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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.

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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
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June 26, 2019 Posted by | Uncategorized | , , , , , , , , , | Leave a comment

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).

  1. 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%
  2. 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.
  3. 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.
  4. 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.

  1. 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.
  2. 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.
  3. 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.
  4. 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!

http://hcmarketplace.com/revenue-integrity-symposium?webSyncID=5c56a212-852b-635d-aad0-430216e04a7e&sessionGUID=c59e2226-ca5d-5741-7187-a3390bc28582

 

 

June 14, 2019 Posted by | Uncategorized | , , , , , , , , , , | Leave a comment

SNF Proposed Rule for 2020

Spring is the time when CMS starts dropping Proposed Rules for various health care provider segments.  This past week or so saw update drops for IRFs, Hospice and SNFs.  Recall, Proposed Rules are administrative law changes that CMS makes to existing provider regulations, typically covering reimbursement and some programmatic policy changes that tie to reimbursement.  Congress does not have to approve or weigh-in other than through the appropriation function, defining the amount of spending globally, allowed under Medicare. The translation thereof to rates, payments, programs, etc. is via CMS rule making authority.  I’ll summarize other industry segments in a follow-up post later in the week.

The SNF proposed rule is best characterized as “mostly” good news.  The best news is the proposed market-basket (rate inflation) update of 3%. Subtracting the productivity factor of .5% from the update, SNFs will see a rate increase of 2.5% starting on October 1 (assuming the rate remains as proposed once the Final Rule is issued).  How this will exactly map to revenue however, is where the “mostly” qualifier is required.

A rate increase is merely an inflationary adjustment to the payment categories under Medicare. In the case of SNFs, the translation will take place in PDPM.  Under RUGs IV, the SNF rates would inflate by the applicable percentage, applied to each of the 66 groups.  Under PDPM, the base rate corresponds to one of six case-mix categories (PT, OT, Speech, Nursing, Non-Therapy Ancillary and Non-Case Mix), multiplied by the applicable case-mix value in each category (excluding non-case mix which is a flat per diem). There are ten clinical categories under PDPM that correspond to the reason that patient is admitted to the SNF (Major Joint Replacement or Spinal Surgery; Cancer; Non‐Surgical Orthopedic/Musculoskeletal; Pulmonary; Orthopedic Surgery (Except Major Joint Replacement or Spinal Surgery); Cardiovascular and Coagulations; Acute Infections; Acute Neurologic; Medical Management; Non‐Orthopedic Surgery).  Using the diagnosis code and patient functional status from Section GG on the MDS, a case-mix value is determined for each of the five categories (not non-case mix).  In the end, it will be difficult for the SNF to see a direct relationship, as in years past, with a rate adjustment and the current (soon to be former RUGs) payment model.  PDPM, even with the best modeling, is an unknown element for the SNF industry.  In short, there is no correlation between this proposed 2.5% increase and what a SNF will see in terms of revenue come October 1.  It is quite possible that some will see, even with the rate increase, a decrease in Medicare total revenue compared to current experience.

Another subtle but important element to consider, one that falls outside of this Medicare policy, is Medicare Advantage.  This Proposed Rule only impacts the fee-for-service side of Medicare, not translating to Medicare Advantage rates paid by plans to SNFs.  Such is the same concerning PDPM.  Medicare Advantage plans do not need to implement rate increases, PDPM or follow CMS reimbursement protocols for any provider segment.  For SNFs that have a high percentage of Medicare Advantage patients as part of their routine census, the impact of this proposed rate increase must be factored against the Medicare Advantage patient volume (e.g., 50% Medicare census that is Med Advantage reduces the rate increase realizable by the SNF, by half).  I am not seeing much rate increase activity on the part of the Medicare Advantage plans in any major market.  The supply of willing SNFs to take their patients exceeds by a large amount, the demand within these plans, for SNF access.  In other words, prices don’t need to increase to gain access, when needed.

Other programmatic updates/changes within the Proposed Rule for SNFs are as follows.

  1. CMS is proposing to align the “Group Therapy” definition for SNFs to the one used for IRFs.  Presently, the SNF definition for group is “four patients”; exactly.  The change will allow “group” to be any number between two and six.  Important Note of Caution: Assuming this definitional change remains, SNFs must not adopt a group therapy practice that immediately accommodates the maximum.  Group is an appropriate therapy treatment option when and only when, clinically warranted by the patients being treated in this setting.  I am hearing way too many therapy companies tout cost control, productivity management, etc. under PDPM via a sweeping expansion of group therapy (not readily usable under the current RUGs system).  Remember, if the SNF patient needs and clinical requirements prior to October 1 were for individual therapy, those same needs will apply post-October 1 and PDPM. CMS has warned providers against wholesale shifts in therapy treatment methodologies and time/minutes (reductions).  Facilities need to be very careful as it is unlikely that their census mix (case mix, acuity, etc.) will change after October 1 and thus, the provision of therapy should be fundamentally the same under PDPM.
  2. The Value-Based Purchasing measurement model for readmissions is shifting from “all cause” to “potentially preventable” as the metric.  As before, CMS is using a two percent withhold in SNF Medicare payments to build a pool for performance incentives under the program.  Sixty percent of the funds withheld will be distributed to high-performing facilities as “a bonus percentage” going forward.  In the first realization of incentives/penalties under VBP, 73% of all SNFs failed to perform at the standardized readmission benchmark and are presently, having their reimbursement reduced on a penalty basis.
  3. The SNF QRP (quality reporting program) is gaining two additional measures: Transfer of health information from the SNF to another provider, and; Transfer of health information from the SNF to the patient.  Both measures are interoperability related designed to impact the flow of information between providers and patients to encourage enhanced productivity and safety.  In addition, CMS proposes to add a number of standardized patient assessment data elements that assess cognitive function and/or mental status, special services, treatments and interventions, medical conditions and comorbidities, impairments, or social determinants of health (race and ethnicity, etc.).  Recall, the SNF QRP imputes a two percent reduction in rate inflation to facilities that don’t report data or stay current.  This means that for this year, a facility can see the rate increase of 2.5% proposed, reduced to .5% for non-reporting.

The full proposed rule is available at this link : https://www.federalregister.gov/documents/2019/04/25/2019-08108/medicare-program-prospective-payment-system-and-consolidated-billing-for-skilled-nursing-facilities

April 22, 2019 Posted by | Uncategorized | , , , , , , , , , , | Leave a comment

Governance and PDPM: What Boards Need to Know

I spend a good (ok, large) amount of time working with non-profit and privately held health care, post-acute and seniors housing organizations.  Nearly all of my work is at the C-level and above and frankly, my career as an executive was there as well (25 plus years).  Boards/governance bodies play a key role in the success and/or failure of an organization.  The same also mitigate or increase risk to the organization, depending on their behavior.   I have witnessed bad boards absolutely devastate once great, market dominant organizations simply through their failure to stay structurally in-tune with industry trends, market conditions, public policy, and patient care and service requirements (from compliance to outcomes and satisfaction).  Naïve, insular and narrowly focused Boards have taken down some of the largest and most prominent companies in any industry.  Health care, with its unique ties to government programs (Medicare, Medicaid, etc.) and regulatory structures, requires a governance model that reflects the industry challenges and mitigates the risks inherent in regulated, reimbursed health care.

Boards have as their primary duty, a fiduciary obligation to the organization.  This duty is best described as an obligation to act and behave solely, in the best interest of the organization and its shareholders/stakeholders.  In non-profit parlance: best interest in the mission of the organization.  To be an effective fiduciary then, the Board must seek to eliminate conflicts of interest and to learn about the risks or potential harms that are inherent to the organization via the business it is in.  The common definitions associated with a Board’s fiduciary obligation is the duty of care, the duty of loyalty and the duty of obedience.  Simply,

  • Duty of Care:  To act as a prudent person and to be engaged in their duties as Board members in the preservation and protection of the organization.  The actions include attending meetings, reading, questioning, and obtaining industry education
  • Duty of Loyalty: Removing self promotion and personal interest (including personal business interest) from Board duties/responsibilities.  Acting only in the collective best interest or the organization and its mission/shareholder/stakeholders.
  • Duty of Obedience: To assure the organization is compliant with all federal, state and local laws and is conducting business in a compliant manner with other rules and regulations as applicable (e.g., bond/debt  covenants).

With PDPM about to change the entire Medicare fee-for-service reimbursement program for SNFs while presenting broader payment change implications (down the road) for Medicare Advantage and even Medicaid (note that Medicaid payment systems always trend-off Medicare programs), Boards need to start NOW to understand PDPM and its certain, organizational impacts.  Each of the above “duties” are in-play but most acutely, the duty of care and the duty of obedience.

To maintain clarity and a certain amount of brevity and readability, below is my Board education/implementation framework for PDPM.

  1. What is PDPM? Explain at a macro-level what the new program impacts (Medicare A, fee-for-service) and how it works compared to the current Medicare RUGs-based system.  I would avoid the jargon and technical while sticking to the core differences.
    • Differences in patient classification and payment level assignment
    • Differences in the role of therapy and the payment thereof
    • Variable payment differences
    • Clinical incentives and behavioral changes
  2. PDPM Impact for the Organization, Part 1? What should the Board know about how PDPM will impact the organization.
    • Revenue impact?  The Board should see and understand, quantified revenue impacts.  Note: Organizations should be modeling the changes NOW to their reimbursement
    • Any technology changes and investments that are necessary prior to October 1
    • Any staff changes, staff education costs, need to budget for consultants, etc.
    • Changes in therapy contracts or therapy provision necessitated by PDPM
    • Changes in care delivery and why such as more group and concurrent therapy, shorter lengths of stay, possible change in clinical acuity
  3. PDPM Impact for the Organization, Part 2? What the Board should know that doesn’t change under PDPM?
    • No changes to other payer sources and programs expected (e.g., Medicare Advantage)
    • No compliance or regulatory changes (survey regulations)
    • No other program changes such as QRP, VBP, etc.
    • No impact to other services or programs the organization may have (home health, hospice, Assisted Living, Pace, etc.)
  4. PDPM Risks: What to Monitor? The Board needs to assure that the organization’s preparation for PDPM and the changes will be implemented and managed such that the organization will stay compliant with all applicable laws, rules and requirements.
    • Will the revenue changes impact bond/debt covenants (negatively)?
    • How will therapy provision be monitored, especially if therapy is provided via a contractor?  CMS has warned that drastic changes in minutes provided and/or treatment levels (from almost exclusively 1 to 1 to group and concurrent) will lead to targeted audits and potential penalties
    • Revenue changes not adequately predicted to the Board
    • Patient satisfaction changes (negative).  PDPM places a premium on efficiency of stay, especially given the variable payment dynamic.  Will care be complete and patients satisfied or will corners be cut adversely impacting satisfaction?
    • Compliance changes (adverse) or performance changes adverse due to PDPM. Has the organization’s performance metrics such as rehospitalizations, falls, infections rates, etc. changed? Any adverse survey changes or serious citations occurred? The Board must be actively engaged in QAPI and should be monitoring quality of care data
    • Budgets and investments met/made to assure smooth and supportive transition to PDPM
  5. PDPM: Other? The Board should require periodic updates across an extended period of time on how the transition to PDPM has impacted the organization, positively and negatively.  Similarly, as with all other major industry changes, PDPM should impact strategic plans and the same, should adjust for the impact PDPM will have.

Given that PDPM will implement October 1, organizations that haven’t at least begun Step 1 above are behind.  Step 2 should occur ASAP, especially since many organizations will likely see some negative revenue impact, if they have a disproportionate Medicare book of therapy of ultra-high RUGs and longer lengths of stay.  Any organization with a therapy contract (not employed, in-house) will need to get into discussions NOW regarding PDPM and their contract terms.  PDPM changes are sweeping and shouldn’t be ignored and/or, under sold and misconstrued to the Board or governing body.  The risks are too great and the organizational peril, too high.

 

January 31, 2019 Posted by | Uncategorized | , , , , , , , , , | Leave a comment

PDPM and Therapy Contracts Webinar

On February 6 at 1:00 PM eastern, my rehab specialty partner Dean Freeland, PT and  I will be conducting a webinar on PDPM and Therapy.  This live (and recorded) event will cover the new SNF Medicare fee-for-service reimbursement program (PDPM) going into effect on October 1 of this year.  As the new system substantially changes how SNFs are paid under Medicare, we will review preparation strategies and contract strategies for SNFs that use rehabilitative therapy contractors for PT, OT, and Speech.  Even if your SNF is using in-house/employed therapists, this webinar is worthwhile as we will cover the mechanics of payment categories and the nuances of PDPM that are critical to capturing the proper levels of reimbursement.

To participate in this event/program, click on the link below for registration details.  Hope you all can attend!

http://hcmarketplace.com/pdpm-therapy-contracts

 

January 28, 2019 Posted by | Uncategorized | , , , , , , , , , , | Leave a comment

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.

https://www.washingtonpost.com/business/economy/opioid-overdoses-bedsores-and-broken-bones-what-happened-when-a-private-equity-firm-sought-profits-in-caring-for-societys-most-vulnerable/2018/11/25/09089a4a-ed14-11e8-baac-2a674e91502b_story.html?utm_term=.5eda486f989c

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.

https://www.mcknights.com/news/cms-drops-value-based-purchasing-data-showing-27-of-nursing-homes-got-bonus-pay/

I hope readers enjoy both articles as they illustrate far better, the implications of poor quality, than I can via my words.

November 29, 2018 Posted by | Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , , | Leave a comment

Site Neutral Payment Update

In early October, I wrote an article regarding CMS 2019 OPPS (outpatient PPS) proposed rule, specifically regarding site neutral payments.  The purpose of the article was to address the site neutrality trend that CMS is on, streamlining payments to reduced location of care disparities for the same care services.  Succinctly, if the care provided is technically the same but the costs by location are different due to operating and capital requirements, should payments vary?

Yesterday, CMS pushed forward the OPPS final rule, maintaining the concept of site neutrality despite heavy hospital lobbying.  The gist of the rule is as follows.

  • Hospital off-campus outpatient facilities will now be paid the same as physician-owned or independently owned/operated outpatient facilities for clinic visits.  No longer will there be a hospital place-of-care premium attached to the payment.
  • Off campus is defined as 250 yards or more “away” from the hospital campus or a remote location.
  • For CY 2019, the phase-in/transition is a payment reduction equal to 50% of the net difference between the physician fee schedule payment for a clinic visit and the same payment for a hospital locus clinic or outpatient setting.  The amount is equal to 70% of the OPPS (hospital outpatient PPS rate).
  • For CY 2020, the amount paid will be the physician fee schedule amount or 40% of OPPS rate, regardless of location.
  • Final Rule text is here: 2019 OPPS Final Rule

What CMS noted originally as the need stemmed from a Medpac report where a Level 2 echocardiogram cost 141% more in a hospital outpatient setting than in a physician office/clinic setting. This final rule is part of an expected and continuing trend to simplify and streamline payments among provider locations.  Similarly, CMS is following a path or theme laid forth by Medpac concerning payments tied to care services and patient needs rather than settings or places of care.  The 2019 OPPS payment change is a $760 million savings in 2019 expenditures.

Finalization of the OPPS rule with site neutral payments cannot be overlooked in significance. As I wrote in the October article, this is a harbinger of where CMS and Medicare policy makers are heading.  Hospitals lobbied hard and heavy against this implementation claiming a distinction in payment was not only required by dictated by patient care discrepancies.  Alas, there appeared to be no common ground found within that argument.

I suspect now that the door is opened just a touch wider for site neutral post-acute payment proposals to advance.  Under certain case-mix categories, there truly is very little difference in care delivered and no difference in outcomes (adversely so) between SNFs, IRFs, and LTAcHs yet there is wide payment difference.  With lengths of stay declining and occupancy rates the same (declining) among these provider groups, CMS will no doubt (my opinion) push forward a streamlined proposal on site neutral payments in the next three years.  I anticipate the first proposal to concentrate almost exclusively, on SNFs, IRFs and perhaps, some home health case mix categories.  If hospitals can’t budge CMS away from the site neutral path, there is zero likelihood that IRFs and LTAcHs can divert CMS from site neutral proposals in the near future.

 

November 2, 2018 Posted by | Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , | Leave a comment

Don’t Miss Event: Webinar on Reducing Rehospitalizations

A week from today, I am conducting a webinar on reducing/avoiding unnecessary rehospitalizations.  With SNFs just experiencing the VBP impact (Medicare incentive or reduction) starting October 1, this event is extremely timely.  I’ll cover the health policy and reimbursement implications regarding rehospitalizations plus new QRP and QM updates.  I’ll also touch on PDPM implications.  Some great tools are available for attendees as well.

Register here at a super price – $59 for the session and the tools!

http://hcmarketplace.com/reducing-readmissions

 

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

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.

  1. Percent of residents developing new or worsening pressure injuries
  2. Percent of residents experiencing one or more falls with major injury
  3. Percent of residents who had a functional assessment on admission and the outcomes incorporated on the careplan and assessed at discharge
  4. Medicare spending per beneficiary
  5. 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.

October 26, 2018 Posted by | Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , | 1 Comment

Post-Acute, Site Neutral Payment Upcoming?

In the 2019 OPPS (outpatient PPS) proposed rule, CMS included a site neutral payment provision.  With the comment period closed, the lobbying (against) fierce, it will be interesting to see where CMS lands in terms of the final OPPS rule – maintain, change, or abate.  The one thing that is for certain, regardless of the fate of this provision, site neutral proposals/provisions are advancing.

CMS has advanced a series of conceptually similar approaches to payment reform.  Site neutral approaches are a twist on value-based care as they seek to reward the efficiency of care by de-emphasizing a setting value.  This is loosely an approach to “payment follows the patient” rather than the payment is dictated by the locus of care.  Assuming, which isn’t always in evidence, that for many if not most outpatient procedures, the care required is the same such that one setting vs. another isn’t impactful to the outcome, then a site neutral payment seems logical.  Managed care companies have been using this approach overtly, attaching higher cost-share to certain sites or eliminating payment altogether for procedures done in higher cost settings. In the OPPS proposal, the savings is rather substantial – $760 million spread between provider payments and patient savings (deductibles).  To most policy watchers, there is a watershed moment possible with this proposal and its fate.  The fundamental question yet resolved is whether hospitals will continue to have a favorable payment nuance over physician practices and free-standing outpatient providers.  Hospitals arguing that their administrative burden and infrastructure required overhead, combined with patient differences (sicker, older patients trend hospital vs. younger, less debilitated patients trending free-standing locations), necessitates a site different payment model (such as current).

In the post-acute space, payment site neutrality has been bandied about by MedPAC for some time.  Up to now, the concept of payment site neutrality has languished due to disparate payment systems in provider niches’.  SNFs and their RUGs markedly different from Home Health and its OASIS and no similarity with LTACHs in the least. Now, with post-acute payments narrowing conceptually on “patient-driven” models (PDPM and PDGM) that use diagnoses and case-mix as payment levers, its possible CMS is setting a framework to site neutral payments in post-acute settings.

In its March 2015 report to Congress, MedPAC called for CMS to create site neutrality for certain patient types between SNFs and IRFs (Inpatient Rehab Facilities).   While both have separate PPS systems for payment, the IRF payment is typically more generous than the SNF payment, though care may look very similar in certain cases.  For IRFs, payment is based on the need/extent of rehab services then modified by the presence or lack of co-morbidities.  IRFs however, have payment enhancements/ additions for high-cost outliers and treating low-income patients; neither applies in the SNF setting.

The lines of care distinction between the two providers today, certainly between the post-acute focused SNFs and an IRF, can be difficult to discern.  For example, both typically staff a full complement of therapists (PT, OT, Speech), care oversight by an RN 24 hours per day, physician engagement daily or up to three times per week, etc.  Where IRFs used to distinguish themselves by providing three hours (or more) of therapy, SNFs today can and do, provide the same level.  As a good percentage of seniors are unable to tolerate the IRF therapy service levels, SNFs offer enhanced flexibility in care delivery as their payment is not predicated (directly) on care intensity.  What is known is that the payment amounts for comparable patient encounters are quite different.  For example, a stroke patient treated in an IRF vs. an SNF runs $5,000 plus higher.  An orthopedic case involving joint replacement differs by $4,000 or more.  Per MedPAC the difference in outcomes is negligible, if at all.  From the MedPac perspective, equalized payments for strokes, major joint replacements and hip/femur related surgical conditions (e.g., fracture) between IRFs and SNFs made sense, at least on a “beta” basis.  With no rule making authority, MedPac’s recommendation stalled and today, may be somewhat sidelined by other value-based concepts such as bundled payments (CJR for example).

So the question that begs is whether site neutral payments are near or far on the horizon for post-acute providers.  While this will sound like “bet-hedging”, I’ll claim the mid-term area, identifying sooner rather than later.  Consider the following.

  • Post-acute care is the fastest growing, reimbursed segment of health care by Medicare.
  • The landscape is changing dramatically as Medicare Advantage plans have shifted historic utilization patterns (shorter stays, avoidance of inpatient stays for certain procedures, etc.).
  • Medicare Advantage days as a percentage of total reimbursed days under Medicare are growing. One-third of all Medicare beneficiaries were enrolled in a Medicare Advantage plan in 2017.  Executives at United Healthcare believe that Medicare Advantage penetration will eclipse 50% in the next 5 to 10 years.  As more Boomers enter Medicare eligibility age, their familiarity with managed care and the companies thereto plus general favorability with the product makes them quick converts to Medicare Advantage.
  • Managed care has to a certain extent, created site preference and site based value payment approaches already.  There is market familiarity for steering beneficiaries to certain sites and/or away from higher cost locations.  The market has come to accept a certain amount of inherent rationing and price-induced controls.
  • At the floor of recent payment system changes forthcoming is an underlying common-thread: Diagnoses driven, case-mix coordinated payments.  PDPM and PDGM are more alike in approach than different.  IRFs already embrace a modified case-mix, diagnoses sensitive payment system. Can homogenization among these be all that far away?
  • There are no supply shortage or access problems for patients.  In fact, the SNF industry could and should shrink by about a third over the next five years, just to rationalize supply to demand and improve occupancy fortunes.  There is no home health shortage, save that which is temporary due to staffing issues in certain regions (growth limited by available labor rather than bricks and mortar or outlets). Per MedPac, the average IRF occupancy rate pre-2017 was 65%.  It has not grown since.  In fact, the Medicare utilization of IRFs for certain conditions such as other neurologic and stroke (the highest utilization category) has declined. (Note: In 2004 CMS heightened enforcement of compliance thresholds for IRFs and as a result, utilization under Medicare has shrunk).
  • Despite payment reductions, Home Health has grown steadily as has other non-Medicare outlets for post-acute care (e.g., Assisted Living and non-medical/non-Medicare home health services).  Though the growth in non-Medicare post-acute services has caused some alarm due to lax regulations, CMS sees this trend favorably as it is non-reimbursed and generally, patient preferred.
  • Demonstration projects that are value-based and evidence of payment following the patient or “episode based” rather than “site based” are showing favorable results.  In general, utilization of higher cost sites is down, costs are down, and patient outcomes and satisfaction are as good if not better, than the current fee-for-service market.  Granted, there are patient exceptions by diagnoses and co-morbidity but as a general rule, leaving certain patients as outliers, the results suggest a flatter, site neutral payment is feasible.

If there is somewhat of  a “crystal ball” preview, it just may be in the fate of the OPPS site neutral proposal.  I think the direction is unequivocal but timing is everything.  My prediction: Site neutral payments certainly, between IRFs and SNFs are on the near horizon (within three years) and overall movement toward payments that follow the patient by case-mix category and diagnoses are within the next five to seven years.

October 2, 2018 Posted by | Home Health, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , , , , , , , | Leave a comment