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: https://altarum.org/publications/may-2023-health-sector-economic-indicators-briefs
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!
Medicare Advantage/Part D Final Rule
Early in April, CMS released the 2024 Medicare Advantage/Part D Final Rule and within, there are a number of interesting policy shifts that could benefit providers. The rule addresses a common practice that has been frankly, often abused by Med Advantage plans – prior authorizations or more commonly known as, “prior auths”. The crux is authorization provisions created delays in care and sometimes, denials for services that the patient and/or his/her physician believes are medically necessary. The SNF industry has most often been on the denial side of prior authorization requirements, either for the whole stay (initial transfer) or for a requested longer stay. The fact sheet for the final rule is here: https://www.cms.gov/newsroom/fact-sheets/2024-medicare-advantage-and-part-d-final-rule-cms-4201-f
With respect to prior authorizations, the rule seeks to make their use more connected to national coverage determinations (NCDs) and local coverage determinations (LCD), common to traditional Medicare. Back in April of 2022, the HHS Inspector General issued a report that included findings of Med Advantage plans use of authorization provisions to issue fairly widespread denials for various care and services. The denials either bar access to care for the patient or in some cases, deny payment to the provider for care and services rendered, subsequently determined by the Med Advantage plan to be “not medically necessary”.
The study noted that the Med Advantage plans were using medical criteria more restrictive than criteria under traditional Medicare (the national or local coverage determinations). Among cases reviewed, 13% of the Med Advantage denials were for care or services that would be covered under traditional Medicare. Other denials were technical in nature whereby the Med Advantage plan denied an authorization as insufficient in documentation yet, the patient medical record contained sufficient documentation of the medical need. In the cases of payment denials, while the payment requests were proper in terms of meeting Medicare criteria, the denials that did occur were due to processing or human claim review error. At a rate of 18%, this is a bit alarming as Medicare fee-for-service claims, properly billed, don’t have such an error rate. The OIG report is here: https://oig.hhs.gov/oei/reports/OEI-09-18-00260.asp
Another target within the rule with respect to Medicare Advantage plans has to do with marketing practices. The plans have become popular such that today, 45 % of all Medicare beneficiaries are enrolled in Med Advantage plans. Medicare anticipates this number to rise to 50% by 2025. Apparently, those annoying generic television ads promoting various Medicare Advantage plan features, some featuring celebrities like JJ Walker and Joe Namath, have gotten notice in Washington. No longer will that style of ad be permitted instead, requiring a specific plan to be identified and each ad, to eliminate images and language that is confusing or misleading (not sure how that will be monitored).
Another change or improvement relates to behavioral health access and coverage criteria. CMS is finalizing a new set of rules requiring Medicare Advantage plans to: “(1) add Clinical Psychologists and Licensed Clinical Social Workers as specialty types for which we set network standards, and make these types eligible for the 10-percentage point telehealth credit; (2) amend general access to services standards to include explicitly behavioral health services; (3) codify standards for appointment wait times for primary care and behavioral health services; (4) clarify that emergency behavioral health services must not be subject to prior authorization; (5) require that MA organizations notify enrollees when the enrollee’s behavioral health or primary care provider(s) are dropped midyear from networks; and (6) require MA organizations to establish care coordination programs, including coordination of community, social, and behavioral health services to help move towards parity between behavioral health and physical health services and advance whole-person care.”
I’m encouraging providers to read the rule’s fact sheet. Medicare Advantage providers will not simply or quickly, make wholesale adjustments to their existing practices because of this rule. Additionally, providers should always be aware of National and Local Coverage Determinations and use the same, as a “road map” for dealing with Med Advantage coverage and authorization issues. Providers will need to push the plans to make proper adjustments accordingly and to protect and advocate, for their patients. It will take time for the Med Advantage industry to adjust but, movement will happen quicker if providers hold the plans accountable.
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: https://wp.me/ptUlY-vL 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.
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.
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: https://wp.me/ptUlY-tj
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.
Medicare Claims, Audits, Denials and AI
AI or Artificial Intelligence has been in the news a lot over the past few months. ChatGPT is the program that I’ve seen the most about. Elon Musk has come forward warning of the advance of AI and its implications for societies. I’ve seen story after story about how AI has the potential to be a “game changer” in medicine and in science advances but also, how it has the potential to produce scary outcomes. Heck, even Joe Rogan is sounding the alarm after a full version of his podcast was done through an AI creation.
As one would suspect, the advances in AI are finding their way into Medicare and Medicaid to adjudicate claims and to detect potential fraud. The first and most prominent use (for AI) is within Medicare Advantage plans. In an analysis published in the health and life sciences publication STAT, the authors found insurers in the Medicare Advantage plans using AI based algorithms to determine post-acute lengths of stay as well as for prior authorizations for certain levels and amounts of care. The purpose is to place a “best practice” construct around certain diagnoses and conditions, reducing variability. Sounds good in theory.
I have been a proponent of the development of clinical algorithms based on certain diagnoses and patient comorbidities. Readers can find some of those algorithms posted on this blog. I also received a U.S. patent for the development of a web based chronic disease management system that involved a highly integrated series of algorithms and pathways to assist patients and physicians with the management of Type 2 diabetes. What I have never been a proponent of is rigidity such that the pathway or the algorithm is the sole determinant of a patient’s care journey and treatment regimen. Every patient is different and some because of the influence of non-medical issues in their life, will require more integrated approaches in their care and treatment plans. For example, where a patient lives (environment, stairs, etc.), who the patient lives with (caregiver?), and what resources the patient has for assistance are all important factors in determining length of stay in a post-acute setting. In other words, some folks need more time, some can advance to discharge sooner.
The government/CMS has been integrating evidence-based algorithms/pathways/protocols into claims reviews and claim adjudication for several years. InterQual Criteria, a McKesson Health Solutions product has been used by MAC (Medicare Administrative Contractors), QIOs (quality improvement organizations) and Administrative Law Judges for years; two plus decades (https://www.businesswire.com/news/home/20161219005102/en/CMS-to-Continue-Use-of-InterQual-Criteria). The theory is that highly researched and fine-tuned, evidence-based data tools can provide a proper roadmap for treatment that emphasizes efficiency and reduced variability and negative outcomes. Code words for “reduce costs”, primarily. I haven’t seen a whole lot of better care, especially in terms of reductions in repeat utilization patters (re-hospitalizations, etc.) among the elderly, especially those with multiple comorbidities.
A rather good report was done on the heels of the STAT article by the Center for Medicare Advocacy. That report can be downloaded here: AI-Tools-In-Medicare What I noticed as most interesting in the report is the discussion around slippery-slopes and the gaps between what AI does/doesn’t do and what role humans and policy, play. For example, the Jimmo v. Sebellius case and its implications. Jimmo’s decision is fundamentally contrary to how AI is being used to determine continued coverage. Where AI is used to factor when care (and thus coverage) should end under Medicare, Jimmo basically says that coverage is not dependent on improvement or potential for improvement and can continue if the goal is to resist deterioration or is required by the patient’s need for skilled care.
Coverage does not depend “on the presence or absence of an individual’s
potential for improvement, but rather on the beneficiary’s need for skilled care.” The settlement
re-emphasized what was already provided for by regulation: restoration potential is not the
deciding factor in determining whether skilled care is required. Skilled nursing or therapy
services are coverable when an individualized assessment of the beneficiary’s clinical condition
indicates that the specialized judgment, knowledge, and skills of a nurse or therapist are
necessary to safely and effectively deliver services. The settlement applies in the skilled
nursing facility, home health, and outpatient physical therapy settings.
As AI use advances within reimbursed health care, the likelihood of a continued disconnect between providers and insurers and ultimately, patients will grove. We have an aging society that will continue to demand and utilized, more health care resources. The federal govt. is intent to continue to drive enrollment in Medicare Advantage plans as traditional Medicare Parts A and B continue to have funding challenges and face, default conditions as tax revenues and fees are headed to a condition of inadequacy to fund the outlays. While evidence-based medicine and the algorithms it can produce have great promise in many regards, reliance on overly broad, one size fits all approaches can cause unintended consequences in terms of overall patient care and quality. When reducing utilization and thus, saving dollars is the primary goal, a short-sighted impact is likely – the forest for the trees adage applies. A good article to wrap this post is here: https://skillednursingnews.com/2023/03/ai-use-by-medicare-advantage-blamed-for-increased-denial-of-nursing-home-services/
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.
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: https://www.cms.gov/newsroom/fact-sheets/fiscal-year-fy-2024-skilled-nursing-facility-prospective-payment-system-proposed-rule-cms-1779-p
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: https://wp.me/ptUlY-sp
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!
Hospice Proposed Rule – 2024
Just about a week ago, CMS released their proposed payment rule for hospices, effective for the Federal Fiscal Year of 2024, beginning October 1, 2023. As readers likely know, these proposed rules are more than just payment rates, incorporating certain regulatory requirements that pertain to the program and Medicare participation (for providers). The rules are subject to change and often, end-up somewhat modified. In most cases however, one can get a pretty good feel for the final “macro” events – rate and programmatic changes to getting a provider, reimbursed for the work it did.
As has been the trend with all Medicare programs, rate is noted as “gross” then subject to certain offsets. The offsets are typically, changes in the labor regions, market baskets (inflation), and the dreaded “multi-factor productivity adjustments”. Each of these elements singular or in combination can influence the final rate providers receive. Note: Initial payment rate updates are basically internally modeled CMS rates, times the market basket calculated inflation.
For Hospice, the market basket inflated rate projected for 2024 is 3.0% – increase. The net rate, after the productivity factor adjustment of .2% is applied is 2.8%. The aggregate cap (max payable to a hospice patient per year) inflates as well by 2.8%, from $32,486.92 to $33,396.55.
Now, the rub for 2024 in this proposed rule is the penalty hospices will receive for failing to meet quality reporting requirements. CMS is recommending that the penalty move from 2% to 4%. This would provide a deficient hospice (not meeting quality reporting requirements) with a rate reduction equal to -1.2% (2.8 – 4.0). CMS indicates that it will provide updates to the HQRP (quality reporting) data reporting periods along with updates on new quality measures and the HOPE patient assessment (Hospice Outcomes and Patient Evaluation) development.
Part of this proposed rule incorporates the end of the COVID -19 public health emergency, slated for May 11. As such, certain elements within the emergency are updated within the proposed rule. Telehealth is one such element impacted. In the rule, CMS is proposing to end the allowance of telehealth routine visits on May 12, 2023, but continuing the allowance of routing home care certifications via telehealth until 12/31/2024 (yes, through the end of 2024).
In an effort to address what is believed to be, on the part of CMS, increasing hospice fraud, CMS is proposing that physicians or permitted providers that can certify patients for hospice, be participating Medicare providers or have validly opted out of the program for the certification period of the patient.
The proposed rule incorporates a fair amount of statistical data on utilization and program growth. Without questions, CMS is concerned about program integrity and in particular, the growth of for-profit agencies. States that have raised suspicion with rapid growth are Texas, Arizona, California, and Nevada. California took action to restrict new agency growth, creating a moratorium. At issue? Hospices where the license location includes more than one hospice, management working at more than one agency simultaneously (a no-no) and concerns about legitimacy of certification of cases. To note however, this issue is not new within the hospice industry as even the large providers (e.g., VITAS) have come under scrutiny for inappropriate certifications, long-lengths of stay within institutional settings, etc.
The fact sheet for the proposed rule is here: https://www.cms.gov/newsroom/fact-sheets/fiscal-year-fy-2024-hospice-payment-rate-update-proposed-rule-cms-1787-p
PDPM: First Blush Analysis
One quarter (three months and change) down and PDPM appears to be mostly positive for SNFs. CMS is reporting a higher average per diem payment level than under RUGs. Despite some added coding complexity, paperwork burdens are down for providers (two MDS’ during most stays now vs. many under RUGs). Anecdotally, the industry is seeing added access for certain patient types that previously, were difficult SNF placements. The NTA category is the driver of this additional access as payments help offset, higher clinical costs associated with certain patient needs and comorbidities. Approximately 2/3rds of facilities have experienced rate increases (67%); 23% experiencing decreases. Where rate erosion has occurred is in facilities that were heavily skewed under RUGs to RU and RH level therapy payments – 75% or more utilization. Conversely and logically, the winners have been facilities with a much more balanced book of business; a normative or typical RUG distribution (historically) and a patient/referral base that included more clinical complexity. Studies that initially showed a 90% plus increase in Medicare per diem rates in October erroneously ignored the initial conversion bounce (NTA pick-up) that came into play for residents in a facility under RUGs on 9/30 that carried-over into PDPM on 10/1. Suffice to say, the playing field has leveled.
Originally, CMS estimated that PDPM would be budget-neutral with a modest or slight bias toward rates being flat or down just a touch at the facility level. The projection from CMS using 2017 data was for a 1.37% decrease. November’s data/results ran 5.7% above the CMS projection. While CMS has provided no immediate reaction to the “better than expected” trend for providers, the reality is that an adjustment of some form is likely. MedPac has called for no rate increases for SNFs in FY21. It is possible that a flat-rate scenario will emerge for at least a few years IF, rate pullbacks aren’t part of the immediate solution.
While fee-for-service rates under PDPM offer encouragement for providers, the overall occupancy trend and payer-mix is a sobering element. Since 2010, overall fee-for-service utilization is down by 17.7%. Length of stay for the same period also declined by 7.4% (covered days).
Three factors are heavily influencing the fee-for-service utilization and length of stay trends. First, Medicare Advantage is a growing payer type (covered lives). MA plans simply account for shorter stays at reduced rates where SNF care is required. Second, home health agencies have filled the bill for certain care needs, circumventing altogether, an SNF stay. It is not uncommon for a routine knee-replacement patient with stable comorbidities to transition home with a home health agency vs. to an SNF or IRF (inpatient rehab facility). Pneumonias, infections, wounds, etc. can be managed at home; preferable for the patient and often, for the payer. Third, ACOs and Bundled Payment programs (and MA plans too) work to steer patients to home or outpatient settings either avoiding the SNF entirely or shortening the inpatient stay by a day or series of days.
While the PDPM rate bump may seem good news, and it is, the euphoric feeling is temporary. Increased revenue is a function of not just rate but utilization. If utilization continues to remain on a downward path, the dip won’t be offset by rate. Similarly, utilization patterns are shifting and as of today, I see no progression or shift toward increased SNF utilization. Frankly, there remains in most markets, too many SNF beds for the functional demand (certainly, for the demand with a good payer source). Assisted Living models, those adapted to a higher-level chronic care model, continue to erode long-term SNF census. This erosion causes a two-part dilemma for SNFs. First, fewer patients/residents to occupy beds and second, the remaining patients tend to have Medicaid as a payer source. For SNFs that can’t play and survive to a large extent in the post-acute realm, alternative options are scarce for long-term resident occupancy (I-SNPs perhaps?).
One last caveat for providers at this juncture, is worth noting. PDPM rates are up and CMS has yet to begin audits. I suspect facilities will see some “shock and awe” once these audits begin. Remember, audits are done by intermediaries and contractors – not by CMS directly. I have seen some claim funk as facilities have strutted their way to some higher payments by additional speech utilization – utilization that wasn’t there under RUGs. I’m watching facilities aggressively pursue cognition via Speech Therapy engagement; seeking to score residents at certain times of the day where cognition may be lower (later day, after a nap, etc.). A note of warning here is warranted. Coding opportunities are available under PDPM and IF, such an opportunity correlates to a higher payment, that’s great PROVIDED that, the care delivered and documented, supports the coding. I am already seeing residents coded at one level of cognition, Speech being used for “cognitive training” and nursing documentation stating that the resident is, “alert and oriented x 3”. Which is it as it can’t be both? The proper approach is to evaluate the overall needs of the resident and develop a careplan with the whole team that reflects this holistic assessment. The key then going forward, is for all disciplines to appropriately document the care provided, consistent with the careplan.
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