Wednesday Feature: The Last Quarter of Life
Following-up on an emerging trend from last week, this post has nothing to do with healthcare, health policy, etc. It is meant to have readers think and enjoy. It’s origin, at least to me, is from a good friend and colleague. Happy Hump Day!
Most of us are now in the last quarter of our life and should read this interesting piece of advice.
This is one of the nicest and most gentle articles I’ve read in a while: no politics, no religion and no racial issues – just food for thought.
You know …… time has a way of moving quickly and catching you unaware of the passing years.
It seems just yesterday that I was young and embarking on my new life. Yet in a way, it seems like eons ago, and I wonder where all the years went.
I know that I lived them all. I have glimpses of how it was back then and of all my hopes and dreams.
However, here it is …… the last quarter of my life and it catches me by surprise.
How did I get here so fast? Where did the years go and where did my youth go?
I remember well seeing older people through the years and thinking that those older people were years away from me and that I was only on the first quarter and that the fourth quarter was so far off that I could not visualise it or imagine fully what it would be like.
Yet, here it is …… my friends are retired and getting grey – they move slower and I see an older person now. Some are in better and some worse shape than me but I see the great change They’re not like the ones that I remember who were young and vibrant …… but like me, their age is beginning to show and we are now those older folks that we used to see and never thought we’d become.
Each day now, I find that just getting a shower is a real target for the day and taking a nap is not a treat anymore. It’s mandatory because if I don’t of my own free will, I fall asleep where I sit.
And so, now I enter into this new season of my life unprepared for all the aches and pains and the loss of strength and ability to go and do things that I wish I had done but never did. But at least I know that, though I’m on the last quarter and I’m not sure how long it will last, that when it’s over on this earth, it’s over. A new adventure will begin!
Yes, I have regrets. There are things I wish I hadn’t done; things I should have done but truly there are many things I’m happy to have been done. It’s all in a lifetime.
So, if you’re not on the last quarter yet, let me remind you that it will be here faster than you think. So, whatever you would like to accomplish in your life do it quickly.
Don’t put things off too long. Life goes by so quickly.
So, do what you can today, as you can never be sure whether you’re on the last quarter or not.
You have no promise that you will see all the seasons of life. So, live for today and say all the things that you want your loved ones to remember – and hope that they appreciate and love you for all the things that you have done for them in all the past years.
‘Life’ is a gift to you.
Be Happy!
Have a great day!
Remember, it is health that is real wealth and not pieces of gold and silver.
You may think:
Going out is good – but coming home is better!
You forget names – but it’s okay because some people forgot they even knew you!
You realize you’re never going to be really good at anything like golf – but you like the outdoors!
The things you used to care to do, you aren’t as interested in anymore – but you really don’t care that you aren’t as interested.
You sleep better on a lounge chair with the TV on than in bed – you call it ‘pre-sleep’!
You miss the days when everything worked with just an ‘On’ and ‘Off’ switch!
You tend to use more 4 letter words – ‘what’ and ‘when’
You have lots of clothes in your wardrobe, more than half of which you will never wear – but just in case!
Old is good –
• Old is comfortable
• Old is safe
• Old songs
• Old movies
• …… and best of all,
• Friends of old!
So, stay well, ‘Old friend!’
Have a fantastic day!
Have an awesome quarter – whichever one you’re in!
Take care
Send this on to other “Old Friends” and let them be smiling in agreement.
It’s not what you gather but what you scatter that tells what kind of life you have lived.
In-Depth: CCRCs First Quarter 2023
The smallest distinct segment of senior housing is Life Plan communities or CCRCs. Assisted Living, Independent Living and Skilled nursing, in each segment, dwarf the number of CCRCs yet, CCRC popularity remains and continues to grow, if ever so slowly.
CCRCs run a gamut between large and small, entry fee to rental, with/without SNFs yet always including some extended care services beyond the housing component. In recent years, I’ve watch CCRCs smartly, expand their service offerings to include home health and personal care, hospice in some cases, and other wellness and medical/care services. Typically, the larger the CCRC or sponsoring organization, the greater the service array (home health, personal care, etc.).
The industry remains dominated by non-profit owner/operators. For profit organizations account for about 25% of the industry, the balance is thus, non-profit. Size as measured by units/residency is largest among non-profits. Additionally, the non-profits dominate the entry-fee CCRC market.
For the last two plus years, COVID has had a profound impact on all senior housing organizations. The fallouts from the pandemic include a diminished workforce (fewer health care and support) workers, inflation, and rising interest rates have hurt all providers and driven all kinds of compensating behaviors such as reducing census due to staff shortages, escalatory pricing, service reductions, etc. CCRCs have not been immune to the pandemic fallouts but have weathered the pandemic and the fallouts better than their segment partners (e.g., Assisted Living and SNF). Similarly, we watched CCRCs experience fewer COVID health impacts (outbreaks, deaths, etc.) than Assisted Living or SNFs.
Through the first quarter of 2023, CCRCs have experienced a steady but slow increase in occupancy. At the start of the quarter, occupancy was still behind pre-pandemic levels at 87% (compared to 91% pre-pandemic). Non-profit CCRCs had stronger occupancy performance than their for-profit counterparts – 88% v. 84% respectively. We also see entry-fee communities outperforming rental communities, 89% to 84%.
In terms of rate and inventory, there has been a shift from pre-pandemic levels. Inventory (units for rent) shifted the least for non-profits and where reductions occurred, they did so in nursing care. For-profits had the biggest inventory shifts, across all living accommodations (independent, assisted and nursing). Rent increases are harder to factor but as occupancy has recovered, inflation and labor factors settle-in, we are seeing rather aggressive pricing shifts. Senior Living in general has seen rate increases in the range of 8 to 10%. Diving into living segments, we see memory care and smaller Independent Living units (one bedroom, studios) increasing the most – 9% to 10% – with studios running at 8% plus, the same as Assisted Living. CCRCs tend to have different pricing packages at the Independent Living level vs. at the care levels. Many incorporate various discounts for residents as they transition to the numbers of actual realized rent v. published or asking rent can be quite different (Sources: NIC, LivingPath.com)
As 2023 progresses, there are a number of headwinds for CCRCs still trying to recover from the pandemic and its related fallouts and impacts. Below is my watchlist for the remainder of the year. I’ll touch base on these items from time to time throughout the remainder of the year.
- Interest rate rises will impact cost and access to capital for CCRCs. These organizations tend to be capital intensive as their marketability is tied to heavily amenitized environments requiring constant updates, improvements, refreshment, etc.
- Rising rates have also severely impacted the residential real estate market. New CCRC occupants typically move post a primary home sale. The inability to effectively liquidate their real estate to pay an entry fee will harm occupancy increases. Most CCRCs have units for sale. Depending on the market location, this impact could be very, very profound for the balance of 2023 and perhaps, beyond. The good news is that homes for sale inventory is low so price reductions have not been (yet) dramatic.
- A marketing strategy often deployed by CCRCs is some form of rent suppression, rent reduction or abatement for a period of time to “sell” a unit. Revenues are already suppressed due to lower occupancy and, likely rent suppression in general during COVID. Revenue recovery will be a function of occupancy and the ability to increase rates to accommodate rising costs. This will be a tricky navigation for most operators/sponsors for 2023 and in my view, early 2024 as well.
- Labor will continue to be a major problem hampering occupancy, service expansion, and increasing cost. I don’t see any labor challenge abatement any time soon, beyond 2023.
- In established CCRCs we will continue to see an increase in resident age and debility and a similar trend on admission. This trend, especially on admission, is a lingering pandemic problem as folks avoided moving to CCRCs during the pandemic. As they do now, they are generally older and more disabled.
- Wealth reduction due to market losses will cause some seniors to remain, ill-advised, at home. Couple the liquidity issue (stagnant) on real estate sales (bad market) and estate shrinkage due to investment losses, an impact in qualified seniors for any CCRC but especially, entry fee CCRCs, has occurred. Recovery will not occur in 2023.
- The demand for CCRCs is very elastic such that, there are a number of substitute options available to a senior, such as staying at home with services. As real estate liquidity is a challenge now, the demand curve has shifted a bit similar to what we saw in 2008 to 2010. Expect this shift to remain in-place for at least all of 2023 and likely, until mid 2024.
Top 5 Tips for Recruiting in a Tough Labor Market
I’ve done a number of presentations on the staffing challenges facing providers and how, certain strategies work and others don’t in terms of recruitment and retention. Over my 30 plus years in the industry, I’ve had reasonable (ok, very good) success in building and retaining high-performing teams, including direct care staff. I’ve been fortunate to have many folks who have worked with me, follow me from assignment to assignment, some across the country. Leadership is no doubt key to recruiting successfully as people want to work with winning organizations. Likewise, really good recruiting strategies don’t use the same methodology as the past – namely advertise, incent (throw money at it), repeat. Steve Jobs said it best: “Innovation is the only way to win”.
Most healthcare providers can’t financially compete for staff, consistently. In reality though, staff only work for money when they see no long-term value in the employment proposition. I know travel nursing and agency nursing catch lots of news and sound sexy and high paying. I also know nurses (really, really well as the same are throughout my family) and, the lure of travel nursing is short, regardless of the money. Stability, home base, regularity, working with good colleagues and peers has more value to most nurses.
Before I offer my five “DOs” for recruiting, let me offer a few “DON’Ts” and a reminder. The reminder is recruiting is like marketing – it requires constant, incremental effort to achieve success. Superb marketing campaigns and brands build year-over-year. One misstep, however, can damage a brand significantly (see Bud Light). The “don’ts” mostly focus on money as in don’t think you can buy staff and don’t think, sign-on bonuses buy anything other than applications and temporary workers. Don’t focus on the economic alone but on the goal of recruiting. Like marketing, it’s about positioning the organization to attract workers. The sale or close comes via an H.R. specialist or someone exceedingly good in the organization of convincing people of the value of working for the organization.
My Top 5 tips for recruiting are….
- Focus on recruiting introductory, PRN workers first. Stop advertising for shifts, full-time, part-time, etc. Focus on people who are interested in flexible work and are willing to take a role and see how it goes. This is the “dip your toe in the water” insight. Be prepared to pay well but not necessarily crazy. You won’t be dealing with many if any benefits for this group other than some soft stuff (meals perhaps, incentive rewards like a gift card now and then, t-shirts) so hourly rates can be decent. Likewise, be prepared to pay weekly if not even more frequently.
- Have a killer, multi-media/onboarding/orientation program. Little investment here but not much. YouTube, Tik Tok (can’t believe I wrote that), a website, and other applications can be used to recruit (what it’s like to work for us) and to onboard and orient. The more new staff, even your PRN, feel comfortable walking in the door, the easier it will be to get them and keep them. Giving them a stack of policies and procedures, a big manual, a drone-on HR speaker or a computer-based checklist is a certain turnoff.
- Give the Bonus to the Staff. Turn your own staff into recruiters and pay them for it. Nurses know nurses, CNAs know CNAs, etc. Comp and incent them to bring referrals and comp them well. Sign-on bonuses really don’t work but referral bonuses do. Heck, do individual and team and create a bit of competition and fun.
- Create a Marketing Campaign and Have Accountability. Recruiting is marketing. Stop thinking otherwise. Sure, many think it’s an HR function but most who do, are wrong. It’s an organization function today requiring the best talent. For people to join your organization as employees, they need to know “why” – what are the tangibles and intangibles. Why should I work for you? This is not about pay and benefits but about the value and benefit internally, of a person working for XYZ organization. What’s the value proposition? What’s the real reason people work and stay for an organization (trust me, it’s not money). Build the case and sell that case.
- Get out of your own way. I watch organizations fail as their message is all wrong – tired, non-descript, sounding like everyone else. I watch organizations fail as their environment and their culture are all the same. Stop and align the incentives. Reward what matters and differentiate. Remember the Jobs quote in the first paragraph. Innovate. Stop looking externally at what everyone else is doing and stop going to the same conference sessions. Direct care staffing has certain red rules but not as many as providers think. In other words, stop the “can’t, regulations won’t let us” and start with WHAT can we do. Maybe even bend a rule or two if the same doesn’t jeopardize patient care or quality. Worklife for nurses and CNAs in terms of direct care has lots of negatives but many that I see are driven by provider foolishness – too much paperwork not necessary, too many meetings not necessary, and very few positive touches and rewards. If your culture and the work create fun, ownership, and staff love their work and their company, recruiting others to join the team just got that much easier.
Upcoming, I’ll touch on the opposite of recruiting – retention.
Wednesday Feature: The Shot Heard Round the World
Happy Hump Day subscribers and readers! With best intentions met, every Wednesday I’ll add a post totally unconnected to healthcare, health policy, economics, etc. These brief notes are the remnants of an old fun precedent I set for myself and my staff. They are meant to be inspirational, educational, and fun. Sort of a way to break-up the week and begin a fun journey into the remainder of the week and into the weekend. I hope you enjoy!
Today is the anniversary of the original “Shot heard round the world”. This phrase has been tied to three historic events (and other lesser events) one arguably, far more meaningful than the others. History buffs (I am one) will connect the dots quite quickly to the first reference but maybe not the second or third. The third and less historically significant “shot” aligns with baseball trivia. I’ll fill that piece in at the end.
Today is the anniversary of the start of the Revolutionary War – April 19, 1775. The “shot” is reference to the first gunshots that rang out at the start of the battles of Lexington and Concord, in Massachusetts, not far from Boston. The phrase comes from the opening lines of a poem written by Ralph Waldo Emerson, “Concord Hymn”. Emerson was referencing a battle/skirmish that his father and grandfather saw along the Old North Bridge in Concord. What is interesting about this reference aligning with the start of war is that the shots Emerson refers to are not the initial gunfire exchanged. The initial shot occurred at Lexington Green when British regulars encountered colony militia. Though neither group were ordered to fire, a shot from somewhere occurred and an exchange of gunfire took place.
The second reference of “shot heard round the world” has international connections. This reference is to the “shots” or “shot” that occurred during the assassination of Archduke Ferdinand of Austria Hungary. He was assassinated in Sarajevo (Yugoslavia) on June 28, 1914. Two shots were fired by the killer, one hitting Ferdinand’s wife Duchess Sophie and the second, killing Ferdinand. The significance of this shot and the event is that it is often referred to as the political genesis of WW I. The assassination basically pushed Austria-Hungary and other major European nations into the war.
For baseball fans, the third “shot” heard round the world refers to a walk-off home run hit by New York Giants (now San Francisco) outfielder Bobby Thomson to beat the Brooklyn Dodgers (now Los Angeles). The Giants won the pennant in 1951 as a result but lost the World Series to the New York Yankees.
Other less notable references to various events, primarily sports, use this coined phrase. In golf. the reference is used to a true rarity of a shot – a double-eagle made by Gene Sarazen in the 1935 Master’s on the 15th hole. Sarazen’s shot was holed from 235 yards on the Par 5, 15th. It was his second shot, thus a double-eagle or a score of 2.
Happy Hump Day!
Econ Update
In this new category of snapshots, I’ll grab some data and headlines and offer a few insights on a topic. This week is full of key economic data regarding inflation. Reading through the data for many can be a bit daunting. Likewise, lots of the data is more geeky than useful in daily life and business.
For healthcare, economic conditions of late (last eighteen months) have provided staunch and daunting headwinds. Capital costs have risen dramatically due to Federal Reserve monetary policy changes to fight inflation (interbank rate increases). Energy inflation has yanked utility costs upward and forced suppliers to raise prices on delivered goods and services. Supply chain issues have created product scarcity ranging from drugs to infant formula to food and consumables to big capital equipment items such as elevators and their parts and electric equipment such as switchgear. No provider type has been immune to harm from the shifting economic conditions, namely rising inflation and rising interest rates.
Quickly, inflation primarily comes about or occurs via an oversupply of money and not enough goods and services for the money to purchase. Simplistically, this is called “too many dollars chasing too few goods”. As the goods are fewer in number than the buyers with dollars, the goods escalate in price – sold to the highest payer. In some cases, such as energy, supply and demand are a bit tricker to sort through as energy tends to be inelastic in demand meaning, there are few if any substitute products for it. Eventually, buyers can use or consume less but in reality, price will not significantly alter energy consumption (gasoline for example or fuel oil/diesel).
In a more intellectual view of inflation, we see government policy taking the lead role in creation or stopping inflationary trend. The economist Milton Friedman noted that all inflation in an economy is basically due to government spending in or at levels, greater than economic growth measured by GDP (gross domestic product). Per Friedman, when government adds money to the economy by spending but does so unattached to productive output (no real return on investment), inflation will occur. Friedman suggests that the real remedy to inflation is for government to spend less or different.
So as we turn to this week’s economic data, we get results that suggest, we have a ways to go before the economy is “healthy”. I use healthy to mean inflation that is in equilibrium to GDP growth, or below. Until we get to this level, we will continue to see inflationary pressures or the alternative, recession and possible stagflation (inflation higher than GDP growth for prolong periods).
The numbers this week and what they mean (quickly).
- Prices remain a bit hot with March’s increase a blip over February (.1) and year-over-year, up 5%. Removing Food and Energy components, inflation was a bit hotter at + .4% for the month and 5.4% for the year. What concerns me here is that the drop to 5% year-over-year is due principally, to energy and food. The current energy trend, however, is not indicative of future drops (see current gas price shifts “up”). OPEC production cuts and continued fed policy constraints on domestic oil and natural gas production may mean that this is the low point of energy softness. Expect the Federal Reserve to push another .25% in a rate increase taking the fed funds rate into a 5% base rate. Here’s the report: https://www.bls.gov/cpi/
- The cousin to CPI is PPI or the final measure of price of products and services produced in the economy by manufacturers/business. It is the crystal ball so to speak, of where CPI will head and where the value of the dollar is trending. Hot PPI suggests future cost increases. Cold or declining PPI suggests economic demand softening (this is a demand side measure) and a weakening of the dollar. For March, the number continued to soften as Fed Reserve interest rates reduced economic demand, devalued the dollar and energy costs pulled back. The decline for the month was .05%. My concern with this measure is a bold signal of recession and erosion of the value of the dollar. Here’s the PPI report: https://www.bls.gov/ppi/
15 minutes
Take 15 minutes each day to examine the day and record my gratitude for what the day has given. Work and news reflect too much negativity and loss. My 15 minute reflection counters the “daily negative”.
Back in the Saddle
Absent a bit, I’ve been. COVID, a crazy health care landscape, new work, new engagements, tons happening and happened. Suffice to say though, the content is coming back.
There are a few updates to this site. All (almost) of the old content remains. Browse as you wish. While over time, some content has become a bit dated or even irrelevant, lots hasn’t. The benefit of having kind of an archive is that those that do research, have a place to land. Everything on the site is free to copy, download, etc., – at least for now.
All of my presentations via Power Point are on a new page called “presentations”. These were all from various conferences and webinars. New ones will pop-in, and I will alert readers of the new content. As with all of the posts and content, the presentations can be viewed and downloaded.
What’s next? New content for sure and also, a likely site update and maybe even a conversion to a more web-oriented page. The site address, however, will remain the same – rhislop3.com.
As always, I hope readers continue to enjoy the site, and please, feel free to recommend it to your friends and colleagues. The more the merrier!
SNFs: Five Issues and Trends to Watch…NOW!
The beautiful, fascinating thing about health policy in the U.S. is its cycle of evolution. It evolves, sometimes slowly and other times quickly but always, in a progressive (not in the political sense) direction. Providers today can be lulled to sleep (quickly) by the vacuum drone of big policy lectures, webinars, etc., easily thinking for example, PDPM is the two-ton gorilla in the room (we need to deal with). Perhaps because reimbursement and survey/certification issues are so large that they shadow, seemingly eclipse, other trends and issues. Yet, think of these other trends and issues like mosquitoes (the state “summer” bird in Wisconsin where I am from); omnipresent, annoying, nipping, but not large enough to cause much damage. Still, mosquito bites can be a real nuisance and in rare cases, rather debilitating.
None of the following trends/issues weigh-out like PDPM but each has a potential impact for the post-acute sector, namely SNFs.
- QRP and VBP: Both can, with poor performance or lackadaisical compliance, reduce Medicare reimbursement. Today, 73% of the SNFs are feeling some kind of Medicare reimbursement reduction due to VBP performance (lack thereof) in terms of readmissions. Come October 1, the penalty for non-QRP reporting at a certain threshold kicks-in with a penalty/reduction equal to 2% of Medicare payments Combine the two and the reduction can mount to 4% of Medicare payments (fee-for-service) to an SNF.
- Medicare Advantage and Readmissions: Tying one to the other for VBP is an interesting proposition. Here’s how this works. While VBP only positively or negatively impacts fee-for-service Medicare payments, the Medicare Advantage impact that the SNF market is seeing with respect to readmission rates, encompasses Medicare Advantage patients. Convoluted, I know. In short-hand: All Medicare patient days count toward the readmission (avoidable) calculation, fee-for-service and/or Advantage. Based on a recent study published in the Annals of Internal Medicine, Medicare Advantage patients have a higher readmission experience than their fee-for-service counterparts. To be clear, the readmission contrast was for patient diagnostic categories of acute myocardial infarction, congestive heart failure and pneumonia. Still, the issue here is that facilities with a high percentage of Medicare Advantage patients need to be aggressive with these payers in terms of care coordination; particularly as the same intersects with length of stay. Medicare Advantage plans often look to aggressively shorten lengths of stay, perhaps too aggressively. Similarly, their networks may not coordinate post-inpatient care via home health agencies as well as one would expect. They simply don’t have the best agencies in network or they don’t work to consistently integrate the post-acute providers in collaborative coordination efforts.
- More SNF VBP?: In a bill recently proposed in the House (bipartisan sponsors) known as the BETTER Act (Beneficiary Education Tools Tele-health Extender Reauthorization), Section 204 includes direction to the Secretary to adopt additional performance measures for reimbursement purposes beginning on or after, October 2021. The language implies the categories (“additional measures determined appropriate”) to include functional status, patient safety, care coordination and/or patient experience. As I have written before: Quality and revenue are directly connected today and more is coming. SNFs better be “on” their Quality Measures and laser-focused on their outcomes or suffer the reimbursement (reduction) consequences.
- Quality Measures: Any SNF that hasn’t looked for a while at their Five Start report and specifically, their Quality Measures section is literally, asleep at the wheel. The numbers now are broken down between long-stay and short-stay measures, with applicable detail. It isn’t the aggregate rating any more that matters. The reality is the categorical ratings matter most and for SNFs hoping to play “big” in the post-acute arena, the short-stay ratings are KEY. Today, referral networks are reshaping how and where patients go, post-hospitalization. Not a day goes by that I don’t hear from hospital and health system folks about their current reviews of SNF QMs, and in particular, the short-stay measure performance. In a recent discussion with a convener for a Bundled Payment project, she relayed how one SNF was beside itself when she said basically, “no inclusion in their preferred network”. The SNF was unaware that their short-stay QM rating was only two stars. The convener was only interested in SNFs with short-stay measures rating four and five stars.
- Phase 3 Conditions of Participation Requirements: Though not as impactful as Phase 2 requirements, there are a few here that could bite facilities surveyed post November 28 of this year. The inspection star ratings are unfrozen now so survey performance will impact star ratings again…no hiatus. The biggies? Infection control with a designated, trained preventionist is required. Remember, infection control citations tend to be widespread in scope. A compliance and ethics program is required after November 28. Staff need to be trained on the program and infection control. The facility assessment is required to tie with the facility’s QAPI program. The facility must develop a person-centered, baseline care plan within 48 hours of admission. With respect to dietary/food service, the facility must designate a director of food service who will have training/certification as a certified dietary manager, certified food service manager, a dietitian, or some other equivalent certification and training in food service management or hospitality from an accredited institution. A good resource that covers all Phase 3 requirements (as well as Phases 1 and 2) is available (download) here: 3-RoP-Checklist-overview-FINAL.101416
The Connection Between Quality and Revenue
In nearly all provider segments of health care, revenue maximization and integrity are directly tied to compliance and quality ratings. In home health, submission of quality data via the OASIS (known as HH CAHPS) is required. Agencies that fail to submit the required data experience reimbursement reductions of 2%. For SNFs, reporting of QRP data is required. Failure to meet the 80% threshold reporting requirement on quality measures equals a 2% payment reduction (beginning October of 2019). The cut-off date to meet the compliance level for the period 10/1/18 to 12/31/18 was May 15, 2019; too late for facilities that under-performed.
Many SNFs (73%) are currently experiencing Medicare reimbursement reductions due to poor quality performance with respect to 30 day re-hospitalization results. Combining this reduction with a potential QRP reduction of another 2% by October 1, certain facilities will experience a 4% reduction in Medicare payments. For an industry already strapped financially, this could be a nail in the coffin. Instead of the inevitable conclusion however, the penalties are wholly avoidable.
Yet not robust, the data reporting via CMS (using facility supplied data) is sufficient enough to trend performance weakness/strengths and thus, the revenue connections. By revenue connections, I mean the places where revenue can be made or lost. And, while the CMS data is not real time, it is close enough to give an SNF a basis by which to track and thus trend, the key data markers. For instance, facilities can research and compare their short-stay and long-stay measures in the following categories.
- Hospital admission/re-admissions
- ER/ED utilization/transfers
- Falls with injury
- Decline in functional status
- Improvement in functional status
- Pressure injuries (not pre-admission acquired)
- Spending per Medicare beneficiary
- Infections
Each of the above have unique implications on revenue and expense; singular and combined. The revenue and expense connections follow.
Today, quality data management in an SNF setting is an integral component of revenue maximization and revenue integrity. Consider the following data implications tied directly to reimbursement (increases or decreases due to data management, reporting, and interpretation).
- Value-Based Purchasing: The focus is on hospital readmissions within a thirty day window post SNF admission. The data is now publicly displayed in an SNF’s QM section on the Five Star report. Poor performance on this measure (below the standardized benchmark) creates a reimbursement penalty equal to 2%. Conversely, exceptional performance creates a bonus payment of up to 1.5%
- Quality Reporting Program: SNFs need to report via the MDS, quality measure data. Simply failing to report at the 80th percentile level (not what data, just reporting the data) equates to a 2% reimbursement reduction beginning October 2019.
- PDPM: It’s all about the assessment and coding come October 1. Facilities need to gather data, starting at the hospital end, to paint the best, clearest picture of the patient and his/her care needs. The focus is on capturing all levels of diagnoses and functional status. Miss the data, miscode the data, or inadequately apply the data and the result can be, a significant payment level gap (under-reimbursed) via a lower than actually applicable, per diem amount. Being able to analyze the clinical data and apply it to the MDS can mean tens of thousands of dollars…one way or the other.
- Referrals, Narrow Networks and Market Share: SNF revenue is totally a function of beds occupied by the best payer source. Facilities that do well know this. Being in a position to garner the most referrals connected to the best payers requires a posture of exceptional quality, demonstrated via data. The best SNFs lever their data to achieve maximum occupancy and referrals. Narrow networks in most markets today are eliminating poor performing SNFs from their preferred referral lists, some with Bundled Payment programs completely eliminating certain SNFs (poor performance) as options. As SNF performance data in terms of survey compliance, staffing levels, re-hospitalization rates, and quality measures/outcomes is public, comparisons among facilities is common. The best stand out because their measures are better than others and thus, they gain the preferred referrals and the revenue in-turn.
The simplest conclusion for an SNF today is quality and performance data equals revenue: either maximized or reduced. The connection however, is not just at the top-line. The impact flows to the bottom line as well. Consider the following elements as bottom-line impactful when it comes to quality and data.
- Insurance premiums for liability coverage are risk-rated. If the SNF quality is low, the premium is higher as is the deductible. Higher expenses here reduce margin.
- For an SNF looking to borrow money, banks and lenders today impute risk/poor quality into the lending terms and thus, into interest rates and debt to equity levels (how much can be borrowed). Higher interest expense reduces margin.
- Recruitment and retention costs for employees are directly influenced by quality performance. Study after study demonstrates that employees prefer to work for high-performing organizations and stay in jobs where the quality is valued and high. Given that labor is the greatest cost an SNF bears, being as efficient as possible in the recruitment and retention arena enhances margin.
- Survey performance directly impacts the bottom-line, especially where fines and often, resultant legal action are involved. Today, the survey format is heavily influenced by facility quality data – the QIS (Quality Indicator Survey) protocol. Poor quality and thus, poor survey performance can lead to enormous fines. An Immediate Jeopardy citation comes in minimally (fines), at $1,000 per day for each day, the jeopardy remains (from the date the jeopardy situation began). The Plaintiff’s Bar scans public survey data and recruits negatively affected residents and families as litigants in cases involving sub-standard care and potentially, claimed wrongful and preventable death. The result, for substandard performance, is hugely negative to the bottom-line and thus, margin.
The message or take-away for providers is that data matters – at the top-line and at the bottom-line. Facilities must know their quality data, have processes in-place to monitor the data, report the data and assure data integrity if they wish to maximize their revenues and ultimately, their margin. It is easy to do with proper knowledge and planning and conversely, too easy without, to experience revenue reductions due to poor performance and poor data management.
Revenue maximization and integrity is not a vacuum concept. Complexity surrounds the ultimate billing and recovery/payment for care provided to patients. Medicare today exists in a pay-for-performance environment and the performance expectations are increasing. The performance metrics are quality measures and the same uniquely, controllable at the facility level. From staffing to re-hospitalizations to falls, infections, survey results (remember, the new SNF survey is principally data driven in the QIS format) to length of stay, ICD-10 codes and patient satisfaction measures, facilities that mine their data, know how it relates to care and use a QAPI process to monitor and improve their outcome numbers, will succeed from a revenue perspective and a market share perspective.
Catch this session (and me) and other great sessions at the Revenue Integrity Symposium in October (15-16) in Orlando!
SNF Proposed Rule for 2020
Spring is the time when CMS starts dropping Proposed Rules for various health care provider segments. This past week or so saw update drops for IRFs, Hospice and SNFs. Recall, Proposed Rules are administrative law changes that CMS makes to existing provider regulations, typically covering reimbursement and some programmatic policy changes that tie to reimbursement. Congress does not have to approve or weigh-in other than through the appropriation function, defining the amount of spending globally, allowed under Medicare. The translation thereof to rates, payments, programs, etc. is via CMS rule making authority. I’ll summarize other industry segments in a follow-up post later in the week.
The SNF proposed rule is best characterized as “mostly” good news. The best news is the proposed market-basket (rate inflation) update of 3%. Subtracting the productivity factor of .5% from the update, SNFs will see a rate increase of 2.5% starting on October 1 (assuming the rate remains as proposed once the Final Rule is issued). How this will exactly map to revenue however, is where the “mostly” qualifier is required.
A rate increase is merely an inflationary adjustment to the payment categories under Medicare. In the case of SNFs, the translation will take place in PDPM. Under RUGs IV, the SNF rates would inflate by the applicable percentage, applied to each of the 66 groups. Under PDPM, the base rate corresponds to one of six case-mix categories (PT, OT, Speech, Nursing, Non-Therapy Ancillary and Non-Case Mix), multiplied by the applicable case-mix value in each category (excluding non-case mix which is a flat per diem). There are ten clinical categories under PDPM that correspond to the reason that patient is admitted to the SNF (Major Joint Replacement or Spinal Surgery; Cancer; Non‐Surgical Orthopedic/Musculoskeletal; Pulmonary; Orthopedic Surgery (Except Major Joint Replacement or Spinal Surgery); Cardiovascular and Coagulations; Acute Infections; Acute Neurologic; Medical Management; Non‐Orthopedic Surgery). Using the diagnosis code and patient functional status from Section GG on the MDS, a case-mix value is determined for each of the five categories (not non-case mix). In the end, it will be difficult for the SNF to see a direct relationship, as in years past, with a rate adjustment and the current (soon to be former RUGs) payment model. PDPM, even with the best modeling, is an unknown element for the SNF industry. In short, there is no correlation between this proposed 2.5% increase and what a SNF will see in terms of revenue come October 1. It is quite possible that some will see, even with the rate increase, a decrease in Medicare total revenue compared to current experience.
Another subtle but important element to consider, one that falls outside of this Medicare policy, is Medicare Advantage. This Proposed Rule only impacts the fee-for-service side of Medicare, not translating to Medicare Advantage rates paid by plans to SNFs. Such is the same concerning PDPM. Medicare Advantage plans do not need to implement rate increases, PDPM or follow CMS reimbursement protocols for any provider segment. For SNFs that have a high percentage of Medicare Advantage patients as part of their routine census, the impact of this proposed rate increase must be factored against the Medicare Advantage patient volume (e.g., 50% Medicare census that is Med Advantage reduces the rate increase realizable by the SNF, by half). I am not seeing much rate increase activity on the part of the Medicare Advantage plans in any major market. The supply of willing SNFs to take their patients exceeds by a large amount, the demand within these plans, for SNF access. In other words, prices don’t need to increase to gain access, when needed.
Other programmatic updates/changes within the Proposed Rule for SNFs are as follows.
- CMS is proposing to align the “Group Therapy” definition for SNFs to the one used for IRFs. Presently, the SNF definition for group is “four patients”; exactly. The change will allow “group” to be any number between two and six. Important Note of Caution: Assuming this definitional change remains, SNFs must not adopt a group therapy practice that immediately accommodates the maximum. Group is an appropriate therapy treatment option when and only when, clinically warranted by the patients being treated in this setting. I am hearing way too many therapy companies tout cost control, productivity management, etc. under PDPM via a sweeping expansion of group therapy (not readily usable under the current RUGs system). Remember, if the SNF patient needs and clinical requirements prior to October 1 were for individual therapy, those same needs will apply post-October 1 and PDPM. CMS has warned providers against wholesale shifts in therapy treatment methodologies and time/minutes (reductions). Facilities need to be very careful as it is unlikely that their census mix (case mix, acuity, etc.) will change after October 1 and thus, the provision of therapy should be fundamentally the same under PDPM.
- The Value-Based Purchasing measurement model for readmissions is shifting from “all cause” to “potentially preventable” as the metric. As before, CMS is using a two percent withhold in SNF Medicare payments to build a pool for performance incentives under the program. Sixty percent of the funds withheld will be distributed to high-performing facilities as “a bonus percentage” going forward. In the first realization of incentives/penalties under VBP, 73% of all SNFs failed to perform at the standardized readmission benchmark and are presently, having their reimbursement reduced on a penalty basis.
- The SNF QRP (quality reporting program) is gaining two additional measures: Transfer of health information from the SNF to another provider, and; Transfer of health information from the SNF to the patient. Both measures are interoperability related designed to impact the flow of information between providers and patients to encourage enhanced productivity and safety. In addition, CMS proposes to add a number of standardized patient assessment data elements that assess cognitive function and/or mental status, special services, treatments and interventions, medical conditions and comorbidities, impairments, or social determinants of health (race and ethnicity, etc.). Recall, the SNF QRP imputes a two percent reduction in rate inflation to facilities that don’t report data or stay current. This means that for this year, a facility can see the rate increase of 2.5% proposed, reduced to .5% for non-reporting.
The full proposed rule is available at this link : https://www.federalregister.gov/documents/2019/04/25/2019-08108/medicare-program-prospective-payment-system-and-consolidated-billing-for-skilled-nursing-facilities
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