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.
- 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
- 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.
- 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.
- 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”.
Now that the real estate dynamics have shifted on-balance to par or better (majority of markets can liquidate inventory at stable or rising prices with constant or modestly increasing demand), the outlook for Seniors Housing (IL, AL and CCRC) is less murky. The recessionary of the last 7 to 8 years has lifted. What is visible, while still fairly complex market to market, is a picture that is illustrative for the next ten or so years – ample to adequate supply and average to slightly soft overall demand. Perhaps, this is the Brookdale lesson?
Amplifying the above; what we know statistically is that demand has globally peaked and now, flattened. Recall that Seniors Housing is very much local and regionally biased/impacted so some markets may be hotter in terms of demand than others. By example, in 2010 (full recession impact), occupancy in the sector was 86.7%. By the end of 2014 and since, occupancy has recovered but only to an average of 90% (per the National Investment Center). During this same later period, new unit production has increased to an average of 3,200 per quarter (trailing seven quarters since end of 2016). This is a 50% increase over the prior eight quarters. The cause? Less about occupancy reality, more about a growing optimistic economic outlook, improving real estate dynamics (the leading cause) and more accessible capital, particularly as nontraditional sources have entered the sector with vigor (private equity). A quick translation is for an increase of approximately 5,000 additional units in the top 31 MSAs (could be as much as 6,000 depending on where the units are in the development cycle). This additional inventory is entering a market that is showing signs of over-supply (again, is there a Brookdale lesson here?).
In multiple articles, I have written about phantom or perhaps more accurate, misunderstood economic and demographic trends. Seniors housing global demand is very elastic, particularly for IL and CCRC projects that are at or above market (where the bulk of the industry is). Demand elasticity exists where and when, price directly impacts the number of and the willingness of, consumers to consume a particular good or service. As price rises, the number decreases. As price falls, the number increases. For seniors housing, the elasticity wanes and trends toward inelastic demand when the price mirrors “rent controlled or modest income” housing. In this case, demand is constant and actually inverse proportionately (more demand than supply). Better real estate economic conditions and improved investment market conditions (stock market, investment returns, etc.) influence to a lesser extent, the demand outlook as stronger or stable wealth profiles for consumers reduces the anxiety of purchase, especially where entrance fee models are concerned.
From a demographic perspective, the issue at bear is the actual or real number of seniors in the target age range with an economic wherewithal to consume (have the financial capacity). Only (approximately) ten percent of all seniors 75 and above reside in seniors housing specifically (IL or CCRC) and a slightly larger (aggregate)number now reside in quasi-seniors housing projects (age limited housing developments ala Del Webb). Between 2010 and 2016, the 75 plus population grew at an anemic rate of 1.8%. The expected rate of growth for this cohort over the next five years increases to 3.8%. More telling, for this same period, the subset of 75-79 grows at a rate of 5.7%. These numbers present a bit of optimism but in real terms, the demand change (within the demographic) doesn’t create sufficient opportunities for absorption of the inventory growth, if the same remains at its present pace. The demographic fortune doesn’t really begin to change dramatically until 2021 and beyond. At 2021, the group turning 75 represent the start of the baby boomers (2021 -75 = 1946). Prior to this point, the demographics of seniors 75 and above still reflect the World War II trend of birth suppression.
To Brookdale. The operative lesson is that Brookdale has far too much supply for the real organic demand that exists for plus market rate, congregate seniors housing. In my outlook comments below, readers will note how the demand around seniors housing and the congregate model is actually shifting slightly which has negatively impacted Brookdale. The acquisition of Emeritus has since offered proof of some age-old adages regarding Seniors Housing: local, not conforming to retail outlet strategies, very elastic demand, tough to price inflate for earnings and margin, asset intense and thus capital re-investment sensitive, and of course, full of me-too projects that are difficult to brand differentiate. In the Emeritus acquisition, economies of scale and cultural assimilation proved difficult but frankly, such is always the case. The real crux is that the retail outlets (the Emeritus properties) were not accretive -seniors housing doesn’t quite work that way. While the asset value of Brookdale skyrocketed, the earnings on those assets retrenched. With soft demand and a lot of congregate projects highly similar and no room at the ceiling for price elevation, a fate accompli occurred. The lesson? Certain types of Seniors Housing is about played out (vanilla, above market projects) and a heavy concentration of this in a portfolio will evidence occupancy challenges and rental income return challenges (no price inflation). Demand is also soft for reasons mentioned above, primarily demographic but also still, economic in some instances. Similarly, as I mentioned above, seniors housing is very local. A retail brand strategy simply (the Wal-Mart concept) won’t work. Residents identify brand to local or at best regional – national means nothing. If the market isn’t supportive regardless of who or what it is, the project will be challenged. Emeritus brought too many of these projects into the Brookdale portfolio.
Below are my key outlook points for 2017 and the next five or so years for IL and CCRCs (non-affordable housing).
- Demand across most property types will remain soft to stagnant. This means 90% occupied is a good target or number. Of course, rent controlled projects will continue to experience high demand, particularly if the projects are well located and well-managed. Regional and local demand can and will vary significantly. The projects that will experience the softest demand are above market, congregate, non-full continuum (non-CCRC). Projects with the best demand profile contain mix-use, mix-style accommodations with free-standing and villa style properties. While highly amenitized projects will attract traffic, demand isn’t necessarily better due to price elasticity in the segment.
- Improving economic conditions/outlook will undergird and help bolster demand, though the demographics still trump (no pun intended). Some notes to consider.
- The real estate economy can benefit, even with a slightly higher interest rate trend, if employment and wages continue to strengthen and de-regulation of some current lending constraints occur. I think the latter two points offset any interest rate increases in the near to moderate term.
- Rising interest rate fortunes help seniors more than stock market returns, though this trend is changing as seniors have been forced to equities to bolster return. Still, most seniors are highly exposed to fixed income investments and a somewhat improving interest rate market will improve income outlooks. Better or improved income does psychologically impact the consumption equation, “positively”.
- Capital access will remain favorable/positive and banking de-regulation to a certain extent, may push banks back to the sector (they have been shy to seniors housing for the last 5 to 8 years).
- Even with improved economic conditions, the mismatch between demand and supply (discussed earlier) will restrain rent increases in the near term. This could present some modest operating challenges for the sector as price inflation on wages, etc. will occur before any opportunity to raise fees/rent. The net effect is a modest erosion in margin. I don’t see much opportunity to fight this effect with increased occupancy.
- Increasing occupancy or in some cases, staying at current occupancy levels will continue to require incentives. Incentives negatively impact revenue in the short-run.
- The average age for residency on admission and across the product profile will continue to move up as a general rule. In addition, the resident profile will continue to slide toward additional infirmity and debility. Providers will continue to work to find ways to keep projects occupied by offering aging-in-place services. While this is a good strategy to a certain extent, the same does harm or impact negatively, the ability to market and sales-convert, units to a more independent resident profile. I liken this to a “rob Peter to pay Paul” approach. It works but not without side-effects and perhaps, unintended consequences that can be very deleterious “down-the-road”.
- The additional inventory that is coming into the sector won’t slow down for another two or so years. This is in-spite of a weak to stagnant demand. Some investors and developers are willing to be somewhat ahead of the baby-boomer curve even though I believe this is unwise (see next point).
- The reason I believe the baby-boomer impact for the sector will be modest and actually, disheartening is that the demographic shift doesn’t equate to product demand directly. Boomers have an increasingly different view of the world and a different set of housing and lifestyle expectations plus economic capacity.
- The first group of Boomers was hurt the hardest by the most recent recession. They lost a great deal of wealth and income profile as many were the first displaced as jobs eroded (oldest employees, highest paid). They also have less employment time to recoup any income/savings losses.
- Generationally, their savings rate is significantly less than their parents. These folks, while still more modest in comparison to Boomers born five to ten years later, didn’t delay gratification or extravagance the way their recession-influenced parents did. Less overall wealth negatively impacts their ability to afford higher-end seniors housing.
- Congregate living (apartments) is less their style. They are the first age group (Boomers) used to a more expansive living arrangement. While they’ll move eventually, they will not see 1,200 sq. feet at $4,000 a month as attractive (not even at $3,000). They will have unfortunately, mismatched expectations in terms of “size” versus cost. They’ll want larger but for less rent than realistic.
- They are generally healthier with a different view of age related to retirement and retirement residency. Don’t look for 75 year older Boomers to be horribly interested in a CCRC or Seniors Housing development, particularly if their health is good. They’ll wait until 80 or older to trigger a move.
- Boomers are more mobile and more detached than their parents. This means in-market moves and the traditional radius markets/math will be less applicable year-over-year with Boomers. They will be willing to shop broader and do so more for value and price – more for less or at least, a perception of the same. They are nowhere near as homogeneous by social construct as their parents.
- Greater pricing flexibility will continue to evolve. This means different entry-fee options, monthly service options with/without amenities, more ala carte, etc. Service infrastructure for certain communities may suffer as residents will continue to want more choice but less bundle (won’t pay inflated fees for what they perceive as things they don’t use or want).
- Because the sector is highly influenced and trended local, some markets will continue to thrive while others will continue to struggle, regardless of national trends.
A new book was just released – The Five-Star Quality Rating System Technical Users’ Guide. Readers may find this resource exceptionally valuable, particularly in-light of how important the Five Star system is today (Value Based Purchasing, Quality Reporting, Bundled Payments, Network participation/formation, etc.). For disclosure purposes, I am co-author along with Maureen McCarthy, RN. The link to purchase/learn more about the book is below.
Now into February, its time to take stock of the Post-Acute/SNF landscape, particularly as the same pertains to the evolutionary policy initiatives in-play and moving forward. To start, there is little evidence on the horizon of an all-out retreat on the policy changes begat by the ACA. While some framework is building to “Repeal and Replace” the ACA/Obamacare, the same will leave fundamentally intact, the changes started and wrought by Bundled Payments, Value-Based Purchasing, and the IMPACT Act. The Republican majority, a smattering of Democrats, and the incoming Secretary of HHS have signaled support for these initiatives. Should a Repeal strategy move forward any time soon, these elements, skeletal perhaps or whole in-flesh, will likely remain.
Reviewing thematically, these policy initiatives are centered on an intentional focal shift from episodic, fee-for-service payments to payments based upon performance. Performance in each element is tied to cost and quality. The objective is to create better outcomes (quality) in a more efficient manner. Because these things are government policy, they are clunky – less than simple. In some cases such as with Value Based Purchasing and readmission measures, the methodology is so cumbersome and disjointed (some diagnoses are OK, some are not) that a layman, even one well-educated, could have a hard time qualifying and quantifying an appropriate readmission (by diagnoses, by risk, etc.).
Below is a quick review of the current policy initiatives and what they mean for 2017 for SNFs.
IMPACT Act: The purpose of the Act is to create standardized reporting of quality measures and cost measures across the post-acute domain (HHAs, SNFs, LTCaH, IRF). The objectives are to reduce avoidable readmissions to acute care settings and to create standardized, comparable quality measures to identify federal policy improvements and payment consistencies. CMS of course, uses more floral language regarding the objectives and intent. Ultimately, the translation of the standardized data allows CMS to target regulatory changes and payment initiatives that reward provider performance and streamline (a bit oxymoronic for government) payment systems (rate equalization models). Below are the pertinent domains under the IMPACT Act
- Skin integrity and changes in skin integrity
- Functional status, cognitive function, and changes in function and cognitive function
- Medication reconciliation
- Incidence of major falls
- Transfer of health information and care preferences when an individual transitions
Resource Use and Other Measures
- Resource use measures, including total estimated Medicare spending per beneficiary
- Discharge to community
- All-condition risk-adjusted potentially preventable hospital readmissions rates
- Functional status
- Cognitive function and mental status
- Special services, treatments, and interventions
- Medical conditions and co-morbidities
- Other categories required by the Secretary
As is common in current health policy, reimbursement policy and other policy interweaves with laws such as the IMPACT Act. Value Based Purchasing and Quality Reporting for SNFs, integrates quality measure reporting and results along with readmission performance with incentives or penalties imputed via Medicare reimbursement for 2018. Beginning in October of 2016, SNFs began to submit QRP (Quality Reporting) data via the MDS. The first data collection period concluded on 12/31/16. The Quality Measures reported and applicable under the IMPACT Act (cross setting measures) are:
- Part A stays with one or more falls with major injury (fracture, joint dislocation, concussion, etc.)
- Percent of residents with new or worsened pressure injuries
- Percent of Long-Term Care Hospital patients with an Admission and Discharge Functional Assessment and a Care Plan that addresses function
The Claims Measures are:
- Discharge to community
- Potential preventable, 30 day post SNF discharge, readmission to hospital events
- SNF Medicare spending per beneficiary
The Quality Measures are the elements that impute, based on performance, a reimbursement penalty in 2018 up to 2% of Medicare payments via a reduction in the SNFs reimbursement (rate) update.
Value Based Purchasing (VBP): SNFs are a tad late to this party as other providers such as hospitals, physicians and home health agencies already have reporting and measurement elements impacting their reimbursement. Hospitals for example, have DRG specific readmission penalties (penalties applicable to common admitting diagnoses). For HHAs, a nine state demonstration project is under way linking a series of measures (process, outcomes, claims) from the OASIS with customer satisfaction from the HHCAHPS to reimbursement via an accumulation tied to a Total Performance Score. The measurement years (data gathered) beget payment changes (plus or minus) in outlying years – 2016 data nets payment adjustments in 2018. The payment graduation increases over time (2018 = 3%, 2022 = 8%).
For SNFs, the VBP measure is 30 day, all cause, unplanned readmissions to a hospital. The measurement reflects a 30 day window that begins at the point of SNF admission from a hospital. The 30 day window of measurement spans place of care meaning that the patient need not reside in the SNF for this measurement to still have an impact. For example, a patient admitted to an SNF, subsequently discharged after 14 days to a HHA and then readmitted to the hospital on day 22 (post hospital discharge) is considered a “readmission” for SNF VBP purposes. CMS has offered guidance here regarding diagnoses that are excluded from the readmission measure. Readers that wish this additional information can contact me via my email (on the Author page of this site) or via a comment to this post. In either case, please provide a valid email that I can use to forward the information.
To avoid getting too technical in this post, a quick summary of how VBP will work is below (readers with greater interest can contact me as provided above for a copy of a Client Alert our/my firm produced last fall on VBP).
- A SNFs readmission rate is calculated in separate calendar year periods – 2015 and 2017. The 30 day readmissions (rate) applicable to an SNF is subtracted from the number 1 to achieve the SNFRM (Skilled Nursing Facility Readmission Measure).
- The 2015 rate is called the Improvement Score and the 2017 rate is called the Performance Score. Both scores are compared against a benchmark for the period applicable.
- The benchmark equals 100 points. The difference between the two (Improvement and Achievement) correlate to points plotted on a range – the Achievement range and the Improvement range. The higher of the two scores is used to calculate reimbursement incentives or withholds – performance score.
- Performance scores in terms of points correlate to reimbursement incentives/ withhold. The maximum reduction or withhold is 2%. CMS has yet to identify the incentive amount but under law, the amount must be equal in total value to 50-70% of the total withheld. In effect, we envision a system that imputes a floor of minus 2% with points up to the threshold limit equaling a net of zero (plus 2%) and then climbing above the threshold to the benchmark (national SNF best readmission (average) decile). This maximum level (and above) is likely to equal 100% of the available incentive.
The 2015 data is already “baked” but 2017 is just beginning. SNFs need to be diligent on monitoring their readmissions as this window is the Improvement opportunity. Reimbursement impact isn’t until 2019.
Care Coordination: This catch-all phrase is now in “vogue” thanks to the IMPACT Act and VBP, along with the recently released, new Conditions of Participation. The implication or applicability for Care Coordination is found in the new COPs. Care Coordination elements are located in 483.21 (a new section) titled Comprehensive Resident-Centered Care Plans. Specifically, the references to Discharge Planning (Care Coordination) in this section are implementation elements for the IMPACT Act requirements. Below are the regulation elements for Care Coordination.
- Requires documentation in the care plan of the resident’s goals for admission, assessment of discharge potential and discharge plan as applicable
- Requires the resident’s discharge summary to include medication reconciliation of discharge meds to admission meds (including OTC)
- Discharge plan must incorporate a summary of arrangements for post-discharge care including medical and non-medical services plus place of residence
- All policies pertaining to admission, transfer, discharge, etc. must be uniform, regardless of payer source
- Requires the facility to provide to resident/resident’s representative, data from IMPACT Act quality measures to assist in decision-making regarding selection of post-acute providers
The above elements are in Phase 1 meaning providers should be in-compliance by now (regulation took effect 11/28/16).
On the Reports and Other Documents page ( http://wp.me/PtUlY-4g ), I have uploaded a Power Point presentation my firm has made available to clients covering the new Federal Conditions of Participation for SNFs and the implementation elements that are part of Phase 1 (titled “New COPS for SNFs Phase 1”). The presentation covers what is happening in terms of the new regulations arising out of the law, focused on Phase 1 requirements which began November 28. The presentation will also alert providers, etc. to Phase 2 issues as applicable.
Additional background information on the Phases and the Rule can be found on this site at these post references: http://wp.me/ptUlY-kU
As always, questions, etc. can be forwarded to me via a comment accompanying this post or via e-mail (contact information on the Author page). Remember, if you wish a reply/response, please include a valid e-mail address/contact with your post or question.
Join me as I host a one-hour webinar and conference call regarding post-election healthcare policy. The program/call is set for Wednesday, December 14 at 1:00 PM EST/noon CST.
With uncertainty looming, providers are wondering what will change as the Inauguration approaches and a new Congress settles in. We will review the ACA, Medicaid and Medicare, and related policy issues including;
- Value Based Purchasing
- CMS Center for Innovation/Alternative Delivery Models/Bundled Payments
- Additional Quality Measures and Quality Reporting
- Inter-Program and Payment Reform – Rate Equalization for Post-Acute Providers
- IMPACT Act
- ACO Expansion
The program is sponsored by HCPro and the registration link is below;
We knew that sooner or later, the first Tuesday in November would arrive and with that, a new President and changes (many or few) to Congress. The outcome certain, we move to uncertainty again concerning “what next”?…or as applicable here, what next from a health policy perspective.
With Donald Trump the incoming President-Elect, only so much from a policy perspective is known. Hillary Clinton’s path was easier to divine from a “what next” perspective as fundamentally, status quo was the overall direction. Trump’s likely direction and thus, changes to current policy, etc. are hazy at best. Thematically, there are points offered throughout the campaign that give some guidance. Unfortunately, much that drives current reality for providers is more regulatory begat by legislative policy than policy de novo.
Without divining too much from rhetoric, here’s what I think, from a health policy perspective, is what to expect from a Trump Administration.
- ObamaCare: Trump ran on a theme of “repeal and replace” ObamaCare aka the Affordable Care Act. This concept however, needs trimming. Repealing in total, existing federal law the magnitude of the ACA is difficult if not nearly impossible, especially since implementation of various provisions is well down the road. The ACA and its step-child regulations are tens of thousands of pages. Additionally, even with a Republican White House and Republican-majority Congress, the Congressional numbers (seats held) are not enough to avoid Democratic Senate maneuvers including filibuster(s). This means that the real targets for “repeal and replace” are the insurance aspects namely the individual mandate, Medicaid expansion, certain insurance mandates, the insurance exchanges, a likely the current subsidy structure(s). The other elements in the law, found in Title III – Improving the Quality and Efficiency of Health Care, will remain (my prediction) – too difficult to unwind and not really germane to the “campaign” promise. This Section (though not exclusively) contains a slew of provisions to “modernize” Medicare (e.g., value-based purchasing, physician quality reporting, hospice, rehab hospital and LTACH quality reporting, various payment adjustments, etc.). Similarly, I see little change made, if any to, large sections of Title II involving Medicaid and Title IV involving Chronic Disease. Bottom line: The ACA is enormous today, nearly fully intertwined in the U.S. health care landscape and as such, too complex to “wholesale” eliminate and replace. For readers interested in exploring these sections (and others) of the ACA, a link to the ObamaCare website is here http://obamacarefacts.com/summary-of-provisions-patient-protection-and-affordable-care-act/
- Medicaid: The implications for Medicaid are a bit fuzzier as Trump’s goals or pledges span two distinct elements of the program. First, Trump’s plan to re-shape ObamaCare (repeal, etc.) would eliminate Medicaid expansion. As mentioned in number 1 prior, this is a small part of the ACA but a lipid test for Republican governors, especially in states that did not embrace expansion (e.g, Wisconsin, Kansas, etc.). Second, Trump has said that he embraces Medicaid block-grant funding and greater state autonomy for Medicaid programmatic changes (less reliance on the need for states to gain waivers for coverage design, program expansion, etc.). It is this element that is vague. A series of questions arise pertaining to “policy” at the federal level versus funding as block grants are the latter. The dominant concern is that in all scenarios, the amount of money “granted” to the states will be less than current allocations and won’t come with any matching incentives. With elimination of the expansion elements, how a transition plan of coverage and care will occur is a mystery – federal assistance? state funding mostly? What I do predict is that Medicaid will only suffer the setback of a restructure and replacement of the Medicaid expansion elements under the ACA. I don’t see block grants happening any time soon as even Republican governors are opposed without a plan for wholesale Medicaid programmatic reform. Regardless of the approach, some initial Medicaid changes are in the offing, separate from the Block Grant issue. The Medicaid Expansion issue is no doubt, a target in the “repeal and replace Obama Care”. The trick however is to account for the large number of individuals that gained coverage via expansion (via eligibility increases due to increased poverty limits) – approximately 8 million impacted. This is less about “repeal” and more about “replace” to offset coverage lapse(s) for this group.
- Related Health Policy/ACA Issues: As I mentioned earlier, the ACA/ObamaCare is an enormous law with tentacles now woven throughout the health care industry. The Repeal and Replace issues aren’t as “clean” as one would think. The focus is the insurance mandate, the subsidies, the mandated coverage issues and to a lesser extent, Medicaid. That leaves fully 80% of the ACA intact including a series of policy changes and initiatives that providers wrestle with daily. These issues are unlikely to change in any substantive form. Republicans support alternative delivery projects, value based purchasing, etc. as much if not more than Democrats. Additionally, to repeal is to open a Pandora’s Box of agency regulations that tie to reimbursement, tie to other regulations, etc. For SNFs alone, there exists all sorts of overlap between Value Based Purchasing, Bundled Payments, new Quality Measures and quality reporting (see my post/presentation on this site regarding Post-Acute Regulatory Changes). The list below is not exhaustive but representative.
- Value Based Purchasing
- CMS Center for Innovation/Alternative Delivery Models/Bundled Payments
- Additional Quality Measures and Quality Reporting
- Inter-Program and Payment Reform – Rate Equalization for Post-Acute Providers
- IMPACT Act
- ACO Expansion
As providers watch the inauguration approach and a new Congress settle in, the wonder is around change. Specifically, what will change. My answer – bet on nothing substantive in the short-run. While Mr. Trump ran partially on a platform that included regulatory reduction/simplification, the lack of overall specifics regarding “which or what” regulations on the health care front are targets leaves us guessing. My guess is none, anytime soon.
The Trump focus will be on campaign specific agenda first: ObamaCare, Immigration, Taxation, Foreign Trade, Energy, etc. – not health policy per se. There is some flow-through gains providers can anticipate down-the-road that can be gleaned from the Trump campaign but these are a year or more off. If Trump does deal with some simplification on drug and research regulation (faster, cheaper, quicker approvals), funding for disease management and tele-medicine and a fast-track of some Republican policy “likes” such as Medicare simplification, Medicaid reform at the program level, and corporate tax reduction (will help for-profit providers), then gains will occur or opportunities for gains will occur.
From a strategic and preparatory perspective, stay the course. Providers should be working on improved quality outcomes, reducing avoidable care transitions/readmissions, looking at narrow networks and network contracting/development opportunities and finding ways to reduce cost and improve care outcomes. Regardless of what a Trump Administration does first, the aforementioned work is necessary as payment for value, bundles/episodes of care, and focus on quality measures and outcomes is here to stay and to stay for the foreseeable future.
In September, I spoke at the Kairos Health conference in Pennsylvania on request/behalf of HCPro. The topic was on upcoming/current regulatory and compliance issues in Post-Acute Care. By request, I am providing the presentation on this site. Readers can find it on the Reports and Other Documents Page. The title is “Upcoming Post-Acute Regulatory Issues”. It is free for viewing or download. As always, questions, comments, etc. feel free to comment to this post or drop me a note at the email address provided on the Author page of this site.
About ten days ago, I published a post regarding the new Federal Conditions of Participation for SNFs. This long awaited regulatory update includes new, revised, and existing regulations published in final rule form last week (October 4). The post is here for reference http://wp.me/ptUlY-kL
The questions frequently asked regarding the new CoPs (since release) are around implementation dates. As readers will note, whether in my post or in the actual Final Rule, enforcement is in phases spanning a three year time frame – November 2016 through 2018. Recall that the CoPs in the Final Rule are the broad law changes. Implementation requires specificity found (typically) in the Interpretive Guidelines – the actual “regs”. We aren’t there yet and given the breadth of change in certain instances, time is necessary for regulations to be written and providers to comply. Hence, the phasing.
I have posted below, the implementation timeframe for reference. This guide is available via this post and is hosted on the Reports and Other Documents page on this site. I have articles forthcoming (soon) here and on other sites regarding implementation strategies and tips. In the meantime, readers can always forward a question via comment to this post or to my e-mail address noted on the Author page. Remember: If you want an answer direct, please provide a current, working e-mail address. I do respond to all questions and comments as efficiently as I can.
The timeframe document is here:
The long-awaited final rule on the revised/new SNF Conditions of Participation is set for publishing on October 4 in the Federal Register. The public inspection version is available now, including the comments from the Proposed Rule at this link: https://s3.amazonaws.com/public-inspection.federalregister.gov/2016-23503.pdf The whole document is over 900 pages. The salient portions that include the regulatory changes/summary of provisions is the first 14 or so pages.
Two things to remember for policy readers and folks in the industry. First, what is available is the “law” not the interpretive guidelines that expands on the law in a way that creates enforcement regulations and the roadmap or “how to”. The Final Rule is absent this information. CMS still needs to develop this element. Second, implementation will occur in phases. The first phase is set for November 28, 2016 with minor changes that most providers should be ready for or are parts (related or integrated) from annual rule releases/updates (CMS updates PPS for each provider segment annually) already disclosed. For example, QMs that translate into this rule regarding unnecessary drugs, antipsychotics-psychotics, etc. These are now encapsulated in the rule but frankly, not new in scope. The second phase is November 2017 and the third phase, 2019.
In November of last year, concurrent with the release of the Proposed Final Rule, I wrote a piece and did a webinar for HCPro on this topic. The written piece is here: http://wp.me/ptUlY-iT In my review of the two, what I though would move forward fundamentally “intact” did. What I was concerned about however, didn’t change much based on the over 10,000 comments. There is definitely, a “Camel’s nose under the tent” element with regard to staffing requirements; though not an overt regulation. The devilish elements are around the “facility assessments” for staff adequacy and competency, etc. and the food service requirement to meet individual preferences plus serve nutritionally adequate, palatable meals, etc. As one of the main issues in any environment remains food (always a certain number of complaints), this one could prove very, very prickly when it comes to survey/enforcement. The summary of changes/provisions is below, as published.
- Basis and scope (§483.1)
We have added the statutory authority citations for sections 1128I(b) and (c) and section
1150B of the Social Security Act (the Act) to include the compliance and ethics program,
quality assurance and performance improvement (QAPI), and reporting of suspicion of a
crime requirements to this section.
- Definitions (§483.5)
We have added the definitions for “abuse”, “adverse event”, “exploitation”,
“misappropriation of resident property”, “mistreatment”, “neglect”, “person-centered
care”, “resident representative”, and “sexual abuse” to this section.
- Resident rights (§483.10)
We are retaining all existing residents’ rights and updating the language and organization
of the resident rights provisions to improve logical order and readability, clarify aspects
of the regulation where necessary, and updating provisions to include advances such as
- Freedom from abuse, neglect, and exploitation (§483.12)
We are requiring facilities to investigate and report all allegations of abusive conduct.
We also are specifying that facilities cannot employ individuals who have had a
disciplinary action taken against their professional license by a state licensure body as a
result of a finding of abuse, neglect, mistreatment of residents or misappropriation of
- Admission, transfer, and discharge rights (§483.15)
We are requiring that a transfer or discharge be documented in the medical record and
that specific information be exchanged with the receiving provider or facility when a
resident is transferred.
- Resident assessments (§483.20)
We are clarifying what constitutes appropriate coordination of a resident’s assessment
with the Preadmission Screening and Resident Review (PASARR) program under
Medicaid. We are also adding references to statutory requirements that were
inadvertently omitted from the regulation when we first implemented sections 1819 and
1919 of the Act.
- Comprehensive Person-Centered Care Planning (§483.21) *New Section*
We are requiring facilities to develop and implement a baseline care plan for each
resident, within 48 hours of their admission, which includes the instructions needed to
provide effective and person-centered care that meets professional standards of quality
We are adding a nurse aide and a member of the food and nutrition services staff to the
required members of the interdisciplinary team that develops the comprehensive care
We are requiring that facilities develop and implement a discharge planning process that
focuses on the resident’s discharge goals and prepares residents to be active partners in
post-discharge care, in effective transitions, and in the reduction of factors leading to
preventable re-admissions. We are also implementing the discharge planning
requirements mandated by The Improving Medicare Post-Acute Care Transformation Act
of 2014 (IMPACT Act) by revising, or adding where appropriate, discharge planning
requirements for LTC facilities.
- Quality of care (§483.24)
We are requiring that each resident receive and the facility provide the necessary care and
services to attain or maintain the highest practicable physical, mental, and psychosocial
well-being, consistent with the resident’s comprehensive assessment and plan of care.
- Quality of Life (§483.25)
Based on the comprehensive assessment of a resident, we are requiring facilities to ensure
that residents receive treatment and care in accordance with professional standards of
practice, the comprehensive person-centered care plan, and the residents’ choices.
- Physician services (§483.30)
We are allowing attending physicians to delegate dietary orders to qualified dietitians or
other clinically qualified nutrition professionals and therapy orders to therapists.
- Nursing services (§483.35)
We are adding a competency requirement for determining the sufficiency of nursing staff,
based on a facility assessment, which includes but is not limited to the number of
residents, resident acuity, range of diagnoses, and the content of individual care plans.
- Behavioral health services (§483.40)
We are adding a new section to subpart B that focuses on the requirement to provide the
necessary behavioral health care and services to residents, in accordance with their
comprehensive assessment and plan of care.
We are adding “gerontology” to the list of possible human services fields from which a
bachelor degree could provide the minimum educational requirement for a social worker.
- Pharmacy services (§483.45)
We are requiring that a pharmacist review a resident’s medical chart during each monthly
drug regimen review.
We are revising existing requirements regarding “antipsychotic” drugs to refer to
“psychotropic” drugs and define “psychotropic drug” as any drug that affects brain
activities associated with mental processes and behavior. We are requiring several
provisions intended to reduce or eliminate the need for psychotropic drugs, if not
clinically contraindicated, to safeguard the resident’s health.
- Laboratory, radiology, and other diagnostic services (§483.50) *New Section*
We are clarifying that a physician assistant, nurse practitioner or clinical nurse specialist
may order laboratory, radiology, and other diagnostic services for a resident in
accordance with state law, including scope-of-practice laws.
- Dental services (§483.55)
We are prohibiting SNFs and NFs from charging a Medicare resident for the loss or
damage of dentures determined in accordance with facility policy to be the facility’s
responsibility, and we are adding a requirement that the facility have a policy identifying
those instances when the loss or damage of dentures is the facility’s responsibility. We
are requiring NFs to assist residents who are eligible to apply for reimbursement of dental
services under the Medicaid state plan, where applicable.
We are clarifying that with regard to a referral for lost or damaged dentures “promptly”
means that the referral must be made within 3 business days unless there is
documentation of extenuating circumstances.
- Food and nutrition services (§483.60)
We are requiring facilities to provide each resident with a nourishing, palatable, well balanced
diet that meets his or her daily nutritional and special dietary needs, taking into
consideration the preferences of each resident. We are also requiring facilities to employ
sufficient staff, including the designation of a director of food and nutrition service, with
the appropriate competencies and skills sets to carry out the functions of dietary services
while taking into consideration resident assessments and individual plans of care,
including diagnoses and acuity, as well as the facility’s resident census.
- Specialized rehabilitative services (§483.65)
We have added respiratory services to those services identified as specialized
- Administration (§483.70)
We have largely relocated various portions of this section into other sections of subpart B
as deemed appropriate.
We require facilities to conduct, document, and annually review a facility-wide
assessment to determine what resources are necessary to care for its residents
competently during both day-to-day operations and emergencies. Facilities are required
to address in the facility assessment the facility’s resident population (that is, number of
residents, overall types of care and staff competencies required by the residents, and
cultural aspects), resources (for example, equipment, and overall personnel), and a
facility-based and community-based risk assessment.
Binding Arbitration Agreements: We are requiring that facilities must not enter into an
agreement for binding arbitration with a resident or their representative until after a
dispute arises between the parties. Thus, we are prohibiting the use of pre-dispute
binding arbitration agreements.
- Quality assurance and performance improvement (QAPI) (§483.75)
We are requiring all LTC facilities to develop, implement, and maintain an effective
comprehensive, data-driven QAPI program that focuses on systems of care, outcomes of
care and quality of life.
- Infection control (§483.80)
We are requiring facilities to develop an Infection Prevention and Control Program (IPCP)
that includes an Antibiotic Stewardship Program and designate at least one Infection
- Compliance and ethics program (§483.85) *New Section*
We are requiring the operating organization for each facility to have in effect a compliance
and ethics program that has established written compliance and ethics standards, policies
and procedures that are capable of reducing the prospect of criminal, civil, and
administrative violations in accordance with section 1128I(b) of the Act.
- Physical environment (§483.90)
We are requiring facilities that are constructed, re-constructed, or newly certified after the
effective date of this regulation to accommodate no more than two residents in a bedroom.
We are also requiring facilities that are constructed, or newly certified after the effective
date of this regulation to have a bathroom equipped with at least a commode and sink in
- Training requirements (§483.95) *New Section*
We are adding a new section to subpart B that sets forth all the requirements of an
effective training program that facilities must develop, implement, and maintain for all
new and existing staff, individuals providing services under a contractual arrangement,
and volunteers, consistent with their expected roles.
Stay tuned. I will have more forthcoming as survey guidelines come out, implementation is sorted, etc.