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Senior and Post-Acute Healthcare News and Topics

SNF Final Rule 2019: Key Points and Provisions

Beginning yesterday, I’ve been following the news regarding CMS’ annual issuance of Final PPS rules for providers.  Of greatest interest is the SNF Final Rule as it includes a completely new payment system, departing from the RUGS IV, therapy-centric system currently in-place.  I’ve read through the Final Rule (all 424 mind-numbing pages) and summarized what SNFs need to know right now. I will undoubtedly expand upon the PDPM model as more is known and I’ve modeled claims via provider experience data.

RATE: The Final Rule includes a 2.4% increase to SNFs via adjustments to the RUGS IV categories/CMIs.  NOTE:  Providers that have not met their QRP (Quality Reporting) requirements/data submissions will receive a .04% increase – net of the 2% penalty.

SNF QRP: There were no changes made to the SNF QRPs in this rule.  The Claims-Based Measures of, 1) Community/Post-Acute discharge; 2) Preventable re-hospitalizations (30 days post discharge), and; 3) Spending per Medicare beneficiary (SNF) remain.  The Assessment-Based Measures of , 1) Falls with injury; 2) New or worsening pressure injuries post-admission, and; 3) Percent of patients with functional admission and discharge assessments and care plans.  CMS did indicate that it will adopt a “burden” or return on investment test for adoption or removal of future measures.

SNF VBP: The impact of Value-Based Purchasing begins Oct. 1, 2018. This incorporates an incentive payment or penalty reduction for the lone applicable quality measure: 30 day re-hospitalization rates post SNF discharge.  The Final Rule includes notably, an extraordinary circumstances exception policy plus discussion on future baseline periods for measurement, scoring changes, etc.

PDPM: This new payment system (Patient Driven Payment Model) is set to go into effect on October 1, 2019 (FY 2020). It will replace the RUGS IV system.  It is case-mix driven, utilizing the MDS assessment tool to categorize resident care needs via five case-mix categories: Physical Therapy, Occupational Therapy, Speech Therapy, Nursing, and Non-Therapy Ancillary requirements.  The base non-clinical case-mix category remains which captures the room and board and capital costs for SNFs (technical stuff here so no need for detail). As part of PDPM, only three assessments (MDS) are needed/required. The first is correlated to admission, the second to discharge and the third is related to change in condition/change in need.  Payment, regardless of service utilization, is assessment driven via each case-mix category.  Also gone from this system is any intensity measure of therapy services (no minute requirements or frequency). Added to the therapy requirements is a provision that as much as 25% (aggregate) of therapy treatment time can be group or concurrent.  Based on data provided, the unadjusted Federal Urban PDPM rate (10/1/2019) would be $410.85 (before labor/wage adjustments). The Unadjusted Rural PDPM rate would be $425.37.

As in the Proposed Rule, PDPM incorporates a variable rate concept.  The Final Rule maintained this concept unaltered.  After day 20, rates begin to decline at a pace equal to 2% every 7 days, starting at day 21.  The decline correlates to reductions in PT and OT rates (.03 per day) and a reduction in NTA (Non-Therapy Ancillary).  More below on Non-Therapy Ancillary inclusions.

Under PDPM, residents are classified/coded via ICD 10 into one (only one) of ten clinical categories corresponding to the primary reason for the inpatient stay. CMS intends to map ICD-10 codes into the clinical categories for providers.

  1. Major Joint Replacement or Spinal Surgery
  2. Cancer
  3. Non-Surgical Orthopedic/Musculoskeletal
  4. Pulmonary
  5. Orthopedic (that doesn’t fall into #1)
  6. Cardiovascular and Coagulations
  7. Acute Infections
  8. Acute Neurologic
  9. Medical Management
  10. Non-Orthopedic Surgery

To accommodate higher-cost, sicker patients in the SNF setting, PDPM implements a Non-Therapy Ancillary case-mix. The NTA categories are below.  Other than the first category of HIV/AIDS, each NTA is picked-up from a corresponding MDS item. Sorry for the length but I think the list is informative for providers.

HIV/AIDS 

Parenteral IV Feeding: Level High

Special Treatments/Programs: Intravenous Medication Post-admit

Special Treatments/Programs: Ventilator or Respirator Post-admit

Parenteral IV feeding: Level Low

Lung Transplant Status

Special Treatments/Programs: Transfusion Post-admit

Major Organ Transplant Status, Except Lung

Active Diagnoses: Multiple Sclerosis Code

Opportunistic Infections

Active Diagnoses: Asthma COPD Chronic Lung Disease Code

Bone/Joint/Muscle Infections/Necrosis – Except Aseptic Necrosis of Bone

Chronic Myeloid Leukemia

Wound Infection

Active Diagnoses: Diabetes Mellitus (DM)

Endocarditis

Immune Disorders

End-Stage Liver Disease

Other Foot Skin Problems: Diabetic Foot Ulcer

Narcolepsy and Cataplexy

Cystic Fibrosis

Special Treatments/Programs: Tracheostomy Care Post-admit

Active Diagnoses: Multi-Drug Resistant Organism (MDRO)

Special Treatments/Programs: Isolation Post-admit

Specified Hereditary Metabolic/Immune Disorders

Morbid Obesity

Special Treatments/Programs: Radiation Post-admit

Highest Stage of Unhealed Pressure Ulcer – Stage 4

Psoriatic Arthropathy and Systemic Sclerosis

Chronic Pancreatitis

Proliferative Diabetic Retinopathy and Vitreous Hemorrhage

Other Foot Skin Problems: Foot Infection Code, Other Open Lesion on Foot

Complications of Specified Implanted Device or Graft

Bladder and Bowel Appliances: Intermittent Catheterization

Inflammatory Bowel Disease

Aseptic Necrosis of Bone

Special Treatments/Programs: Suctioning Post-admit

Cardio-Respiratory Failure and Shock

Myelodysplastic Syndromes and Myelofibrosis

Systemic Lupus Erythematosus, Other Connective Tissue Disorders, and Inflammatory Spondylopathies

Diabetic Retinopathy – Except Proliferative Diabetic Retinopathy and Vitreous Hemorrhage

Nutritional Approaches While a Resident: Feeding Tube

Severe Skin Burn or Condition

Intractable Epilepsy

Active Diagnoses: Malnutrition

Disorders of Immunity – Except : RxCC97: Immune Disorders

Cirrhosis of Liver 

Bladder and Bowel Appliances: Ostomy

Respiratory Arrest

Pulmonary Fibrosis and Other Chronic Lung Disorders

Summary: Ten clinical categories essentially begin the coding process (reason for admit).  From this point, each case-mix category is developed (PT, OT, SLP, Nursing and NTA). This is done via the admission MDS.  The rate is constant for days 1-20 of the stay.  Beginning on day 21, the rate reduces equal to 2% every additional 7 days.  A change of condition MDS can occur, altering the rate variability (reduction) by change in patient need.  One more assessment (MDS) is completed to recap the stay at discharge and capture QRP data.  In the meantime, stay tuned for additional information and strategic tips on how to prepare for PDPM and what specifically, to know in interpreting the “best path/best-practices” at the facility level.

 

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August 1, 2018 Posted by | Skilled Nursing | , , , , , , , , , , , | 2 Comments

SNF PPS Final Rule 2019

Yesterday I wrote a quick post regarding the news that CMS was about to issue the SNF Final Rule for Fiscal Year 2019.  Today, the text is available.  Official publication in the Federal Register is set for August 8th.  Readers may access the text here: SNF 2019 Final Rule

I will have analysis and more information available regarding the Final Rule implications for providers later today.  NOTE: Biggest implications center on the shift away from RUGS IV to PDPM (new payment model).  That shift/change occurs 10/1/19 unless otherwise delayed.  On this site, on the Reports and Other Documents page, there is a PDPM calculation worksheet for download.  You can also access it here via this link: PDPM Calculation for SNFs

The worksheet is a good tool/review to grasp the basic mechanics of PDPM and how rates are/will be derived.

August 1, 2018 Posted by | Skilled Nursing | , , , , , , , , , , , | Leave a comment

CMS Final SNF PPS Rule for 2019: Increases plus PDPM

Late this afternoon, I caught news that CMS will release a number of Final Rules impacting post-acute providers over the next few days.  Below is a quick summary of what is known for SNFs.  I will update this information as I get access to the Final Rule.

  • PPS rates (manual) to adjust by 2.4% (increase).
  • A final version of PDPM is included in the Final Rule.  Implementation steps including dates won’t be known until the Final Rule is issued and likely, there will still be some “fill-in-the-blanks” that will be later developed and issued. The good news is that the assessment and documentation changes that were part of the PDPM proposal remain.
  • There will be some quality measure changes forthcoming as CMS’ Meaningful Measure Initiative is tasked with weighing cost vs. benefit across provider measures.  It will be some time however, before it is clear which measure changes will occur and the impact.  Important to know: Changes in meaningful measures impact QRP and ultimately, Value Based Purchasing/Pay for Performance for providers.  It is important that SNFs pay close attention to these measures as their use is beyond reporting; now reimbursement correlated and compliance correlated as well (new survey process is very similar in many ways to QIS – data driven).

More information on this topic once the Final Rule is public.

July 31, 2018 Posted by | Uncategorized | , , , , , , , , , , | Leave a comment

Interoperability and Post-Acute Implications

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

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

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

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

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

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

 

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

CMS Proposes New SNF Payment Model

Last Friday, CMS released the contents of its annual proposed rule updating the SNF PPS plus (as always), fine tuning certain related programmatic elements. Final Federal Register Publication is set for May 8.  (Anyone wishing the PDF version may download it from the Reports and Other Documents page on this site or access it here SNF Proposed Rule 4 2018 ).  The most watched information for providers is the proposed rate adjustment though lately, for the post-acute segments of health care, other elements pertaining to payment model changes have eclipsed rate “watching”.

Last year’s proposed rule for the SNF PPS contained the release of RCS-1.  After extensive commentary, CMS pulled back RCS-1, shelving it for some conceptual remake.  We now, as of Friday, know the remake – PDPM for short (Patient Driven Payment Model). As with all yearly releases similar, a comment period has begun, lasting until (if not otherwise extended) the last week of June (June 26).

PDPM as proposed, is designed to replace the current SNF payment methodology known as RUGs IV.  Unless date changes, etc. are made by CMS post commentary review, the effective date of the change (from RUGs to PDPM) is 10/1/19 (next October).   PDPM as an outgrowth of RCS-1 and received commentary, is a simplified payment model designed to be more holistic in patient assessment, capture more clinical complexity, eliminate or greatly reduce the therapy focus by eliminating the minute levels for categorization, and simplifying via reduction, the assessment process and schedule (reduced to three possible assessments/MDS tasks). Below is a summary of PDPM core attributes/features as proposed.  On this site in the Reports and Other Documents page is the PDPM Calculation Worksheet that provides additional details beyond the reference points below PDPM Calculation for SNFs.

  • PDPM uses five, case-mix adjusted components for classification and thus, payment: PT, OT, Speech, Non-Therapy Ancillary and Nursing.
  • For each of these components, there are separate groups which a resident may be assigned, based on MDS data.  For example, there are 16 PT groups, 16 OT groups, 12 Speech groups, 6 Non-Therapy Ancillary groups and 25 Nursing groups.
  • Each resident, by assessment, is classified into one of the group elements within the component categories. This means that every resident falls into a group within the five case-mix components of PT. OT, Speech, Non-Therapy Ancillary and Nursing.
  • Each separate case-mix component has its own case-mix adjusted indexes and corresponding per diem rates.
  • Three of the components, PT, OT and Non-Therapy Ancillary have variable per diem features that allow for changes in rates due to changing patient needs during the course of the stay.
  • The full per diem rate is calculated by adding the PT, OT, and Non-Therapy Ancillary rates (variable) to the non-adjusting or non-variable Nursing and Speech components.
  • Therapy utilization may include group and/or concurrent treatment sessions provided no more than 25% of the total therapy utilization (by minutes) is classified as group or concurrent.
  • PT, OT, and Speech classification by group within their respective components do not include any function of “time”.  The sole denominator of how much/little therapy a resident receives is the necessity determined by the assessment process and by the clinical judgment of the care team.  In this regard, the minimum and maximum levels are based on resident need not on a predetermined category (RUG level).
  • Diagnoses codes from the hospital on admission (via ICD-10) are important and accuracy on the initial MDS (admission) are imperative.
  • Functional measures for Therapy (PT, OT) are derived from Section GG vs. Section G as provided via RCS-1.
  • The Non-Therapy Ancillary component allows facilities to capture additional acuity elements and thus payment, for additional existing comorbidities (e.g., pressure ulcers, COPD, morbid obesity, etc. ) plus a modifier for Parenteral/IV feeding.
  • There are only three Medicare/payment assessments (MDS) required or predicated starting in October of 2019 – admission, change of condition/payment adjustment and discharge. NOTE: All other required MDS submissions for other purposes such as QRP, VBP, Quarterly, etc. remain unchanged.

For SNFs, the takeaways are pretty straight-forward. First, clinical complexity appears to be the focus of increased payment opportunity.  Second, therapies are going to change and fairly dramatic as utilization does not involved minutes and more is better, when clinically appropriate but less is always relevant (if that makes sense).  The paperwork via MDS submissions is definitely less but assessment performance in terms of accuracy and clinical judgment is increased.   MDS Coordinators, those that are exceptional clinicians and can educate and drive a team of clinicians, will be prized as never before.  RUG style categorization is over so the focus is not on maximizing certain types of care and thus payment but on being clinically savvy, delivering high quality and being efficient.  The latter is what I have been preaching now for years.  Those SNFs that have been trending in this direction, caring for clinically complex patients, not shunning the use and embrace of nursing RUGs, and being on the ball in terms of their assessments and QMs are likely to see some real benefits via the PDPM system.

More on this new payment model and strategies to move forward will be in upcoming posts.

May 1, 2018 Posted by | Policy and Politics - Federal, Skilled Nursing, Uncategorized | , , , , , , , , , , , , , | Leave a comment

CMS Issues Proposed Home Health Rule for 2015

Just ahead of the Fourth of July holiday, CMS released its proposed home health rule changes for FY 2015.  As common, the proposal includes rate changes/modifications and clarifications and adjustments to Conditions of Participation.  The proposed rule continues a path for CMS and the industry of rate reduction/rate rebasing and movement toward greater emphasis on “pay for performance” or should I say, payment reductions for inadequate quality reporting.  Following is my summary analysis of key provisions in the proposed rule.

Rate/PPS Update: The target is a payment reduction/spending reduction of .3% or $58 million.  This is exclusive of the 2% sequestration cuts.  This proposal also includes the effect of year 2 of a 4 year rebasing effort to the HH PPS schedule.  The rate mechanics flow as such: A 2.2% increase/payment update less rebasing updates to the national 60 day episode payment rate, less the national per visit rate conversion, less the non-routine supplies conversion factor.  The 2.2% increase incorporates a market basket update of 2.6% less the productivity factor of .4%, totaling an increase of 2.2% prior to the adjustments. The Non-Routine Supply reduction is 2.8% and the national 60 day per episode payment includes a planned decrease of $80.95 to $2,922.76.

Face to Face Requirement: CMS is proposing a simplification to the current requirement, eliminating the current narrative note requirement from the encounter.  Physicians and/or the discharging facility must still document in the patient’s medical record the need for home-based care (skilled).  Re-certifications will still require a face-to-face encounter.  CMS also is proposing to eliminate payment to the physician for any face-to-face encounter if the such encounter occurs when the patient is NOT eligible for coverage under the HH Medicare benefit.

Wage Index Changes: Wage indexes inflate or deflate nationalized rates based on relevant location, labor costs.  CMS is proposing to update the Home Health Wage Index based on more current data from the Office of Management and Budget (data known as the CBSA or Core Based Statistical Area).  The proposed changes would phase-in over a one-year transition period, moving on a blended basis of 50% current Wage Index data and 50% 2015 (updated) data.  What we know so far is that providers feeling the biggest shifts are those that reside in the 37 counties presently considered part of an urban area shifting to rural and the 105 counties considered rural shifting to an urban area.  For further information on this topic, contact me (via the contact page on this site) or see the actual proposed rule.

Quality Reporting: CMS is proposing to set a minimum submission level of OASIS assessments for 2015 at 70% (less than this level imputes a 2% payment reduction to the provider) and then in subsequent years, move the percentage required for submission up by 10% (e.g., 80% in 2016).

Therapy Reassement Time Frames: The proposed rule would shift the requirement for a licensed therapist to re-assess the therapy plan of care and need from “as close to day 13 and day 19 as possible” to every calendar 14 days.

Coverage for Insulin: CMS is seeking clarification and input into the current list of coverage codes for insulin care (table 28) as to their adequacy in determining the need for skilled care for insulin management in the home. The program does not cover care for individuals capable of self-administration or who have another “person” willing to provide insulin administration as needed.

Revised Definitions for Speech Language Pathologists: Provides clarification that a Speech Language Pathologist is someone who has a graduate degree (accredited) in Speech/Language Pathology, or: is licensed by his/her state and has completed 350 hours of supervised clinical time, or; has at least 9 months experience unsupervised, or; has completed a national competency exam approved by the Secretary of HHS.

Value-Based Purchasing: CMS is offering for comment, a proposed Value Based Purchasing demonstration program in up to 8 states, similar to the hospital program.  In this approach, agencies would  receive a 5% to 8% adjustment in payment for  meeting performance criteria across a designate performance period.

July 9, 2014 Posted by | Home Health | , , , , , , , | Leave a comment

Medicaid Case-Mix States: A Reader Question

Recently, a reader asked me a question regarding which states still use RUGs III for their Medicaid case-mix payments. At the time, I honestly didn’t know the answer completely. Based on a little research, I’ve outlined the RUGs status as I currently know it, across the states that utilize Medicaid case-mix. Note: Not all states use a case-mix reimbursement methodology for their Medicaid SNF payments (eighteen don’t). Any readers that know more specifics about any of the states and their status as listed below, are free to comment with additional information.

RUGs IV

  1. Washington
  2. Minnesota

Transitioning to RUGs IV (either upcoming, very recent or at this point in time)

  1. Vermont
  2. Wisconsin
  3. Illinois
  4. Maryland (last cost based state in the country, transition in July of 2014)
  5. Indiana (2015)

RUGs III (some may be in the process of developing a transition)

  1. Montana
  2. Idaho
  3. Nevada
  4. Utah
  5. Colorado
  6. North Dakota
  7. South Dakota
  8. Nebraska
  9. Kansas
  10. Texas
  11. Iowa
  12. Louisiana
  13. Mississippi
  14. Kentucky
  15. Ohio
  16. Maine
  17. New Hampshire
  18. New York
  19. Pennsylvania
  20. West Virginia
  21. Virginia
  22. North Carolina
  23. Georgia

Again, if anyone knows more specifics about any of the above mentioned states, please feel free to comment to this post.

April 7, 2014 Posted by | Skilled Nursing | , , , , , , , | Leave a comment

CMS Releases Home Health Final PPS Rules for 2014

Last Friday, CMS issued its final rules for 2014 Home Health PPS.  As is typical within these final rules, earlier proposals are clarified and additional direction for the future becomes clearer.  In this case, most people who follow the Home Health industry trends will find the continuation of prior year themes; rate reduction, episodic rebasing, additional reportable quality measures, etc.

In context, CMS and Medpac had unveiled a plan years ago to reduce the expansive growth in home health spending.  Essentially, as reported profit margins under Medicare rose for the largest agencies to the upper-teens, CMS via direction from Congress took notice.  The net result is a series of revisions to the home health PPS, primarily driven at reducing payments and reallocating resources away (re-basing) from certain highly reimbursed PPS categories.  Additionally, though not a trend unique to home health, CMS has integrated quality measures and a reporting structure as a means to encourage a pay for performance dynamic.

Below is the synopsis of the final rule.  Readers who wish to see the entire final rule can e-mail me (contact information on the Author page) or comment on this post with a contact e-mail address and will forward accordingly.

  • Overall outlays for home health will reduce year-over-year by $200 million.  To get there, CMS updates home health payments by 2.3% ($440 million), offset by a required rebasing element of $500 million further offset by an additional $120 million in HH PPS Grouper refinements.
  • CMS also plans to begin rebasing the 60 day episodic payment rate (the national per visit standard). This adjustment is mandated by the ACA and must occur over a four-year period during which, no year may adjust by more than 3.5%. The final rule calls for a 2.7% rebase (reduction) though CMS has targeted the amount to a fixed-dollar element of $80.95, rolled through 201.  Oddly enough, when we do the math the amount of $80.95 equates to 3.5% of the 2010 calendar year amount. The CY 2014 60 day episode rate is $2,860.20.
  • The net result of the adjustments above is a 1.5% decrease in Medicare payments to agencies.
  • Two new quality measures are added in the Final Rule – hospital readmissions (during the first 30 days of the home health stay) and preventable emergency room visits.
  • In terms of the HH PPS Grouper refinements, CMS is removing two categories of ICD-9-CM codes.  The first is related to “excess acuity” meaning that the patient’s condition does not warrant care in a home health environment (too acutely ill). The second elimination is regarding codes that would not change the plan of care or adjust the appropriateness of home health case.  CMS plans of converting to ICD-10 on October 1, 2014.

My sole comment on the above relates to “no news”.  CMS had foretold as much and perhaps the only take-away clarity is that more is forthcoming.  Expect no additional spending from Medicare on home health payments for the upcoming years.  Flat will be good but personally, I think 1% to !.5% reductions are the new “norm” for the next four or so years.  In a conference call back mid-summer with some investment folks and industry followers, I and my firm called this result (on the head) when many were saying flat to a positive 2%.  With the ACA impacts and the stated objectives from CMS to realign home health spending, flat was never in the cards.

November 25, 2013 Posted by | Home Health, Policy and Politics - Federal | , , , , , , | Leave a comment

Medicare Advantage Plans and HIPPS (SNF PPS) Codes

A topic that I receive queries about from time to time concerns the payment practices of Medicare Advantage (MA) plans as the same relates to traditional Med A coverage under the PPS system.  Recently (earlier this year and then again in October, CMS issued some fairly vague guidance to the MA world regarding a requirement to include the HIPPS codes (PPS codes) for any SNF stays utilized by enrollees.  The same communication was scare to SNFs.  Initially, CMS targeted implementation for July of this year, then backed-off in October to December implementation.  This week, CMS postponed this requirement until July 2014.

The take-away and caution for SNFs with MA contracts is this.  Regardless of how the contract is structured for payment between the SNF and the MA (groups, levels, per diem, etc.), the CMS requirement for MA plans to report HIPPS will alter the SNF’s billing cycle, now encompassing an assessment schedule (MDS) identical to the cycle for traditional Part A covered residents.  My firm has many SNF clients with MA patients that presently aren’t required via their contracts to follow the traditional PPS/RUG and assessment schedule for this payer type.

On the same theme, this impact is separate from how the MA plan pays the SNF.  It will clearly be less onerous for MA contracts that are paying the SNF per diem rates, though this type is less typical than the group or level payment schedule.  My advice to SNFs is as follows;

  • Open dialogue ASAP with your MA contracts, letting them know you are aware of this upcoming requirement.  You have time as the requirement is now delayed to July of next year.  December implementation was clearly unrealistic.
  • If possible, I recommend working with your MA contract to negotiate a different payment methodology.  My firm has had success in re-negotiating these agreements.  The desire methodology is per diem and going forward, per diem following the RUGs determined via the MDS.  SNFs will have to report this data to the MA plan regardless come July.  It is to the MA’s advantage and the SNF to align payment systems accordingly.
  • For SNFs with therapy contracts (outsourced), make sure your therapy provider is aware of this forthcoming change.  Such a change, especially if the SNF seeks to modify its payment agreement with the MA, will alter how therapy is billed to the SNF.  Further, your therapy contractor will need to know that MA patients must soon be included in your reporting to the MA plan (EOTs, COTs, etc.).

While we know July 2014 seems distant, don’t expect much guidance or heads-up from your MA contractors or CMS.

November 8, 2013 Posted by | Policy and Politics - Federal, Skilled Nursing | , , , , , , , | 2 Comments

Post-Acute Issues Worth Watching

In my recent work and across recent discussions, phone conferences, etc., I’ve encountered a thematic trend; a circle of issues or as in reference to geese, perhaps a gaggle. Doing a bit of research and sifting through notes written over the past few weeks, here is what is trending.

Pharmacy: In October of last year, CMS issued a proposed rule with a provision inserted which, if published within a final rule, would prohibit consulting pharmacists in SNFs to be employed by or contracted with, the dispensing pharmacy.  The theory is that when consultations are performed by pharmacists employed by or affiliated with, the dispensing pharmacy, there exists a greater potential for SNF residents to have as part of their medication regime, higher levels of anti-psychotic drugs, psychoactive drugs, and an increased level of unnecessary or unwarranted drugs.  Of concern to most of us working in the post-acute/healthcare arena is that CMS can point to no specific data or research to support this theory, save a well-known fact (historically) that seniors in SNFs use far more anti-psychotic and psychoactive medications that seniors in non-instiutional settings.  Drawing a bright-line conclusion that consulting pharmacists related to dispensing pharmacies are the cause is boneheaded to say the least. 

Despite this flawed view on the part of CMS and the comments generated during the comment period, my sources inside the D.C. beltway are saying that CMS will publish a final rule soon including a provision requiring SNFs to use independent consultant pharmacists, effective January 1, 2013.  Assuming this does occur as I am hearing, SNFs today should begin to work to develop a plan to source possible options ASAP.  The inherent difficulty of course is;

  • Insufficient supplies of pharmacists, particularly those that have current clinical consulting experience.
  • In light of the point above, pharmacists with access to clinical consultation software applications.
  • Knowledge – Geriatrics and chronic disease is a specialized field.
  • Time and efficiency – getting to know the residents and their respective drug regimens will take a non-affiliated consultant longer.
  • Cost – finding a source will not come cheap.

Some options do exist for SNFs in the right market areas.  My best advice is to approach hospital systems, work with universities with pharmacy schools, band together with other SNFs, and start now to build a consultant’s package with your current consulting pharmacist, assuming he/she is working with your dispensing pharmacy.  It is likely the dispensing pharmacy will work with its SNF clients to a great degree, trying as best possible not to lose the current dispensing business as a result of being a barrier in a transition period.

Hospice and Fraud: Most people who are close to the hospice industry either foresaw or should have seen, the current investigative and crack-down activity from OIG and CMS. The industry in terms of providers and benefit utilization, grew substantially over the past decade, despite overall health care utilization remaining on a relatively slow-growth to no-growth plane. For people like me who watch the industry closely, it was illogical to assume that a growth of terminally ill individuals suddenly sprouted and maintained the growth rate recently evident.  The same logic concerns were expressed by Medpac and the OIG with the OIG specifically warning of forthcoming investigations where the bulk of a hospice’s patient encounters arose from nursing home contracts.  Just last July, the HHS OIG indicated that it found that hundreds of hospice agencies relied on nursing homes for over two-thirds of their case load. Other reports from Medpac and the OIG found that literally half if not more of these proto-typical nursing home patients under the hospice benefit, did not meet one or more of the qualifying criteria for coverage/certification.

While the large agencies, predominantly investor-owned will be on the radar, even smaller and regional agencies are coming under scrutiny. CMS reports, and I have encountered this first-hand, that claim denials are up, particularly at re-cert periods.  Diagnoses are being scrutinized carefully, with CMS looking at re-certs and probing for some evidence of deterioration or movement toward death.  CMS knows that certain diagnoses and patient locations correlate to longer stays and as such, the audit focus is squarely on this relationship.

For hospices, the direction is clear – be wary and cautious of certain patient types and the “nursing home/assisted living” patient flow.  Nursing homes and assisted living facilities are not necessarily gold-mines of potential referrals,  In fact, the true number of organically terminal patients that would/will fit the hospice benefit criteria is not much greater from an overall ratio perspective, than the number found in the general population.  While the business relationships between a hospice and a SNF or assisted living facility appear attractive, it is the attractiveness that also makes the same perilous today unless smartly coordinated and managed.

For the past couple of years or so, the hospice growth trend in terms of referrals has been slow to flat.  Nothing regarding the recent fraud cases in the industry suggests this trend to arrest.  If anything, I expect to see the trend marginally down for a period with the industry actually contracting in terms of the number of providers.  Some will simply call it quits while others will sell or merge.  Either way, expect fewer total providers and a stable to decreasing referral pattern shift.

Qui Tam, Me Too: The latest round of major fraud actions and False Claims Act identified violations arose out of Qui Tam actions or more commonly, Whistleblower actions.  While the Federal government is clearly targeting certain post-acute segments (see OIG 2012 workplan), equally as profound an impact on the industry is the proliferation of former employees and/or contractors willing to disclose less than scrupulous provider behavior.  While this element of the law always existed (enforcement and recovery via a private citizen for a portion of the recovery settlement), it has clearly grown to a new level in recent years. The reasons?  First, down economies bring forth certain behaviors on the part of businesses pressured to generate earnings and revenue growth.  If no organic growth exists within the business sector or market(s) a business occupies, it is incumbent upon the business to find new ways to mine potential market niches.  This is very apparent within the hospice sector and in the Medicare component of the SNF industry.  The pressure to build revenues in non-growth periods inherently leads to some corner-cutting or machinations that run afoul of the False Claims Act.  Shrinking or saving to a profit while a short-run strategy, is nearly impossible to maintain over a longer term horizon without shedding fixed costs as well; very difficult.

The problem inherent with manipulation of Medicare coding, billing, referral requirements, etc., is that what seems good or plausible at a 20,000 foot level must also seem good and plausible at the ten foot level; a level where multiple people must buy-in to the same structural arguments, beliefs and incentives.  As the folks existing at the ten foot level rarely see the same level of incentive nor have perhaps, the same level of “skin” in the game, any level of apprehension arising on their part or disgruntlement can be quickly structured into a Qui Tam action. Mix equal parts news coverage with employees disgruntled by certain practices with a growing element of the bar (lawyers) seeking Qui Tam actions with a government willing to pursue these actions and you have a fairly fertile tract of ground for more Qui Tam events.

The moral of this story is that organizations need to be very vigilant concerning their compliance activity, removing any incentives tied to new revenue growth without some counter-balance of audit and scrutiny.  Too many times I have heard providers tout abnormally good results in segments or sectors that are flat to under-performing.  This is a red flag simply from the standpoint of “why you and not everyone else” logic.  If for example, an SNF has an inordinately strong, high paying rehab case-mix and therapy productivity, my counsel is always around “red flag”.  Any facility’s profile should match close to the national case-mix distribution and when it doesn’t, either abnormally low or high, its time to delve deeper.  The same is true with hospice growth, nursing home days, length of stay and percentage of continuous care designations.  Remember the age-old economic axiom – “what gets rewarded or paid for, gets done”.  Incentives perversely aligned within the boundaries of False Claims Act risk areas are ripe for peril and thus, someone within the organization or tangentially connected to this process, to cry foul with today, the expectation of a decent future pay-day.

Revenue and Earnings Cautions: In light of some of my comments regarding Qui Tam above, certain post-acute sectors are seeing revenue reductions and thus, earnings shortfalls resulting from Medicare payment reductions and fraud/probe activity.  Hospice is a segment that I predict will continue to under-perform as growth is truly non-existent and where growth was attainable via SNF relationships, clearly constrained by federal oversight. Additionally, the SNF industry will suffer as well.  Kindred’s recent earnings announcement showed this quite clearly.  Medicare cuts impacting therapy RUGs primarily will impact SNF organizations that relied on “mining” certain RUG categories for revenue and margin.  Without a more streamlined and balanced revenue model, the Medicare reduction comes faster than the trailing operational improvements possible via rebalancing the business enterprise. Kindred announced as much as it intends to shrink its facility holdings via non-lease renewals and concentrate on building a more efficient revenue/expense equation. Remember, fixed costs are the most difficult to shed and variable costs, tough to align in tight labor markets and markets where patient populations flux daily.  In short, only so much can be gained via trimming variable expenses and typically, the amounts are less than adequate to offset revenue reductions and protect margin.

Quality or Quit: The final issue and one that has been lurking in the shadows and unfortunately, ignored by too many providers, is the issue building around “quality”.  The frank reality is that from all my sources in Washington and around the various policy arenas is that quality is what matters.  There is a prevailing and growing belief that payment must be tied to quality and that government must do everything within its power, regulatory and otherwise, to push providers to deliver better outcomes, more efficiently.  This is the genesis of the ACO movement.  I have heard directly from important policy and political figures, directed at provider organizations and industry segments, produce “Quality or Quit” the business.  Providers have longed believed that quality was the furthest thing linked directly to payment, even though lip service was given to the subject.  For post-acute providers and industry segments, the recent release of proposed outcome measures by the National Quality Forum (anyone wishing a copy, e-mail me and I will forward) is a good place to start grasping what is coming, and in a big hurry.  Providers across the post-acute spectrum that are not presently, directly and seriously engaged in measuring key care outcomes, need to get up to speed quickly.  Reimbursement will be tied to quality measures and more important, providers that are not jointly participating up-stream and down-stream in quality improvement across industry segments, will not see the level or quality of referrals necessary to stay in business.

March 6, 2012 Posted by | Home Health, Hospice, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , | 3 Comments