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SNFs Get Ready – Claims Audits Start Soon!

Recently, CMS announced that its Medicare Audit Contractors (MACS) would soon commence (June 5) a five-claim audit process for every nursing home in the nation participating in the Medicare program. The reviews are set to occur on a rolling basis whereby each MAC in its region, will begin by pulling five Medicare claims from each provider in their region, assessing the claims for billing errors. The genesis of this program is a Health and Human Services report that noted that (approximately) one-fourth of all SNF claims were improper as supported by documentation. In CMS language improper means overbilling vs. underbilling.

The goal of the claims review program is purportedly a combination of recoupment when payment is too high combined with education. It is likely that providers with prior bad history of ADR (Additional Documentation Requests) or probes, if their performance on this review is poor, will receive additional follow-up attention. The claim reviews are pre-payment vs. post-payment.

From the Medicare FFS (Fee for Service) Improper Payment Report (all provider types) for 2022, I included two pages with data, illustrative of the SNF improper payment issue and the reasons why. The pages are located here:2022 Improper Payment Report – SNF The most common cause of impropriety was insufficient documentation.  Some of this continues to relate to PDPM as SNFs in many regards, lag in terms of MDS coding knowledge and billing education.  COVID did not help.  Other issues are as simple as improper certification times, illegible signatures, improper Section GG (therapy coding) and improper diagnosis codes.   Per CMS, the improper payment amount for 2022 is estimated to be $5.8 billion.

My caution here for all post-acute providers but especially for SNFs and Home Health Agencies, claims audits are here to stay.  According to Altarum’s Health Economic Sector Index, SNFs spending increased 11.6% YoY (March) and Home Health spending increased 8.7%.  Outlays, within programs with known billing impropriety issues, beget claims reviews. The full Altarum brief is here:

As I have written before, compliance is a fairly new requirement for SNFs.  Within the ethics and compliance Condition of Participation found at 483.85 (F- 895) SNFs must, among a number of requirements, implement a system (reasonable with policies and procedures) to find and correct, improper billing practices such that the same, could be fraudulent or could be in violation of federal law.  The last element, violation of federal law is tricky.  It is against the law to bill Medicare for care that is rendered improperly or is sub-standard.  Technically, care provided to a resident, billed to Medicare, later determined to be harmful via a survey (G level violation or worse) is a violation of federal law.  A decent overview of the compliance requirement is available here ComplianceandEthics 483.85

Essentially, post-acute care providers, particularly HHAs and SNFs need to develop a comprehensive ethics and compliance program that INCLUDES regular claim audits.  The difficulty, however, is for the audits to be useful and proper, the same should be conducted by an independent auditor.  This can be costly and often, non-helpful when the auditor is not uniquely familiar to normal provider operations and typical survey and certification processes.   The goal of the audit process is detection and then, education.  Incorporated properly within a well-developed ethics and compliance framework, the audits can be completed efficiently and wrapped within a proper QAPI (Quality Assurance) function.  Done right, the ethics and compliance program dovetails into a QAPI program and vice-versa.  This reduces separate work, enhances process improvement, focuses on resident/patient care and how the same is effectively provided, properly documented, and properly billed.  Watch this site for more on this topic and for additional tools that I have developed and effectively used with H2 Healthcare clients.

A bit of travel awaits so I will not offer new posts/updates until next week.  Until then, Vaya con Dios!



June 1, 2023 Posted by | Health Policy and Economics, Home Health, Policy and Politics - Federal, Skilled Nursing, Uncategorized | , , , , , , , , , , , , , | Leave a comment

Friday Feature: SNFs Still Make Sense

For some recent years, enhanced by the pandemic, the role of SNFs in the post-acute/senior living industry has tarnished. Residents and families often view the SNF as a “negative place” to reside, even if for short-term recuperation. Clinical staff take a dim view of the care complexity such that the SNF is a downgraded clinical setting, less than a hospital or outpatient setting. Providers, struggling with reimbursement inadequacy and advancing regulation, have reduced beds or closed locations. Some organizations like CCRCs, have minimized bed capacity or completely eliminated the SNF and moved to advanced Assisted Living care as the highest available care option for residents. Yet, in spite of these trends and the tarnish, SNFs have a place in the continuum and in some regards, and advancing place.

What challenges the SNF industry and thus, its reputation, are more external forces than flaws in the core purpose of an SNF. External forces such as onerous and increasing regulation, below cost reimbursement, and labor shortages are the most common forces providers deal with. Gone are the days where nursing homes were locations of long-term stays, typified by years of residency. Where and when this still occurs is for residents with early-age disabilities, or for residents that have minimal financial means such that Medicaid nursing home benefits are the primary level of support for care. With Medicaid supports via waiver programs expanding, long-term skilled nursing care includes primarily the most complicated residents, those with multiple conditions requiring skilled nursing interventions weekly or even, daily. Examples include ventilator care, dialysis, tube feedings, ostomy care, etc. While these services can be provided in the home or a non-SNF setting, location challenges often make an inpatient environment (SNF), the best place for consistent care when required.

The demographics forward, favor a post-acute, SNF setting. Despite the push for post-acute care to migrate to home settings with home health the reality remains, this is not the answer for every patient. The older the patient, the number of comorbidities involved, the nature of the comorbidities, the presence of an aging spouse with health challenges, etc. all are a predicate to whether or not, home care via home health is viable. Today, even access to home health can be challenging if not, impossible. The staffing challenges all health care providers face are particularly daunting for home health agencies where, acceptance of cases, especially complex cases, comes down to having available staff to meet patient needs. As home health care by its nature is inefficient, facility-based care can be more feasible when complexity of the case is at issue and the availability of staff is challenged. In other words, staffing one location that can accommodate say 60 residents, is easier than staffing a caseload of 60 separated by travel with distances expressed in miles.

The SNF industry and the facilities within tend to be some of the oldest classes of assets in the senior living industry. The cost of new construction is high and without access to a very high-quality payer mix, the returns are challenging. For providers than can maintain solid occupancy and high-quality payer mixes (Medicare, insurance, private pay), the returns are solid and the access to capital is there. Medicare Advantage plans are starting to create solid value-based care propositions for good providers with exceptional quality records AND great care coordination partners. For example, an SNF that has a relationship with a Home Health Agency, either owned or in partnership, has the ability to package price disease management approaches by common clinical conditions that include SNF care and HHA care, all bundled, and care coordinated. If the pricing is mapped with overall savings, reductions in re-hospitalizations, improved patient outcomes and satisfaction, the opportunities going forward are significant. I have a number of pathways/algorithms that fit this example.  A few can be downloaded here.

What headwinds lie ahead fall mostly around staffing, regulation, and reimbursement.  Oddly enough, the failures that will inevitably occur necessitating closures and bed reductions, will make good SNFs stronger going forward.  The demand by demographics and patient needs is only increasing.  There will be a significant role for SNFs to play in meeting the market needs.  The questions that beg are around reimbursement keeping up with increasing costs and how disconnected will new staffing regulations be to the reality of the labor markets. As I have said in other posts, mandates make no sense when in all reality, the mandate cannot be met now, or anytime in the near future.

Bottom-line: Banks are still willing to lend to good providers. REIT capital is available as is private equity for facility improvements and modifications.  Demand is decent and recovering.  There is a lot of pent-up demand as well, post-COVID. Valuations have remained stable for SNFs as well.  Plenty of partners exist, more so than other senior living segments (hospitals, Med Advantage plans, health systems, Home Health Agencies, etc.).  

Litigation risk is still an issue but a recent court case in Washington involving Life Care Centers of America concerning COVID and the liability for infections obtained in an SNF was found favorably for Life Care Centers.  One case, however, is not a trend but it is a good sign that perhaps, the SNF industry will not be overwhelmed by COVID litigation pertaining to outbreaks and occurrences in facilities.  A synopsis of the case is available here:

Well-run, well-capitalized SNFs with more modern physical plants have a solid opportunity in the evolving post-acute industry.  Challenges exist but opportunities do as well and, in my opinion, the opportunities outweigh the challenges for operators that understand value-based care models, are willing to develop partnerships, can maintain staff, and have great quality and service records.


May 26, 2023 Posted by | Health Policy and Economics, Skilled Nursing, Uncategorized | , , , , , , , , , , , | Leave a comment

Friday Feature: Three Trends to Watch

TGIF! This Friday, I’m focusing on three trends that I think, will have a major impact on healthcare and senior living for the balance of the year and likely, at least the first half of 2024. These trends are in no particular order.

Banking and Credit Struggles: This past week, the Federal Reserve provided some not too encouraging data and outlook on the banking sector via their regular Fed Survey. According to the quarterly Senior Loan Officer Survey, the number of banks increasing loan terms of industrial and commercial loans rose from 44.8% to 46% at the end of 2022. No doubt, this percentage is higher (still) for the first quarter of 2023. Among the conditions driving this tightening are lessening liquidity (deposit level shrinkage), credit quality deterioration (poor performance on loans issued/held), and significant reductions in borrower collateral positions. Loan demand, principally due to higher interest rates, is also significantly trending down for 2023.

Credit tightening and fallow credit demand are typically, signs of weakening economy and a possible recession. The challenge for senior housing and healthcare is that these industries tend to be almost recession proof and always, in need of credit for primarily, plant, property and equipment investment. The senior housing sector is a large consumer of credit for ongoing improvements and for expansion or merger/acquisitions. Likewise, the sector is vulnerable somewhat to rising interest rates as a significant amount of current debt is variable vs. fixed. Quick rate increases place loan covenants at-risk for default.

While I see an end to Fed rate hikes, I don’t see an end to inflation in the near term. With recent CPI (Core inflation too) running around 5% and the Fed funds rate, at 5% to 5.25%, we may see a “hold” period while the Fed waits for the lag effects to further diminish inflation. What is for certain, the current economic conditions will be significantly impactful for the healthcare/senior housing industries for the balance of 2023.

Employment/Labor: For all of healthcare, this is a major concern as demand exceeds supply in nearly all categories of employment and most acutely, for bedside/direct patient care staff. A possible recession and other industry slowdown will benefit healthcare and senior living via increased numbers of non-clinical staff needing work, but that same effect won’t move the supply “needle” on clinicians, especially nursing.

The trend here that I am watching is a bit nuanced. I’m watching the regulatory responses around staffing mandates, particularly in senior living/skilled nursing. The Biden administration has said, along with the 2024 SNF PPS rule that a staffing standard is forthcoming. We have yet to see it but states, such as Connecticut are somewhat ahead of the Feds. But, as of late, reality is beginning to settle-in; namely, the funding cost reality. Connecticut posed a per day increase in hours per patient from 3 to 4.1, along with ratios for certain positions. Both long-term care associations lobbied against the bill stating that while desirable for the industry to accomplish these levels, the reality is that supply won’t allow it. The state Office of Fiscal Analysis said the bill would require an increase in Medicaid spending by $26.6 million in 2025 and $15.5 million in 2026 and 2027.

Pennsylvania ticked-up staffing levels from 2.7 hours per day to 2.87, starting July 1. In July of 2024, the hours per day requirement jumps to 3.2 hours (direct care) per patient. Even though Pennsylvania increased its Medicaid reimbursement by 17.5% in 2017, funding woes for providers still persist. The genesis of the staffing level mandate is a report completed by the Pennsylvania State Government Commission. It noted that working conditions, training and career development were sorely needed to combat negatives about work in long-term care. The report further noted that long-term care spending needed an annual investment of $99.9 million to cover the cost of services which, translates to $12.50 per patient day increase or a Medicaid reimbursement rate of $263.05.

Finally, within the employment/labor trend, I’m watching legislative activity around staffing agencies and specifically, a move to cap the mark-ups that agencies can charge providers. Pennsylvania, in its report (noted) above, noted the rapid increase in agency costs to providers resulting from the pandemic and yet, the limited impact the fee increases matriculated to staff in the form of wages. A recently passed Indiana law includes a provision limiting “predatory practices” by agencies, specifically, price gouing. Minnesota is also working on legislation to increase funding and to in some ways, attempt to address staffing inadequacies.

Patient Transitions/Care Transitions: I’m continuing to watch the post-acute flow dynamics or the admission/transition referrals from hospitals to post-acute providers. My specific focus is on home health which seems to be struggling the most to sustain a referral dynamic that has home care preference but can’t be accommodated by home health agencies. The benefactor of this referral trend is the SNF industry. In a report from Trella Health for 3rd quarter 2022, the SNF industry saw a referral increase of 5.8% (YOY) and the home health industry saw a 8.6% decrease. Hospice referrals remained essentially unchanged. The data is for Medicare Fee-for-Service patients (traditional Medicare), excluding Medicare Advantage referrals. With the growth of Medicare Advantage, I expect to see a continued preference toward home/community discharges yet, staffing levels will dictate how this preference is realized. While home health has a distinct advantage in cost and desire by the patient typically, the setting has challenges to accommodate volume. Productivity levels are currently near the max for many agencies and thus, referral denials are at record levels.

Happy Mother’s Day to all moms and expecting moms, everywhere!

May 12, 2023 Posted by | Health Policy and Economics, Home Health, Policy and Politics - Federal, Senior Housing, Skilled Nursing | , , , , , , , , , , , , , , | Leave a comment

SNFs: 3 Overnight Stay Requirement Returning

As the Public Health Emergency (COVID) ends, healthcare providers will revisit pre-pandemic policies as a slew of waivers expire. One waiver particularly impactful to hospitals and SNFs is the requirement of a 3 Overnight (3 Day Stay) for a patient to receive Part A Medicare benefits in a SNF. Recall, the rule pre-pandemic was that a person had to be admitted to an acute hospital with a stay of at least 3 overnights in the hospital prior to discharge to a SNF, in order to qualify for Medicare coverage applicable to the SNF stay. One little wrinkle, rarely experienced, is that the discharge could be to another location within a thirty-day window of the patient entering the SNF, and the patient still could qualify for Medicare benefits in the SNF. In other words, the patient could be sent home, and for whatever reason, subsequently enter the SNF within 30 days of the hospital discharge and still be eligible for Medicare SNF benefits.

While there has been support for the waiver of this requirement to remain via a continued policy change from CMS, it is now apparent that CMS will reinstitute the 3 overnight rule. The primary impetus for this? Of course, cost control. A study from the AMA, appearing in the JAMA Internal Medicine publication (released on Monday 4/24) basically provides CMS with its positional defense. The study is here for anyone interested: jamainternal_ulyte_2023_oi_230019_1681999138.05344

The study analyzed MDS data for patients admitted to a SNF between January 2018 and February 2020 (pre-pandemic) compared to admissions between March 2020 and September 2021 (pandemic period). During the pre- pandemic period, there were 130,400 care episodes per month, 59% of which were female.  During the pandemic period, there were 108,575 episodes, again 59% were female. Per the study: “All waiver episodes increased from 6% to 32%, and waiver episodes without preceding acute care increased from 3% to 18% (from 4% to 49% among LTC residents). Skilled nursing facility episodes provided for LTC residents increased by 77% (from 15 538 to
27 537 monthly episodes), primarily due to waiver episodes provided for residents with
COVID-19 in 2020 and early 2021 (62% of waiver episodes without preceding acute care).”

What was interesting to me is where the predominant utilization of the waiver for non-prior hospitalized patients occurred.  Per the study, the 80% v. 68% of the LTC waivers (non-prior hospitalized) were for-profit facilities.  These facilities had lower overall star ratings on average with the for-profit average at 2.7 stars v. the non-profit average rating of 3.2 stars. The same kind of variance was found looking at the staffing star ratings – 2.5 v. 3.0.  Skilled admission spending was $2.1 billion prior to the pandemic and $2.0 billion during but a big jump in LTC (Medicare covered) occurred from $301 million to $585 million.  Hospital spending remained relatively unchanged, despite lower overall patient volumes (COVID incentive payments making up outlay differences).

Here is the key takeaway from the study:

Key Points

Question: Did skilled nursing facility (SNF) care volume and
characteristics change when the public health emergency (PHE)
waiver for 3-day qualifying hospitalization was introduced in March 2020?

Findings: In this cohort study of SNF care provided for 4 299 863
Medicare fee-for-service beneficiaries from January 2018 to
September 2021, waiver episodes without preceding acute care increased from 3% to 18% during the PHE in 2020 to 2021. Among long-term care residents, such waiver episodes increased from 4%
to 49%, with 62% of episodes provided for residents with COVID-19.

Meaning: This study found that the use of SNF care for long-term
care beneficiaries without a preceding qualifying hospitalization
increased markedly during the PHE, primarily for care for patients with COVID-19.

So SNFs will return to a pre-pandemic point where coverage for SNF skilled services under Medicare will require a 3 overnight hospital stay as the Public Health Emergency ends.  The study cites cost as the main driver, but I also believe, that cost on an escalatory basis is more the concern.  As the pandemic has ended and hospital volumes are normalizing, we’ve seen SNF referrals increase. I noted this trend in a post on Monday…link is here: What this means is that a shift toward more expensive post-acute care is happening and may be more longer-term in trend than not.  In other words, while a bias toward discharge to home health was prevailing pre-pandemic, the factors of reimbursement policy, staffing dynamics, and increasing patient acuity on discharge have moved the needle (so to speak) toward SNF discharge.  Staffing is of course, the main driver.

What does this mean for hospitals, if anything?  Maybe a bit of shift in consciousness about length of stay, inpatient admission, and discharge planning will occur.  The growing use of observation stays vs. inpatient admits was always a sore spot for SNFs and patients and families.  I saw lots of confusion a few years ago among SNFs and, then unfortunately families, when a patient arrived for admission and lo and behold, the majority of the stay was classified as observation vs. an inpatient admission, not meeting the 3-day inpatient admission requirement.

Medicare Advantage plans will also need to rethink some approaches in their care coordination.  While the preference may be a discharge to home health, admission acceptance is still on the lower side (lots of rejections).  it may just require a shift in focus from Med Advantage plans toward better coordinated SNF stays.  

For SNFs, the loss will be felt among facilities that were able to “skill” typically, long-term care Medicaid patients.  The missing revenue will be felt without a counterbalance pick-up readily available.  For good performing SNFs that have focused on building strong value propositions and positioned themselves well for value-based care, options are plentiful, but they had been prior to the pandemic. Staffing remains the challenge. My advice for these folk?  Get your care pathways together and your algorithms and be efficient in cost and length of stay.  Use your data to drive partnership referral bases with hospitals and in particular, Med Advantage plans.  Now is a good time to take advantage of the shifting policy dynamics.


April 26, 2023 Posted by | Health Policy and Economics, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , , , , , | Leave a comment

SNFs and HHAs: A Common, Concerning Trend

Current economic and government policy conditions have converged to create a concerning trend for home health and SNF providers. The trend for both segments is loosely known as “referral rejection”. The number of referrals that both provider types are rejecting is up considerably since the start of the pandemic and for now, I see no change in direction.

The chart above is a snapshot of the issue across the predominant pandemic periods of 2020 through January 2022. One would expect referral rejections to escalate during this period as outbreaks would necessitate, caution and temporary admission holds, especially for SNFs. Yet, even without a winter breakout of COVID, rejection rates in home health increased to 76% for January 2023. Interesting, during this same period SNF referrals increased by 113%. During the pandemic, the referral lines/patterns crossed as home health from hospital referrals increased and SNF referrals, dipped. COVID period hospitalizations also changed and therefore, overall post-acute discharge volumes during 2020 – 2022 dropped. An in-depth look at hospital volumes and discharge patterns is here: COVID-FFS-Claims-Analysis-Chartbook_2022Q1

SNFs are now garnering more referrals at the expense of home health yet, we are seeing shifted patterns around a number of factors.  COVID policy and Medicare policy during the height of the pandemic created a preferential shift from SNF to home and hospital admissions (non-COVID related) were down substantially (elective and other procedures).  As hospital admission patterns are recovered to near pre-pandemic levels, discharges have shifted to SNFs, not due to a preferential change but due to policy (reimbursement) and staffing.

Though both provider types share staffing and reimbursement concerns, home health has had the biggest negative impacts from the two.  SNFs have certain economies of scale in terms of staffing whereas, home health typically, cannot maximize efficiencies with a caseload spread among various locations.  In some instances, smaller caseload blocks are possible but in rural and suburban areas, cases are typically spread such that productivity for therapists and nurses is hampered by travel times.  Home Health received a pittance of an increase in their PDGM rates for 2023 and CMS is targeting potential reductions going forward to offset programmatic growth and what it believes, is a rich fee schedule for providers.

Acuity on discharge is also up and thus, home health rejection rates seem to correlate.  While home health may remain the preferred discharge location for Med Advantage plans and physicians (and patients), finding an agency that can staff the case let alone deal with a higher acuity patient is problematic in most markets.  SNFs tend then, to be the beneficiary of the home health rejection.

One thing is certain in the current environment, the 2o ton gorilla in the room is staffing levels – ability to have sufficient number in sufficient roles (RNs, LPNs, CNAs, etc.) to meet patient needs on referral.  Similarly, restrictive Medicare rate increases, with staffing costs rising and costs of doing business the same (insurance, supplies, energy), SNFs and HHAs will both be vigilant on patient needs vis a vis, reimbursement.  Small margins can quickly get eaten-up by higher wage cost, agency staff, and patient care supply requirements.

As we approach mid-year, I’ll continue to watch this referral trend and how it manifests in terms of rejections and ultimately, care access.  I’m afraid that continuation of these patterns will cause access problems if not for post-acute care services in general, but for preferred care locations (home v. facility based).  And while it may be nice for SNFs to see a rebound in referrals, I don’t know too many SNFs these days that are able to occupy full capacity (staffing) and to accept without condition, every referral that comes their way.

April 25, 2023 Posted by | Health Policy and Economics, Home Health, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , | Leave a comment

Friday Feature: The Supreme Court and Medicaid Beneficiary Rights to Sue

TGIF! In a little known but important case argued in November of 2022, the family of a Medicaid nursing home resident in Indiana began a suit against a publicly owned nursing home (originally 2016), Valparaiso Care and Rehabilitation. The nursing home is operated by the Health and Hospital Corp. of Marion County. The corporation’s board is appointed by the mayor of Indianapolis and the Marion County Commission and city council. A ruling is expected from the Court soon.

The Talevski family sued the Health and Hospital Corp. after their father was denied readmission to the facility, alleging he was cared for by Valparaiso and other facilities, negligently. He passed away due to complications from dementia but during his initial stay and subsequent travels among nursing homes, the family argued that he was excessively drugged – six psychotropics. The nursing home claimed that the elderly gentlemen became violent, sexually aggressive, necessitating a transfer to another facility more capable of caring for him. The other facility was an hour away from the family. The family said the facility tried to transfer him to another facility even farther away – 2 plus hours. The facility, Valparaiso, refused to take him back.

After the facility refused to accept the readmission, the family sued. One of the daughters is an attorney. The basis of the suit against the Health and Hospital Corp. is that the extensive use of medication, unwarranted and against federal law (SNF Conditions of Participation), and his unauthorized transfers against his rights, violated his rights under federal law. This law, the Federal Conditions of Participation for SNFs, regulates care provided to Medicaid and Medicare beneficiaries. The suit alleges that it is fundamentally illegal to harm patients, provide substandard care, and received Medicaid reimbursement. The suit seeks redress for the rights violations against the County.

At issue is whether a beneficiary can sue a governmental entity for breaches of rights under a federal program or denial of benefits under a federal program such as Medicaid. The argument against the suit is that programs like Medicaid are a joint federal-state funding contract and as such, beneficiaries don’t have the right to sue based solely on this relationship. The question thus is, can individuals interfere with or become a party to, a contractual relationship between the state and federal government?

The implications of this suit are enormous for seniors in the Medicaid program and for providers that care for Medicaid beneficiaries. For beneficiaries, the risk of loss in this case is that they would not be able to sue a government or governmental agency for things as simple as a denial of benefits, even if they are eligible under Medicaid criteria. Administrative procedure may be the only method for addressing complaints or benefit issues.

Providers and governments take the opposite approach indicating that a codification of a right of a beneficiary to sue could create havoc for key programs such as Medicaid waiver (home, community-based services) programs, PACE, Special Needs Plans, etc. They say that lawsuits don’t create a remedy but do ultimately, push unnecessary litigation costs and damage claims into the program such that funding elements would be harmed.

Court watchers see parallels with a decision and the recent Dobbs abortion ruling – a question of rights and access to certain care and services. Some believe the Court may attempt to place limits around certain beneficiaries and litigation such as the ability to sue nursing homes using provisions in the Federal Conditions of Participation as a basis; a patient/resident rights violation. The thought here is that rule enforcement or rule violations when not enforced or addressed, is a regulatory function. There is no likelihood that the Court would speak to any issue of harm due to poor care which, is a different matter and not part of this suit directly.

I’m fascinated by this case as there is so much at stake for Medicaid beneficiaries and providers in the Medicaid program. Its nuances and challenges are many. It is a poster case, in my opinion, for the overall argument that these programs, Medicaid and Medicare, have become too bureaucratic, over-regulated, and incapable of truly supporting and addressing, the real needs of their beneficiaries.

A good synopsis of the case and the issues is here:

April 21, 2023 Posted by | Health Policy and Economics, Policy and Politics - Federal | , , , , , , , , | Leave a comment

Staffing and Turnover: Medicare Payment Implications?

This morning, I caught some reporting on the Biden Administration’s plan to issue an executive order, a rather large order, that will include several provisions related to jobs and long-term care. Recall in recent articles on staffing on this site, I’ve noted that the Biden Administration and CMS are working on promulgating rules under Medicare for required direct care staffing levels in SNFs and ultimately, tying these levels and turnover to Medicare payment in some regard. This is an off-shoot or addition to other non-staffing related VBP (Value Based Purchasing) elements already in-place or soon to be added.  See my post here on the recently released SNF Proposed 2024 rule:

The order is expected to include direction to DHHS (Dept. of Health) to adopt a series of rules that add to minimum/mandatory staffing levels for SNFs (these levels yet unknown) and to condition some elements of Medicare reimbursement to staff turnover at the SNF. The expectation remains that DHHS and CMS release the proposed staffing rule yet this year (some say spring, but I doubt that timing).

Also within the order is a directive to cabinet level agencies (e.g., Interior, Commerce, Energy, Education, etc.) to expand access to long-term care and childcare and, provide financial support to workers for these services. The objective is to improve access to care and support for people such that the same with financial support, will allow caregivers to thus, be employed rather than staying at-home to support childcare or adult care.  The rule will also seek to have Medicaid dollars apply to fund an increase in home care workers to support additional seniors and the disabled accessing care under Medicaid.

The devil, as always, will be in the details.  I’ll be watching for the final order once it is signed and released.  Typically, these kinds of Executive Actions/Orders come with little detail as they are a series of directives to cabinet agencies to develop the rules and apply them going forward.  What is clear is that the Biden Administration is heavily invested in creating some kind of staffing mandate for SNFs and tying the same to reimbursement.  As I have written before, I’m not sure a mandate in an environment with a caregiver supply problem is going to do anything other than create additional economic hardship for providers that already, can’t obtain enough staff.  Similarly, while I know turnover is a problem in the industry, many of the turnover drivers (regulations, aged facilities, inadequate numbers of staff, negative regulatory environment, etc.) are beyond control of the industry.

April 18, 2023 Posted by | Health Policy and Economics, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , , | Leave a comment

Friday Feature: Nursing and LTC

Each Friday (hopefully so), I will take a specific topic that has been in the news or been directly posed to me by a colleague or a reader and do a bit of a deep dive feature. This week it’s the future of nursing or more directly, nurses in senior housing and long-term care.

As I’ve discussed in other posts and in presentations I have done, the U.S. post the pandemic has a major nurse shortage – RNs and LPNs. The shortage is most noticeable at the bedside, hospitals and SNFs standing out. This is not to say that home health and hospice are immune from short numbers, but the most acute demand/supply contrast is found in inpatient settings. This shortage creates care problems and access problems. The typical admission/discharge cycles among providers are constantly interrupted such that patients are often stuck in one element or another of a care queue simply because not enough staff are available to provide care. I’ve seen all too many times over the past two years, SNFs not accept discharges, even of their own transfers, simply because staffing is inadequate in number to provide the care required.

To anyone watching prior to the pandemic, the shortage problem has been building. The pandemic exacerbated what was already a modest imbalance (more demand than supply). For various reasons from safety to mandates to burnout, COVID pushed retirement numbers for nurses and/or, created a disengagement from inpatient settings to other settings where nurses could work in a more even-keel environment, less taxing. Clinic settings, schools, software companies, lab companies, insurance companies, etc., all consume nurses, especially RNs. While the wage trade-off may be a few bucks or so per hour, the stability and scale of Monday-Friday, days only even some with full remote work, pulled nurses away from hospitals and SNFs.

The demographics in terms of age illustrate nursing to be an older profession. In other words, the nurses working are more seasoned in years than compared to other professions. Younger people are not entering the profession with the same pace of say, twenty or thirty years ago. Too many other alternative professions exist and the “care” calling just doesn’t appear to be as strong as it once was. I also know too many nurses of parent-age or slightly older that no longer advocate for their children or grandchildren to enter nursing. Being in a family of nurses (my mom, my aunt, my wife, my daughter, etc.), nursing was almost the family profession in some regards and thought highly of as a noble calling and a great career. Here’s a quick snapshot at the demographics, albeit a couple of years old:

A recent report from the National Council of the State Boards of Nursing highlights the negative trend of supply in nursing. The report illustrates a major forward problem in terms of the supply of nurses. According to this report, 100,000 nurses left the workforce during the pandemic. Of a total workforce of 4.5 million nurses, 900,000 are projected to leave the profession by 2027 – four years from now. What’s most concerning is the profession negativity among nurses with less than 10 years of experience. This lack of regard and dissatisfaction with the profession spills over into their cohorts/peer groups, painting nursing as a less than desirable career.

Image and positivity among professionals within any vocation is a key recruitment and retention factor. For a parallel, look at what has happened to police officers and law enforcement. The negativity and disdain for policing that has occurred over the past three years primarily, has driven large numbers of officers away from police work. Concurrently, recruiting new officer candidates has become a major challenge. Nursing is seeing a similar, though not as pronounced, trend. The report and data observation is here:

Digging a bit deeper, I looked specifically at senior living and long-term care. While most other health care sectors have recovered for the most part, hospital and senior living, direct care have continued to struggle. Long-term care bedside nursing has struggled to recover the most, not that it was super staff healthy prior to the pandemic. According to the American Health Care Association (AHCA), an industry trade association, long-term care is 400,000 workers short of demand and the rate is climbing. Per AHCA, 90% of SNFs report being understaffed, 50% severely understaffed, and 98% report hiring is problematic. The result of this staffing crisis is 60% of facilities are reducing census due to lack of staff. A study from the University of California, San Francisco projects that the long-term care/senior living industry will be short 2.5 million workers by 2030. NOTE: CMS and the Biden Administration are proceeding on developing required, mandatory staffing levels in SNFs, in spite of this information. The reference article is here:

What we can glean from literature, nursing professional organizations, nursing unions, and providers is a rather bleak picture of an industry problem that seems to be getting worse, not better. Fixes will require a whole of industry, profession and government approach. Policy makers are definitely going to have to develop a different mindset regarding the work of nurses in nursing homes and how overbearing regulations and enforcement actions don’t improve patient care but do drive nurses from the industry. Listening and reading, what nurses say about why they won’t work in LTC or are leaving their LTC jobs is summarized below.

  • Working conditions – short staffed, short supplies, outdated equipment and environments
  • Pay and benefits not par with other nursing jobs
  • Turnover, especially management
  • Bad management
  • Paperwork burden
  • Negative surveyors and regulations – focus on paper compliance, not patient care
  • Mandatory overtime
  • Lack of support systems internally
  • Lack of training
  • Difficult patients and families – unrealistic about care demands
  • Negativity of the industry.

Solutions? My vantage point encompassing thirty plus years in health care and senior living says we nationally, need a two-prong approach. First, we need to ramp supply. Make nursing a cool and rewarding profession and easy and inexpensive or free to become a nurse. Second, obliterate the foolish impediments to job satisfaction for nurses. Reimbursement in LTC is atrociously low and unable to seriously sustain needed environmental updates and improve comp opportunities for nurses. Pay is not the sole issue, but it is an issue. Likewise, regulations and heavy-handed enforcement is anathema to attracting and retaining good nurses and especially, good nursing leaders. I lost track of how many RN managers and Directors of Nursing I know that have left their jobs because of regulatory foolishness, inept surveyors, and illogical citations. Paper compliance and the amount of time devoted to the same versus patient care is a huge dissatisfier and an equally huge trigger to exit long-term care. A final reference:


April 14, 2023 Posted by | Health Policy and Economics, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , | Leave a comment

SNFs: Compliance, Medicare Billing and RACs

Despite significant delays due to COVID, Phase 3 requirements of the “mega rule” are now in effect and one of the most unique elements for SNFs is the Ethics and Compliance requirement – 483.25. A good primer on the requirement is attached here. I have highlighted some key points relative to this post. SNF Compliance and Ethics

Aside from a bit of a title misnomer (ethics), the requirement is really about compliance with applicable Medicare and Medicaid law.  Ethics refers to “business ethics” versus bioethics and providers need to understand that the core requirements of care and service delivery contained within the Conditions of Participation are in many ways, separate from this requirement, save the billing contexts.

I know confusion arises at this point but in reality, it is quite simple.  Ethics and Compliance for SNFs focuses on how providers “operate” or “conduct business” versus how care is delivered.  There are dozens of COPs related to how residents are supposed to be cared for and the same, assessed and documented.  This condition ties the business aspects and in particular, the payment aspects with the care delivery.

The key for providers to note with this requirement is that the documentation, delivery of care, and billing must be in harmony.  It is against federal law for a provider to bill for services not rendered, care not required (by definition) or care that is substandard. This is where RAC audits and auditors come in.

RAC auditors are responsible for assuring that care provided is properly substantiated and billed.  They conduct their work on a post-payment review basis.  CMS continually updates their (contractor’s) charge by identifying audit conditions that should be reviewed.  While CMS states that RACs are charged with identifying overpayments and underpayments, the overpayments are the focus.  Overpayments typically relate to billing for services unsubstantiated by payment in relation to actual care provided or required (upcoding, excess service utilization).  The current approved RAC audit list for all provider types is attached here.  I highlighted the conditions impacting SNFs. RAC approved_issues_list_04_12_2023

What RACs and compliance requirements mean for SNFs is simple but difficult in application.  SNFs in the new Ethics and Compliance requirements are obligated to monitor their billing practice and to do so via an audit process.  The best audit processes incorporate an independent dimension meaning, using an outside source/contractor.  This is different than engaging an accounting firm to audit financial statements and records and produce GAAP statements.  The process is basically, assuring that the claim sent to CMS or Medicaid, is accurate and supported by records and assessments; services rendered.  The best audits also incorporate a dimension of patient/resident satisfaction.

For proper compliance, how frequent the audits are completed/conducted would really depend on the volume of Medicare/Medicaid claims a facility submits.  For most SNFs, bi-annual is more than adequate with periodic topical checks of common RAC results/pitfall areas.  In other words, there are patient types and diagnostic codes that are flagged or targeted more often than others for billing impropriety (e.g., IV, infections, wounds, etc.).  Lengths of stay are also an issue (long and short).  Good compliance audits also detect care/documentation deficiencies.  In looking at how care was documented/assessed versus what was billed, the audit can detect sloppy documentation or perhaps, knowledge gap problems necessitating training.  For many facilities, it is not uncommon that a good audit will detect opportunities for additional reimbursement as facilities commonly underbill rather than overbill.  

For the SNF, the goal is not to avoid a RAC audit (can’t) but to be able to withstand claim scrutiny by having systems and processes in-place, to assure compliance.  This is the purpose of the Ethics and Compliance requirement. Being vigil and consistently testing the process of care provided, documented and then billed, assuring accuracy and integrity, is a best practice.  For organizations that I ran and consulted for, using this type of an audit process was a requirement and best practice, well before CMS made it a Condition of Participation.

April 13, 2023 Posted by | Health Policy and Economics, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , , , , | Leave a comment

SNF Proposed Rule – 2024

‘Tis the season for CMS to release updated payment and program rules for providers under Medicare. In the past week or so, we’ve seen releases for Hospice and Inpatient Rehab Facilities. A couple of days ago, CMS released the proposed 2024 rules/updates for SNFs (skilled nursing). The fact sheet for the release is available here:

Like all of these proposed rules, there are two categories of information within: what will happen and what CMS is signaling for the future. I find the forward commentary, the future stuff, far more interesting. It has in prior rules, given us insights into programmatic staples such as VBP (value-based purchasing), PDPM replacing RUGs, etc. In this rule, we see commentary on CMS studying a move toward minimum staffing requirements. CMS/Biden administration has targeted a move toward minimum staffing requirements (direct care) concurrent with COVID. I am leery of moves like this especially since a future mandate will likely come without additional major funding increases and within a labor market that simply won’t accommodate additional direct care staff. Facilities that I know are groveling, begging for more staff and simply, cannot find them. And yes, turnover in the industry is high but much of that is tied to structural problems within the industry and corollary staffing problems (staff turning over because there is not enough staff – a circular argument).  In a post from earlier this week, I touched on the current staffing dynamics:

What CMS is proposing which, is likely to happen in the final rule and move forward on October 1 of this year, is as follows.

  • A 3.7% increase in rates.  This number comes about via a rather convoluted process and formula.  Essentially, the market basket (inflation costs) update is 6.1%.  This amount is the aggregation of a 2.7% market basket increase plus a 3.6% market basket forecast error, plus a .2% productivity factor adjustment = 6.1% (rounded). To get to the 3.7%, CMS reduces the gross calculation by 2.3% which, is attributable to the parity adjustment under PDPM.  Recall, CMS missed the spend mark with PDPM (high side) so the budget neutrality required when the payment systems changed, is being factored in via rate offsets going forward (2023 and 2024).  I know, this makes little sense to anyone trying to rationalize these rate mechanics logically.
  • Additional changes to the ICD 10 code mappings under PDPM.  The goal here is to improve consistency between coding and diagnostic maps under PDPM. 
  • A bunch of proposed refinements and additions to the SNF QRP (quality reporting program) are within this proposed rule.
    • Addition of a discharge function score which, assesses the number of residents that meet or exceed an expected score, using self-care and mobility items from the MDS.  This score is proposed to replace the discharge assessment measure (Application of Functional Assessment/Care Plan).
    • Adoption of the Short Stay Discharge Measure known as CORE Q, beginning in FY 2026 (October 1, 2025).  This measure assesses the percentage of residents post-discharge within 100 days that are happy with their care and stay in the SNF.
    • A COVID 19 measure for FY 2026 assessing what percentage of SNF residents are up to date with the recommended COVID 19 vaccination schedule.
    • A COVID 19 measure for FY 2025 assessing what percentage of SNF staff are up to date with the recommended COVID 19 vaccination schedule.
    • Remove for FY 2025, the Application of Percent of Long-Term Care Hospital (LTCH) Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function (Application of Functional Assessment/Care Plan) measure.
    • Remove for FY 2025, theApplication of the IRF Functional Outcome Measures: Change in Self-Care Score for Medical Rehabilitation Patients (Change in Self-Care Score) measure; and the Change in Mobility Score for Medical Rehabilitation Patients (Change in Mobility Score) measure.
    • By FY 2026, CMS will require SNFs to submit QRP data on 100% of collected QRP data on 90% of MDS assessments submitted.  SNFs that fail to meet this standard will face a 2% reduction in the annual payment update for the fiscal year.
    • Public reporting of the transfer of health information requirement to the patient and to the subsequent provider post-discharge, will be implemented in FY 2025.  The information required is a reconciled medication list.
  • Under the VBP for SNFs, CMS is proposing a number of instrumental changes, effectively reducing the weight of readmissions via complete elimination of the 30 day all cause readmission measure.  The proposed program changes are,
    • Add a nursing staff turnover measure where data is compiled in FY2024 and factored into performance in FY 2026.
    • Addition of a discharge function score that assesses the number of residents via a functional score, that met or exceeded anticipated functional levels on discharge.  Data will be gathered in FY 2025 with performance factored in for FY 2027.
    • Addition of a long-stay hospital measure per 100 residents with data gathered in FY 2025 and performance factored in for FY 2027. The measure assesses the hospitalization frequency of long-stay residents.
    • A measure addition for falls with major injury for long-stay residents.  The data collection begins in FY 2025 and performance is factored in for FY 2027. the measure assesses the rate of falls with major injury among long-stay residents.
    • Adding a new readmission measure to assess the potential for avoidable (hospital) readmission within the SNF stay for residents (SNF WS PPR) with data collected in FY 2025 and performance factored in for FY 2028.
    • CMS is expecting to increase the bonus payment (payback)levels for high-performing facilities from 60% to 66% of the dollars withheld.
  • Finally, CMS is proposing to make a technical change to the process for CMP reductions.  Right now, if a facility waives its right to an appeal hearing, the CMP is reduced by 35%.  As 90% plus of all facilities receiving a CMP take the reduction via the waiver, CMS will change the process to one where the waiver is imputed UNLESS the facility requests a hearing within the required timeframe.

My best wishes to all for a blessed Easter and Passover holiday season!

April 7, 2023 Posted by | Health Policy and Economics, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , , , , , , | Leave a comment