearly, completely, out of the control of the leader.  The leader can only react or respond but truly, never change the paradigm or structure and always, in terms of the payer customer, sit beholding to the rule changing process and bureaucracy of the payer customer.  This last element can be unbelievably insidious.  For example, in the State of Kansas, dozens of SNFs face grave peril in terms of solvency because the State cannot efficiently certify eligibility for Medicaid for qualified seniors.  The delay has left dozens of facilities with Medicaid IOUs at six digits and climbing – the human customer receiving care, the paying customer bureaucratically inept and unwilling and incapable of paying its bills, and the SNF sitting with no real recourse.

Given the above, its frankly easy to see why so many leaders fail or simply, give up.  The deck is stacked toward failure.  On the expense side of the equation, because of mounting regulation, fewer elements are within a leader’s control.  With a rare exception, revenue is completely beyond control in terms of price and reimbursement for services provided.  With RAC and other audits, revenue initially earned can be retrospectively recast and denied.  (The PDQ six month’s later decides to recoup payment for the hot dog because, in its infinite wisdom, you didn’t need to the eat the hot dog or you should have made a wiser food choice).  The overwhelming variables that can contribute to failure in a micro and macro sense for a leader are not lessening.  His/her organization is open and under scrutiny, 24/7.  He/she must oversee and be accountable for the health outcomes of a human customer that in turn are interpreted by the payer customer (remotely), subject to alteration, and retroactive scrutiny.  Today, success isn’t just based on what occurred at the point of service but after the service concluded.  The enterprise is at-risk for human behavior (compliance and non-compliance) of the consumer for not just days post service but months.  Further, the enterprise is at-risk for the satisfaction of a consumer whose behavior and lifestyle may have significantly contributed to his/her need for care and service initially.  As one executive told me recently; “We have to tell people the truth about their disease, figure out how to make it sound good and nice, and hope that we have done so in such a life affirming fashion that the patient will give us 5 stars for service.  Figure that one out”.  Alas, perhaps failure is inevitable.

Aside from failure correlating to burn out or shear “giving up” (the average large system executive tenure is less than 10 years), the failure in leadership that I see resides primarily in two areas.  The first is an inability or lack of willingness to realize that the paradigm is constantly changing today and the pace of which, is accelerating.  It is human nature to seek equilibrium; to pursue elements of stasis and calm. The same ( is) anathema to leading a health care enterprise.  The second area is aversion to risk.  Precisely because of the first point, taking risk or being capable of tolerating large elements of risk is imperative today in health care.  The best leaders are true entrepreneurs today.  They see opportunity and are willing to pursue it with vigor.  They find the niches and pursue them.  Every bureaucracy and rapidly changing industry paradigm begets opportunity with equal pace and ferocity.  For example, the growing “private, non-reimbursed” service sectors in health care that continue to grow and flourish because of and in-spite of the heavily regulated, price tied market.  I know of and have consulted for, provider groups that have moved further away from Medicare and managed care to private payment with phenomenal success.  Was the strategy a risk?  Yes.  Most would not take this type of risk.  I am harkened however by the notion that at times, the greatest risk present is the risk of doing nothing.

Successful leadership and leaders today, those that I know, have the ability to think systematically and algebraically – to solve the industry polynomials with all of the variables.  They are inquisitive by nature and unwilling to accept the status quo, regardless of where and why.  They embrace the famed Pasteur quote: “Chance (luck) favors the prepared mind”.  They also have the soul and panache (tempered) of Capt. Jack Sparrow (from Pirates of the Caribbean).  They like risk and have the entrepreneurial heart and mind to innovate and move fluidly through problems and challenges such that the same are opportunities.  They don’t allow their enterprises to become complacent or bureaucratic.

Today, success is about better – better products, better service, and better care.  Payers are demanding accountability and want an increasing level of care and service for lower levels of payment.  That is the paradigm and it is moving to higher levels of accountability and lower levels of overall payment.  The best execs know this and don’t quibble with it (much).  They realize that success if about adapting the enterprise accordingly while finding the pliable spots that such an environment creates.  These spots are service lines, system enhancements, productivity improvements, and different levels of patient engagement.  Similarly, they realize the risk limits of concentration – too much exposure to certain payers.  They have seen this trend coming and have already moved.  For those still trying to reverse or slow the trend, this is where failure first begins ( the search for stasis in a rapidly changing world).

 

April 1, 2016 Posted by | Assisted Living, Home Health, Hospice, Senior Housing, Skilled Nursing | , , , , , , , , | Leave a comment

Bundled Payments: Final Hip and Knee Rule

On November 16, CMS issued the final rule for bundled payment demonstration, lower extremity, effective April 1, 2016.  A single payment, made to a qualifying hospital in one of 67 regions/MSAs covers all aspects of the hospital care, the surgery, and any post-discharge, post-acute stay components through 90 days (from initial hospitalization). The payment exclusions include unrelated hospital and Part B costs, unrelated acute and chronic DRGs and drugs outside the episode (clotting factors, etc.).  The original proposal known as CCJR (Comprehensive Care for Joint Replacement) included 75 regions/MSAs.  The final rule whittled the total to 67 excluding regions such as Colorado Springs, Richmond, VA and Las Vegas.

The CJR (eliminate “care”) is the adjunct or next logical progression from the BPCI (Bundled Payment for Care Improvement) project. The BPCI is voluntary.  CMS has foretold policy watchers and providers that this initiative was forthcoming and while comments to the  proposed rule were deep, CMS was determined to move forward.  The sole major concession was a 3 month delay in implementation (April 1 v. January 1).  Among the concerns expressed were;

  • Impact likelihood on home care (negative) as the home health value based purchasing model comes on-line January 2016.  Concern across the industry about adjustment and preparation time given that the two program implementation dates are fundamentally, side-by-side.
  • Lack of preparation time and specifics in the final rule regarding payment.
  • Lack of fraud and abuse clarifications in the rule.  CMS has acknowledged a need to publish guidance and waivers for providers, specifically around physician self-referral and kickbacks (incentives shared between participating Medicare providers in a coordinated care program violate Medicare anti-kickback provisions on a prima facie basis). CMS has provided waivers before to facilitate ACO operation and formation.

The core of the  demonstration program is to clearly, create a model for shared risk and shared savings between providers, targeted at common care events that span acute and post-acute stays/utilization. The fee for service average for hospitalization and recovery ranges from $16,000 to $33,000 (excluding medical/physician care). CMS is targeting $343 million in savings over the 5 year program life.

In order to achieve the targeted savings, the program has some unique twists or elements that are different from the typical fee-for-service model.

  • The three-day/three inpatient overnight rule for coverage in a post-acute environment is waived.  Patients can be admitted or not, surgery performed, and discharged as care and conditions warrant.
  • For SNFs to participate, their star ratings must be no less than 3 stars on the CMS Compare website.  This is already an issue in certain markets where few facilities meet the criteria.
  • The target price for an episode is a blend of historical and regional pricing, discounted by 2%.  If the actual spend is less than the target price, a reconciliation or incentive payment is due PROVIDED, the hospital has met or exceeded (30th percentile nationally in years 1-3, 40th percentile thereafter) the HCAHPS (patient satisfaction measures), hip and knee readmissions and hip and knee complications measures. Any over-spend or failure to meet quality measures equals no reconciliation payment.  Reconciliation payments are effectively the recoup (partial) of the imputed discount to the target price.

The takeaway for post-acute providers is simple, especially as it relates to the thematic shift this demonstration project is foreshadowing: get lean, get good, and get partners. I wrote about the “new era” a few months ago on this site: http://wp.me/ptUlY-iE .  The fee-for-service trend and the Medicare maximization game (highest RUG, longest stay, etc.) is ending.  I have lectured and written for years before this rule was ever finalized that quality is the number one element that SNFs and HHAs must understand, embrace and demonstrate if they wish to thrive and survive.  The CJR demonstrates it via the “star rating” requirement for SNFs. Facilities that haven’t paid attention, are not up to par, will risk being left out.  Improving your star rating is not quick nor is there a gimmick to employ to change the rating or an appeal process available.

In a soon to follow post, I will address the go-forward implications and strategies for post-acute providers, principally SNFs and HHAs, with respect to the CJR.

 

 

December 1, 2015 Posted by | Home Health, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , | Leave a comment

Modern Health Care Risk Management

The second most important function an executive and/or a governance board conducts (second only to planning) is risk management.  This key leadership function is evolving rapidly primarily due to the evolutionary movement around compliance (ACA, CMS, etc.) and the payer focal shift from episodic, procedural care to outcome or evidenced based care, pay-for-performance, etc.  Similarly, as government policy shifts so does commercial market dynamics with like movements toward pay-for-performance and disease management.  While the core concept of “enterprise” protection remains the same, the scope today is different, the breadth wider and the responsibilities and tasks more structured than say, ten plus years ago.

Risk management is the term that encompasses a series of activities, programs, policies, etc. that work (ideally) together to protect and secure the overall enterprise/organizational identity, value, market share, legal structure and by downstream relationship, the stakeholders/shareholders.  Its activities, etc. are passive and active.  Passive activities (examples) include the purchase of insurance  and implementation of firewalls and data security systems.  Active activities include audits, training of staff, QA/QI activities, customer/patient engagement programs, etc. The purpose of this post is to focus on the “active” elements and in particular, the most important elements today given the evolving environment and the new risks emerging.  The purpose is to frame a model of risk prevention culture rather than an environment fraught with rule deontology and protectionism.  The latter tends to breed its own kind of risk(s) in addition to the risk(s) it seeks mitigate.

I like to think of effective risk management plans today as having six key elements.  Importantly, the plan is not operative while the elements are.  The plan is what the organization uses to monitor the completion (activities), ongoing improvement (identification and address of organizational weakness and vulnerability), and accountability of management in identifying and managing risk. Remember, these elements are the “active” side.  I, for sake of the theme of this article, will assume that providers acquire adequate insurance policies utilizing industry professionals in their development plus that they maintain modern IT infrastructure to secure patient data, etc.

  1. Organizational Focus on Patient Care Quality and Service: This isn’t about slogans or marketing rather, it is about having an overall and deeply integrated culture around patient care outcomes and satisfaction. In a pay-for-performance, competitive, ACO world, this element is key.
    • Executive and Board involvement in QA/QI, especially at the highest organizational levels.
    • Compensation for management and executives incorporating (heavily) patient outcomes and satisfaction to the degree that all other elements are dwarfed by the weight given to this measure.
    • Monitoring in-place of key patient outcome data and benchmarking of the same.
    • Monitoring of response and wait times.  This element is key as the goal is to create response times as near as possible/practical to immediate or to minimize wait times wherever possible.
    • A program of patient/family engagement that includes surveys, focus groups, etc.
    • A grievance resolution system that is open, accessible and seeks to address concerns as instantaneous as possible.  The approach must be around resolving concerns without delay and bureaucracy.
    • Staff training focused on customer service, QA/QI, communication and dealing with patient/family stress, trauma, etc.
    • Engagement of staff in a “bottom-up” program or approach whereby lower level line staff are engaged in all training, QA/QI processes, mentoring, etc.
  2. Audit Contractors and Sub-Contractors: The use of contractors such as physician intensivists (hospitalists) and therapy companies, imaging companies, lab providers, environmental service providers (laundry, housekeeping, etc.) is on the rise as organizations seek to control costs and improve efficiency.  Contractors, etc. yield new risk as their conduct, care, service, etc. create a risk transferable directly to the parent organization.  The risk of course, is multi-fold.  First, as applicable, is care risk (outcomes, service, competence, qualifications, insurance, etc.).  Second, is labor risk (legal status, background checks, etc.). Third, is billing risk and compliance risk.  If the contractor is involved in any element of care that is billable to a payer (Medicare, Medicaid, commercial insurance), the organization must assure complete compliance with billing and care provision rules in order to negate billing fraud or inappropriate claims risk (risk of non-payment or worse).  Summarized, organizations must monitor and audit, externally, the work of contractors.  Immunization clauses within contracts cannot supplant audits of risk areas proportional to the scope of the service agreement.  For example, the organization must audit its medical staff, the care provided, documentation, billing as applicable, patient contact and satisfaction, response times, etc.  The same is true for any care service contractor.
  3. Billing Audits: This element is particularly crucial for government programs such as Medicare and Medicaid.  Providers today must get in the habit of reviewing their claims submitted to payer sources, particularly the government.  Two huge risk areas are present today.  First, focused fraud actions against providers under the False Claims Act.  Audits here are all about making sure that what was billed was actually provided, documented, necessary and compliant. Second, billing accuracy such that claim submissions are “clean” and “accurate”.  Denials for inaccuracy, etc. can lead to imbalances in error rates and thus, probes and claims held for review.  The latter negatively impacts cash flow and staff productivity as extra work to justify payment is required. I also recommend that organizations be very, very careful about compensation programs tied to revenues and claims, especially without counter-balancing elements and a strong audit program.  I like billing audits that are third-party conducted, benchmarked against regional and national data (our business should look like others in the region and nationally) and occur episodically and randomly as frequent as monthly and certainly, no less than quarterly.
  4. Organizational Transparency and Staff Engagement: A huge risk area providers continue to face is the mixed message and incongruent messages sent to staff from leadership and at the highest levels of the organization.  The impetus behind so many False Claims investigations and actions undertaken by the DOJ (Department of Justice) isn’t smart federal auditors – its disgruntled staff.  Whistleblowers are the fundamental impetus behind False Claims allegations and actions. Mitigating this risk is simple (beyond doing the right things of course).  Organizations, especially leadership, must be transparent and as open and candid as possible.  The point here is that there really is no reason to not share goals, plans, operating data, etc. with staff.  When I was a CEO, my office was never locked and thus, work and files on my desk and credenza.  My compensation was open and I did not hide what I made or how I made it.  Not too surprising, across decades of running large healthcare organizations, I never had a fraud allegation or an allegation of any impropriety.  Staff knew what the corporate plans were, how they achieved compensation and bonuses, etc.  We gain-shared so staff had opportunities to reap reward as the organization grew and performed.  Staff engagement means at the planning and implementation levels.  It also means active programs of training and a large amount of dialogue regarding why the organization does what it does and where the right and wrong lie.  The same Whistleblower mentality is also fundamentally sound when it is used to police bad internal behavior, including that of management.
  5. Focus on Competence: A simple thing but rarely do I see this element boldly, prominently emphasized.  Competence is about the ability to do what is required at the professional, validated level.  It is about validation of core skills and abilities within a framework of education and testing.  Organizations that focus on developing and maintaining staff and managerial competence limit risk inherently.  All together, risk is often a byproduct of incompetence and protection of a weak, status quo.  If excellence and competence is demanded and the systems engaged and in-place to assure it, then there is little room for marginal, sub-standard and incompetent to remain.  How does an organization focus on competence?  First, eliminate old, worn out HR policies and job descriptions and performance evaluations and replace the same with competency and behavioral standards.  Competency standards are the elements one must demonstrate and perform as part of the job at a repetitive, proficient level.  Behavior standards are the elements of personal conduct and accountability that the organization demands (uniforms, attendance, inservice attendance, etc.). Evaluate standards routinely, move in new skills, refine old skills, educate and test.  Require ongoing passage and demonstration and be intolerant of employees and managers that can’t/won’t meet the competency and behavioral requirements.  Competency standards are required for ongoing employment; reward for performance thus can only and should only occur when the base standard is consistently exceeded.
  6. Be Public: By employing all of your constituents in oversight, the likelihood of getting surprised or being caught off guard is minimized.  Be public as possible with standards, expectations, contact information, grievance steps, etc.  Be open to all criticism and frankly, demand (as much possible) feedback regarding just about anything in the business.  No reason that business goals can’t be public and yes, even margin goals.  Heck, explain why margins are necessary.  Engage the broader universe and community and ask for input and reactions.  People will tell you the good, the bad and the ugly – the latter being where potential risk lies.  Force the conversation and the accountability and in doing so, limit a large area where risk can fulminate.

August 25, 2015 Posted by | Assisted Living, Home Health, Hospice, Senior Housing, Skilled Nursing | , , , , , , , , , , , | Leave a comment