As I have written before and readers know, I field as many questions and provide as many resources as I can “free” of charge. My e-mail is publicly available for contact on this site and on my LinkedIn page. The title of this post thus, is a reference to the many questions I’ve received as of late regarding a number of issues ranging from fraud, to Medicare, to managed care, to therapy contracts, to quality. Core Administrative Competency is about what truly, folks in senior administrative positions need to know/develop in order to be more effective in their role(s).
- Know How and Why You Get Paid: Sounds fundamental but I have so many conversations with folks that just simply don’t know this subject area very well. I’m not talking at a technical level like being an MDS expert but at a core level – core enough to understand the relationship between the case-mix, the payment, the RUGs, and to ask clear questions regarding RUG distributions, etc. How about Part B? Do you know the cap? Do you know the authorization requirements for cap exceptions? The same is true if your facility takes managed care patients. Is the payment based on RUGs, levels, other negotiated rate?
- Know What you Make from What you Get Paid: Again, sounds fundamental but this one I often find sorely lacking. The RUG isn’t what the facility makes. The payment either from managed care or Part B. How about Medicaid? I have had way too many discussions with SNF administrators and even finance and billing folks where they didn’t realize that they were getting creamed by the insurer and their therapy contractor. The therapy contract facilities tend to be the most out of line. The facility is paying the therapy contractor per increment rates – flat for service per the contract. The facility is receiving then a RUG, a level payment, payment under Part B, etc. Sometimes, the difference between what the facility is receiving via payment and what it is paying out to the therapy contractor for the therapy component, nets the facility zero or less in terms of margin. This is particularly true with managed care agreements, unless the facility has negotiated variable rates reflective of the payer source. The same can be true with drugs, medical supplies, etc. I don’t know how many facilities I have worked with that fail to negotiate “carve-outs” within their managed care agreements for high cost DME (special beds, etc.), certain types of drugs (some antibiotics for example), and wound care supplies. These elements alone, with RUG based or level payments, can quickly create losses at the facility level.
- Know Your Quality Indicators and Measures: Battling fraud, survey/compliance risk, litigation risk, etc. boils down to knowing your quality and how it stacks up against the industry. Likewise, these measures are core principles in the upcoming ACO, bundled payment, managed risk environment. Administrators and DONs should be intimately familiar with and checking on, core quality measures such as infections, falls, hospitalizations, call light wait times, medication and treatment errors, etc. One of the largest fraud risk areas for any SNF today is over-billing or improperly billing Medicare. This occurs when the care is substandard or inappropriate for the resident’s needs/condition. Knowing your quality, being engaged in the QI process is critical to risk prevention and management.
- Know Your Contracts for Service: Again, sounds fundamental but all too many administrators that I talk with have never really read their therapy contract. No wonder they are surprised when they see charges for say, $75 per hour for meeting attendance – at a Care Plan meeting! How about the limitations of liability clauses? Payments? QA participation requirements, audit elements, staff retention terms, etc.? Same is true for pharmacy. What are the consulting costs and provisions? What about drug costs? How are drugs dispensed and in what supply? Liability for medication errors? What are the limitations? Now, extend the same logic to food, other vendors, etc.
- MBWA: The goal of all facility administrative staff is to emphasize time spent doing this – known as Management By Walking Around. The job of an administrator, DON, etc. is not in the office but on the floor, in the meetings at the care level, engaged with patients, physicians, families, and the community. The best prioritize their days around time out of the office. I often ask administrators how many careplan meetings they sit in, staff education sessions, stand-up meetings, QA, staff meetings, departmental meetings, etc. I am amazed at the answer (how little). I am equally amazed and perhaps more, at how few tell me they ever meet with their key hospital referral sources at their peer level.
- Know the Industry: The industry is changing rapidly in terms of policy and trends. Perhaps the largest leadership failure I see “routinely” is administrative personnel (administrators and DONs) that don’t stay current and don’t seek best practices. Sure, they may attend a trade association conference from time to time, but read, study or explore beyond – rarely. To be really effective requires being as far ahead as possible; to see the trends and understand the policy, reimbursement, and best practice landscape. Doing so affords the ability to do gap analysis – where are we vs. where do we need to go. Doing good gap analysis thus allows development of plans and strategies for improvement. The biggest risk is getting caught off-guard, behind the times. For example, being an SNF today with a rehab contract and no plans in place to audit your contractor. I’ve described “why” and the fraud trends that are rampant on this site.
One of the top questions I’m asked by clients, readers, students, and interested parties everywhere is how can my organization excel in a competitive environment. In other words, how can I build my organization’s value proposition such that the organization becomes the provider of choice in the market? My answer is always thematically the same: Be different in a way that is perceptible and tangible to the market and to the trends in the industry. Think Apple. Apple is constantly rolling forward new technology to feed the trends and its customer base iterations (the changes that occur among its customers as each Apple release begets more desired upgrade on behalf of the users).
Before I give out five rock solid strategies that any SNF can pursue, I need to frame what not to do first or specifically, what won’t work. First, building the organization’s Medicare star number by manipulating the input data on staffing, quality indicators, etc. Waste of time, perilous on a number of levels and ultimately, a no -win unless compliance surveys correlate to the 4 or 5 star level. Second, baiting, paying, cajoling and/or bribing referral sources (discharge planners and physicians). This is fraud and while it may work in the short-run, in the long-run it won’t plus its illegal (for those saying this doesn’t happen, guess again – I see it all the time). Third, marketing and advertising without the requisite pedigree to back it up. All the words and images don’t and won’t work if the product isn’t there and the experience on behalf of residents isn’t good.
On to the strategies. These work for a number of reasons but most importantly, because they are cutting-edge, fit the health policy landscape, and are patient/family centric. Additionally, none of these is expensive, though each requires some investment -just not mega-bucks. Once operative, each is a difference marker and likely, not repeated within a given market area.
- Excel at Food: Institutional food service whether outsourced or produced on-site is the bane of residents and families from a service and quality perspective. Further, it is unnecessarily clinical. The trend is complete de-institutionalization; top to bottom. First, ditch all diets – one general diet is fine and preferred. It is the facility’s job to manage resident weight, health, etc. and special diets just aren’t required. Second, quit modifying food products and fluids chemically or mechanically. Use food to create substitute products with recipes and to modify products for thickness, texture or consistency. Find a culinary school or good chef near your facility for pointers here. Have great food and diets that any resident, under any condition will rave over and the facility will rise immediately to the top of the market, at least in this category.
- Excel at Care Coordination and Advanced Care Planning: Advanced Care Planning is all about helping residents and families make good choices with regard to care and treatment decisions. Healthcare people and especially institutional care sites stink at this. Being great means knowing how to have the right conversation at the right time and having resources available to help people make good decisions. Think of how many dollars can be saved in everything from unnecessary meds, to unnecessary tests, to reduce hospitalizations, ER visits, etc. with proper communication around risks and benefits and individual choices. Likewise, great pre-admission planning and discharge planning wrapped around Advanced Care Planning will lead to fewer hospital re-admissions, more complete care on discharge, faster care on admission (fewer delays in care), and enhanced staff productivity (particularly nursing) as less time is spent on phone calls, communicating non-critical labs, etc. Excel at this and watch hospital referrers, physicians and satisfied residents/families laud your facility.
- Excel at Behavior Management: This is all about reducing unnecessary drugs plus improving the care of behavioral challenged residents. The latter includes the ability to “step-up” your rehab and restorative nursing programming, even for the dementia afflicted. This is all about training and employing the techniques that are available from organizations such as CPI and TCI (Crisis Prevention Institute and Therapeutic Crisis Intervention). Residents become medicated most often for staff convenience and conformity with the institutional environment. Train all care levels and support levels in how and why behavior occurs, make simple changes, and meet as a Behavior Team regularly and watch overall resident behavior decrease, staff confidence rise, crisis and panic reduce and residents and families become happier. Likewise, facilities which become really good at crisis and behavior management become a resource for the community – a center of excellence.
- Get Connected: For a minimal investment, get your facility on the web and if it already is, build its own ap! Develop a patient/family access point with all kinds of information and resources about everything common to resident questions, family concerns, etc. Use Skype as an activity and as an options for families to watch an activity, to talk to the doctor and/or to participate in a therapy session with their loved one. Connect with a local tech school or university for cheap talent maybe, talent which is free as part of an internship.
- Bring it In-House: This strategy requires the most investment dollars but again, not a ton if done right. The more internal capacity/competency that is available on-site, the fewer care transitions the facility will experience. Fewer care transitions = lower risk. Fewer care transitions reduces and/or eliminates, delays in care. The list here is lengthy but any of the limited following are inexpensive (relatively) and simple: I&Rs, mobile x-ray with digital results, on-site swallow studies via FEES, IV starts including PIC lines, fluoroscopy, Doppler studies, EKGs, in-house therapy (non-contracted). Each of these can be a simple, huge improvement and none require a six figure investment or even half of a six figure investment.
Accomplish any of the above, a few of the above or all of the above and communicate and market the same within the facility’s market area and start becoming the provider of choice.
In early May, CMS released its proposed rule for FY 2012 concerning Medicare PPS reimbursement for SNFs. As most followers of the industry from investors, to operators to developers know by now, CMS dropped a “bomb” to the industry indicating bluntly, a warning of a parity adjustment (reimbursement or payment reduction) of 11.3% or $3.94 billion. In typical convoluted CMS fashion, the logic behind this foreboding news is scattered; an analysis of the agency’s inability to adequately anticipate provider behavior, utilization patterns, and to appropriately create a reimbursement mechanism that ties the cost of care required by current SNF patients with the costs and delivery systems necessary to provide the care.
Initially, the interpretation from many inside the industry was that CMS was overreacting, using only one-quarter’s worth of claims data to substantiate a “sky is falling” conclusion. More recently, six month’s worth of claims data became available and analysis proved the trend correct and even a shade worse or better stated, more prevalent than originally assumed. In short, the implementation of MDS 3.0 and RUGs IV missed the budget mark (budget or expenditure neutral) by $2.1 billion or 16%.
In the last week to ten days, the OIG (Office of Inspector General) for CMS stepped into the debate, stating its opinion that the overpayments must be stopped immediately. Interpreting the OIG’s qualification of “immediately”, the timeframe at issue is next fiscal year. In essence, the core of the problem continues to be the structural flaws within the RUGs system predominantly, that disproportionately pays more for rehabilitation therapy than for other primary care modalities. A major intent of CMS during the switch from RUGs III to IV was a reallocation of the incentives (higher payments) from therapy to other resident care requirements. Suffice to state, the methodology failed. Below is a simple illustration of how on a pure rate basis, the RUGs III to IV therapy categories compare.
|Table 1: Average Amount That Medicare Pays SNFs per Diem for Each Level of Therapy, FYs 2010 and 2011|
|Level of Therapy||Number of Therapy Minutes Provided During Assessment Period||Average per Diem Payment FY 2010||Average per Diem Payment FY 2011||Percentage Increase From FY 2010 toFY 2011|
|Low||45 to 149||$288||$430||49%|
|Medium||150 to 324||$369||$488||32%|
|High||325 to 499||$364||$532||46%|
|Very high||500 to 719||$418||$594||42%|
|Ultra high||720 or more||$528||$699||32%|
|Source: OIG analysis of unadjusted per diem urban rates for FYs 2010 and 2011. See 74 Fed. Reg. 40288, 40298–40299 (Aug. 11, 2009) and 75 Fed. Reg. 42886, 42894–42895 (Jul. 22, 2010).|
Reviewed on-the-face, it is logical to see how CMS could miss the targeted expenditure mark by the margin it has, even in-spite of the “methodology” changes that occurred in the conversion from 2.0 to 3.0 and RUGs III to IV. Providers, being logical creatures of certain habits, moved accordingly to grab the payments at the highest attainable levels or in short, fulfilled the economic axiom of, “what gets rewarded (paid for) gets done”. The expectation on the part of CMS that utilization trends would fall-off from the higher paying therapy categories, necessitating a higher re-balanced rate to negate a revenue “shock” to the SNFs was poorly thought through.
Quickly reviewing “what” occurred to produce such a variance from assumption to actual is easy. Getting to the core takes a bit more thought and digging. In summary fashion; CMS assumed that by restructuring how therapy minutes were calculated for concurrent therapy (therapy provided to two individuals) from a two-equals one basis to an equal half, would reduce the ability of providers to meet the higher per minute category qualifications, necessitating more one to one therapy sessions (the previous concurrent therapy rules allowed providers to have two people in the same therapy session with the total session time allocated to both participants equally). Similarly, CMS assumed that ending the look-back provision to establish reference dates and care requirements would more accurately stage the resident’s acuity and care needs to the point of admission (or proximally forward from admission) to the SNF. Additional tightening of the extensive services qualifier rules would also, as assumed, reduce higher RUG scores and thus, payments. Of these changes and assumptions, only the look-back period changes combined with the changes in qualification for extensive services provided any material classification changes (lower payments) though such changes were far less in total dollars than the dollar increase CMS imputed on the corresponding RUGs III to RUGs IV therapy payments. Providers however, merely switched to the remaining “open ground”, providing more therapy on an individual basis and most noticeably, on a group basis. On a group basis, minutes are counted collectively, not split in equal parts among the participants – a provision CMS did not change from RUGs III to RUGs IV. While the modifications made to the extensive services qualifier and the look-back period provision did impact providers, CMS completely misunderstood the application and prevalence within the provider community of these two provisions under RUGs III and as played-out, found that providers could still code residents into higher payment groups/categories in spite of the changes.
To understand what might happen next, one needs to look at how this mess occurred. As I’ve typically found, the answer lies in both camps; providers and CMS. In my recent work, its clear that many providers don’t understand the transition from RUGs III to RUGs IV and as I have looked at “oodles” of Medicare claims, I dare say a large number are still frought with “up-coding” and questionable therapy-minute counting practices. This is not to say that the whole of the industry has behaved in this fashion but arguably, and CMS understands this as do both major trade associations, providers have not totally changed their business models to reflect the changes in payment systems. One needs only to look at how claims trended under RUGs III and how they now are trending under RUGs IV. The trend is too consistent to support an assumption of SNFs; a) staffing substantially more therapy personnel to capture the minute requirements via individual treatment or, b) SNFs moved a sizable share of their Medicare case-load into group therapy. The latter, while I’m certain it has occurred on a broad basis as the OIG report suggests, is problematic from a care delivery perspective for a large range of diagnoses that truly require individual therapy sessions.
CMS continues to remain fundamentally inept at developing reimbursement systems that provide adequate payment for the care and services required by SNF residents. I have yet to see, across my 25 years in the industry, any period or any system devised by CMS that didn’t under-support or over-support, one type or category of patient versus others. It is also illogical that CMS cannot develop the audit tools and claims management infrastructure that both educates providers and pre-emptively kicks-back claims clearly evidencing up-coding. I am consistently amazed at “what” gets paid and for how long. In short, CMS is apparently willing to consistently miss the mark, make wholesale adjustments and reallocation of dollars, only to over-correct past inconsistencies while producing new ones. Such will not doubt occur with this latest blunder.
While I won’t claim to have a crystal ball in terms of forecasting “what happens” next, experience and ongoing dialogue with individuals on Capital Hill and within CMS gives me some decent insights. With debt ceiling/deficit reduction talks mired in politics, it is unlikely any substantial cuts to entitlement spending are forthcoming. Senate Democrats and the President are sufficiently dug-in on cutting Medicare spending by any measurable amount thus the target on this issue (Medicare SNF spending) has moved away from the current political fracas. The remaining Washington impetus for cutting SNF reimbursement resides within CMS. In spite of the OIG’s report, enacting cuts of the magnitude suggested is a political issue. CMS can propose all the spending cuts its desires but Congress has the final say. Rarely if ever, although given today’s climate an exception may be possible, has Congress sustained reimbursement cuts of this magnitude. Synthesized, my view of what happens next, based on what I know to date, is:
- Providers and their trade association are willing to capitulate to a modest adjustment in the therapy categories. This symbolic give-back will play well politically. Net of a market-basket/inflation update, cuts of 2% to 4% are possible in a “cut scenario”.
- In a scenario that involves no real cuts, rates will be flat. CMS will institute additional refinements and perhaps, even re-calibrate or fine tune payments by RUGs category, moving dollars within the RUGs system, without reducing payments. In this scenario, the attempt on the part of CMS to is to “patch the potholes” and let the system itself reduce payments via tightening the requirements and re-allocating dollars within the RUGs categories.
- A most probable scenario involves, as is typical, a bit of both. CMS will cut the therapy rates using some language about re-basing. At the same time, a series of corrections will be made regarding the counting of minutes for group therapy, assessment windows, etc. Overall, payments to SNFs across all RUGs IV categories will be flat or targeted as a reduction equaling 2-4%. The pull-back on the therapy RUGs rates could be as steep as 8% to 10%. Even at this level, the remaining rate will be higher than the former RUG III rate.
Due to a fair amount of travel recently, I’m a tad behind in pushing out updates, etc. Despite my rather harried schedule, I have kept track of questions, issues, etc. and in the next week to ten days, I will endeavor to get caught up. Please know that I do appreciate the comments and questions from readers and colleagues.
A theme that I get queried on quite a bit involves the relationship between Hospices and Nursing Homes, particularly when the SNF enters into a contract with a Hospice for the provision of hospice care to its residents. Suffice to say that I frequently, and I have written on this subject before ( http://wp.me/ptUlY-3W ), hear concerns and misunderstandings among both providers (Hospices and SNFs) about contractual issues, care issues, documentation issues and compliance issues. The most recent set of questions or issues comes via my wife who is a clinical consultant (RN) in long-term care. While working with a client SNF on pre-survey preparations, she saw a number of things wrong from a compliance perspective that the SNF simply missed or misunderstood in regard to its responsibilities for its residents placed on hospice service with one or more of its hospice contractors.
Below I’ve outline the required compliance elements for SNFs when they have residents in their facilities that are on service with a Hospice agency (of course, via a contract). These elements are taken right from the federal Conditions of Participation for SNFs and represent the essential requirements that surveyors are tasked to review. NOTE: For SNFs it is imperative to remember that even though the primary responsibility for the careplan for a hospice patient in an SNF belongs to the Hospice, the SNF cannot transfer any compliance requirements that are its responsibility under the law to the Hospice. The all too common theme that I hear of “he/she is now on hospice and therefore, is no longer an SNF resident” is false.
- The Hospice and SNF must communicate, establish, and agree upon a coordinated plan of care for both providers that reflects the hospice philosophy, the individual’s needs, and the unique living circumstances of the individual in the SNF. The plan must address pain and symptom management and be revised and updated as necessary to reflect changes in the individual’s care needs. The plan must also identify the services that each provider will deliver in order to meet the needs of the patient and his/her desire for hospice care. NOTE: Regardless of this requirement, the Hospice is still required to provide the core hospice services (nursing, social service, bereavement, etc.) as stipulated under federal law. The subtleties lie in the definitions of duties as delineated in the plan of care.
- The Plan of Care must reflect the following:
- The participation of the hospice, the SNF and the resident and/or responsible party
- The plan of care provides for pain and symptom management and clearly provides for (or has) updates reflecting the changing needs of the resident
- Medications and medical supplies are provided for by the Hospice as required to care for the patient’s/resident’s terminal illness (requirement that the Hospice provides (or pays for) the supplies and meds related to the care of the terminal condition).
- The Hospice and SNF communicate with each other when changes to the plan of care are required.
- The Hospice and SNF are aware of each other’s duties and responsibilities in meeting the plan of care.
- The SNF’s services are consistent with the plan of care and in coordination with the Hospice. The SNF resident/patient should not experience any reduction in SNF services due to his/her hospice status.
- The SNF offers the same services to its hospice residents as it does to all other SNF residents not on a hospice service. The resident retains the right to accept or decline services offered by the SNF.
- If the SNF has concerns with the provision of service from the Hospice and the same is not satisfactorily addressed by the Hospice, it is the responsibility of the SNF to inform the appropriate licensing authority that has oversight of Hospice’s in the state.
The biggest key to take away from the above is that the SNF and Hospice need to develop a very clear plan of care, hold each other accountable for the delivery of services as outlined under the plan of care, and clearly understand each other’s duties and responsibilities under the law and as detailed in the plan of care.
In another procedural vote on the revamped Jobs bill in the Senate, Democrats fell short of mustering 60 votes to end a Republican filibuster, effectively ending for now, legislative efforts to extend unemployment benefits. The vote count was 57 to 41 to continue debate. Dying with the extension of unemployment benefits are a series of pro-business tax cuts, tax increases on domestically produced oil and on investment fund managers as well as the extension of the enhanced Medicaid match provided in the Stimulus bill, set to end December 31 of this year.
In an attempt to keep the bill alive, Senate democrats removed the provision related to Part B/physician fee schedule cuts and crafted a smaller, temporary fix (see my posts from last week on this same subject). This separate “temporary” patch provides for a 2.2% increase in the Part B fee schedule and delays any cuts to physician fees until November 30. Prior legislative efforts deferred the fee schedule cuts, pegged at 21%, until June 1 of this year. This past week, CMS began paying claims incurred after June 1 at the reduced fee schedule rate. In response to an enormous push-back from physicians and the health care community in general, the House passed this temporary Senate measure, sending the bill to the President for signature. Assuming the President signs the bill, providers that have submitted claims for services provided after June 1, will have to re-submit their claims to assure correct payment, including the modest increase of 2.2%.
What’s next (as I have been asked routinely over the past two-weeks)? Is the enhanced Medicaid match extension dead? Legitimate questions, no doubt. In brief, here’s my take or EWAG (educated, wild-assed guess).
- Typically, when legislation such as this stalls, there is a single, two-ton elephant that needs to be circumnavigated or removed from the room in order for things to proceed. In this case, there are three elephants in the room. First, and larger in size than the other two, is the upcoming mid-term elections. The current “tone” in electoral politics is not good for Democrats and decidedly, anti-incumbent, anti-big government, and bail-out weary. Any legislation that looks-like and feels-like a bail-out is perceived as poisonous by incumbents headed toward a November election date. Even seats once believed safe, are up for grabs and some, such as Sen. Boxer in California and Sen. Reid in Nevada, are considered bell-weather contests marking a shift in electorate sentiment (assuming losses on the part of Boxer and Reid). The second elephant is the rising federal debt, now at $13 trillion and climbing. This elephant is a cousin of the first and the Democrats are beginning to feel ownership, correctly or incorrectly, of this elephant. With the EU struggling with an enormous debt load, principally due to burgeoning social welfare programs and a slow economy, economists, the Fed, and investment rating agencies such as Moody’s, are warning that the U.S. debt load could pose the same level of risk to the economy as is present across much of the EU. In fact, the U.S. debt load is perilously close to the value of the GDP; an indicator of a level of negative economic wealth (more debt than assets). Saving an economic lesson for later, the rising debt load is potentially crippling in so many ways to a recovering economy (enough said for now). The third elephant is the moribund U.S. economy, incapable of soaking up large additional amounts of debt and virtually non-responsive to the government’s deficit spending in the form of targeted stimulus. Simply put: The Stimulus and the continued bail-out packages coming from Washington have done virtually nothing to stimulate recovery while adding billions to the debt level. Arguably, the instability and the spending levels have hurt the recovery more than helped. With these three elephants present today in the House and in the Senate chambers, very little prior to November (mid-term elections) can get done and what will get done will be temporary in nature (the doc-fix for example).
- I’m not sure that the enhanced or extension of the enhanced Medicaid match is dead but it is definitely, on life-support in its current form. It seems that the tone of this Congress now is to avoid issues that include big price tags unless such an issue is immediately pressing (the doc-fix) and can be pushed every so slightly, down the road, but just by a bit. The problem here is that many states are stuck with June 30 fiscal years and/or balanced budget requirements. For these states, the uncertainty of additional Medicaid match dollars from the Feds requires establishing a plan that includes cuts, reimbursement and benefit levels combined. The real devil in some cases, is for states that have expanded their Medicaid programs via the use of added match funds through the Stimulus, as the expansion components cannot be cut by law. The additional funds via the Stimulus bill came with “golden handcuffs”, requiring states that used the funds via expansion, to maintain these services. In short, Medicaid is a real mess but frankly, that is nothing new given how ridiculous its financing provisions are and how “federal” money hungry the states have become, selling their fiscal stability souls for additional federal funds and then shifting budget problems elsewhere, hoping new or additional federal money would continue, bailing out their current spending sins.
- The logic of once again deferring the Part B cuts, now to November, is to buy Congress time to craft a permanent solution. Anyone who buys this rhetoric needs professional counseling. This issue is nowhere close to a permanent fix as such a fix requires political willpower (non-existent today), a revisit to the recently passed PPACA where the budget numbers are already out of whack, and finally, a commitment to spend new money as part of the solution. Fixing the problem means abandoning the flawed sustainable growth formula, recasting the actual costs associated with the PPACA (estimates of deficit reduction relied heavily on unsustainable and impractical Medicare cuts), and finding new money within the budget, deficit or not, to create parity and stability within the Part B fee “world”.
On a fairly routine basis, I run across SNF Administrators and Directors of Nursing that continue to have issues with hospice patients in their facilities but not from the standpoint of the patient typically; from the standpoint of dealing with the Hospice and the terms of the contract between the Hospice and the SNF. In fact, because this issue continues to rise frequently enough, a “primer” post on the relationship between a Hospice and an SNF and how these contracts work, by federal code, seemed timely. Below, I’ve arranged the concepts topically, perhaps even useful as a cheat sheet.
- Is an SNF Required to Contract with a Hospice? The answer is no. Regardless of what a surveyor, patient, family, or hospice tells you, there is no requirement for an SNF to establish a contract with a Hospice. While patients have “choice” under Medicare of providers, the SNF is a “provider” and so is the hospice. SNF care is treated entirely separate from a hospice level of care and even the Medicare benefit for Hospice requires a different benefit election. Bottom line: While it likely will make sense for the SNF to have a contract with a Hospice, there is no legal or regulatory requirement for the SNF to do so, if it chooses not to.
- If an SNF Has a Hospice Contract with One Hospice, Must it Contract with Other Hospices as Well?: Again the answer is not and in many cases, not advisable as I will discuss later. Once an SNF has decided to contract with a Hospice, it can choose to limit its contract to just that one and no more. It is possible that changes being discussed around the Hospice Medicare COP (Conditions of Participation) will modify this a bit but as of right now, an SNF can choose to contract with as many or as few (or none) Hospices as it desires. The rule interpretation that is analogous here involves physicians. Even if a patient has a right to choose his or her own provider, the law does not require that an SNF allow “any” provider. Most SNFs limit the number of credentialed physicians they will permit “on-staff” just as hospitals do. The patient retains the right to use a different hospice, just not within the walls of the SNF.
- The Patient Resides in the SNF but is Under the Service of the Hospice. Who is Responsible for the Patient?: Under Federal law, the Hospice is responsible for developing and coordinating the plan of care, providing physician care, medications and supplies related to the terminal diagnoses, and any and all other core services that are required under law for the Hospice to be certified and in business. Essentially, any care related to the terminal diagnoses is the purview of the Hospice and the SNF becomes by definition, the “home” of the patient. This does not alleviate the SNF of certain levels of responsibility for the basic care of the patient such as nutrition, activities, medication administration, ADL care, etc. The Hospice assumes the overall responsibility of managing these “non-core” services and assures that the same are performed according to the plan of care and according to hospice policy. It also surprisingly, doesn’t mean that a negative outcome caused by the SNF to the patient can’t be cited under the SNF code – it can (such as in the case of a life safety code violation, a medication administration violation or an allegation of abuse on the part of an SNF employee).
- What Must be or Should be in a Contract Between a Hospice and an SNF?: Fundamentally, all of the following need to be clearly addressed. Note: This is not an exhaustive list and each provider should refer to the specific governing Federal and State code as a final reference.
- The services provided by the Hospice
- The services provided by the SNF. The SNF cannot provide, even under contract, the core required hospice services (Physician Services, Nursing, Social Services and Counseling/Bereavement).
- Hospice policies and philosophy in writing (as pertinent and applicable)
- Statements that specify that the Hospice takes full responsibility for the professional management of the patient’s hospice care and that the SNF provides room and board.
- Statements spelling out that the Hospice provides the same level of care and service within the SNF that it does for its home-bound patients including necessary medical care and inpatient care.
- Statement prohibiting the Hospice to discharge the patient from its service even if the care becomes costly or inconvenient.
- Statement requiring the Hospice to continue care for a Medicare beneficiary, even if the beneficiary cannot pay.
- Definition of admission criteria and requirements and necessary statements that the same apply for all payer sources and types.
- The Agreement should clearly define that roles and duties of each provider separately as well as in coordination with each other.
- The Agreement should specify all of the reimbursement and billing requirements and understandings between both parties. This is particularly critical when a patient is dually eligible (Medicaid and Medicare) and may be using Medicaid to cover the cost of room and board in the SNF and Medicare for the hospice benefit. Bed hold requirements also need to be addressed.
- What Duties are Joint Between the Hospice and the SNF?: Both providers must jointly develop the plan of care and share the responsibilities for completion of the MDS. Each must also establish a communication plan for changes of condition or other events but it is the responsibility of the Hospice to change the plan of care (SNF may not alter the plan of care). Medication changes (terminal condition related), lab reports and action/in-action, etc., are all the responsibility of the Hospice and the SNF may not take action without the approval of the Hospice. An example that occurs all too frequently concerns the responsibilities between the providers when a patient falls or has frequent falls. SNFs are accustomed to addressing falls almost instantaneously, developing new interventions and care plans. In the case where the patient is under the care of the Hospice, this is the responsibility of the Hospice. The SNF needs to be aggressive in getting the Hospice involved and responsive, timely but it (the SNF) cannot alter the care plan without Hospice involvement and approval.
- Which Provider Has to Deal with Difficult Patients or Difficult Families?: For the most part, this is the responsibility of the Hospice, not the SNF. Clearly, because difficult circumstances arise with patients when the Hospice is not present, the SNF will bear a large portion of the burden but all negative interactions or difficulties need to be shared with the Hospice. For example, the Hospice is required to provide counseling and social service to patients and their families and SNFs need to hold the Hospice accountable for this. Even a difficult family situation in the middle of the night needs to be handled by the Hospice and the SNF should not expect to wait until morning for the Hospice to intervene. If the patient is restless or needs more attention than the SNF can directly provide because the patient is dying, the Hospice must provide the adjunct staff, including Volunteers. Hospice staffing issues, etc. are not the concern of the SNF. The Hospice is required by law to have its personnel available to the SNF and their patient, twenty-four hours per day, 365 days per year.
- What Happens with Hospice Patients in the SNF During Survey and How are Surveyors Required to Review the Care Provided to these Patients?: Essentially, the plan of care and the direction of the care for the Hospice patient in an SNF is the responsibility of the Hospice and surveyors may not take issue with the SNF for adequacy of the care plan, etc. The SNF must still be responsible for the legal requirements of its scope of duties as spelled out in the Hospice/SNF contract. Surveyors may not however, take issue with an SNF because of the actions of a Hospice employee (or the lack of action, etc.). The surveyor can and is only legally bound, to take actions with an SNF regarding the role and responsibility of the SNF as the patient’s “room and board”. All of this said however, it is very important for an SNF to remember that it is responsible for holding the Hospice accountable for the Hospice’s responsibilities under the contract and as set forth by law. An SNF runs the risk of having severe regulatory problems if it chooses not to hold a Hospice accountable for providing required care as needed by the patient or for addressing serious issues in a timely fashion such as a change of condition or adverse, unplanned event that occurred with the patient or his/her family.
- Why Not Have Contracts with Multiple Hospices?: Developing one good, functioning and workable contract takes time and energy. Mutliple contracts take twice as much (if not more) time and frankly, for an SNF already limited in resources and responsible for a house-full (hopefully) of patients, more work in this case is not warranted or advised. Multiple contracts lead to more opportunities for error, confusion and a burden on staff to have to think-through another set of players and nuances. I have never seen an instance where having multiple contracts is beneficial for an SNF and to be quite honest, presents more opporunities for problems than what the extra contracts are worth. My advice: Find a good Hospice, develop a contract, and take the time and energy to work and build a very solid program within the SNF. If the relationship turns sour and issues can’t be resolved, don’t add another contract without eliminating the one that isn’t working.
In an effort to salvage some hope for the flagging Senate health reform bill and to provide sustenance for the neutered Harry Reid, President Obama convened all Democratic senators at the White House earlier this week for a strategy session. Per Mr. Obama, this activity was not a roll call to establish a majority but moreover, a time to convene his party and to find “common ground” on the issues that have stalled the passage of the bill. In all likelihood, the session was more about damage control for Senate democrats and the President as well as a time to eulogize the now deceased public option/Medicare expansion.
After the conclusion of the meeting, Mr. Obama gave a quick press conference, saying little more than he was, “ pleased with the progress, issues remain that will be worked out, passage is certain and in the end, the bill meets the broad outline that he provided in his speech to the Joint Session of Congress”. Mr. Obama also took the opportunity to reinforce the White House party-line regarding the Bill’s success in reducing waste and efficiency, covering 30 million people presently uninsured, reducing the deficit (the largest single piece of deficit reducing legislation according to Mr. Obama) and reforming health insurance practices (eliminating pre-existing conditions, life-time maximums, and prohibiting insurers from dropping coverage due to claim experience). Mr. Obama effectively chastised any of the Bill’s critics stating that (summarized), ‘contentions that the Bill doesn’t reduce the deficit or that it raises taxes and is hurtful to small business’ were fabrications, designed to undermine the good of health care reform’. At one point, Mr. Obama even stated that “not one single health care economist” disagreed that the Bill would be good for the U.S. health economy and the economy in general. He further claimed that the CBO, being the non-partisan expert that it is, supported the Bill’s positive impact on the deficit and that it does in fact, “slow the trajectory of health care spending in the U.S.”.
In so much as I dislike disagreeing with the claims of the President (it seems somewhat unpatriotic to basically call the President a liar), I feel in this case, it is imperative to re-direct the President’s statements with the facts.
- Fact: The CBO scoring of the Bill only projects a ten year period. In the Bill, the revenue from all taxes begins immediately as do the Medicare cuts while the actual spending or expenditure side is phased-in gradually beginning in year 3. When fully phased-in, according to the CMS Office of the Actuary, the Bill actually produces a greater deficit than the present system. If Mr. Obama is referring to the “revised” Bill (whatever that may be) sans the public option, the CBO has yet to score the final version as no such Bill has been produced. One final point here: The Congressional Budget Office is far from truly non-partisan and historically, inaccurate in its projections – historically low. I doubt that in this one instance, the CBO has become conservative and is factoring its projections on the “high side”. I think former British Prime Minister Benjamin Disraeli said it best: “There are three types of lies – lies, damn lies, and statistics”.
- Fact: The Bill raises taxes substantially including on small businesses, particularly any small business that has revenues above $500,000 and is organized as an LLC, a Subchapter S, a partnership, service corporation or sole proprietorship. Each of these designations requires the owner to essentially pay income taxes on the net revenue of the business at the owner’s personal tax rate. Small businesses that presently don’t offer health insurance to their employees will face a penalty or begin to provide a health plan for their employees. Apparently, Mr. Obama thinks that the taxes within the Bill will only affect wealthy individuals, forgetting that small business owners may in fact, fall into this classification.
- Fact: No health care economists, not one, are in disagreement that the Senate bill is good for the U.S. health care economy and the economy in general? He must mean just the one’s he’s talked to. Being a health care policy and economics guy myself, I can safely state that the Bill is far from good for the health care economy and far from good for the U.S. economy. There is nothing in the Bill that reduces the cost of health care, save Medicare cuts which are frankly, one time and I’d be surprised if they are not eventually, sooner rather than later, reduced or eliminated by Congress. Congress has a history of not being able to maintain spending reductions in entitlement programs too far back and too deep in number to list. The Bill dramatically expands Medicaid yet provides no reforms to Medicaid or for that matter, sufficient funding resources to the states to cover the expansion. Medicaid, as I have written before, is a ridiculously structured program, rife with benefit and service gaps and inefficiencies on a state by state basis. This provision alone is justification of my argument that the Bill is far from beneficial for the U.S. health care system. The Bill also raises, yes raises, the cost of health insurance for most individuals not income qualified to receive a subsidy. How can higher cost health insurance be good for the health care economy let alone the U.S. economy? I seem to think that an individual, paying more his/her health insurance as a percentage of their income, has fewer dollars to invest or spend, hurting not helping the overall economy. Finally (though not totally as I could go on for pages), the Bill contains 2,000 pages with hundreds devoted to new regulations and new charges given to the Secretary of Health and Human Services to write new regulations; all focused on health care. Mind you, all of these new regulations are on-top of, existing regulations as the Bill plainly states repeatedly, that the regulatory process is in addition to, the requirements already in-place. Again, perhaps I am a bit callous and cynical but I hardly think that the addition of hundreds upon hundreds of new regulatory provisions creates any value for a system already enmeshed in regulation and bureaucratic inefficiencies. Medicare and Medicaid are already laden to the point of bursting with regulation and bureaucracy and the Senate bill adds more. Good for the health care system and health care economy?
- Fact: The Bill does nothing to “bend the cost curve” , again unless one believes that Congress has the will-power collectively to stick to Medicare spending reductions and is willing, as will certainly be required, to periodically adjust downward, Medicare and Medicaid spending as required. In reality, this is such an illogical conclusion and preposterous claim on the part of Mr. Obama that it seems hardly worth the effort on my part to point out the obvious flaws. For example, unless Mr. Obama or any politician or group of politicians can alter the demographic shift occurring in the U.S., Medicare can’t possibly keep from growing arithmetically. The reality is that the Senate bill changes nothing fundamentally about Medicare, its funding or its benefit and reimbursement structures save the one time spending reductions which, again I doubt seriously that Congress will maintain over time. The core set of issues with Medicare are simple. First, it is and will remain a system that reimburses more for more complex care and increased utilization, particularly at the institutional level. Nothing within the Senate bill changes this reimbursement system paradigm. Second, there are more people achieving the benefit age due to the aging demographic than there are non-beneficiaries paying into the system. Nothing within the Senate bill changes this fact or alters the age to attain the benefit. Third, the combination of an aging demographic and a populous that is living longer, often with disability or chronic conditions that pre-ordain additional use of the presently configured health system under the present benefit structure, will with certainty, lead to additional utilization. Again, nothing in the Senate bill changes this fact or frankly, even shifts resources toward better reimbursement for primary care, additional funding of any magnitude for chronic disease management or for any innovations or care models that have proven to reduce unnecessary and expensive utilization. In short, the Bill does nothing to fundamentally change how healthcare is paid for or delivered and without such changes, “bending the cost curve” is frankly, a preposterous and unsupported claim.
The cold reality is that the Senate bill is nothing more than the House bill politically contrived to survive passage in the Senate where hopefully for Mr. Obama and his party’s sake, the conference process can craft a final bill that can be passed and serve as a political victory for Democrats and the President. Factually, the Senate bill, like the House bill, does nothing to reform health care or the health system, to reduce the level or trajectory of federal health care spending, or to improve the quality and reduce the costs of health care in the U.S. One thing that is factually correct is that in any shape or form remotely similar to what is presently presented in the House or Senate, the final legislation will lead to more dollars spent for healthcare in the U.S. from all sources and no improvement whatsoever in quality or access as a result; in the end, a rather dismal tradeoff for such an expensive proposition.
On October 1, the SNF industry received a 1.1% reduction in Medicare payments. On October 13th, the Senate Finance Committee passed its version of Healthcare Reform, commonly known as the Baucus Bill. While the Baucus Bill is the least penalizing to the industry, of the major health reform bills waiting in Congress, it is destined for the Senate shredder as I write – to be carved into a million pieces for a cut and paste job by Harry Reid with the Dodd plan. In other words, anything good for SNFs that exists within the Baucus Bill has only a fifty-fifty chance of remaining in the final Senate legislation brought forth for a vote.
Turning to the other side of the Hill, the House has yet to officially wade through the reams of proposed policy put forth by various committees on the same subject – healthcare reform. The most complete package is HR 3200 and its provisions are far from favorable for SNFs. The House version(s) in their present form, call for elimination of the market basket almost immediately – the same market basket that reduced the SNF cut to only 1.1% at the start of October.
So what do we know or what can we discern at this point? The answer: The prospects for the SNF industry appear rather gloomy. Taking into account that which we know and that which we can reasonably predict, the following is a practical analysis of where the industry stands today and where its fortunes appear headed.
- The October 1 Medicare cuts will reduce revenues for the industry at a time when Medicaid continues to run deficits, programs include rate cuts or rate freezes, and the private pay census continues to suffer the effects of the economic downturn. Most facilities will continue to see migration from private pay to Medicaid at rates far faster than periods prior to the economy’s collapse.
- Medicaid is a significant problem for nearly all state’s budgets and were it not for the Federal Stimulus program adding additional federal matching funds, many state Medicaid programs would have to cut rates to providers. The Stimulus funding is set to end in 2011. Medicaid is already a poor payer, significantly under-reimbursing costs to providers. Without significant efforts to reform Medicaid and to achieve additional massive amounts of funding over the next decade, the program will assuredly face continued financial pressure to reduce reimbursement levels to providers.
- Regulatory activity is on the up-swing and providers have just begun to see the effects of the introduction of CMS Five Star Quality Rating System. While the industry continues to generally improve its quality of care, the rating system is far from accurate and far from informative with respect to actual facility performance. In many regards, provider data is not updated frequently enough, survey information is poorly explained, and results that have been overturned or changed due to appeals and IDR, slow to get updated.
- Regardless of the status in either the Senate or the House of healthcare reform legislation, all of the bills tend to follow the same course when it comes to issues that are potentially detrimental to the SNF industry. It is illogical to presume that any final bill or bills will not include significant Medicare spending reductions. Frankly, all versions of reform legislation require massive spending reductions in current programs just to get within the radar screen of “budget neutrality”. Medicare spending reductions means reimbursement cuts above and beyond the October 1 level. The most logical target is the elimination of the market basket, replaced by a contrived productivity adjustment formula that actually penalizes the industry for becoming more efficient. Complicating matters further, the healthcare reform bills all foretell expansion of the Medicaid program but without additional funding. To be certain, Medicaid in its present form will fall victim to healthcare reform in some fashion but it is impossible to tell quite how. What this ultimately means is that healthcare reform includes Medicaid spending reductions and without additional stimulus funding, the financial prospects for Medicaid in the next two years are dire at best. Even with the rosiest of economic assumptions for recovery, states will not see tax revenue increases climb fast enough to radically alter the fiscal health of their Medicaid programs. Finally, there is nothing in the cards in any of the healthcare reform proposals that reduces the operating cost platform of the industry, either via tort reform or regulatory relief. The various bills foretell just the opposite – an increase in auditing activity, oversight, regulations, etc. To be succinct, the industry will shovel more paper, complete more assessments, undergo more regulatory changes, and remain the target of the plaintiff’s bar all in exchange for lower levels of reimbursement.
What is disconcerting to me, someone who has been around and in the industry for nearly a quarter of a century, is the level of disconnect that has occurred between policy makers and industry reality. Demographic trends tell us that the population will continue to age, live longer and do so with increasing levels of disability. Meeting the needs of this aging demographic is set to become nigh-onto impossible given the path that Washington is plowing for Medicare and Medicaid. It is incredulous for anyone to believe that decreasing reimbursement and increasing compliance (unfunded as it is) will lead to better overall health for the industry. The reality is that bad health for the industry means assuredly, bad outcomes over time for seniors – this end result is simply unavoidable.
In our annual Healthcare Leadership Labor Market Report released in July, we presented some rather alarming trends regarding the long-term care and post-acute care industry’s retention of nursing executives. For example, we noted that 71% of the Directors of Nursing in nursing homes leave their positions each year. We also noted that the average tenure of a Director of Nursing is three years. Within the report, we cited numerous reasons for the short-tenure and resultant turnover with the key take-away point being “job dissatisfaction”. Of course some or a large amount of the job dissatisfaction within long-term care has to do less with the “job” and more with “what” the job has become as a result of what is going on in the industry today.
The purpose of this post is not to reiterate the informationin the report, rather to provide some key information to combat the trends presented; namely turnover of this incredibly key resource. What is most important to note however, is why these positions turn and what an organization can and should do about keeping the right people working in the right positions. The reality most apparent is that there are not enough good nursing executives to fill the voids that are created at the rapid pace at which they are occurring. The depth of this labor pool is rather shallow, especially when skill and acumen are accounted for as key requirements over against the willingness of a registered nurse to put his or her life and license on the “line”. To that end, the principal reasons “why” a nursing executive or as is commonly known, a D.O.N. leaves his or her post are as follows.
- Job Dissatisfaction: To be specific, this means general feelings of an inability to adequately perform one’s job and to be recognized for the performance due to the role or positional requirements which are viewed as unreasonable. In most cases, the demands and expectations are too great for any one person to consistently accomplish.
- Industry Dissatisfaction: This dissatisfaction is principally about the present state of the long-term care industry and often is categorized into regulatory and budgetary issues that impact the D.O.N.’s ability (real or perceived) to deliver care sufficient to meet organizational and professional standards. Not too surprising, labor issues such as staffing are also a part of this factor (insufficient and inadequate staffing numbers).
- Hours and Working Conditions: The sheer time demands and the often physical and emotionally demanding role of a Director of Nursing simply takes a toll and lifestyles and personal health (emotional and physical) suffers to the extent that leaving a position is viewed as necessary.
- Organizational Dissatisfaction: Key components herein were dissatisfaction with immediate supervisors and dissatisfaction with perceived or real lack of organizational support and allocation of resources. Important to note that for Directors of Nursing in nursing homes, dissatisfaction with the Administrator was frequently cited and generally, cited more often than overall dissatisfaction with the larger organization.
- Professional Needs Not Met (Compensation, Advancement, Autonomy): Somewhat lumped together but this catch-all is rarely the key reason (or reasons) alone for turn-over. What is important to note however is that compensation in terms of straight salary and benefits in long-term care falls significantly below compensation levels in acute care settings and when viewed in light of the job demands is appallingly low compared to other executives in healthcare and out of healthcare, especially non-clinical executives in healthcare.
Taking the above into account, the key is to devise an overall program and plan that sufficiently reduces the dissatisfiers, where at all possible. It may seem impractical to think that any organization can change the influence the industry has on a position however, there are strategies that can be used to significantly minimize the negative environmental factors that come to bear and produce turnover. To be certain, the most important step to take is to create a list of factors that an organization controls directly and a corresponding list of the factors that an organization doesn’t directly control but can manage as a means of developing an overall retention strategy.
Without going into a full-blown plan that may or may not be applicable to a particular situation, there are some very basic organization level steps that can and should be taken to improve the probability of D.O.N. retention.
- Develop an organizational commitment to keeping goals and objectives extremely clear and focused, inclusive of the time expectations required to complete same. Involve the D.O.N. directly in establishing these goals and objectives including gaining agreement on realistic time frames for completion and identification of resources required for completion.
- Make certain that no organizational expectations are formally or informally enforced regarding “time in office” versus performance. Provide complete control to the D.O.N. to come and go and be present as necessary and judge performance strictly on agreed-upon goals and objectives – not on time in the office or on a set schedule.
- Reduce to a minimum the number of non-essential and often, counter-productive meetings and committees involving the D.O.N. Meetings add busy work and create confusion and often, lead to endless additional tasks that should be handled elsewhere. Help the D.O.N. process his/her schedule and assure that maximum time is provided to him or her to complete his/her objectives, not consumed by organizational meetings that are not relevant.
- Make abundantly clear to the Administrator that a key element of his/her performance requirements and ultimately, job retention is the retention of the D.O.N. It may be necessary (and advisable) to have a qualified third-party work with both the Administrator and D.O.N. to forge a true partnership agreement and develop role expectations and a structured reporting relationship. Long-term care tends to be backward here in so much that Administrators are presumed to be superior roles when in reality, the D.O.N. is often the de facto leader within the nursing home. Good Administrators fully understand their role and how to complement this relationship and support the work of the D.O.N.
- Pay special attention to getting and receiving constant and consistent feedback from the D.O.N. regarding job and positional demands. Encourage the D.O.N. to participate in external networking opportunities and to take advantage of continuing leadership and clinical educational opportunities.
- Provide external resources such as consultants to the D.O.N. pre and post-survey. Most D.O.N.s don’t feel adequately supported in advance of a compliance survey and don’t have the resources necessary to dissect survey issues. Surveys are horrendously stressful and are not a true reflection of the D.O.N.’s performance in many cases. Organizations that are aware of how widely variable compliance surveys are and how inconsistent surveyor practices are understand that D.O.N.s have only so much control over the ultimate outcome.
- Increase the expectations of other clinical staff (and the accountability) including the Medical Director in terms of overall patient care and satisfaction. Too much falls directly on the plate of the D.O.N. that belongs to other disciplines and most often, he/she is left “holding the bag” for what others should have done. In a fully evolved organization, the D.O.N. and the Administrator should actually jointly oversee and partner in managing and planning the work, required performance outcomes and review of all other clinical/care disciplines.
- While financial resources are always tight in long-term care, the organization must make an overt commitment to providing the D.O.N. with sufficient dollars to build and reward an adequate staff and to have current clinical resources and support systems. Make the D.O.N. aware of key financial issues and measurements but don’t place the onus on him or her to be accountable for other organizational financial matters beyond his/her scope of control. Too often, D.O.N.s are brought into census and payer mix issues that are only sources of frustration and beyond the scope of what a D.O.N. should truly be concerned with.
- Create an overall organization compensation policy that allows for frequent recognition and reward, beyond the scope of standardized evaluation programs, bonus programs and wage increase programs. These programs work best if they are totally person-centered, allowing for the compensation program of the D.O.N. to be personalized. Rewards and recognition need to be frequent and not just monetary. Programs that use paid time off as reward, gift certificates, movie passes, flowers, spa certificates, etc. are viewed by all staff as significant and personal and D.O.N.s need to be a part of these programs and have the programs at their disposal for use among their own staff.
There is a time worn saying that is appropriate: “Its cheaper to keep them than to lose them”. In too many cases, a highly qualified D.O.N. leaves only to be replaced by someone lesser qualified, often at a higher cost and in all cases, at a higher organizational cost. Rarely is the replacement of this position an “upgrade” and certainly, at the rate of turn-over (once every three years) nearly always at a strategic and financial disadvantage to the organization.
I am often asked in my profession to “opine” on “what’s going on in this industry or that industry”; give us the trends. As a matter of fact, this Monday past I spent an hour with a principal from a hedge fund wanting to know “what are the major issues” in the seniors housing and healthcare industry. His fund needed an industry perspective on what is happening or likely to happen so that they could position their investments strategically and hopefully corollary to the current trends.
I won’t profess to have a crystal ball but I do spend a great deal of time reading publications, working with providers, investors, developers, etc., and listening to trade associations, politicians, and people working in the industry so suffice to say, my insight is generally pretty darn accurate. In other words, I accumulate and validate a whole lot of data and when I see and hear the same things repeatedly and validate the information, I believe a “trend” is solid. I’ve compiled my Top Ten for 2009 and early 2010 (and perhaps a bit longer) for the SNF Industry and listed the same below. I’ll do the same for each seniors housing and healthcare segment I cover in upcoming posts.
- MDS 3.0: The reality of RUGs refinement is here and it means big reimbursement changes for therapies in particular. Many in the industry and particularly contract rehab providers aren’t really prepared and as in all cases with Medicare reimbursement, you snooze you lose – dollars.
- Probes and RACs: The Feds are searching for money and they believe that many providers, especially those running higher acuity case mix and strong Medicare census are billing incorrectly, over-charging, etc. This recapture activity will continue to heat-up and the goal is to recover Medicare dollars.
- Medicaid: The States have budget woes and even though the Feds will kick-in additional dollars including stimulus funds, don’t expect any windfalls coming via Medicaid. In fact, many states are looking at reducing inflationary increases, raising bed taxes or other provider taxes and pushing through only paltry or meager (if at all) increases – way below the inflationary trends in the industry. The bottom-line is that the Medicaid losses (shortfalls) will grow wider over the next year and longer.
- Medicare: Aside from recovery audits, probes, MDS 3.0, etc. the wind of spending reductions in Medicare for nursing home reimbursement is blowing hard. MEDPAC and the Congress have come straight out and stated that they believe the industry has been riding a gravy train via Medicare and that they (CMS and Congress) have intentionally let the “surplus” funding via rates go on long enough. Succinctly stated, they know that Medicare has been funding Medicaid shortfalls and that will end. Current proposals and discussions include reducing or freezing the market-basket increase, providing a market-basket increase but re-basing the rates and/or combinations of both. In short, with the healthcare reform movement in full motion, payment for healthcare is front and center and Medicare is an enormous target – for all providers. The outlook is bleak for this program continuing to be a lucrative, long-term payment source for the industry – certainly not as lucrative as it has been.
- Person-Centered Care: A wonderful concept that is turning into a Frankenstein monster via regulators and once again, less than clear interpretations offered via CMS. The initiatives with person-centered care that will come forth via survey activity are virtually impossible to comply with and so nebulous that enormous survey and compliance inconsistency will occur. The premise is good but with facilities primarily relying on Medicaid and a certain dwindling Medicare payment as their financial resources, giving every resident what he/she may want when and how they want it will be impossible financially and highly impractical from an operating standpoint. Being boldly honest, environments can be comfortable, nurturing and safe but a nursing home was never meant to be the same as “someone’s home”.
- Regulations and Surveyors: A topic that likely will never leave a top ten list in any year is compliance. The industry is overrun by nonsensical and increasingly vague regulations. The system is wildly variable and consistency is far from attainable. The system does little to promote quality and clearly, based on what I hear and see, promotes increasing numbers of highly qualified staff to leave – especially Directors of Nursing. In a period when nurses are in short supply and everyone believes that quality needs to be increased, using an outdated system untied to measurable and demonstrable outcome statistics, relying wholly on interpretations (reasonable or unreasonable) from “point-in-time” inspections and from point-in-time inspectors that may or may not have any direct industry experience is frankly, ludicrous. Any system that essentially finds guilt, levies fines and provides only an expensive and bureaucratic methodology for arguing whether guilt actually was present at all, is destined to fail in terms of achieving its intent – improved quality and consistency of care. During this upcoming year or so, where the industry will certainly see declining reimbursement and increased audit and recovery activity, there appears no reduction on the horizon for the endless stream of regulatory insanity that comes from Washington.
- Aged Physical Plants: With the cost of new construction being as high as it is and many states using some form of CON (Certificate of Need) or other bed-cap provisions prohibiting increases in new bad capacities, much of the industry is sitting on physical plants that are decades old. Combine the age of the plants with Medicaid and Medicare reimbursement programs that no longer allow any realistic hope of capital cost recovery (exception programs for these costs were abandoned years ago), there has been little incentive for providers to modernize their physical plants. The problem however is that the Feds continue to pass unfunded, regulatory mandates in the form of new Life Safety Codes (for example, requiring all buildings to be fully sprinkled by 2013) as well as other environmental regulations (see Person Centered Care) that place the provider with an aged plant at risk for compliance problems. The primary issue here is that without any recognition of the costs to modernize the older physical plant on behalf the Feds, the revenue flows to update an older plant are scarce at best. Another complication at present to this problem is the tight capital markets. Lenders are shy to the industry and capital is scarce and where accessible, prices and terms are steep. If, and such is the case, capital from borrowing is either too expensive or too difficult to access, another source for plant updating is “off the books”. While I believe capital will become more accessible to the industry in the near and intermediate future, the economic outlook via rates from Medicare and Medicaid is not rosy thereby still making borrowing for many a tough path to access (lower revenue from reimbursement reduces coverage levels for new debt).
- Labor: This is an industry where 60% to 70% of operating costs are associated with labor. Reimbursement has not kept up with the increasing costs of labor, the demand for additional staff and types of staff on behalf of patient advocacy groups and regulators, and the increase in regulatory requirements that burden staff, most directly, Directors of Nursing. Turnover, even in a down economy remains a problem and now the industry is beginning to see real shortages (beyond what has been seen before) in Pharmacists, Physical Therapists, Physicians and Advance Practice Nurses. To attract and retain this group of professionals, let alone all other skilled professionals, wages, perquisites and benefits have inflated dramatically. With forecasted actual cuts in reimbursement and/or freezes in rates, the cost of labor will climb ever higher as a percentage of overall revenue. Additionally, less resources means less dollars available to pay for critical labor that is presently and will remain, in high demand.
- Liability: All of healthcare faces a liability crisis in the United States and the SNF industry continues to see its share of problems. Trial lawyers have “wised” up and are becoming very adept at watching survey results, the five star rating reports put out by CMS and other sources of industry information. Compounding the problem, there are still too few major liability carriers willing to write business in the industry space and as a result, competition lacks and premium pricing remains artificially higher than perhaps it should. While more states have moved to place caps and collars on malpractice and liability claims, the whole of the healthcare liability/malpractice issue needs to be addressed with serious and substantive tort reform out of Washington if the industry is to garner any permanent relief. With a Democratic President who won election supported by the Plaintiff’s Bar and a Democratic Congress that has pandered to this same group, real tort reform necessary to reduce the liability threat level is not likely forthcoming from Washington this year or the next.
- The Federal Government: Awash in the healthcare reform debate, Washington and the Feds have drawn the bulls-eye around the U.S. healthcare industry. In every corridor of power, debate across both parties is centered on reducing and controlling, healthcare costs. While this may be a good thing globally, the Feds have shown no ability to exercise discretion and/or common sense in reforming an overly bureaucratic and inanely regulated industry instead, focusing on politics and poorly crafted budget driven policy as a means of “patting themselves on the back” come election time. There is no question that the Feds will focus on cutting spending via changes in reimbursement while continuing to craft more inane and useless regulations as a means of achieving some “reform” agenda. In all of my years in the healthcare industry, I have never seen a time that is more concerning and frankly discouraging, when viewed in light of the role the Federal government is playing in healthcare. I fear that this trend will get worse before it gets better.