Pastoral Care and Risk Management
In 2001, the Association for Professional Chaplains honored me with their Distinguished Service Award for my work in expanding the impact of professional chaplaincy and programs of pastoral care/ ministry in specialized healthcare settings. This was (and remains for me) a huge honor. Yet, since that time, a little over twenty years ago, programs of pastoral care, Clinical Pastoral Education, and chaplaincy are struggling for a concrete place in healthcare. Sadly, instead of watching these programs expand, I’ve seen contraction. Even more sad, I’ve watched geometric increases in management positions in risk management, etc., often while chaplaincy positions were eliminated.
Entering the “way back machine”, the core of my work which was recognized by the Association of Professional Chaplains, was that chaplaincy and programs of pastoral care make good business sense. The clear revenue picture isn’t present – I get it. The payback however, expressed as ROI via reduced risk, reduced litigation, improved employee retention, and patient satisfaction is enormous. One needs to however, understand and live, the work of chaplains in a healthcare setting to understand how the benefits are manifested.
I have literally sat in exceptionally contentious family meetings, dealing with issues of death and dying, where years of anger, hostility, sometimes abuse, come forward. The patient gets lost. Staff get frustrated and no common ground appears visible. In this midst, a professionally trained chaplain enters and when introduced, the dialogue begins to change. The issues remain but in short order, a sense of calm and a sense of order begins to emanate. The anger drops as the chaplain listens differently, redirects conversations, asks probative questions, and turns the focus to core beliefs and values. Ultimately, almost all important, life altering decisions have as their basis, a person’s core beliefs and values. Even for folk not identifiably religious or denominationally, spiritual tradition faithful, a series of beliefs and values can be found and from there, a decision framework can be built.
What we know about litigation risks, patient and staff, is that the desire to litigate is often born in a search for an answer. Something less desirable happened or questions posed, were not answered or the answers were obtuse. Healthcare of course, is not an exact science and bad things happen for no particular reason, even with adequate protections in place. For example, and I know this one well as my firm via my wife’s practice, handles complex litigation matters for defense counsel; old people fall. Save physical restraints, prohibited by law, old people will fall and sustain injury, sometimes that same leading to death or being associated with death. Falls beget lots of litigation in post-acute care yet, when the organization is heavily invested in pastoral care and the approach of the care team is “transdisciplinary” and the care coordinated, litigation risk can be minimized. I know, I’ve seen it in action.
Healthcare phraseology loves the words, multi-disciplinary or interdisciplinary. Pastoral care and care coordination done right (see yesterday’s post on care coordination here: https://wp.me/ptUlY-xO) is transdisciplinary. Transdisciplinary process and teams occur when roles are shared beyond traditional boundaries (removing the silo effect) and people collaborate among themselves beyond their specific discipline and restrictions. The patient becomes the center and his/her values and beliefs are the focal point for decisions and plans. Incorporating the patient’s key stakeholders into this process is where pastoral care has power and risks are reduced. Bad outcomes, if they occur, are no longer viewed as something to litigate as all along, the patient had clear value, the team was collaborating in the patient’s best interest, familial stakeholders were present, and the need to find flaw and extract some sort of retribution, diminished. Is it a perfect process? Of course not. Is it a process that better handles the ambiguities and the imperfections of healthcare outcomes, especially among the oldest with comorbidities and fragility? I believe it is and again, I’ve seen it work.
Among the defined dimensions of human care, spiritual care is a specific dimension. Providers need to address the physical, the emotional, the psychological, the social, and the spiritual dimension of human existence if care is to be complete. Staff have the same needs in many regards. As direct witness to suffering, grief and loss, the meaning of their work is often only reconciled spiritually. Their own feelings manifest in the milieu with the patient, the family and each other and they too, require care. An excellent White Paper, funded by Bristol-Myers Squibb covers the role of Chaplaincy in healthcare. Its link is here: https://citeseerx.ist.psu.edu/document?repid=rep1&type=pdf&doi=6a559606ee9814ea4e9b6a39f677ad9114dd7386
The role pastoral care plays in risk management is evident in literature as well but, the words risk management specifically, are not always present. Managing risk is about reducing negative outcomes or for patients and staff, dissatisfaction with what has occurred or is occurring. For example, in the journal Supportive Care in Cancer, an article titled, “Unmet spiritual needs impact emotional and spiritual well-being in advanced cancer patients”, the authors noted: When spiritual needs are not met, patients are at risk of depression and reduced sense of spiritual meaning and peace. Spiritual care should be matched to cancer patients’ needs. The risk management that is evident is the reduction of depression and an increase in a sense of peace. Reductions in frustration, sense of loss, anger, etc., all are reductions in risk and without question, lessened frustration begets better outcomes for patients and their loved ones and lower levels of litigation risk.
Major Upgrade Needed: Care Coordination
I’ve been in and around healthcare for three plus decades and a concept that has always been front of mind for me is care coordination. This is something that is so important for a patient’s well-being in terms of improved outcomes and satisfaction. It is also a real opportunity for cost improvement. Unfortunately, I’ve seen this concept advanced via discussion but rarely via systemic adoption among providers. In fact, COVID set care coordination advances backward in many ways.
Care coordination is a patient focused process that seeks to single-point, map patient desired outcomes with patient needs. It seeks to connect providers to a common focus and to reduce steps, eliminate redundancy, and restrict unnecessary services or interventions. It in theory, reverses the driver’s seat role among the patient and providers, giving the patient voice the primary role as opposed to the provider (physician, etc.).
The challenge within the U.S. system is regulation and bureaucracy stifle care coordination. While we see regulations in the post-acute arenas prompting certain levels of care coordination, the regulations further segment rather than advance creativity. At the hospital/acute arena, the driver of care tends to be procedural and payment. There simply is little room for a holistic approach and/or a team approach. The driver of the admission is often, the need for an intervention. Multiple providers are involved (physicians) and the primary care provider of the patient by origin, is rarely if at all, involved. If the patient is elderly (the most common hospitalized patient), issues of multiple comorbidities and prior and current treatments confound the hospital stay. Tests are often repeated as no contemporaneous record follows the patient and history, may be sketchy at best. The ability to deliver effective care and coordinate the next step of the journey is bollixed by the need to complete the stay in the shortest time possible.
As more care and procedures for patients sub-65 with little prior comorbidity or controlled comorbidities are pushed outpatient, the inpatient hospital stays are dominated by elderly and/or complex care arising out of the need for major surgeries or trauma. For a senior patient, care coordination can be the difference between poorer outcomes, lengthier stays, and the need for additional inpatient stays, post-acute.
According to the Agency for Healthcare Research and Quality, care coordination is: “Care coordination in the primary care practice that involves deliberately organizing patient care activities and sharing information among all of the participants concerned with a patient’s care to achieve safer and more effective care. The main goal of care coordination is to meet patients’ needs and preferences in the delivery of high-quality, high-value health care. This means that the patient’s needs and preferences are known and communicated at the right time to the right people, and that this information is used to guide the delivery of safe, appropriate, and effective care”.
Broadly, care coordination involves a specific framework that emphasizes data sharing, teamwork, and patient-focused assessments clinical and psycho-social in nature. The desired outcome is a shared plan of care that covers admission, in-stay communication and education, and transitions from acute to post-acute. In some cases, the stay maybe an inpatient post-acute stay (e.g., SNF) with the same series of events (shared plan of care, communication and education, transition planning).
COVID in particular, illustrated how fractured the health care system in the U.S. remains. Care denials and delays became the norm and patients lost connections with their physician, clinics, and other providers. Access, already a problem, caved in many cases and for some, remains a continued problem as staffing shortages already at-risk, manifested. A few weeks ago, I wrote a post about access problems for SNFs and Home Health resulting post COVID. The post is here: https://wp.me/ptUlY-vL
The U.S. healthcare system is notorious for its silos. The silo issue is what care coordination attempts to ameliorate. For a senior adult patient, this issue of silos is incredibly perilous. Without direct connection within the system, it is not uncommon for a senior to either avoid care due to the access complexity or receive care that is unnecessary or unwanted, driven entirely by systematized processes. In other words, I have seen older adults all too often, become victims of polypharmacy for example, simply by seeing multiple physicians, all of which prescribe without going through medication reconciliation BEFORE writing the script. I’ve seen repeat procedures within the same day – multiple tests that don’t get checked because the patient follows orders and doesn’t ask questions. I’ve seen X-rays taken two days prior lead to an MRI, just to be cautious.
Objectively, and I have written this before, the system needs to be redesigned to advance the goals of patient care as primary, in fact, driven by a fundamentally simple concept known as primary care. The need for a different system and one that emphasizes care coordination, is succinctly stated by the Institute of Medicine.
- Current health care systems are often disjointed, and processes vary among and between primary care sites and specialty sites.
- Patients are often unclear about why they are being referred from primary care to a specialist, how to make appointments, and what to do after seeing a specialist.
- Specialists do not consistently receive clear reasons for the referral or adequate information on tests that have already been done. Primary care physicians do not often receive information about what happened in a referral visit.
- Referral staff deal with many different processes and lost information, which means that care is less efficient.
For readers interest in care coordination and applications, tools, and additional reading, I’ve provided some resources below including a presentation I did with some colleagues at a LeadingAge national conference a few years back.
https://www.qualityforum.org/ProjectDescription.aspx?projectID=73700
https://www.ahrq.gov/ncepcr/care/coordination.html
SNFs: Five Issues and Trends to Watch…NOW!
The beautiful, fascinating thing about health policy in the U.S. is its cycle of evolution. It evolves, sometimes slowly and other times quickly but always, in a progressive (not in the political sense) direction. Providers today can be lulled to sleep (quickly) by the vacuum drone of big policy lectures, webinars, etc., easily thinking for example, PDPM is the two-ton gorilla in the room (we need to deal with). Perhaps because reimbursement and survey/certification issues are so large that they shadow, seemingly eclipse, other trends and issues. Yet, think of these other trends and issues like mosquitoes (the state “summer” bird in Wisconsin where I am from); omnipresent, annoying, nipping, but not large enough to cause much damage. Still, mosquito bites can be a real nuisance and in rare cases, rather debilitating.
None of the following trends/issues weigh-out like PDPM but each has a potential impact for the post-acute sector, namely SNFs.
- QRP and VBP: Both can, with poor performance or lackadaisical compliance, reduce Medicare reimbursement. Today, 73% of the SNFs are feeling some kind of Medicare reimbursement reduction due to VBP performance (lack thereof) in terms of readmissions. Come October 1, the penalty for non-QRP reporting at a certain threshold kicks-in with a penalty/reduction equal to 2% of Medicare payments Combine the two and the reduction can mount to 4% of Medicare payments (fee-for-service) to an SNF.
- Medicare Advantage and Readmissions: Tying one to the other for VBP is an interesting proposition. Here’s how this works. While VBP only positively or negatively impacts fee-for-service Medicare payments, the Medicare Advantage impact that the SNF market is seeing with respect to readmission rates, encompasses Medicare Advantage patients. Convoluted, I know. In short-hand: All Medicare patient days count toward the readmission (avoidable) calculation, fee-for-service and/or Advantage. Based on a recent study published in the Annals of Internal Medicine, Medicare Advantage patients have a higher readmission experience than their fee-for-service counterparts. To be clear, the readmission contrast was for patient diagnostic categories of acute myocardial infarction, congestive heart failure and pneumonia. Still, the issue here is that facilities with a high percentage of Medicare Advantage patients need to be aggressive with these payers in terms of care coordination; particularly as the same intersects with length of stay. Medicare Advantage plans often look to aggressively shorten lengths of stay, perhaps too aggressively. Similarly, their networks may not coordinate post-inpatient care via home health agencies as well as one would expect. They simply don’t have the best agencies in network or they don’t work to consistently integrate the post-acute providers in collaborative coordination efforts.
- More SNF VBP?: In a bill recently proposed in the House (bipartisan sponsors) known as the BETTER Act (Beneficiary Education Tools Tele-health Extender Reauthorization), Section 204 includes direction to the Secretary to adopt additional performance measures for reimbursement purposes beginning on or after, October 2021. The language implies the categories (“additional measures determined appropriate”) to include functional status, patient safety, care coordination and/or patient experience. As I have written before: Quality and revenue are directly connected today and more is coming. SNFs better be “on” their Quality Measures and laser-focused on their outcomes or suffer the reimbursement (reduction) consequences.
- Quality Measures: Any SNF that hasn’t looked for a while at their Five Start report and specifically, their Quality Measures section is literally, asleep at the wheel. The numbers now are broken down between long-stay and short-stay measures, with applicable detail. It isn’t the aggregate rating any more that matters. The reality is the categorical ratings matter most and for SNFs hoping to play “big” in the post-acute arena, the short-stay ratings are KEY. Today, referral networks are reshaping how and where patients go, post-hospitalization. Not a day goes by that I don’t hear from hospital and health system folks about their current reviews of SNF QMs, and in particular, the short-stay measure performance. In a recent discussion with a convener for a Bundled Payment project, she relayed how one SNF was beside itself when she said basically, “no inclusion in their preferred network”. The SNF was unaware that their short-stay QM rating was only two stars. The convener was only interested in SNFs with short-stay measures rating four and five stars.
- Phase 3 Conditions of Participation Requirements: Though not as impactful as Phase 2 requirements, there are a few here that could bite facilities surveyed post November 28 of this year. The inspection star ratings are unfrozen now so survey performance will impact star ratings again…no hiatus. The biggies? Infection control with a designated, trained preventionist is required. Remember, infection control citations tend to be widespread in scope. A compliance and ethics program is required after November 28. Staff need to be trained on the program and infection control. The facility assessment is required to tie with the facility’s QAPI program. The facility must develop a person-centered, baseline care plan within 48 hours of admission. With respect to dietary/food service, the facility must designate a director of food service who will have training/certification as a certified dietary manager, certified food service manager, a dietitian, or some other equivalent certification and training in food service management or hospitality from an accredited institution. A good resource that covers all Phase 3 requirements (as well as Phases 1 and 2) is available (download) here: 3-RoP-Checklist-overview-FINAL.101416
The Connection Between Quality and Revenue
In nearly all provider segments of health care, revenue maximization and integrity are directly tied to compliance and quality ratings. In home health, submission of quality data via the OASIS (known as HH CAHPS) is required. Agencies that fail to submit the required data experience reimbursement reductions of 2%. For SNFs, reporting of QRP data is required. Failure to meet the 80% threshold reporting requirement on quality measures equals a 2% payment reduction (beginning October of 2019). The cut-off date to meet the compliance level for the period 10/1/18 to 12/31/18 was May 15, 2019; too late for facilities that under-performed.
Many SNFs (73%) are currently experiencing Medicare reimbursement reductions due to poor quality performance with respect to 30 day re-hospitalization results. Combining this reduction with a potential QRP reduction of another 2% by October 1, certain facilities will experience a 4% reduction in Medicare payments. For an industry already strapped financially, this could be a nail in the coffin. Instead of the inevitable conclusion however, the penalties are wholly avoidable.
Yet not robust, the data reporting via CMS (using facility supplied data) is sufficient enough to trend performance weakness/strengths and thus, the revenue connections. By revenue connections, I mean the places where revenue can be made or lost. And, while the CMS data is not real time, it is close enough to give an SNF a basis by which to track and thus trend, the key data markers. For instance, facilities can research and compare their short-stay and long-stay measures in the following categories.
- Hospital admission/re-admissions
- ER/ED utilization/transfers
- Falls with injury
- Decline in functional status
- Improvement in functional status
- Pressure injuries (not pre-admission acquired)
- Spending per Medicare beneficiary
- Infections
Each of the above have unique implications on revenue and expense; singular and combined. The revenue and expense connections follow.
Today, quality data management in an SNF setting is an integral component of revenue maximization and revenue integrity. Consider the following data implications tied directly to reimbursement (increases or decreases due to data management, reporting, and interpretation).
- Value-Based Purchasing: The focus is on hospital readmissions within a thirty day window post SNF admission. The data is now publicly displayed in an SNF’s QM section on the Five Star report. Poor performance on this measure (below the standardized benchmark) creates a reimbursement penalty equal to 2%. Conversely, exceptional performance creates a bonus payment of up to 1.5%
- Quality Reporting Program: SNFs need to report via the MDS, quality measure data. Simply failing to report at the 80th percentile level (not what data, just reporting the data) equates to a 2% reimbursement reduction beginning October 2019.
- PDPM: It’s all about the assessment and coding come October 1. Facilities need to gather data, starting at the hospital end, to paint the best, clearest picture of the patient and his/her care needs. The focus is on capturing all levels of diagnoses and functional status. Miss the data, miscode the data, or inadequately apply the data and the result can be, a significant payment level gap (under-reimbursed) via a lower than actually applicable, per diem amount. Being able to analyze the clinical data and apply it to the MDS can mean tens of thousands of dollars…one way or the other.
- Referrals, Narrow Networks and Market Share: SNF revenue is totally a function of beds occupied by the best payer source. Facilities that do well know this. Being in a position to garner the most referrals connected to the best payers requires a posture of exceptional quality, demonstrated via data. The best SNFs lever their data to achieve maximum occupancy and referrals. Narrow networks in most markets today are eliminating poor performing SNFs from their preferred referral lists, some with Bundled Payment programs completely eliminating certain SNFs (poor performance) as options. As SNF performance data in terms of survey compliance, staffing levels, re-hospitalization rates, and quality measures/outcomes is public, comparisons among facilities is common. The best stand out because their measures are better than others and thus, they gain the preferred referrals and the revenue in-turn.
The simplest conclusion for an SNF today is quality and performance data equals revenue: either maximized or reduced. The connection however, is not just at the top-line. The impact flows to the bottom line as well. Consider the following elements as bottom-line impactful when it comes to quality and data.
- Insurance premiums for liability coverage are risk-rated. If the SNF quality is low, the premium is higher as is the deductible. Higher expenses here reduce margin.
- For an SNF looking to borrow money, banks and lenders today impute risk/poor quality into the lending terms and thus, into interest rates and debt to equity levels (how much can be borrowed). Higher interest expense reduces margin.
- Recruitment and retention costs for employees are directly influenced by quality performance. Study after study demonstrates that employees prefer to work for high-performing organizations and stay in jobs where the quality is valued and high. Given that labor is the greatest cost an SNF bears, being as efficient as possible in the recruitment and retention arena enhances margin.
- Survey performance directly impacts the bottom-line, especially where fines and often, resultant legal action are involved. Today, the survey format is heavily influenced by facility quality data – the QIS (Quality Indicator Survey) protocol. Poor quality and thus, poor survey performance can lead to enormous fines. An Immediate Jeopardy citation comes in minimally (fines), at $1,000 per day for each day, the jeopardy remains (from the date the jeopardy situation began). The Plaintiff’s Bar scans public survey data and recruits negatively affected residents and families as litigants in cases involving sub-standard care and potentially, claimed wrongful and preventable death. The result, for substandard performance, is hugely negative to the bottom-line and thus, margin.
The message or take-away for providers is that data matters – at the top-line and at the bottom-line. Facilities must know their quality data, have processes in-place to monitor the data, report the data and assure data integrity if they wish to maximize their revenues and ultimately, their margin. It is easy to do with proper knowledge and planning and conversely, too easy without, to experience revenue reductions due to poor performance and poor data management.
Revenue maximization and integrity is not a vacuum concept. Complexity surrounds the ultimate billing and recovery/payment for care provided to patients. Medicare today exists in a pay-for-performance environment and the performance expectations are increasing. The performance metrics are quality measures and the same uniquely, controllable at the facility level. From staffing to re-hospitalizations to falls, infections, survey results (remember, the new SNF survey is principally data driven in the QIS format) to length of stay, ICD-10 codes and patient satisfaction measures, facilities that mine their data, know how it relates to care and use a QAPI process to monitor and improve their outcome numbers, will succeed from a revenue perspective and a market share perspective.
Catch this session (and me) and other great sessions at the Revenue Integrity Symposium in October (15-16) in Orlando!
Follow-Up: Real Impacts of Poor Quality and Lax Compliance
About ten days ago, I wrote a piece regarding the negative impacts providers can expect (and receive) when quality of care and service combined with vigilance on compliance are not primary in and across their organizations. All too often, I hear companies and organizations that I work with, say they are committed to quality but by deeds, the evidence is lacking. In fact, I have never heard a failed organization say that they weren’t (always) committed to quality patient care, etc. I have also never heard a failing organization or poorly rated one say that “while we will talk about quality, that’s all we do – talk”. No organization ever says that quality is “lip service more than substance” just like no restaurant ever says their food is “marginal or poor”. Yet with health care, the peril of poor performance is all over the news and the news is quite sobering.
Below are two news stories that colleagues and readers have sent. I think each in its own right, helps frame this issue in “real terms”.
Here is the first regarding the care fall-out associated with the story/saga of HCP and HCR ManorCare. I have written on this subject extensively, with many articles available on this site.
The second story concerns SNF Value-Based Purchasing and how the industry performed in the first phase. Again, I have written articles on VBP which can be found on this site and just conducted a webinar for HCPro on this subject. The article is fascinating in two regards. First, the limited number of facilities/providers that performed above the benchmark – only 27%. Fully 73% of the SNFs performed poor enough in terms of avoidable rehospitalization rates that they are receiving reduced Medicare reimbursement rates as a penalty. For an industry hardly flush with cash, it is incongruous how any organization can perform below standard and take payment cuts. Quality, as I have written and lectured on consistently, rewards and punishes depending on how it is provided (good vs. bad). The article is below.
I hope readers enjoy both articles as they illustrate far better, the implications of poor quality, than I can via my words.
The Real Impacts of Poor Quality, Inadequate Compliance and Weak Risk Management
A number of interesting information drops occurred this past week or so reminding me that from time to time, the obvious isn’t always so obvious. The seniors housing and skilled care industry today is going through a rocky patch. A solid half of the SNF industry is severely hurting or struggling mightily due to Med Advantage, softer demand, pervasive reliance on Medicaid for census, labor shortages, rising wage pressure, tight Medicare reimbursement, new regulations, etc. (I could elaborate for a stand-alone article). While not as pervasive in its struggles as the SNF industry, Assisted Living is facing challenges due to softer census, too much capacity, rising resident acuity, labor costs and shortages and gradually increasing regulatory scrutiny. The relative strength in the overall seniors housing and post-acute sector is home health and independent housing. Notice, I did say relative as home health demand is good but regulatory over-burden is still present along with tight reimbursement. Home health is also experiencing labor challenges, the same as SNFs and ALFs. The relative strength that is found in independent housing tends to be more on the market and sub-market rent side. Many, many high-end providers are still struggling with census challenges and soft demand in certain markets.
As I have written and counseled many times to investors and clients alike, there is something to learn from the national trends but health care and seniors housing is still, a local reality. What this means is that in spite of some rocky water for the industry, there are providers that do well and are bullish about their fortune in their respective industry segments. Not to seem too convoluted, the national trends matter but as I like to think, in the context of what they truly mean. In this regard, what they truly mean is how the trends impact providers on a macro basis as well as on a micro, behavioral basis.
As I started, this past week or so included some interesting information drops. The first and not too surprising, is another alarm from a major, publicly traded provider organization that it was on the narrow ledge to failure. Five Star Senior Living provided notice that given its financial condition now and as forecasted, it would not be able to meet its continuing obligations in the form of debt or timely payment of operating expenses. When I say half the SNF industry is in battle to survive, I’m not kidding.
In unrelated drops, CNA (the major national commercial insurance provider) released its 2018 Claims Report for Long-Term Care/Senior Living. The claims in this case are liability related. Following CNA’s release, Willis Towers Perrin (major insurance brokerage and consultancy firm) provided their outlook for liability insurance noting that Long-Term Care and Seniors Housing should expect liability premium increases of 5% to 30%. Anecdotally and unrelated, we are seeing steep property/casualty increases in the industry as well due to extreme weather losses over the last twelve to eighteen months.
While not absolute but substantial in nature, there is a direct correlation between providers that are struggling and the quality of care and service they provide to their patients. The core competencies required to provide superb care are tied directly to compliance and risk management. I have never seen an organization that delivers excellent care have poor compliance trends (billing, survey, other) and weak risk management leading to high levels of worker’s comp cases, lawsuits, liability insurance claims, etc. Lately, there is the same correlation developing between quality and financial results. As more quality payer source referrals and higher reimbursement with incentive payments connect to patient care outcomes, a gap is evident between the providers that are thriving and those that are dying. That gap is the quality divide.
There is a spiral effect that is visible today in the SNF industry. This effect has been visible for some time in hospitals. It occurs as follows.
- Care delivery is inconsistent and in most cases, not great. Service is the same.
- Complaints and survey results demonstrate the same and are reflected in star ratings.
- Consumers and referral sources catch wind that care is not good.
- Staff turnover accelerates, including key personnel that take with them, a disparaging message regarding care.
- Quality mix erodes slightly. Medicaid census increases as the “next best” alternative to an empty bed.
- Financial results start eroding and losses occur or come into view. Cash margins are getting tighter.
- Expenses become an issue and cuts are necessary. The cuts are incongruous to improving care.
- With limited resources, quality suffers even more. No money is available for capital and equipment upgrades. Staff morale suffers and staffing levels are lower. Productivity wanes as morale is poor and patient care follows.
- Survey results are very poor and fines now happen. The fines are expensive, removing more resources away from patient care.
- Costs are growing rapidly related to higher insurance premiums, poor worker’s comp experience, unemployment costs, turnover, and legal costs to defend the facility. These costs are removing resources away from patient care.
- Finally, because the resources are too depleted to make the necessary changes to rebuild quality, staff levels, etc. and no lender is available to front any more capital, the enterprise collapses. The names are becoming familiar….Signature, ManorCare, Five Star, Genesis, Kindred are all SNF providers whose future is extinction or “almost”.
Arguably it takes money to have and deliver quality. Equally as arguable today is that without quality, money won’t be made sufficient enough to stave-off failure due to…poor quality. When quality isn’t the primary objective, compliance and risk management work as dead weights that the organization must carry; and the weight increases over time. Why this isn’t obvious yet in the post-acute and seniors housing industry is beyond me. An analogy that I have used time and time again is the restaurant analogy. Successful restaurants are laser-focused on their products – food and service. They know that poor marks in either category or an outbreak of food borne illness can be death to their livelihood. In a crowded market of diners, price or value ties to quality and experience across a myriad of options. What is common among the restaurants that succeed is their quality meets and exceeds, the customer’s realization of value (getting equal to or more satisfaction for the price paid). When this occurs, money flows in increments sufficient to reward investors, pay employees, invest in equipment, and to reinvest in the products and services that customers buy. Simple.
Seniors housing and post-acute care aren’t too different or disparate from the restaurant analogy. The market is crowded with options…too many actually. Yes, the customer relationships are a bit different but the mechanics and economic levers and realities identical. Providers that give great care, equal to or higher than the price points/reimbursement levels are GAINING customers via referrals. The customers they are gaining are coming with good payment sources. Money in the form of cash flow is strong enough to invest in plant, property, equipment and staff. Doing so reinforces quality and service and allows the referral cycle to optimize. As the market continues to shrink in terms of number of providers due to failure, the few that are exceptional continue to see their future and fortune improve. Again, simple.
What we know is the following and the message should be clear today for those who still can control how they approach and manage their quality and customer experience.
- Poor quality costs money disproportionately more than the dollars required to deliver “high quality”. The costs are erosive and ongoing.
- Higher insurance premiums
- Poor compliance results with fines (the federal fines today are steep and immediate for SNFs)
- Higher capital costs (yes lenders are now looking at quality measures as a measure of credit risk)
- Increased litigation risks which when realized, contribute to higher insurance premiums.
- All of the reimbursement incentives today and going forward are only available to providers that can deliver high quality, efficient patient outcomes. Value-based purchasing rewards good care (limited rehospitalizations) and punishes poor care. The impact is just being seen today and in the years forward, the impact is greater – both ways (reward and punishment). The same is true under the new and forthcoming, case-mix payment models. The high quality, adept providers will be able to provide the care rewarded highest, under these new payment models (PDPM, PDGM). Those that don’t have the clinical infrastructure will languish.
- Referrals today are more and more, skewed toward quality providers. With hospitals and narrow networks looking for select post-acute providers that won’t increase their risks in value-based purchasing or bundles/ACOs, poor providers in terms of quality are increasingly seeing diminished referrals.
- The Plaintiff’s Bar is watching the SNF and seniors housing industry carefully and with optimism. The CNA report I referenced includes these snippets.
- 22.6% of closed claims relate to pressure injuries (an almost entirely avoidable negative outcome).
- Death from or related to pressure injuries is the highest average claim by cost.
- 14 out of the 15 highest cost claims occurred in for-profit facilities.
- Assisted Living claims cost more on average than SNF claims.
- Falls continue to represent the lion share of liability claims – 40+%. The vast majority tie to SNF care.
- The frequency of claims is increasing.
- Independent Living is not immune. The report contains claim data on fall and pressure injury cases from Independent Living.
While no organization is immune from a law suit, the reality remains that organizations with exemplary quality history, high satisfaction levels, and processes that focus uniquely on the elements of great care and service (staffing levels, staff competency, good management, proper equipment, IT infrastructure, etc.) provide less of a target, if any. No matter where, negative outcomes still occur but in “quality” organizations, they are an exception. Because care is primary and service right behind, there is far less of a motivation for patients and families to litigate as by reason, the organization wasn’t negligent. Again, the connections are rather ‘simple’.
SNF QRP and What the Data Means
Yesterday, CMS began posting the first elements from the Quality Reporting Program. There are five elements that contain data, compared to the national average.
- Percent of residents developing new or worsening pressure injuries
- Percent of residents experiencing one or more falls with major injury
- Percent of residents who had a functional assessment on admission and the outcomes incorporated on the careplan and assessed at discharge
- Medicare spending per beneficiary
- Percent of successful return to home or community
A sixth measure regarding avoidable, 30 day hospital readmission was not reported as CMS is still trying to determine how to best present the data.
The above data is available for each SNF on Nursing Home Compare. To view, go to the website, choose a facility and then delve into the “Quality of Resident Care” tab. At the bottom of the screen, expand the sections on short-stay and long-stay to view all Quality Measures including this latest set.
As in most cases, data is only as valuable as it is meaningful and communicates a story. In this case, I would caution that these new measures still bear a touch of skepticism for current interpretation.
- The data in most cases, is more than nine months to a year old (observations between 2016 and 2017).
- The context of some of the measures may be incongruous to others more recently reported. For example, there is a long-stay QM on falls with a major injury where the data set/accumulation period is 7/1/17 to 6/30/18. The comparable new QRP data point on falls is illustrative of data between 1/1/17 and 12/31/17. My point is that no data for any measurement, including the new QRP measures, should be viewed separately without a common review of all QM data current (or at least as current as is available).
- The famed quote of former British Prime Minister Benjamin Disraeli (appropriated by Mark Twain and others) harkens: “There are three types of lies; lies, damn lies, and statistics”. There are 15,000 plus SNFs and as I have experienced, clear uniformity in data reporting exists in form as much as spotted Zebras. And, I am not calling any SNF a liar. Claims-based measures are a touch more reliable but remember; inaccurate claims and upcoding per CMS OIG is rampant in the industry. Garbage in, garage out?
So a question I have already been asked dozens of times today: Is this data meaningful, useful and if so, how so? Being a true Trinitarian: Yes, No and Maybe. Here’s how I see the QRP impact now.
- It will have virtually no impact or should I say, absolutely no impact, for consumers. It is simply too arcane to digest without a better context for consumers.
- The data is old so now, its reliability on a face-value basis is questionable (kindly stated). Much changes in the SNF environment, good and bad. Changes in leadership, ownership, MDS Coordinators can “funk-up” data results quickly.
- As I indicated, it must be viewed in complete context against all other QMs.
- Those facilities that are good, consistent performers will exhibit the same outcomes with their QRP results.
- Facilities that are poor performers will have their poor results magnified or validated via the QRP data.
- There will be a small set of facilities for which the QRP data is not relevant at all. They are the facilities that have undergone some sort of cataclysmic change since the data measurement started in 2016, likely in 2017. This could represent a good or negative trend.
Finally, if there is some use it will be in the form of strategy within narrow networks, ACOs, etc. The Medicare spend per beneficiary number, if it is below 1, could be of value. Again, one needs caution as that result is more than one year old. What I do know from the Managed Care/Med Advantage folks is that this data set will have ZERO implications for them. As I have written before, these plans are buyers in a universe of sellers. There are too many beds available, even among good providers, in most markets. Frankly, SNF supply exceeds demand by a TON. A Med Advantage plan has no need to pay-up for access nor be horribly concerned that a bed will not be available, even at the best 5 Star providers. Until supply ratchets down to meet actual demand, it will be a Buyer’s market for Med Advantage plans with no need to negotiate/pay more for access.
Five Post Acute Axioms (Truisms)
I read a lot – part of the job. I hear lots of conversations and participate in many in-person and online. Last week, I spent a few evenings with my rehab partner. Between he and my wife, with clients across the country, it was fascinating how the conversation regarding fortune or famine (providers) boiled down to a few simple truths. Summarizing, those that do well have accepted and work doggedly at embracing and living out these axioms. Those that are struggling, simply refuse to grasp these plain truths. Regardless of the entity (SNF, HHA, etc.), these axioms apply (truthfully, for any provider including hospitals).
To preface, I’ve slimmed-down hours upon hours of recent conversations to these five “axioms”. One could argue more apply. Between my partners, my wife (a partner) and me, we have some context here as we work with multiple entities that rank in the top 1,000 post-acute providers in the nation. For example, we all share a working relationship with the 6th ranked SNF in the nation, out of 15,636 SNFs. Unfortunately, we also have client relationships with the lowest ranked providers including one that ranks 15,609. This dichotomy (cruel as it is) gives us a unique perspective regarding truisms (embrace them and succeed, ignore them and fail).
- Quality Matters: This isn’t about hype or verbiage; it’s about results. Organizations that are succeeding are doggedly, persistently and hyper-fixated on their care outcomes. Their culture is deep in quality and they benchmark themselves and what they do, how they perform, with an effort on getting better all the time. Their outcomes demonstrate their quality.
- Staffing Matters: Providers that perform invest in and have in number, great staff perform better. They put the right people closest to the patients. They have assessed their operations and know precisely, what levels of staff by credential and education, their operations require. They train, teach and invest in their “troops”. You won’t find a great SNF that doesn’t have RNs on every shift, every day. You won’t find a great provider, HHA or SNF, etc., that doesn’t have actual employees, not contractors, taking care of patients (primarily).
- Excellence in Management and Leadership is Imperative: The best have long-term, highly qualified management and leadership at every level in the organization. They retain great talent and grow it like a prized rose-bush (ever watch rose “aficionados” you’ll get the reference). These folks aren’t the highest paid or even with the most credentials; they are excellent directors of task and people. The most credentialed (education, certifications, etc.) don’t correlate to the best manager or leader. In a nutshell: Excellence here means bright, strategic, engaged, earnest, industry and trade experts, that are quality driven.
- The Devil is in the Details: The best providers are not just current with policy issues and reimbursement trends, they are ahead and know the implications and manage to these details. For example, they know length-of-stay matters and they are working to shorten each encounter to only the resources required (days, visits, etc.). Their quality measures are excellent because they review the dozens of measurable data points to look for trends and to track outcomes. They have protocols and disease pathways in-place. They adopted antibiotic stewardship practices before the buzzword existed. They already were on pain and the management thereof, without or minimizing opioids, before alarms sounded. They had steps in place to quality review care transitions and hospitalizations. QAPI was something new but not to them. Doing things right was and still is, the driver for these excellent organizations.
- The Organization is like a Car: This is meant to be a silly reference but also serious. Driving is all about what is going on ahead of you and being anticipatory and prepared. The rearview mirror is checked but only briefly. Failure to pay attention to the road ahead and anticipate hazards, keep safe distances, etc. is how one arrives at a destination, safely and efficiently. Think of it this way: Slow is smooth, smooth is fast (an old and time-honored, Special Forces reference). Great providers embrace this philosophy – do things slowly, smoothly to be able to respond quickly when necessary. What differentiates the very best providers from the very worst is their focus on FORWARD – being very anticipatory and developing core, innate competencies that help be “smooth and fast” as adaptation is required in health care.
Food for thought. If one chooses to use the above points on a comparative basis, my guess is you will find what I know. The best embrace these axioms. The worst don’t or don’t consistently. Everyone else in the middle has a choice to make – get better or get worse. The truth about “great’ in health care is easy to understand.
SNF Fortunes, HCR/Manor Care and Salient Lessons in Health Care
Long title – actually shortened. In honesty, I clipped it back from: SNF Fortunes, HCR/Manor Care, Five Star, Value-Based Payment, Hospitals Impacted Too, Home Health and Hospice Fortunes Rise, and all Other Salient Lessons for/in Health Care Today. Suffice to say, lots going on but almost all in the category of “should have seen it coming”. For readers and followers of my site and my articles and presentations/speeches, etc., this theme of what is changing and why as well as the implications for the post-acute and general healthcare industry has been discussed in-depth. Below is a short list (not exhaustive) of other articles I have written, etc. that might provide a good preface/background for this post.
- https://rhislop3.com/2017/05/04/snf-outlook-reits-kindred-and-where-to-from-here/
- https://rhislop3.com/2017/03/28/health-systems-hospitals-and-post-acute-providers-making-integration-work/
- https://rhislop3.com/2017/02/15/impact-act-vbp-care-coordination-and-the-snf-landscape/
- https://rhislop3.wordpress.com/wp-admin/post.php?post=1323&action=edit
- https://rhislop3.com/2016/09/14/post-acute-providers-and-narrow-networks-join-form-or-wait/
- https://rhislop3.com/2015/05/12/snfs-a-new-era-in-post-acute-care-begins/
- https://rhislop3.com/2016/10/13/conference-presentation/
Maybe a better title for this post is the question (abbreviated) that I am fielding daily (sometimes thrice): “What the Heck is Going On?” The answer that I give to investors, operators, analysts, policy folks, trade association folks, industry watchers, etc. is as follows (in no particular order) HCR/Manor Care: This could just as easily be Kindred or Signature or Genesis or Skilled Healthcare Group…and may very well be in the not too distant future. It is, any group of facilities, regardless of affiliation, that have been/are reliant on a significant Medicare (fee for service) census, typified by a large Rehab RUG percentage at the Ultra High or Very High level with stable to longer lengths of stay to counterbalance a Medicaid census component that is around 50% of total occupancy. The Medicaid component of census of course, generates negative margins offset by the Medicare margins. For this group or sub-set of facilities in the SNF industry, a number of factors have piled-on, changing their fortune.
- Medicaid rates have stayed stable or shrunk or state to state conversions to Managed Medicaid have slowed payments, added bureaucracy, impacted cash flows, etc. This latter element in some states, has been cataclysmic (Kansas for example).
- Managed Medicare has (aka Medicare Advantage plans) increased in terms of market share, shrinking the fee-for-service numbers. These plans flat-out pay less and dictate which facilities patients use via network contracts. They also dictate length of stay. In some markets such as the Milwaukee (WI) metro market, almost 50% of the Medicare volume SNFs get is patients in a Medicare Advantage plan.
- Value-Based Care/Impact Act/Care Coordination has descended along with bundled payments in and across every major metropolitan market in the U.S. (location of 80 plus percent of all SNFs). This phenomenon/policy reality is dictating the referral markets, requiring hospitals to shift their volumes to SNFs that rate 4 Stars or higher. The risk of losing funds due to readmissions, etc. is too great and thus, hospitals are referring their volumes to preferred environments – those with the best ratings. The typical HCR/Manor Care facility is 3 stars or less in most markets.
- Overall, institutional use of inpatient stays is declining, particularly for post-acute stays. Non-complicated surgical procedures or straight-forward procedures (hip and knee replacements, certain cardiac procedures, other orthopedic, etc.) are being done either outpatient or with short inpatient hospital stays and then sent home – with home health or with continuing care scheduled in an outpatient setting. Medicare Advantage has driven this trend somewhat but in general, the trend is also part of an ongoing cultural and expectation shift. Patients simply prefer to be at home and the Home Health industry has upped its game accordingly.
Adding all of these factors together the picture is complete. Summed up: Too much Medicaid, an overall reduction in Medicare volume, an overall reduction in length of stay, and a shift in the referral dynamics due to market forces and policy trends that are rewarding only the facilities with high Star ratings. That is/will be the epitaph for Manor Care, Signature, etc.
Five Star/Value-Based Care Models, Etc.: While many operators and trade associations will say that the Five Star system is flawed (it is because it is government), doesn’t tell the full story, etc., it is the system that is out there. And while it is flawed in many ways, it is still uniformly objective and its measures apply uniformly to all providers in the industry (flaws and all). Today, it is being used to differentiate the players in any industry segment and in ways, many providers fail to realize. For example, consumers are becoming more savvy and consumer based web-sites are referencing the Five Star ratings as a means for comparison. Similarly, these same consumer sites are using QM (quality measure) data to illustrate decision-making options for prospective residents. Medicare Advantage plans are using the Five Star system. Hospitals and their discharge functions use them. Narrow networks of providers such as ACOs are using them during and after formation. Banks and lenders use the system today and I am now seeing insurance companies start to use the ratings as part of underwriting for risk pricing (premiums). Summed up: Ratings are the harbinger of the future (and the present to a large extent) as a direct result of pay-for-performance and an ongoing shift to payments based on episodes of care and via or connected to, value-based care models (bundled payments, etc.). Providers that are not rated 4 and 5 stars will see (or are seeing) their referrals change “negatively”.
Home Health and Hospice: The same set of policy and market dynamics that are adversely (for the most part) impacting institutional providers such as SNFs and hospitals is giving rise to the value of home health and hospice. Both are cheaper and both fit the emerging paradigm of patients wanting options and the same being “home” options. Hospice may be the most interesting player going forward. I am starting to see a gentle trend toward hospices becoming extremely creative in their approach to developing non-hospice specific, delivery alternatives. For example, disease management programs evolving within the home health realm focused on palliative models, including pain and symptom management. Shifts away for payment specific to providers ala fee-for-service will/should be a boon for hospices. The more payment systems switch to episode payments, bundled or other, the more opportunity there is for hospices to play in a broader environment, one that embraces their expertise, if they choose to become creative. Without question, the move toward less institutional care, shorter stays, etc. will give rise to the home care (HHA and hospice) and outpatient segments of the industry. As fee-for-service slowly dies and payments are less specific (post-acute) to place of care (institutional biased and located), these segments will flourish.
Hospitals Too: The shift to quality providers receiving the best payer mix and volume and payments based on episodes of care, etc. is impacting hospitals too. This recent Modern Healthcare article highlights a Dallas hospital that is closing as a result of these market and policy dynamics: http://www.modernhealthcare.com/article/20170605/NEWS/170609952?utm_source=modernhealthcare&utm_medium=email&utm_content=20170605-NEWS-170609952&utm_campaign=dose
REITs, Valuations, M&A, and the Investment World: As we have seen with HCR/Manor Care and Signature (likely others soon), REITs that hold significant numbers of these SNF assets have a problem. These companies (SNF) can no longer make their lease payments. Renegotiation is an option but in the case of Signature, the coverage levels are already at 1 (EBITDAR is 1 to the lease obligation). IF and I should say when, the cash pressure mounts just a bit more, the coverage levels will need to fall below 1. This significantly impacts the REITs earnings AND changes the valuation profile of the assets held. What is occurring is their portfolio values are being “crammed” down and the Return on Assets negatively impacted. And for the more troubling news: there is no fluid market today to offload underperforming SNF assets. Most of the Manor Care portfolio, like the Genesis and Skilled Healthcare and Kindred portfolios, is facilities that are;
- Older assets – average age of plant greater than 20 years and facilities that were built, 40 years or more ago. These assets are very institutional, large buildings, some with three and four bed wards, not enough private rooms and even when converted to all private rooms, with occupancy greater than 80 or so beds with still, very inefficient environments. Because so few of these assets have had major investments over the years and the cash flow from them is nearing negative, their value is negligible. There are not buyers for these assets or operators today that wish to take over leases within troubled buildings with high Medicaid, low and shrinking Medicare, compliance (negative) history, etc. Finally, the cost to retrofit these buildings to the new paradigm is so heavy that the Return on Investment (improved cash earnings) is negative.
- Three Star rated or less with fairly significant compliance challenges in terms of survey history. Star ratings are not easy to raise especially if the drag is due to survey/compliance history. This Star (survey) is based on a three-year history. Raising it just one Star level may take two to three survey cycles (today that is 24 to 36 months). In that time, the market has settled again and referral patterns concretized – away from the lower rated providers.
- In the case of Manor Care, too many remain or are embroiled or subject to Federal Fraud investigations. While no one building is typically (or at all) the center of the issue, the overhang of a Federal investigation based on billing or care impropriety negatively impacts all facilities in terms of reputation, position, etc.
As “deal” volumes have shrunk, valuations on SNF assets are getting funky (very technical term). The deals that are being done today are for high quality assets with good cash flow, newer buildings or even speculative deals on buildings with no cash flow (developer built) but brand-new buildings in good market locations. These deals are purchase and operations (lease to operators and/or purchased for owner operation). Cap rates on these deals are solid and range in the 10 to 12 area. Virtually all other deals for lesser assets, etc. have dried up.
Final Words/Lessons Learned (or for some, Learning the Hard Way): As I have written and said ad nausea, the fee-for-service world is ending and won’t return. Maximizing revenue via a focal opportunity to expand census by a payer source, disconnected from quality or services required, is a defunct, extinct strategy. That writing was on the wall years ago. Today is all about efficient, shorter inpatient stay, care coordination, management of outcomes and resources and quality. The only value provider assets have is if they can or are, corollary to these metrics. By this I mean, an SNF that is Five Stars with modern assets and a good location within a strong market has value as does the operator of the asset. An SNF that is Two Stars with an older building, a history of compliance problems, regardless of location, 50 percent Medicaid occupied has virtually no value today…or in the future. Providers that can network or have an integrated continuum (all of the post-acute pieces) are winning and will win, especially if the pieces are highly rated. Moreover, providers that can demonstrate high degrees of patient satisfaction, low readmission rates, great outcomes and shorter lengths of stay are and will be prized. The world today is about tangible, measurable outcomes tied to cost and quality. There is no point of return or going back. And here’s the biggest lesson: The train has already left the station so for many, getting on is nearly impossible.
IMPACT Act, VBP, Care Coordination and the SNF Landscape
Now into February, its time to take stock of the Post-Acute/SNF landscape, particularly as the same pertains to the evolutionary policy initiatives in-play and moving forward. To start, there is little evidence on the horizon of an all-out retreat on the policy changes begat by the ACA. While some framework is building to “Repeal and Replace” the ACA/Obamacare, the same will leave fundamentally intact, the changes started and wrought by Bundled Payments, Value-Based Purchasing, and the IMPACT Act. The Republican majority, a smattering of Democrats, and the incoming Secretary of HHS have signaled support for these initiatives. Should a Repeal strategy move forward any time soon, these elements, skeletal perhaps or whole in-flesh, will likely remain.
Reviewing thematically, these policy initiatives are centered on an intentional focal shift from episodic, fee-for-service payments to payments based upon performance. Performance in each element is tied to cost and quality. The objective is to create better outcomes (quality) in a more efficient manner. Because these things are government policy, they are clunky – less than simple. In some cases such as with Value Based Purchasing and readmission measures, the methodology is so cumbersome and disjointed (some diagnoses are OK, some are not) that a layman, even one well-educated, could have a hard time qualifying and quantifying an appropriate readmission (by diagnoses, by risk, etc.).
Below is a quick review of the current policy initiatives and what they mean for 2017 for SNFs.
IMPACT Act: The purpose of the Act is to create standardized reporting of quality measures and cost measures across the post-acute domain (HHAs, SNFs, LTCaH, IRF). The objectives are to reduce avoidable readmissions to acute care settings and to create standardized, comparable quality measures to identify federal policy improvements and payment consistencies. CMS of course, uses more floral language regarding the objectives and intent. Ultimately, the translation of the standardized data allows CMS to target regulatory changes and payment initiatives that reward provider performance and streamline (a bit oxymoronic for government) payment systems (rate equalization models). Below are the pertinent domains under the IMPACT Act
Quality Measures
- Skin integrity and changes in skin integrity
- Functional status, cognitive function, and changes in function and cognitive function
- Medication reconciliation
- Incidence of major falls
- Transfer of health information and care preferences when an individual transitions
Resource Use and Other Measures
- Resource use measures, including total estimated Medicare spending per beneficiary
- Discharge to community
- All-condition risk-adjusted potentially preventable hospital readmissions rates
Assessments
- Functional status
- Cognitive function and mental status
- Special services, treatments, and interventions
- Medical conditions and co-morbidities
- Impairments
- Other categories required by the Secretary
As is common in current health policy, reimbursement policy and other policy interweaves with laws such as the IMPACT Act. Value Based Purchasing and Quality Reporting for SNFs, integrates quality measure reporting and results along with readmission performance with incentives or penalties imputed via Medicare reimbursement for 2018. Beginning in October of 2016, SNFs began to submit QRP (Quality Reporting) data via the MDS. The first data collection period concluded on 12/31/16. The Quality Measures reported and applicable under the IMPACT Act (cross setting measures) are:
- Part A stays with one or more falls with major injury (fracture, joint dislocation, concussion, etc.)
- Percent of residents with new or worsened pressure injuries
- Percent of Long-Term Care Hospital patients with an Admission and Discharge Functional Assessment and a Care Plan that addresses function
The Claims Measures are:
- Discharge to community
- Potential preventable, 30 day post SNF discharge, readmission to hospital events
- SNF Medicare spending per beneficiary
The Quality Measures are the elements that impute, based on performance, a reimbursement penalty in 2018 up to 2% of Medicare payments via a reduction in the SNFs reimbursement (rate) update.
Value Based Purchasing (VBP): SNFs are a tad late to this party as other providers such as hospitals, physicians and home health agencies already have reporting and measurement elements impacting their reimbursement. Hospitals for example, have DRG specific readmission penalties (penalties applicable to common admitting diagnoses). For HHAs, a nine state demonstration project is under way linking a series of measures (process, outcomes, claims) from the OASIS with customer satisfaction from the HHCAHPS to reimbursement via an accumulation tied to a Total Performance Score. The measurement years (data gathered) beget payment changes (plus or minus) in outlying years – 2016 data nets payment adjustments in 2018. The payment graduation increases over time (2018 = 3%, 2022 = 8%).
For SNFs, the VBP measure is 30 day, all cause, unplanned readmissions to a hospital. The measurement reflects a 30 day window that begins at the point of SNF admission from a hospital. The 30 day window of measurement spans place of care meaning that the patient need not reside in the SNF for this measurement to still have an impact. For example, a patient admitted to an SNF, subsequently discharged after 14 days to a HHA and then readmitted to the hospital on day 22 (post hospital discharge) is considered a “readmission” for SNF VBP purposes. CMS has offered guidance here regarding diagnoses that are excluded from the readmission measure. Readers that wish this additional information can contact me via my email (on the Author page of this site) or via a comment to this post. In either case, please provide a valid email that I can use to forward the information.
To avoid getting too technical in this post, a quick summary of how VBP will work is below (readers with greater interest can contact me as provided above for a copy of a Client Alert our/my firm produced last fall on VBP).
- A SNFs readmission rate is calculated in separate calendar year periods – 2015 and 2017. The 30 day readmissions (rate) applicable to an SNF is subtracted from the number 1 to achieve the SNFRM (Skilled Nursing Facility Readmission Measure).
- The 2015 rate is called the Improvement Score and the 2017 rate is called the Performance Score. Both scores are compared against a benchmark for the period applicable.
- The benchmark equals 100 points. The difference between the two (Improvement and Achievement) correlate to points plotted on a range – the Achievement range and the Improvement range. The higher of the two scores is used to calculate reimbursement incentives or withholds – performance score.
- Performance scores in terms of points correlate to reimbursement incentives/ withhold. The maximum reduction or withhold is 2%. CMS has yet to identify the incentive amount but under law, the amount must be equal in total value to 50-70% of the total withheld. In effect, we envision a system that imputes a floor of minus 2% with points up to the threshold limit equaling a net of zero (plus 2%) and then climbing above the threshold to the benchmark (national SNF best readmission (average) decile). This maximum level (and above) is likely to equal 100% of the available incentive.
The 2015 data is already “baked” but 2017 is just beginning. SNFs need to be diligent on monitoring their readmissions as this window is the Improvement opportunity. Reimbursement impact isn’t until 2019.
Care Coordination: This catch-all phrase is now in “vogue” thanks to the IMPACT Act and VBP, along with the recently released, new Conditions of Participation. The implication or applicability for Care Coordination is found in the new COPs. Care Coordination elements are located in 483.21 (a new section) titled Comprehensive Resident-Centered Care Plans. Specifically, the references to Discharge Planning (Care Coordination) in this section are implementation elements for the IMPACT Act requirements. Below are the regulation elements for Care Coordination.
- Requires documentation in the care plan of the resident’s goals for admission, assessment of discharge potential and discharge plan as applicable
- Requires the resident’s discharge summary to include medication reconciliation of discharge meds to admission meds (including OTC)
- Discharge plan must incorporate a summary of arrangements for post-discharge care including medical and non-medical services plus place of residence
- All policies pertaining to admission, transfer, discharge, etc. must be uniform, regardless of payer source
- Requires the facility to provide to resident/resident’s representative, data from IMPACT Act quality measures to assist in decision-making regarding selection of post-acute providers
The above elements are in Phase 1 meaning providers should be in-compliance by now (regulation took effect 11/28/16).
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