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Senior and Post-Acute Healthcare News and Topics

Leading Age Ohio Presentation

The slides/Power Point from my presentation at the Annual Conference for Ohio Leading Age titled “QAPI in Action/Ohio” is available on this post (below) and on the Reports and Other Documents page of this site.  Please feel free to download and distribute as desired.  Good to see everyone in Ohio!

QAPI in ActionOhio

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August 29, 2014 Posted by | Policy and Politics - Federal, Skilled Nursing | , , , , , , | Leave a comment

SNFs: Five Compliance Issues to Pay Attention To

I don’t write a lot on compliance issues. Given the scope of my firm’s practice in this area, maybe I should.  My practice focus is more strategic, policy, research  and corporate development while compliance is the purview of another Sr. Partner and it is our largest practice area (by full disclosure, this practice area is headed by my wife).  In a recent meeting, we reviewed the list of common/current compliance issues, engagements, and information and speaking requests and determined that five compliance issues bear illustration via a post here.  These are not in order of importance but their appearance represents issues of current magnitude or issues where we see clients potentially putting themselves “behind the 8 ball” by not addressing the requirements properly.

  1. Emergency Disaster/Preparedness Plan: In December of last year (2013), CMS issued a proposed rule that will significantly update the requirements for providers to address all elements of Emergency Preparedness (storms, earthquakes, active shooters, infectious disease outbreaks, etc.).  While final Conditions of Participation are forthcoming as comment periods were extended, providers who have yet to start on a path toward compliance will find themselves startled by how lengthy and daunting the route toward compliance is. This process is a complete revamp of anything prior.  Attached via link is the CMS Preparedness checklist: https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertEmergPrep/Downloads/SandC_EPChecklist_Provider.pdf   Clearly, the larger the organization the greater the length of time and preparation required to complete the plan.  As of this writing, the significant majority of the providers we connect with regularly are not in compliance and worse, haven’t started a process toward compliance and/or, haven’t paid attention that this new requirement is forthcoming.  Note: This requirement applies to virtually all providers that participate in Medicare and Medicaid including hospitals, home health organizations, hospices, and yes, Assisted Living Facilities if the same receive resident care funding via Medicaid waiver programs (Home and Community Based Services).  Anyone wishing additional info. or templates on this requirement, contact me directly via a comment to this post with a valid e-mail address or via the contact info. on the Author page of this blog.
  2. CPR/Advanced Care Planning: In October of 2013, CMS issued new survey guidance to SNFs and State Survey Agencies requiring that all SNFs provide CPR to residents who wish resuscitation and that each SNF have a program and process in-place to assure adequate trained individuals, the communication and education of residents regarding the availability of CPR and the rights of residents to execute Advance Directives including no-code orders.  Effectively, CMS has said that a facility must provide residents access to CPR if desired, 24 hours per day, 365 days per year and no longer will “no code” policies suffice or “911 policies” be permitted.  This regulation went into effect 30 days after it was published though we are just beginning to see enhanced enforcement.  For SNFs there are many nuances to consider including the issues around resident transportation, activities outside of the facility, etc.  As the SNF, without a complete discharge or transfer to another provider for specific care (hospital, ER, etc.) is still responsible for the care of the resident, CPR trained individuals must be available (and the SNF must assure availability) when residents are transported to physician visits, on therapeutic (recreational) outings, etc.  Again, as with the Emergency Preparedness requirements, we continue to see a large number of SNFs unaware of this requirement and not in compliance by the documentation and trained staff requirements across the resident care continuum.  The original CMS memo on this issue is here : http://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertificationGenInfo/Downloads/Survey-and-Cert-Letter-14-01.pdf
  3. QAPI: I have written about this topic in an earlier post ( http://wp.me/ptUlY-fa ) and posted a PowerPoint from a presentation I did last fall on the Reports and Other Documents page of this site.  While CMS has not yet set a hard date for SNFs to be compliant with a QAPI program, one is forthcoming.  Like the Emergency Preparedness requirement, QAPI is not a simple “paperwork” fix.  Meeting the requirement takes time and requires commitment fromf the entire organization plus an enhanced engagement from residents (via input), families/loved ones, and community.  Additionally, with pay-for-performance forthcoming (competitive bidding/Quality Measures), facilities that are not actively engaged in a QAPI effort are today, behind and falling further behind.  Illustratively, we have clients that have had their proverbial compliance Bacon “saved” by having a fully functional QAPI program in-place (QAPI minutes, data, etc. were used to show surveyors that issues were addressed, monitored and continued to be monitored – particularly QIS friendly).  The take-away is that SNFs need to get on their QAPI journey now and build, build, build!  Again, anyone needing additional resources that aren’t on this site or direction, feel free to contact me via comment or e-mail (on Author’s page).
  4. Care Transitions: SNFs that aren’t actively monitoring any and all transitions of their residents to other providers, especially hospitals, are placing themselves at- risk; competitively and from a reimbursement perspective.  While the latter has yet to arrive, it is coming as CMS will, under ACA mandated pay-for-performance rules, begin to reduce Medicare payments for SNFs that re-hospitalize and hospitalize unnecessarily, Medicare residents.  Additionally, as bundled payment models expand and ACOs increase, SNFs that cannot control their transitions are at competitive risk; the risk that they will be precluded from various alliances, ACO models, etc. In May of 2003, CMS issued enhanced survey guidance for hospitals via updated interpretive guidelines on discharge planning, focused on re-admission reductions.  In order for SNFs to continue to garner referrals and position themselves for competitive success in the near future (and survival), a focus on care transitions is paramount.  Attached is the link to Interact – a good resource for transition monitoring and reductions tools: http://interact2.net/
  5. Medicare Therapy Billing: This issue is on the OIG’s radar, in their 2014 work plan and forward on the audit agenda for CMS.  SNFs that ignore this issue are asking for potential significant problems including False Claim Act exposure (it is illegal to bill Medicare for services not medically necessary).  SNFs need to have an audit step engaged, periodically reviewing claims against the MDS, the careplan, nursing documentation, etc.  If an SNF is using a contract therapy provider, this audit step is even more critical.  Remember, SNFs cannot cede liability for fraudulent acts committed as a Part A provider to a contractor.  Additionally, most therapy contracts we see (virtually all) limit the therapy company’s liability (indemnification) for rejected claims to the cost of the therapy billed to the SNF. In other words, while the entirety of the stay or large portions thereof are deemed non-payable to the SNF by CMS (or a CMS auditor), the SNF will recover from the therapy provider, the cost of therapy billed to the SNF for the stay – the rest of the RUG revenue is gone!  In short, SNFs cannot nor should ever allow, their therapy contractors immunity from routine outside audits of their care provision, their MDS coding, their documentation, etc.  This is a big and growing compliance risk area for SNFs and knowledge and simple systemic audit tools are a big step toward keeping this risk low.  For additional insight on this area and resources, contact me directly via e-mail or post a comment on this article.

June 19, 2014 Posted by | Skilled Nursing | , , , , , , , , , , | 2 Comments

QAPI: What’s it all About?

Last week I spoke at two joint provider-surveyor training conferences regarding QAPI or more specifically, how it really works and what it looks like in “real-time”.  QAPI is a new survey requirement for SNFs; fully expanded to Quality Assurance, Performance Improvement.  Up until recently, SNFs were required by federal conditions of participation to have a Quality Assurance function, though the same requirement was ill-defined.  The definition evolving today is QAPI which really isn’t new or all that vogue.

For SNFs that have undergone JCAHO or CARF accreditation, you know what (or should know) QAPI is.  Its core is measurement of key resident care outcomes, tracking the same, and then improving care delivery processes to improve outcomes.  Key areas in SNFs today are Falls, Psychoactive Drugs, Wounds/Pressure Sores, ADL Decline, etc.  QAPI also integrates education, staff input and resident input/satisfaction as elements to identify and measure, performance and improvement.

My first encounter with QAPI (we didn’t call it that at the time) was 20 plus years ago when I was the CEO of a large post-acute/seniors housing system and we tackled JCAHO accreditation.  Briefly, back then, we developed and instituted a process of identifying key resident clinical outcomes, service outcomes, audit steps, and then process improvement/performance improvement teams.  We developed resident/family survey processes, tracking tools, and a committee structure to review performance, identify gaps in service, and conduct education and improvement projects.  Suffice to say, accreditation went famously as did numerous re-accreditation surveys throughout my career.

Since then, I have taken this same system to clients and continue to see similar results, when the system is used appropriately (principally, good compliance and good care outcomes).  It is a bit labor intensive at first but not expensive.  Any organization can use the methodology and modify accordingly, including using it as a core tool for planning, etc.

Below is my core framework for a functional QAPI program (call it whatever you want).  Like any recipe, customization is somewhat required based on the organization’s size, resident mix, etc.

Start

  • Create a simple Mission statement and policy for your committee. This should come from the highest level of management in the organization including the Board or the Ownership elements.
  • Identify a Committee including all elements/disciplines of care – Nursing admin and staff including CNA representation, Administration, Social Work, Dietary, Activities, Therapy, Medical Care/Medical Director, others as warranted.  Add a community member of two as well – an outsider with core health care knowledge is best.
  • Select a committee chair – should be someone who can effectively run a meeting and keep people accountable.
  • Develop a record keeping and minute taking function – a committee coordinator or secretary.
  • First tasks for the Committee: Decide a meeting structure, rules, frequency, roles, etc.
  • Identify, via the Committee, key elements to start monitoring – areas of weakness, opportunities for improvement, etc.

Next

  • Conduct and audit or assessment of the organization, utilizing an outside source to do the work.  I recommend a Mock survey as the best tool to use.  Have the findings reviewed by the Committee.
  • Develop a series of indicators based on the audit findings – a dashboard with benchmarks.  If Falls are identified as a weakness, start with the raw number.  Response times same thing (call light wait times).  Use actual data and unambiguous, easy to understand outcomes that are readily measurable.  I suggest only a few at the beginning and add more as the process progresses.
  • Assign improvement tasks to groups or sub-committees to review processes and recommend changes.  Find the “core” or “root cause” for non-satisfactory results.  Set a time-table for the analysis to be completed and recommendations made to the Committee.
  • Educate the organization staff, all levels, about what the Committee learned from the audit, what it is measuring and where the process is headed.  Be as open and as candid as possible without violating any confidentiality rules. Solicit input during the education sessions.

Up and Running

  • Plan on continual repetition of the above process.  Even when indicators achieve an ideal level of performance, keep monitoring.  Always review and always audit.
  • Integrate feedback loops – resident/family satisfaction surveys.  I suggest starting with paper surveys and focus groups.  I also encourage adding other point-in-time systems such as a customer comment “hotline” and e-mail box.
  • Produce visible results that are open to all staff – show how things work and how they improved.
  • Add focused audits on unique or separate issues highlighted by feedback loops.  Families may identify certain care or service elements that no one else has.
  • Schedule continuous outside audits – annual mock surveys, complaint mock surveys, billing audits, careplan audits, etc.  Run the findings back through the Committee.

Over time, the best practices I have seen focus primarily on education and repeat “testing” mechanisms.  It is impossible for an organization to audit its self so partnerships with an outside resource are critical; a trusted resource that is skilled and efficient (readers who need referrals here, please e-mail me at the address provided on the Author page).

Below and in conclusion, is my “must have” elements to create a really functional, viable QAPI program.

  • Top management engagement including if applicable, ownership or governance.  These folks must buy-in and must be stakeholders.
  • Broad committee representation, not necessarily filled with management personnel.  Front-line individuals must be part of the committee.
  • A methodology for integrating customer feedback.
  • A defined audit partner and a system of audits.  I like to see three routine audits – billing, documentation related to billing (especially Medicare/Medicaid) and compliance.
  • A record-keeping function/communication function.
  • A process that ties in policy review and approval, research, physician performance, education at the committee level (grand rounds, journal club review, etc.).
  • A process that can evolve and tie to compensation for senior management, gain sharing programs, and other reward systems.

My Power-Point presentation from the two-day training sessions is available to readers, for download, on the Reports and Other Documents page of this site.

September 20, 2013 Posted by | Skilled Nursing | , , , , , , | 2 Comments

Assisted Living, PBS and the Lessons Learned

Since last week, I’ve fielded a number of questions/inquiries stemming from the PBS segment on Assisted Living.  Interesting, a number of the queries have come from sources tangential to the industry (policy folks, trade associations, advocacy groups, etc.).  Thematically, these sources are looking for answers as to “why” and “what can be done”.  Aside from ill-advised regulations, my perspective is the best fix is an industry driven effort.

One could over-simplify by saying, “don’t take anyone as a resident that needs more care than can be or should be provided in Assisted Living” but that’s not practical.  Residents change throughout their stay, sometimes rather abruptly.  The most complex changes, and those that represented the focus of the PBS piece, are cognitive and behavioral.  While medications exist to ameliorate or control certain behaviors, the medications have side-effects and are ideally, the final, last course of behavior management.  In all instances, behavior medication should only be given in a setting where a Registered Nurse is present and assessments and monitoring can occur (remember, only Registered Nurses can assess by license authority).

The lessons learned or should have been learned and the counsel I have provided to clients and inquisitors alike is as follows;

  1. Be clear with residents and families on admission, what kind of staff are on-site and immediately available.  This communication should frame then, the services that can and will be provided.
  2. Be clear with resident physicians on the same information.  Don’t encourage or allow physicians to become comfortable with providing orders for PRN (as needed) medications if the same medications require a professional assessment prior to administration, unless the facility has RN coverage on each shift.  Effectively, this means that PRN orders for anxiolytics, hypnotics, anti-psychotics, narcotics, etc. are inappropriate without access to an RN for an assessment.
  3. Beef-up pre-admission screening and assessments with qualified, licensed personnel to fully understand, prior to admission and re-admission, the care needs of the resident.  In many cases, I advise going to the resident’s current place of residency prior to admission.
  4. Make certain that any public (written in particular) or oral representations of Assisted Living as an alternative to nursing home care are gone and certainly, not made or implied. Assisted Living is not a substitute for institutional care if the institutional care is truly required.
  5. Create specific assessment and re-assessment periods to address care changes more frequently.  I like quarterly reviews for Memory Care residents and no less than semi-annual for Assisted Living (non-Memory Care).  I also like mandatory 30-45 days post admission, again at 90 days and then semi-annual.  I also like this schedule to repeat whenever a resident is hospitalized and returns or returns after an SNF stay.
  6. Utilize evidence-based, best practice protocols for AL and Memory Care.  AMDA is a good resource.  Provide physicians with the information as well.
  7. Develop and utilize, a solid orientation and training program for staff.  For Memory Care, there are some good resources available today from Leading Age, AHCA and ALFA.  For facilities and organizations that are heavily invested in Memory Care, I also recommend exploring and using, TCI or CPI to augment training (specialized training in dealing with aggressive and combative behaviors).
  8. Be focused on staff levels based on care needs of residents.  If increasing or integrating more professional staff is not an option, be vigilant on discharge planning or transition planning.  Bottom-line: If you can’t effectively meet resident needs 24/7, say so and start discharge planning.  Have sufficient numbers of staff trained and available, even PRN if required, to address resident care challenges.

For facilities/organizations capable of going to the “next” level, either by size or by financial status, I recommend the following as true “game-changers” for Assisted Living.

  1. Contract with a “house doctor” or Medical Director.  Build a system that integrates elements of medical oversight and engagement with your resident population and staff.
  2. Expand the care team to include social workers, in Memory Care a psychologist or psychiatrist (or RN extender), a dietician, qualified activities professionals, and rehabilitation therapists.
  3. Employ a building or program administrator with appropriate degrees and training plus a demonstrable history of working in a post-acute/long-term care environment.  Paying a bit more is worth it for someone with appropriate training and education.
  4. Become active participants in state and national trade associations.  Encourage staff to participate as well.  I also encourage networking with other professional organizations such as the Alzheimer’s Association.
  5. Hold regular family meetings or focus groups to both inform and solicit feedback.  I like at least semi-annual.
  6. Connect with a local home health provider for staff augmentation when residents need more care, temporarily or until discharge.  I also recommend connecting with a hospice agency.
  7. Contract for pharmacy consultations on all residents and if possible, have a pharmacist as a resource to Memory Care staff.

Final Word: Communicate and be clear with residents and families regarding the services that are “truly” available and where the “appropriateness” line resides for the organization/facility.  Don’t ever extend beyond what staff can provide and what the organization is capable of delivering on a consistent almost constant basis.  Recognize that resident care needs change and that limitations exist as to what ALFs can and should provide.  Be clear, be compassionate, and be honest – within the community and the organization.

August 6, 2013 Posted by | Assisted Living, Uncategorized | , , , , | 1 Comment

Emeritus/PBS and a Window on Assisted Living

PBS is planning on airing a segment tomorrow (Tuesday, July 30) on its program Frontline, highlighting Assisted Living care in the United States (titled “Life and Death in Assisted Living”).  Much of the content focuses on Emeritus and other large, for-profit operators.  A link to the PBS website follows as summary to the broadcast. http://www.pbs.org/wgbh/pages/frontline/pressroom/frontline-propublica-investigate-assisted-living-in-america/

I have seen a first-run of the program on a pre-release basis finding it fascinating, troubling, accurate and inaccurate all at the same time.  The core takeaway that I found relates to an issue I have written on, lectured on and consulted on for a number of years now.  This issue dominates the conundrum that is Assisted Living.  The issue is what I label as “appropriateness”.

Routine readers and followers of mine know that I am of the opinion that the Assisted Living industry is essentially over-developed in most major markets.  By over-developed I mean more units than true “appropriate” demand.  The PBS piece reflects this to a learned viewer.  Like Hospice, the true niche’ for Assisted Living and particularly, Memory Care in Assisted Living, is rather small if we apply the “appropriateness” criteria.  Taking the analogy a bit further (Hospice and Assisted Living), the fraud trend that has enveloped a major portion of the Hospice industry via primarily Vitas (and others) bears striking similarity between the PBS/Emeritus feature segment; a large supply of outlets, a drive for continued earnings growth, and a lack of truly appropriate patients and/or residents to fuel the occupancy/encounters required to support continued earnings growth, increasing sales, etc.

While I realize the above is a bit esoteric, the logic is economically sound at all ends. More is often not better and the principal of diminishing utility is easily visible, especially to the customer when supply exceeds demand in health care. The plain fact of the matter is that the Assisted Living market has flourished due to a drum-beat fallacy that it is a suitable replacement in many regards, for structured institutional care.  This myth is perpetuated by policy makers who crave relief within their Medicaid programs (transition nursing home residents from institutional care environments to assisted care facilities and save big money).  It is perpetuated by senior care advocates.  It is fostered by marketers for AL companies that ply families with a mixed message of phenomenal care in non-nursing home settings, etc. In the end, no matter what the rhetoric, the reality rises – appropriateness.

Before anyone assumes that I am a basher of the Assisted Living industry, think again.  I have run Assisted Living facilities, developed them and consult for Assisted Living operators, investors and developers.  Like Hospice, I think Assisted Living is phenomenal, when used and structured “appropriately” (there’s that word again). The problem is that the “appropriateness” definition has morphed and incorrectly so.

Assisted Living is a growth industry primarily because it remains essentially unregulated in terms of development and minimally regulated in terms of operating.  True some states are a bit more rigid than others but for the most part, building an Assisted Living facility is primarily a capital-raise challenge as opposed to a licensing challenge. The sole impediment, once capital is available, is community zoning ordinances in most states.  Even then, working with most communities and through zoning is not an insurmountable challenge.  With a fueled belief that an onslaught of baby-boomers will chew-up unit supplies (these boomers not yet even close to Assisted Living age profiles), units spring forth.

As units sprung forth, what many developers and operators first noticed is that the promised circle of consumers was a bit “short” for occupancy targets.  No problem.  Thus, a re-labeling or re-purposing began to take shape.  Turn the excess into Memory Care via new labeling and plow another niche’.  This re-purposing worked enough to beget a new trend; build new Memory Care Assisted Living units.  Fueled by all of the same non-realities as mentioned before and a rather simplistic and easy development environment supply of Assisted Living and Memory Care cranked-up.

By definition in most states, Assisted Living and Memory Care is a non-skilled environment.  To that point, most operators don’t consistently staff a registered nurse or other skilled personnel on a daily basis and to this point, they aren’t required to by regulation.  The typical model includes varying degrees of professional or licensed presence ad hoc as opposed to directly purposed.  In this ad hoc system, professional staff act more like consultants rather than direct caregivers.  Most states don’t require a specific license or education component for the building administrator or manager; typically a minimal training or vocational course with a test.  I have literally encountered Assisted Living managers who have a high-school education and were formally, food service personnel or in one rather larger organization, a failed insurance salesman.  His training consisted of a three-day state endorsed program, followed by a multiple choice test earning him a “license”.  He was hired despite never running a facility or working within an elder care environment. The company brought him in as a “trainee” and promoted him within three months to a manager of a 70 unit facility; Assisted and Memory Care.

Where the industry challenges lie are at the appropriateness level.  Assisted Living is appropriate, properly structured, for residents requiring minimal to no direct professional care.  It exists to provide a structured, non-institutional environment and care level that includes meals, ADL care, cueing, activities, and wellness.  The bulk of the care can and should be provided by non-licensed, non-professional individuals.  Correlating to regulatory requirements current in most states, this is the basic premise and thus, definition.  Given today that in many locations, supply of units exceeds individuals who truly require this minimal level of direct care, operators in need of occupancy and revenue, introduce higher-care level residents.  Since the regulatory environment is minimal and structurally, ill-equipped to monitor the number of Assisted Living facilities, operators could freely expand the “appropriateness” criteria to suit their business needs.  Unfortunately, as the PBS segment implies, the infrastructure for many operators (particularly staff levels, skill and training levels) didn’t adjust to the actual care needs of residents.

It is important to note, not all operators are guilty or frankly even the majority, of stretching the appropriateness definition and when more challenges arise, they have staff and programs in-place to adjust their care accordingly.  As in hospice, the typical bad-actor pattern is apparent arising from a fundamentally flawed business model, incongruous with the customer.  I like profit and so do my clients, including my non-profit clients.  The problem arises when profit becomes too short-term, short-sighted and drives all decisions separate from the underlying needs of the customer.  As in Hospice for certain organizations, the economic realities of the industry that is Assisted Living , primarily supply and demand, are working against it.  What I fear most for the industry is a regulatory back-lash that like all back-lashes regulatory, will be onerous, ill-conceived and punitive for the providers doing it “right”.

July 29, 2013 Posted by | Assisted Living, Senior Housing | , , , , , , | Leave a comment

Five Things Every Healthcare Executive Should Focus On: Updated, Revised

More than two years ago I wrote a post regarding “five” things every SNF administrator should focus on and lo and behold, a reader asked late last week if I would revisit this subject.  She (the reader) is not an SNF administrator so she asked if I could focus more globally; sort of a “best practices” approach.  While each health care industry segment has its nuances, in reviewing my travels, the challenges and successes leaders have, where failures occur, and where careers are made and sustained, I quickly found commonality in approaches and focused competencies.

Healthcare leadership is complex and very dynamic.  The alchemy is nearly one-part inquisitor, one-part psychologist, and one-part theoretician.  Those that do well and thrive, regardless of industry segments, are today “global” thinkers capable of transitioning to tactician seamlessly.  They are outcome oriented and know the pieces of the puzzle well enough to be bull**it proof.  They think and act as if synergism is their main duty and they understand (acutely) the law of unintended consequences.   Bottom line: They see cause and effect and constantly seek ways to shorten the distance between the two.

Industry issues aside regarding changing reimbursement, regulation, etc., the focal core that I find as key and thus, displayed in action by the successful executives is as follows.

  1. Quality: This is an oft used buzzword but very skilled and successful executives can articulate this for their business immediately.  In healthcare, quality is all about tangible outcomes that patients experience.  Going one step deeper, quality today is also about a measurable outcome at a particular cost.  In my economist jargon, this is about utility and warranty.  Utility is maximized in healthcare when the payer and the patient receive a desired, tangible outcome at a market or below market price.  Warranty in healthcare is about the outcome’s sustainable benefit to the patient and the payer.  Technical yes but this theory is a key focal area for healthcare executives.  Think about it tangibly in light of today’s issues.  Hospital executives need to understand this because it impacts re-hospitalizations.  The outcome must match the warranty or in other words, the care must be complete such that avoidable readmissions are low or non-existent.  For SNF executives, the same holds true but with a slight twist.  The SNF executive must deliver excellent care all while minimizing the risk areas that lead to re-hospitalizations such as infections, falls, and medication errors.  As a core competency, the best executives I work with didn’t wait for the government to tell them to reduce their falls, reduce their re-admissions, etc.  They knew these issues years ago and had already understood the relationships between quality or utility and warranty.
  2. An Outside-Inside View: Where I find failings in healthcare leadership it almost always starts with executives that believe their challenges and their industry are utterly unique.  They not only bought the healthcare executive manual but they memorized it.  They seek only peer knowledge or interaction, often I believe to validate that “they” are doing the same thing everyone else is doing.  Alas, the story of the Lemmings on their way to the sea is cogent.  What I see as key competency among the best is that they have an “outside-inside” view competency.  This outside-inside view is characterized by looking beyond their industry at analogous problems or issues and seeking solutions that are applicable.  Yes, healthcare is unique but certainly not so unique that strong parallels in marketing, customer service, project management, systems design, etc. can’t be found via other industries.  Across my career, the best ideas I’ve used came from other industries – not healthcare.  I simply altered the concept to fit the situation.  Philosophically, “the coolest things in life exist in places where their aren’t any roads”; a quote from a former camp counselor to my son.  Developing this competency is all about forcing oneself to explore well beyond the industry noise, rhetoric and ideologies.
  3. Small Spaces and Closet Organizers: As odd as this heading sounds, it makes sense to me when I see it applied.  The industry has run through its hey-day where bigger was better and, “if you build it, they will come”.  Really strong executives today have learned how to creatively adapt and re-adapt and they realize the core competency of “revenue contribution” per square foot is the new reality.  This competency area is all about revenue maximization and in a go-forward universe of revenue stagnation via reimbursement cuts and flat payments, using space efficiently and keeping the closets organized rather than overflowing with stuff not needed nor ever used, is the requirement.  Gone are the days where more is better or additional lines of inventory make sense.  This focus is truly a trend from manufacturing where realities on plant size, productive capacity and just-in-time inventory came to roost many years ago.
  4. The True Meaning of Health Policy: This is about the Paul Harvey requiem; “the rest of the story”.  Health policy impacts are point in-time in terms of regulatory implications and reimbursement implications but woven together, a trend is evident.  This competency area is about knowing what the policy trends are, where Medpac is going and why and how the enterprise led should position accordingly.  I have written repeatedly that regardless of regulation and new laws like the PPACA, core issues about entitlement financing, sustainability of funding, etc. will beget certain and permanent changes in health policy.  Ignoring these realities and the resulting policy trends is akin to committing hara-kiri with a butter  knife; no one blow is fatal but the culmination of all blows leads to a slow, painful death.  Much is trending right now regarding networks, ACOs, bundled payments, pay-for-performance, accountability, fraud, etc.  Knowing not only the implication of each but how the same is directing the future is a core executive competency.
  5. Freakonomist: OK, I’m stealing from a book title here but the point is simple: Healthcare executives need to understand at a certain level, core human behavior and economics.  I’m not talking about finance or reimbursement but behavioral economics.  One of the major problems or arguably, the single most demonic problem with healthcare today lies in the axiom that “what get’s rewarded, get’s done”.  We have lived too long on the native belief that acute, fee-for-service, episodic medicine or care is how the U.S. health system thrives.  Thus, we have overspent and over-taxed the system without regard to a potential breaking point.  We have arrived at such a point.  Today’s healthcare executive must realize this core reality and to survive and thrive, re-define his/her leadership to developing systems and services that prevent utilization or revise utilization to more of a minimalist plane.  Those that embody the philosophy that “better is better” rather than “more is better” will understand this innately.  This competency is about “solving” core problems and not chasing root, flawed ideologies of the past.  Profit and success will come via innovation and system-thinking not from finding new ways to exploit Medicare and Medicaid.

November 13, 2012 Posted by | Assisted Living, Home Health, Hospice, Senior Housing, Skilled Nursing | , , , , , , , , , | 3 Comments

Presidential Debates and the Core of Health Policy

Tonight marks Round 1 in the three-part series of presidential debates.  Why Round 1 is interesting, aside from the political points and positioning each side craves (in his favor) is that this round is supposedly focused on domestic issues. Deficits, tax policy, education and yes, health policy will no doubt work through each candidate’s comments.  As debates aren’t really a debate, moreover a synopsis of highlighted ideas and a reference guide to potential political ideology, its important for viewers at the very least, to understand the gravitas of current health policy issues facing each candidate.  Neither will delve into detail tonight but both will crack the door and offer a peek into their “politically” framed policy agenda.  Some of this will be a re-hash of what we already know and some, a nuance yet divulged.

What strikes me as a tad odd is that little true substance exists for either candidate when it comes to health policy and the major issues facing the economy and the country going forward.  Perhaps the Obama camp believes it has laid out its cards via the ACA. Perhaps the Romney camp believes that its cautious embrace of the Ryan plan is sufficient to paint a contrast and thus, a different direction.   Substance from both camps is sorely lacking.  With the issues today, the “devil is truly in the details”.

The plain facts remain unchanged and unaddressed by either party and thus, by either candidate.  The entitlements in this country, especially Medicare and Medicaid are unsustainable, underfunded and consuming the entirety of the income tax revenue flowing into the government’s coffers.  The net result is that this country prints debt obligations and relies on the power of a central banking system and a moribund world economy to keep debt costs low (via interest rates) and thus, repayments viable – for now.  Repetitively, we print new debt to fund the payments on existing debt plus our new debt.  We have become so used to looking forward with unreasonable projections of a recovery period and phantom GDP growth that somehow, we believe the political pundits and the rhetoric that the hemmorhagic problems within our entitlements can be solved with band-aid solutions.  We willingly deny the world realities confronting us in Greece, Ireland, Spain, France, and Italy instead, buying a failed story of omnipotence and a belief that the European issues are somehow “different”.  Wrong.

The frank reality of today is that the health care system in the U.S. has become a governmental entity unto itself and thus, a whole new economy.  Unfortunately, the incentives are poorly and incorrectly aligned and the revenues uncorrelated to actual population needs for health and services required.  Neither candidate has come close to addressing this reality.  The Obama plan does nothing to “reform” health care spending or to change the relationship between spending and care delivered.  If anything, it creates a new entitlement so ill-conceived in funding that it requires the country to print even more debt to fund.  While it does attempt to solve an issue of assuring some form of health insurance for everyone it does so at a cost that isn’t covered by any credible source of revenue, sans debt.  At the core, the system remains as flawed as it always was with new layers of red tape and bureaucracy that only increase the gap between care services, cost and ability to pay.

The Romney approach is as flawed.  It too places “ear-rings on the pig”, focusing on expenditure controls as a solution.  Like the Obama approach, it falls short of addressing what is truly wrong with the system and relies solely on a less government is better approach.  Kudos to Romney for at least recognizing that some path of privatization provides more hope for a sensible outcome than interventionist government.  Negative points however, for not recognizing that some interventionism is required to realign the incentives and to change the policy framework.  Without some direct intervention, merely shifting the problems horizontally won’t solve anything.

What we need and should hear is painful and yet simple.  The painful part is that revenues must go up and that means tax collection.  It also means that we must address the growing percentage of people in this country whose “intake” from the government is greater than their “input”.  This gap creates apathy and disengagement and it is demonic at its core.  As we have seen in Europe, a diet rich in entitlements leads to bloat and too much bloat creates stagnation and ultimately, civil and economic discord.  Apply austerity isn’t the answer but it is the only thing governments can do.  Common sense is the answer but to get there, we need to be clear where the issues lie and how the fixes will create winners and losers.

In the U.S., the path toward entitlement reform starts with identifying who truly needs ‘what” and then, developing a system for distribution of the “what” and proper, simple payment systems that fairly compensate those that provide the “what”.  Gone must be all current definitions born out of times in history that no longer are relevant.  Eligibility ideology must be the first thing to change and quickly.  Next, we need to get “real” about the “what” and who pays.  Bioethicists such as Daniel Callahan and Arthur Caplan and economists and researchers such as Uwe Reinhardt and the folks at Dartmouth Atlas have done significant work in this arena.  We need to embrace quickly, their work and that of others who have researched how health care is used and by whom.  Moreover, we need to look closely at the relationships between utilization and incentives or payments.  Dr. Gawande’s piece published in the Atlantic points this out famously.

Being in and around health care now for thirty years and an economist by training, it is apparent that so much can be done quickly and efficiently, albeit not without some pain and definitive leadership from Washington.  We must be willing to identify the elephant in the room and to start to clean-up after it.  Our delivery and our focus is not only wrong but it is wrong-headed.  Simple economics tell us that “what gets paid for or rewarded gets done” and thus, we spend disproportionate sums on acute, episodic care at the expense of where the real issues lie.  We are an aging society and one fraught with chronic disease.  Our systems and our payments fail to address these key realities.  While our population ages, our supply of physicians trained to treat elderly patients is stagnant and in real numbers, dwindling.  Primary care is needed in huge amounts yet no incentives exist for the system at present to train sufficient numbers and to pay adequately.  The process of medical education and payment is horrendously skewed.  I have heard from all too many physicians in training that the debt to earn ratio is too prohibitive to enter primary care and certainly, geriatric care.

We need to begin to pay well and directly, for prevention and treatment of chronic conditions and proportionately and over-time, less well for acute episodic care that on its face, against the lower cost of prevention, is a negative return.  I am not suggesting eliminating but reducing the incentive to accurate and tested correlations of necessity and payment.  I doubt that one or perhaps even a dozen less heart centers in major metropolitan areas would change the level of care and in fact, may improve it as the efficiency created by focused and known volumes at centers of excellence will produce better returns and likely better outcomes.  Certainly, the opportunity cost of prevention applied and early treatment produces a far greater return (for less resources) than care that is delivered in “earnest” and in “crisis”.  This stuff we know.

My top ten, not that either party is listening, quick initiatives that make simple policy and economic sense are hewn through observation and in the trenches work.  For what they are worth and happy debate watching!

  1. Make the purchase and annual premium payments for the purchase of Long-Term Care insurance fully deductible – not subject to itemization.
  2. Until we can reform Medicare, up the eligibility age for fee-for-service Medicare to 68 and require anyone younger, non-disabled, to enroll in a Medicare Advantage Plan. Pay the plans at 92% of the fee for service rate and allow them to keep any excess profit – stop quibbling here.
  3. Subsidize physician education through grants for any primary care physician at the rate of 50% of the cost of their medical education.  For geriatricians, the subsidy should run to 75%.
  4. Re-balance physician payments to more adequately pay for Medicare patients at real rates and get rid of the insane “meaningful measures” garbage.  Fix the sustainable growth formula by abandoning the whole thing and going to a cost plus formula that is simple and correlated to real practice data.
  5. Reform at a national level, the medical liability system in the U.S.  Create hard caps and a sole administrative system (like mediation or arbitration) for adjudication.
  6. Reinvigorate and complete the core goal of HIPAA – a single, standard claim form.  No other form for any private or governmental claim can be used in the U.S.
  7. Change Medicaid funding and eligibility to a per person funding status with a simple, core benefit structure.  Allow states flexibility to expand coverage but only if the state funds the expansion.  The core funding status should be 50/50.  Allow high-risk Medicaid patients to enter a national health risk pool that requires third-party management of their care and directs their care to high quality, low-cost centers.
  8. Publicly post cost and quality data that is meaningful and consumer oriented.
  9. Target with national education and information, the top five chronic diseases.  Employ private, third-party agents skilled in managing chronic illness to target this issue with outcome targeted payments – some up-front, some from savings.
  10. Re-base all provider payments with an up to date, modernized payment system that is outcome driven.  Reform regulatory oversight for providers to a completely privatized accreditation system that is focused entirely on patient care outcomes versus insane regulatory standards.  If providers can measure-up and reduce costs but still provide meaningful, standard outcomes, all the better.  The hospital systems, the SNF system, the home care system, the hospice system under Medicare is so convoluted and disconnected from patient outcomes and care requirements that it produces fraud, incents poor behavior and disproportionately rewards unnecessary care.

October 3, 2012 Posted by | Policy and Politics - Federal | , , , , , , , , | Leave a comment

SNFs: Its All About Quality Now

Across a recent engagement that spanned a large system, wide geography and about a year’s worth of work, I had the chance to reflect numerous times on “what” has changed in the post-acute arena, particularly applicable to SNFs, over my 30 years.  Below I’ve organized my thoughts in “eras” or periods of time.

  • Cost Based/The Good Old Days: A fond period of time pre-OBRA 1987 where reimbursement was cost-based (the more you spent on bricks and mortar, the higher you could drive your Med A rate), regulations at the Federal level were simple and cost-reports mattered, financially.
  • PPS: The Early Years: No more cost-based payments and worse, a whole slew of new federal regulations involving nurse aide training, assessments, care plans, resident rights, etc.  Thus began the dawn of “subacute” and the end of distinct part units for reimbursement purposes.  This period also included the passage of the Medicare Catastrophic Coverage Act including repeal of the three-day qualifying hospital stay, expanded benefit levels and the introduction of a new outpatient prescription drug benefit.  A year later, this Act was repealed.
  • PPS: Generation II: I think of this period as a time when health care reform discussions became a political priority and awareness of the expanding entitlement spending under Medicare and Medicaid heightened.  I also think of this time as the period of system growth and the start of a formation of a true post-acute awareness encompassing LTAcHs, Home Health and Hospice.  While SNFs stayed the course and the industry contracted in terms of bed numbers, health systems began to emerge in earnest with hospitals morphing into mult-tiered provider organizations, incorporating as many provider components as possible.  In this period, bigger was better. At the close of this period, the Medicare Prescription Drug Act arrived.
  • PPS: Here We Grow: After sorting and sifting and balancing and restructuring, Medicare as a payment source is viewed by the post-acute industry as a really, really good payer and in all reality, one that should be mined.  SNFs focused on building therapy services and targeting certain patient types.  Home Health began doing the same.  SNF prices per bed paid during transactions were strong and growing, valuations the same and providers were investing in plant and equipment designed to take advantage of opportunities to attract Medicare patients.  Home Health agencies increased in number and the profit margins for home health driven by a high Medicare payer census pushed into the 20% area.  Hospice also grew in numbers and profitability, targeting terminally-ill Medicare beneficiaries, many residing in nursing facilities.  Hospitals came to the full realization that post-acute was fraught with regulatory and reimbursement land mines and this period began the earnest push among hospital systems to divest post-acute holdings.
  • Health Care Reform: A unique combination of principally two events created the period current: The Passage fo the Affordable Care Act (health care reform) and the crash of the economy.  The economic crash brough forth with vigor, a policy debate and focus on U.S. debt levels and moreover, the solvency of entitlement programs such as Medicare, Medicaid and Social Security.  Into this mix occurred the creation and passage of the Affordable Care Act, federal health policy designed to rein in health care spending, improve access, drive quality and expand coverages.  Arguably, the legislation once vetted and analyzed, is less of a solution than perhaps, an expansion of entitlement spending. Time will tell as to whether the Act even remains intact and the outcomes fully known (success, failure or some levels of both).

Coming forward and today arriving in the early phase of the Reform period, clarity is possible in terms of devising strategy and coming to grip with new paradigms.  For SNFs (and frankly, all other post-acute providers), and I’ve touched on this before, this period is principally about quality.  Reimbursement in terms of rate and harvesting as a strategy is secondary or tertiary in terms of success and growth.  The primary focal point must be on quality and quality that is tied to current policy initiatives, including those embedded with the Affordable Care Act (regardless of its future).  Whereas in the period before, reimbursement was the principle driver for SNF care provision and strategy (e.g., therapies), today reimbursement is being driven and tied to clinical outcomes and clinical competency, inclusive and exclusive of therapy services.  Briefly, like it or not, the following is the “new” and further developing paradigm.

  • SNFs will still see strong margins on Medicare cases but not as strong as before.  The bigger issue here is that the best payer mix will only be accessible by providers that can deliver a high standard of clinical competence and resulting, care outcomes.
  • The point above is directly tied to the focus on unnecessary hospitalizations, avoidable re-admissions and provisions within the Accountable Care Act that roll-out in October (reimbursement penalties to hospitals for re-admits across three common DRGs of pneumonia, heart failure and MI).  An SNF that cannot deliver high quality, comprehensive care and eliminate or significantly contain re-hospitalizations or frankly, any avoidable hospitalization, will witness a swift and painful reduction in Medicare referrals and solid case-mix (those patients that come with higher RUG scores and payments).
  • The issue around re-hospitalizations encompass a plethora of issues spanning the total perspective of hospitalization (for specific DRGs) through discharge to the SNF, into admission at the SNF, post-discharge from the SNF if the discharge is within 30 days of the original hospital discharge.  Briefly;
    • The SNF must be prepared to coordinate the discharge from the hospital, prior to the actual discharge. It is critical that the SNF be a partner to the hospital, on-site and engaged in the process.  The SNF must “know” what it is getting into with the discharged patient and be prepared to deliver the care that the patient requires – anything less opens up a risk area for potential re-admission risk if things go “south” within 30 days.
    • It is imperative that the SNF adopt a “care completion” approach rather than a discharge when Medicare coverage ends approach. Regardless of payment source on admission and then throughout the stay, the SNF must focus its work entirely on completing the required care of the patient, nothing less.  An SNF that discharges a patient too quickly runs the risk of the patient going home too soon, ill-prepared to do so, and then returning to the hospital.  If such a return occurs within 30 days of the original hospitalization, regardless of location of the patient (SNF, home, other), and results in the patient being re-admitted the subsequent hospital stay is considered a re-admission and penalties apply.
    • Discharge coordination on behalf of the SNF to other providers is imperative if the SNF wishes to avoid being embroilled in a hospital re-admission issue.  If care is being ceded to another provider such as a home health agency or hospice, the SNF needs to be as certain as possible that the other provider is capable of delivering the requisite care, including staffing.  Knowing that some patients will request discharge prior to care completion at the SNF, the discharge risk belongs to the SNF and thus, it is incumbent on the SNF to coordinate the discharge with other providers as “completely” as possible.
  • The biggest risk areas that I commonly see for SNFs in terms of inappropriate referrals of patients back to a hospital are;
    • Falls – failure to have an integrated falls prevention program.  Falls with injury, particularly fractures are the number one cause of discharge from an SNF to a hospital.
    • Medications – failure to completely manage pain or other symptoms through effective pharmacotherapy is the number two reason for discharge from an SNF to a hospital.
    • Inadequate staff levels across weekends and later shifts – insufficient staff numbers or inadequate clinical competency on weekends and nights particularly leads to hospital discharges.  Remember, residents are within the facility twenty-four hours per day, seven days per week.  Staffing levels in terms of numbers and competency should match resident acuity and care needs, regardless of the shift or day.
    • Lack of diagnostic and procedural tools in the facility – SNFs need to have adequate tools and diagnostics available in-house to avoid a discharge to the hospital for issues that can and should be triaged and managed at the SNF.

My five key recommendations for an SNF to get up-to-speed now on where quality levels need to be, are;

  • Get in the hospital with a qualified clinician, preferably an RN and work directly with hospital discharge staff, medical staff, and the hospital care leadership.  Develop a true partnership.
  • Analyze pre-admission, drugs, care needs, resident discharge goals, etc.  Know the risks pre-admission.
  • Develop care pathways and protocols that are evidenced based for a whole host of key “discharge” risk areas such as infections, pain, falls, pneumonia, etc.  The pathways/protocols should encompass diagnostics, drugs, other proven interventions.
  • QA now every hospitalization to know where your current risk areas are.  Regardless of the original hospital DRG, SNFs should be all over their discharges to a hospital, even if the same doesn’t result in an inpatient admission.  Understand why patients get discharged and then, address the reasons with action plans that provide interception and keep the patient within the SNF to the greatest extent clinically possible.
  • Develop a care-completion “only” practice for discharge.  Likewise, circle your referral partners such as home health and hospice to assure that these providers are fully capable and committed to mitigating hospital transfers. Don’t assume that these organizations understand the gravity of an inappropriate hospital transfer at the same level.

The final take-away is while the focus today shifts to a monitoring of certain hospitalizations by DRG (heart failure, MI, etc.) and their subsequent discharge/re-admission patterns, SNFs need to be prepared as if every hospital discharge fits into one of the identified DRGs.  The future for SNFs that want to continue to garner high quality referrals, particularly those with Medicare as a payer source, requires the SNF to have the clinical competence to manage these referrals and avoid unnecessary hospitalizations and re-admissions; regardless of the admitting DRG.

May 28, 2012 Posted by | Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , | 1 Comment

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

Accountable Care Organizations: A Post-Acute Perspective

Suffice to say, I am behind in getting this post “out”.  My best intentions of a month or so ago were quickly dashed by other more pressing commitments. Nonetheless, I did read the proposed regulations as produced by the Department of Health and Human Services/CMS on April 7 and worked through a stack of research on the subject of Accountable Care Organizations; loosely coined by me, the Good, the Bad and the Ugly.

In the purest of definitions, easily lost within the DHHS/CMS proposed regulations, Accountable Care Organizations (ACO) are about improving patient care outcomes and satisfaction while reducing cost or expenditures for care.  At the core of the premise about “why” and “how” an ACO would work in achieving better care, higher satisfaction and lower costs are three key assumptions or “truisms”.

  1. Best practices via algorithms and care pathways exist in sufficient supply, tested and proven, to reduce the variability that drives higher cost and lower satisfaction for a large and growing number of common patient care issues.
  2. Satisfaction is directly correlated to increased patient knowledge and communication, reduced bureaucracy at the provider level (fewer redundant steps) and better outcomes, more directly delivered and/or attained.
  3. Providers, properly incentivized to focus on outcomes and satisfaction will gravitate toward any and all steps and measures that improve outcomes and satisfaction and resultingly, deliver better and cheaper (less costly) care.  The key is developing the right level of incentives that drive provider behavior in the desired direction.

For years, I’ve written and lectured repeatedly that bending the cost curve or lowering the overall costs of health care in the U.S. system must first begin at the core of the issue; the system of reward.  A simple economic axiom defines this best; “what gets rewarded gets done”.  Fundamentally, the U.S. health system has rewarded in the form of payment, procedures, pills, tests, and surgical (or surgical-like) interventions at the expense of prevention and wellness/care management.  In spite of an enormous and growing body of evidence that much of the escalation of costs (steepening of the “curve”) in the U.S. is driven by chronic conditions poorly managed and lacking in early detection and prevention strategies, funding has remained skewed toward treatment practices that are technical and predominantly surgical or interventional in nature.  The result is poor to minimal access for Type II diabetics (as an example) to integrated chronic care programs designed to stave-off emergency room visits, loss of limbs, peripheral vascular disease, loss of vision, etc. while access to the latest imaging technology, interventional cardiac programs and surgery ranges from good to stellar and even drastically redundant in some markets.

Knowing the above and understanding that a fluid and flourishing economy has been built around this system, the belief or premise that one can design and make work effectively, a paradigm shift such as is intended with ACOs is curious at best.  Suffice to say that while I know such a premise makes sense (Accountable Care Organizations), I’m less than certain from my read of the proposed regulations and knowledge of the current system, how incentive realignment will work to first, bend the “cost” curve and second, create a necessary body of invested, at-risk stakeholders willing to place their economic futures (such that they are) in the hands of a governmental half-and-half, moving payment system.  Moreover, the initial investment capital is clearly all provider capital placed at first dollar risk and the shared-savings return proposed, provides a poor return on the capital invested.  This is particularly true for the post-acute elements critical in the formation of a truly functional ACO.

For an ACO at is primordial core to work (achieve the desired outcomes), hospital utilization and the most expensive clinical utilization must be diminished.  Diminution of such care is achieved primarily, via three methods/interventions/actions.

  1. Primary care available and accessible enough to create consistent early detection and provide low-cost interventions that arrest a progressing disease-state prior to an acute event that ordinarily would cause hospitalization.  In the case of Type II diabetics for example, education and monitoring of insulin levels and Ha1c to create optimal therapy and patient knowledge and disease management efficacy that delays and avoids, hospitalization and interventions on a crisis basis.  By simply deferring and/or avoiding, undetected and untreated peripheral leg and foot ulcers, thousands upon thousands of days of hospitalizations for amputations and/or intravenous therapy for infections can be avoided – annually.
  2. Delivering care in lower-cost settings or alternative settings, non-hospital based, nets enormous savings.  As payment today is skewed toward hospitalization and hospital-based care, patients disproportionately receive care, tests, procedures in hospital settings.  A primary example of how skewed the system has been is the artificial and unnecessary three-day prior hospital stay qualifier in order to receive Medicare coverage in a nursing home.  Equally as non-sensical are the present Part B outpatient therapy caps for any non-hospital based and provided therapy.  I could literally list hundreds of payment and care provision inequities but my point is made.
  3. True integration and data sharing among providers must occur and each provider must bear an incremental reward benefit and/or downside risk.  If providers cannot access data fluidly on a patient population and share best practices encompassing steerage to the most cost-effective,  best-outcome sources for care without fear of system reprisal, holes and gaps to effective care delivery at the best price/cost will remain too plentiful.

Taking the above into account, two major obstacles still remain in terms of successful development of an ACO.  The first is patients, now indoctrinated into a system where pills, brands, certain tests, and other non-proven care modalities are expected, nay demanded.  Simultaneous, this same group is famous for varying elements of non-compliance born out of a belief (though untrue) that most anything has a “medical fix” component.  All the best practices and lower-cost alternative settings can’t overcome patient behavior unless and until, patients are part of the risk-benefit system.

The second obstacle, touched on earlier, is the system of reward or the model of risk-benefit.  The ACO core model is one of risk-sharing; gains in the form of varying levels of saving returned to the providers willing to bear “risk” in the form of higher than desired utilization, costs, etc., or outcomes including satisfaction that are below certain pre-determined and desirable levels.  The inherent fallacy within this concept is multifaceted to say the least.

  1. As indicated, patients are a true wild-card; both in terms of behavior and health status.  As the patient remains effectively detached from the risk-benefit equation, behavior is left to chance.  Additionally, health status going into the population on behalf of patients is effectively unknown.  In short, a “ticking coronary time-bomb” may be present (or similarly present) creating a cost and outcome explosion that defeats the opportunity of an ACO to truly deliver effective savings.  The inability in the present regulations to set a path for securitizing against this risk and for truly integrating patients into the risk-reward equation (some element of cost-share broader than present) makes the attainment of long-term savings at a significant level, illusory.
  2. For many providers (or perhaps all) the up-front investments in terms of technology and service accessibility are steep.  This is dramatically so for post-acute providers as the Federal Government refuses to offer any resources for technology investment – not the case with physicians and hospitals.  This is fundamentally illogical as a major element to delivering true savings is via the full use of alternative care settings – lower cost options for care such as therapy/rehabilitation, chronic disease clinics, etc.  What occurs as a result of this enormous “up front” investment is a return on investment profile that is marginal to poor; in most cases (and in all that I have analyzed) below the organization’s cost of capital.  Additionally, the prospective savings return is not fluid or rapid leaving providers with a self-funding equation of producing results, subsidization of investment and cash flow, netting a return that is below any other reasonable and readily available alternatives.
  3. The sharing of incentives is impractically aligned such that the largest sources of current costs stand to lose the most while the post-acute elements stand to gain the least, though as the above occurs, the distribution is far from quid-pro-quo.  Briefly: ACOs begin fundamentally with physician groups and hospitals.  To fully achieve functionality and to meet the objective of better care provided cheaper, other providers core to the care continuum must be brought into the ACO.  Hospitals primarily have invested heavily in the current system of fee-for-service reimbursement, building environments that return the most on investment when heavily utilized on an in-patient and procedural basis.  It is illogical to assume that for most hospitals, voluntarily steering utilization elsewhere to lower cost settings or abating certain levels of utilization altogether in exchange for “shared savings” spread across the ACO players is a winning proposition.  On a similar plane, the same is true for physician specialists.  Interventional cardiologists will be hard-pressed to forego any elements of business financially and in honest reflection, Medicare-age patients are a major (if not the primary) source of patients.  For post-acute providers, utilization should likely increase as their services are more cost-effective but as established, these providers are bit players in the ACO game and while perhaps the most effective element in controlling costs and utilization, not proportionately rewarded.  Their participation for example, is all down-streamed through the ACO.

Forming a post-acute synopsis of the current ACO landscape is as simple as this: Play at your own risk.  There is little for most post-acute providers to gain within the present ACO framework, financially.  All gains are more market and patient-flow related.  The investments in terms of technology are steep and unsupported via government funding.  Similarly, the net margin attainable via an ACO that is at “risk” or participating in shared savings is less than adequate to support a return on capital investment scenario that justifies the up-front costs.  Personally, I would treat ACO participation at this stage as exploratory only; a devotion of only a small investment on-par and an expectation that minimal financial gain will occur, if any.

It stands to reason that some provider elements within the post-acute industry will stand to benefit better than others if for no other reason that they are already aligned from a business perspective to do so. LTACHs could reap significant market share if they can pose as legitimate first-admit options to an acute hospital.  SNFs that are and have been, operating as true transitional care providers with in-house, integrated services could become major partner players within the ACO landscape.  Key however to an SNF’s viability is some reform from three-day prior hospitalization requirements and relaxation/elimination of the Part B therapy caps.  Home health agencies that already have an infrastructure for electronic charting, referrals and a strong physician partnerships and hospital referral/discharge relationships are the most logical post-acute, ACO partners. The ability of a home health agency to manage a more complicated patient directly discharged from a hospital as well as bring into the home, core chronic disease management services adjunct to physician care is an ACO necessity.  As today and for the foreseeable future, ACO realization or not, Hospice will remain only a bit player, if that.  While Hospice is an effective alternative to more costly inpatient care when continued inpatient care and/or other procedural steps are unwarranted, getting patients, their families/significant others, and the physician community in general to openly embrace Hospice early and frequently is not going to occur simply because of an ACO.  Hospice, as I have written before, is a niche’ in the post-acute continuum and nothing within current trends suggest to me that the U.S. health system and patient expectations are moving to a deeper appreciation for or understanding of, the role hospice can and should play.

June 6, 2011 Posted by | Home Health, Hospice, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , , , , , , | 2 Comments