Reg's Blog

Senior and Post-Acute Healthcare News and Topics

Site Neutral Payment Update

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

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

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

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

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

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

 

Advertisements

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

Post-Acute, Site Neutral Payment Upcoming?

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

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

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

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

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

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

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

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

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

Interoperability and Post-Acute Implications

I’m not sure how many of my readers are following the subject and CMS stance/policy on interoperability among providers but the concepts and resultant debate are rather interesting.  I am trying to encourage as many clients and readers to tune-in on this subject as the implications are sweeping – positively and negatively.

Interoperability in this context means the ability of computer systems or software to exchange and/or make use of information for functional purposes.  In health care, the genesis of the interoperability concept began with HIPAA in the nineties.  HIPAA spawned the HITECH Act in 2009 which ultimately created Meaningful Use.  For anyone unfamiliar with Meaning Use and its incentive provisions, think no further than Value-Based Purchasing (VBP) and quality reporting.  The IMPACT Act is an analogous outgrowth of blended concepts between Meaningful Use, Value-Based Purchasing and Interoperability.  Conceptually, the goal is to create data measures that have “meaning” in terms of clinical conditions, outcomes, patient care and economics.  Ideally, data that matters and can be shared will improve outcomes, improve standardization of care and treatment processes and reduce cost through reduced waste and duplication.  Sounds simple and logical enough.

In April of this year, with the roll-out of various provider segment Inpatient PPS proposed rules for FY 2019, CMS included proposals to strengthen and expedite, interoperability.  The concept is contained within the SNF and Hospital proposed rules.  The twist however, is that CMS is changing its tone from “voluntary” to “mandatory” regarding expediting or advancing, interoperability. Up until this point, Meaningful Use projects that advanced interoperability goals were incentive driven; no punishment.  Among the options CMS is willing to pursue to advance interoperability are new Conditions of Participation and Conditions for Coverage that may include reimbursement implications (negative) and fines for non-compliance and non-advancement.  In the SNF 2019 Proposed Rule, providers are mandated to use the 2015 Edition of Certified Health Record/Information Technology in order to qualify for incentive payments under VBP and avoid reimbursement reduction(s).  For those interested, the 2015 Certified EHR Technology requirement summary is available here: final2015certedfactsheet.022114

The possible implications for providers are numerous – positive and negative.  The greatest positive implication is a (hopeful) rapid escalation of software systems that can share functional data directly without having to build and maintain separate interfaces (third-party).  Likewise, the proposed regulations will facilitate faster development of Health Information Exchanges (HIEs).  Many states have operating HIEs but provider participation and investment has been limited.  A quick interoperability interchange is via an HIE versus separate, unique data and software platform integration.  As SNFs and HHAs have MDS and OASIS assessment requirements on admission, fluid patient history, diagnoses/coding exchange and treatment history will facilitate faster and more accurate, MDS/OASIS completion – a real winner. Dozens of other “tasky” issues can be addressed as well such as portions of drug reconciliation requirements by diagnosis on admission, review of lab and other diagnostic results, order interchanges and interfaces, etc.

The most negative implication for providers is COST.  In reality, the post-acute side of health care isn’t really data savvy and hasn’t really kept pace with software and technology developments.  Many providers are small.  Many providers are rural. Many providers maintain primarily paper records and use technology only minimally.  Full EHR for them is impractical and with present reimbursement levels, unlikely any time soon.  The second most negative implication for providers is the fragmentation that exists among the system developers and software companies in the health care industry.  The “deemed” proprietary nature of systems and their software codes has limited collaboration and cooperation necessary to advance interoperability. HIEs were supposed to remedy this problem but alas, not yet and not at the magnitude-level CMS is foretelling within its Proposed Rules.

Interoperability is needed and amazing, conceptually.  The return is significant in terms of improvements in outcomes and reductions in waste and cost.  Unfortunately, the provider community remains too fragmented and inversely incentivized today to jump ahead faster (money not tied to integration and initiatives among providers).  Software systems don’t work between providers in fashions that support the interoperability goals.  More troubling: the economics are daunting for providers that are not seeing any additional dollars in their reimbursements, capable of supporting the capital and infrastructure needs part and parcel to additional (and faster), interoperability.

 

June 27, 2018 Posted by | Home Health, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , , , | Leave a comment

Hospice, Hospital Readmissions and Penalty Implications

Late yesterday, a reader (who also happens to be a client from time to time), posed this question to me. “When hospitals discharge to hospice and if the hospice has to readmit to the hospital, the hospital doesn’t get penalized for the readmit?  Is this true?”  Since this question is not one that I have been asked, to my recollection, ever before my guess is that others may have a similar query or interest.  My answer to him/the question, follows.

The short answer is that the readmission penalty issue is not applicable for a hospice to acute hospital transfer/admission.  There is one single caveat that must be present, however: The patient in question must be on the Medicare Hospice benefit rather than traditional Part A and receiving services under some other Hospice offered program such as a Palliative Care program (a home health care style offering).  Below is the reason and regulatory/legal construct why the readmission penalty is not applicable.

  • When a patient elects and is qualified under the Medicare Hospice benefit, the patient opts (effectively) out of his/her traditional Medicare benefit structure – including the assumed coverage for inpatient hospital coverage offered under Medicare Part A.
  • The issue or applicability for readmission penalties for hospitals is only under traditional Medicare fee-for-service or qualified Medicare Advantage plans  It is also only applicable to certain originating DRGs (not all readmissions qualify for a penalty).
  • When a patient enrolls in the Medicare Hospice benefit, the assumptive relationship under Medicare with regard to the patient and his/her provider relationship changes.  The assumption becomes that the patient is effectively, now the “property” (bad word choice but illustrative nonetheless) of the Hospice.  This is so much so that no patient can receive the Hospice benefit under Medicare without becoming a patient of a qualified, certified Hospice provider. Unlike the relationship under traditional or managed Medicare, the patient care is thus the property and coordinated responsibility of the Hospice.  Prior to enrollment, the patient had no connective relationship to any provider – free (for the most part) to seek care from any qualified provider (Med Advantage networks notwithstanding).
  • By his/her enrollment in the Hospice benefit with a Hospice, the patient agrees to a set of covered benefits tied to his/her end-of-life care needs.  He/she also elects to have his/her care effectively provided by or through the Hospice exclusively.  In fact, the patient can’t really show-up at a hospital for an admission and expect to be admitted, without the approval of the Hospice.  The only option a patient has to receive care in this fashion is to “opt out” of the Hospice benefit.
  • Once a patient is enrolled in Hospice, there effectively is no “hospital” benefit left.  The use of a hospital by a Hospice patient is through the Hospice exclusively and any hospital or inpatient use is (only) technically via a GIP or other contracted event/need.  In fact, the hospital has no DRG or admission code nor records the GIP stay as a “hospital” admission.  It (the hospital) can’t create a bill to Medicare for this event and must seek all payment through the Hospice.  As no bill is generated to Medicare Part A with a corresponding DRG and billing code, no inpatient admission occurred and thus, no readmission occurs either applicable (or not) for a penalty.

Like most things Medicare, you won’t find a succinct “memo” to this effect.  Instead, you have to know and go through the detail on the program benefit side and understand how billing, coding and benefit eligibility/program payments work for each provider segment.

 

April 20, 2017 Posted by | Hospice | , , , , , , , , | 2 Comments

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 | , , , , , , , , , , , , , | 2 Comments

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

Medicare, Billing Audits and Self-Disclosure

Over the last six months or so, I’ve written a number of articles on the issue of SNFs, therapy contracts/contractors, and recent fraud settlements. I’ve also given a few presentations on the same subject, covering how fraud occurs, the relationships between therapy contractors, SNFs and Medicare, and the keys to avoiding fraud. A reader question based on this subject area is the genesis (the answer is anyway) of this post.  The questioned shortened and paraphrased is;

“If we (the SNF) conduct an audit of our therapy contractor and our Medicare claims as you suggest and we find abnormalities that appear to be fraudulent claims, what do we do next?  We know we have to correct the practices that allowed the claims to happen but is there something else we need to do?”

Not only is this an excellent question given the subject area, the answer or outcome is likely the reason so many providers don’t or won’t audit their therapy contractors and Medicare claims (afraid of what they might find). The answer to the question is YES, there is something else to do and it is a federal requirement if a provider wishes to potentially avoid Civil Monetary Penalties and other remedies.  This key step is known as Self Disclosure.

Starting at the beginning: If the results of the “audit” determine that Medicare was billed inappropriately, the provider is in potential violation of the False Claims Act.  The False Claims Act describes violations as ‘any entity or person that causes the federal government to make payments for goods or services that are a) not provided b) provided contrary to federal standards or law or, c) provided at a level or quality different than what the claim was submitted for (summarized)’. For Medicare, providers are in violation of the False Claims Act if bills are/were submitted to Medicare (and paid) for care that was inappropriate, unnecessary, falsely misrepresented (upcoding, documentation etc.) or not provided.  Assuming, as the questioner poses, that the audit found abnormalities (improper bills and payments) to Medicare (Parts A, B, or C) for any of these reasons, a False Claims Act violation (liability) has been identified.  The provider has obligations as a result, under federal law.

The “obligation” once the activity is discovered is to self report.  The OIG maintains a Self Disclosure Protocol policy that can be accessed here ( http://oig.hhs.gov/compliance/self-disclosure-info/files/Provider-Self-Disclosure-Protocol.pdf ). Self Disclosure is a methodology that providers can use to potentially avoid Civil Monetary Damages, other remedies and extensive legal costs. Self Disclosure however, cannot be used to mitigate criminal penalties if the activity that is part of the Medicare False Claims violation was/is criminal.  Self Disclosure also is not relevant for overpayments.  Overpayment issues are handled via the Fiscal Intermediary directly.

Per the OIG Self Disclosure Protocol:

“In 1998, the Office of Inspector General (OIG) of the United States Department of Health and Human Services (HHS) published the Provider Self-Disclosure Protocol (the SDP) at 63 Fed Reg. 58399 (October 30, 1998) to establish a process for health care providers to voluntarily identify, disclose, and resolve instances of potential fraud involving the Federal health care programs (as defined in section 1128B(f) of the Social Security Act (the Act), 42 U.S.C. 1320a–7b(f)). The SDP provides guidance on how to investigate this conduct, quantify damages, and report the conduct to OIG to resolve the provider’s liability under OIG’s civil monetary penalty (CMP) authorities.”

Below are some key points providers need to know prior to and in connection with, a self disclosure process.  Again, I encourage all providers that are conducting a billing audit or considering a billing audit, to access the PDF from this post and review the OIG Self Disclosure Protocol.

  • A current regulatory process or audit from Medicare (or a contractor such as a ZPIC audit) does not mean that the provider cannot self disclose, provided the disclosure is in good faith.
  • Further investigations and reviews are part of the process and providers need to be aware that the OIG will direct the provider’s investigative process as part of the self disclosure.  In other words, the audit the provider conducted which may have identified the false claims is not the end nor will it suffice to resolve the matter once disclosed.
  • Providers that wish to self disclose need legal counsel as the initial disclosure requires a succinct identification of the legal violations applicable and the scope of the activity and dollar amounts (potential) involved.
  • Self disclosure should only be made after corrective action has occurred.  The disclosure does not suffice as a remedy for conduct going forward nor can it absolve liability in scope that predates the disclosure or the period disclosed (see the point prior).
  • Providers need to be aware that this process is not quick nor does it alleviate or mitigate any requirement for repayment of improper claims. Additionally, providers need to recognize that resolution will require mitigation steps including potential agreement to a compliance program/plan and commitment to additional monitoring/auditing, depending on the scope of the violations disclosed.

I encourage providers to read the Protocol and to pay particular attention to 5 – 9. While I know the information may seem daunting and discouraging, don’t use this post or the information in the Protocol as a reason to not conduct a Medicare billing/claims audit and/or to not report, if violations are found.  I assure you, having worked extensively with providers caught by the OIG, DOJ and/or in a Qui Tam action, prevention and self disclosure, while onerous is far better and cheaper than what occurs if the violations are discovered federally.

 

April 10, 2015 Posted by | Home Health, Hospice, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , , , | 2 Comments

Doc Patch in the Works

Yesterday, the Speaker of the House (John Boehner) announced that a compromise is forthcoming to alleviate, for one year, the pending 24% payment reduction to the Physician Fee Schedule arising out of the current SGR formula. Ten days or so ago I wrote a post regarding a House bill that repealed the SGR but contained a “poison-pill” provision assuring its death in the Senate ( http://wp.me/ptUlY-gm ). As is the common methodology in Congress today, this initiative is a “patch”; another extension of the current status quo, delaying any SGR implications for one year.  Alas, while the SGR demands fixing, permanently, no traction is available among the parties to resolve the issue.

What the compromise does and doesn’t do is as much the center of debate as any efforts to replace the SGR with a more permanent formula.  In summary, the compromise;

  • Staves off the 24% cut but doesn’t restore any cuts related to sequestration.
  • It delays the implementation for hospitals of the 2 midnight rule for another six months.  The 2 midnight rule essentially reduces Medicare payments to hospitals for short in-patient stays.  It requires admitting physicians to have justification for the inpatient stay and if the same is lacking, the stay could be deemed (by RAC auditors) outpatient observation and thus, paid under Part B  at a lower rate.  The Bill would delay RAC auditors ability to review such stays until March of 2015 and give CMS authority in the interim and beyond, the ability to probe and educate but not re-classify stays.
  • It extends the implementation of ICD-10 for one more year.
  •  It extends certain programs that provide additional funding for rural hospitals.

While no one wins under these compromises, the Patch is likely to pass both houses quickly, viewed as a better alternative than the SGR cuts.  For post-acute providers, this is good enough news as the therapy fee schedule was subject to the same 24% reduction.

Interesting to note is that while the Bill extends the implementation of the 2 midnight rule, it doesn’t address the backlog of Administrative Appeals that continues to mount due to the Medicare RAC initiative.  This backlog is enormous and growing and it is the sole source initially, for providers to appeal RAC decisions.  I know of multiple providers today in the appeal queue waiting for a review of what appears to be, many erroneous determinations and shabby reviews of claims.   More on this in another post – later.

March 27, 2014 Posted by | Policy and Politics - Federal | , , , , , , , , , , | Leave a comment

Observation Stay Relief via Congress?

An issue that continues to confound the hospital and SNF industry is the growing use and thus, referral and coverage (Medicare) ramifications of observation stays.  Fundamentally, and observation stay by current definition is a non-inpatient stay – an extended residence in an outpatient status.  Truly, this a bifurcated problem or issue; hospitals wishing to avoid admission and readmission penalties and SNFs trying to determine the nature of the hospital stay for Medicare coverage purposes.

The observation stay issue at hand is truly the proof of the law of unintended consequences and outgrowth of competing health policy agenda.  For elderly patients and SNFs, it can be exceptionally difficult to sort out a multiple day hospital stay (greater than three days) when many of the days, or all, occurred in what appears as a private room.  In fact, in many hospitals, expanded outpatient areas are easily confused as inpatient environments, with no visible delineation in accommodation, care, etc.  The sole differentiating factor is whether the room and location are defined by the hospital’s license as an “inpatient room”.  As Medicare coverage in an SNF requires a precluding three-day inpatient hospital stay, a stay that does not incorporate an actual admission to the hospital proper (not an outpatient admission) of at least three days in length fails to satisfy the three-day inpatient requirement.

For the hospital, observation stays (and the increase thereof) are a direct outgrowth of aggressive Medicare Recovery Audits. By deeming, via post review, inpatient stays “inappropriate or not medically necessary”, Medicare has recovered hundreds of millions of dollars from hospitals.  Additionally, a growing list of admitting diagnoses (DRGs) are plaguing hospitals in terms of looming reductions in reimbursement if a patient originally admitted and subsequently discharged, is readmitted for any reason within 30 days of the discharge.  To avoid this readmission penalty, hospitals will use an observation stay as an alternative. The most significant observation trend ramification is the growth in the length of stay in this status.  In 2006, only 3% of observation stays lasted longer than 48 hours.  In 2011, the percentage increased to 11%.  In certain regions today, the percentage is as high as 14% of observation stays exceed the 48 hour period.

In May, CMS proposed to alter or modify the observation stay vs. inpatient stay criteria; creating additional clarity for recovery auditors.  The proposal would allow recovery auditors to presume that any inpatient stay equal to or greater than two midnight periods (one Medicare day)  is appropriate.  Stays shorter than this duration (inpatient) are thus classified as outpatient.  CMS has not yet codified this change.

Earlier by a month or so, two bills were introduced (companions) in the House and the Senate.  Both bills proposed modification to Title 18 (Medicare) of the Social Security Act, effectively classifying an observation stay day as equivalent to an inpatient stay day for purposes of satisfying the three-day prior stay requirement for Medicare coverage in an SNF.  The bills are titled “Improving Access to Medicare Coverage Act of 2013”.  Each has achieved a fair number of co-sponsors and today, reside in committee (House sub-committee on health and the Senate).

The likelihood of passage is by my estimate, 50/50 at best. The rub in terms of passage is cost as a change in definition (proposed) will increase the coverage exposure for SNF stays.  No one knows what the exact magnitude is and no CBO score exists for either bill (yet).  Additionally, CMS is likely to balk as simplification as proposed will have a spill-over impact on the “appropriateness” definition presently used to recover hospital payments for “unwarranted” inpatient stays.  There is no question that weighting a day under federal law equivalent to another day for coverage purposes will push hospital lawyers to pose arguments that reclassification of inpatient to outpatient days via recovery auditors is “capricious”.  Such arguments are already in federal courts and administrative courts. Further, a case filed in 2011, Bagnall v. Sebellius argues that the use of observation stays violates federal law.  This case is not yet at trial but will in all likelihood, receive a boost if Congress amends the Social Security Act as proposed.

Regardless of the legislative outcomes, it is clear that movement is in-place for additional clarity around the use and misuse of observation stays.  Even sans legislative success, CMS is now tasked to modify and clarify the use of observation status and thus, re-focus recovery auditors on a more direct course of Medicare payment excess.  This issue needs resolution and frankly, Medicare auditors need to focus more attention where the real abuse and overpayments are occurring.  This is small potatoes by comparison.

September 25, 2013 Posted by | Policy and Politics - Federal, Skilled Nursing | , , , , , , , | Leave a comment