Reg's Blog

Senior and Post-Acute Healthcare News and Topics

Wisconsin Directors of Nursing Fall Conference

Last Friday, I was honored to speak at the Wisconsin Directors of Nursing Fall Conference.  The crowd was great and I had a lot of fun talking with the hardest working professionals in health care.  As promised to them, I have attached the presentation to this post and a bunch of tools and references that everyone can use.  All links (except the books) are free!

Thanks again to everyone that attended.  Questions?  Feel free to reach out to me at hislop3@msn.com!  Looking forward to seeing you all again in the near future!

WI DON Council Presentation

QAPI Indicator Summary – blank

ELOS

PRE SURVEY OBSERVATIONS WALKING ROUNDS

QUALITY ASSURANCE- HOSPITALIZATIONS

Tuck in Program

CVA pathway

ANALYSIS OF UNPLANNED HOSPITAL TRANSFERS -blank

Admission Audit

5 day post discharge

30 Day Post Discharge Questionnaire

3-RoP-Checklist-overview-FINAL.101416

http://hcmarketplace.com/survey-success-for-long-term-care (book with great survey tools)

http://hcmarketplace.com/preventing-uti-in-ltc  (tools, etc. all pertaining to UTIs)

September 25, 2019 Posted by | Uncategorized | , , , , , , , , | Leave a comment

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

June 26, 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

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

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

Upcoming Webinar: Reducing Hospitalizations and SNF Reimbursement Implications

I am conducting a webinar on Thursday, November 8 regarding the strategies SNFs can and should employ to reduce unnecessary hospital transfers/hospitalizations (E.R. visits and inpatient admissions).  Value-based purchasing has just taken hold in the SNF realm with facilities about to experience their first outcome October 1, 2018 (incentive or reduction).  I’ll cover the policy implications but moreover, review upcoming reimbursement issues beyond just VBP, delving into the care transition (hospitalization) implications that are woven in PDPM.  For example, with PDPM instilling a critical focus on length of stay via imbedded payment reductions after day 20, facilities will naturally look to shorten lengths of stay perhaps at the peril of VBP (Value-Based Purchasing) implications.

During the hour-long session, I’ll address;

  • Reimbursement and policy related implications associated with unnecessary care transitions/hospitalizations under VBP but also, tangential to QRP, PDPM, Five Star QMs, survey and relative to the IMPACT Act.
  • Proven strategies with tools to identify transition risk, monitor performance and benchmark an SNF against its peers.
  • How to leverage good performance in a competitive market and to gain market share in a bundled payment, Medicare Advantage, pay-for-performance environment.

More information and registration information is available at this link.

http://hcmarketplace.com/reducing-readmissions

 

September 13, 2018 Posted by | Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , , | Leave a comment

SNF PPS Final Rule 2019

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

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

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

August 1, 2018 Posted by | Skilled Nursing | , , , , , , , , , , , | 1 Comment

Stuck in Neutral: Bundled Payments and Post-Acute Providers

After CMS nixed the mandatory expansion provisions for Bundled Payments and reduced the metro areas participating in CJR (joint replacement), the prospects for post-acute provider involvement in non-fee-for-service initiatives (payments and incentives based on disease states and care episodes) went in to limbo.  With a fair amount of excitement and trepidation building on the part of the post-acute world about different payment methodologies, new network arrangements, new partnerships, incentive possibilities, etc., CMS put the brakes on the “revolution”; a screeching halt.

While Bundled Payments aren’t dead by any means, the direct relationships for post-acute providers are in “neutral”.  The Bundled Payments for Care Improvement Advanced (BPCI Advanced) initiative announced in January included no avenue for SNFs, HHAs (home health) to apply and participate.  Nationally, other voluntary bundle programs continue including the remnants of CJR, and Models 2, 3 and 4 in Phase II.  According to CMS, as of April of this year, 1100 participants were involved in Phase 2 initiatives.  The Phase 2 initiatives cover 48 episodes of care ranging from diabetes, through various cardiac issues and disease to UTIs.

BPCI Advanced opportunities (episode initiators) involve hospitals or physician groups.  Post-acute will still play a role but the direct connections and incentives aren’t quite tangible or specific, compared to CJR.  Time will tell how the roles for post-acute providers evolve in/with BPCI Advanced.  Oddly enough, the economic realities of care utilization and negative outcome risk suggest that post-acute should play a direct, large role. As hospital stays shorten, outpatient and non-acute hospital surgical procedures increase, the directed discharge to post-acute has taken on greater meaning in the care journey.  HHAs in particular, are playing an expanded role in reducing costs via enhancements to their ability to care for more post-surgical cases direct from the hospital/surgical location.  Simultaneous however, readmission risk exposure increases.  What is certain is that system-wide, the window of 30 to 90 days post hospital or acute episode is where significant efficiency, quality and cost savings improvement lies.

While the direct opportunities initially forecast under BPCI for the post-acute industry have evaporated (for now), strategic benefits and opportunities remain.  Providers should not stray from a path and process that focuses on enhancing care coordination, improving quality and managing resource utilization.  Consider the following:

  1. For SNFs, PDPM (new proposed Medicare reimbursement model) incorporates payment changes and reductions based on length of stay (longer stays without condition change, decrease payment after a set time period).  A premium is being placed on getting post-acute residents efficiently, through their inpatient stay.
  2. For HHAs, payment reform continues to focus on shorter episodes in the future.  Like PDPM for SNFs, the focus is on efficiency and moving the patient through certain recuperative and rehabilitative phases, expeditiously.
  3. Medicare Advantage plans are increasing market share nationwide.  In some markets, 60% of the post-acute days and episodes are covered by Medicare Advantage plans – not fee-for-service. These plans concentrate on utilization management, ratcheting stay/episode length and payment amounts, down.  Providers that again, are efficient and coordinate care effectively will benefit by focused referrals and  improved volumes.
  4. Quality matters more than ever before – for all providers.  Star ratings are increasingly important in terms of attracting and retaining referral patterns  Networks and Medicare Advantage plans are focused on sourcing the highest rated providers.  Upstream referral sources, concerned about readmission risks are targeting their discharges to the higher rated providers.  Consumers are also becoming more market savvy, seeking information on quality and performance.  And of course, government programs such as Value-Based Purchasing place providers with poor performance on key measures (readmissions for SNFs) in the reimbursement reduction pool.
  5. Indirectly, Bundled Payment initiatives move forward and the Advanced option will require physicians and hospitals that participate, to source the best referral partners or lose incentive dollars and inherit unwarranted readmission risk.  SNFs and HHAs that excel at care coordination, length of stay management, have disease pathways in-place, can manage treatment, diagnostic and pharmacology expenses and produce exceptional outcomes and patient satisfaction are the preferred partners.

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

Interoperability and Post-Acute Implications

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

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

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

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

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

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

 

June 27, 2018 Posted by | Home Health, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , , , | 1 Comment

Home Health and Hospice: Strategic Movement in an Evolving Market

Last year 2017, was a bit of a “downer” in terms of mergers/acquisitions in the home health and hospice industry.  Though 2017 was fluid for hospital and health system activity, the home health and hospice sectors lagged a bit.  Some of the lag was due to capacity concerns in so much that health system mergers, if they involve home health as part of the “roll-up”, take a bit of sorting out time to adjust to market capacity changes (in markets impacted by the consolidations).  The additional drag was attributable to CMS proposing to change the home health payment from a per visit function to a process driven by patient characteristics – after implementation, a net $950 million revenue cut to the industry.  CMS has since scrapped this proposed payment revision however, the future foreshadows payment revisions nonetheless including changing to some format of a shorter episode window for payment (ala 30 days).

Hospice has always been a bit of niche in terms of the post-acute industry.  Where consolidation and merger/acquisition activity occurs, it is most often fueled by a companion home health transaction.  De Novo hospice “only” activity of any scale has been steady and unremarkable, save regional and local movement.  From a reimbursement and policy implication standpoint, hospice has been far less volatile than home health.  Minor changes in terms of scaling payment levels by length of stay have only marginally impacted the revenue profile of the industry.  What continues to impact hospice patient flow is the medical/health care culture within the U.S. that continues to be in steep denial regarding the role of palliative medicine/care and end-of-life care, particularly for advanced age seniors.  Sadly, too many seniors still pass daily in expensive, inpatient settings such as hospitals and nursing homes (hospitals more so), racking up bills for (basically) futile healthcare services.  If and when this culture shifts, hospice will see expansion in the form of referrals and post-acute market share.

Despite somewhat (of) a tepid M&A climate in 2017, the tail-end of the year and early 2018 provided some fireworks.  Early 2018 is off to the races with some fairly large-scale consolidations.  In late 2017, LHC group and Almost Family announced their merger, recently completed.  Preceding this transaction in August, Christus Health in Texas formed a joint venture with LHC, encompassing its home health and hospice business (LTAcH too).  Tenet sold its home health business to Amedysis (though not a major transaction by any means).  And, Humana stepped forward to acquire Kindred’s Home Health business.

In the first months of 2018, Jordan, a regional home health and hospice business in Texas,  Oklahoma, Missouri and Arkansas, announced a merger with fellow regional providers Great Lakes and National Home Health Care.  The combined company will span 15 states with over 200 locations.  In other regions, The Ensign Group, primarily a nursing home and assisted living provider continues to expand into home health and hospice via acquisitions; primarily underperforming outlets that have market depth and need restructuring.  Former home health giant Amedysis continues to redefine its role in the industry via additions of agencies/outlets in states like Kentucky.  Amedysis, once the largest home health provider in the nation, fell prey to congressional inquiries and regulatory oversight regarding suspected over-payments and billing improprieties.  Having worked through these issues and shrinking its agency/outlet platform to a leaner, more core and manageable level, Amedysis is now growing again, though less for “bigger” sake, more for strategy sake.

Given the preceding news, some trends are emerging for home health in particular and a bit (quite a bit) less so for hospice.  Interestingly, one of the trends apparent for home health has been present for hospitals, health systems, and now starting, skilled nursing: there is too much capacity, somewhat misaligned with where the market needs exist.  I believe this issue also exists for Seniors Housing (see related post at https://wp.me/ptUlY-nA ) but the drivers are different as limited regulation and payment dynamics are at play for Seniors Housing.  While home health is no doubt, an industry with continued growth potential as more post-acute payment and policy drivers favor home care and outpatient over institutional options, capacity problems still exist.  By capacity I mean too many providers wrongly positioned within certain markets and not enough providers properly positioned to deliver more integrated elements of acute and post-acute, transitional services in expanding markets (e.g., Washington D.C., Denver, Dallas, etc.).

Prior to their final consolidation with Humana, Kindred provided an investor presentation explaining their rationale for exiting the home health business (somewhat analogous to their exit rationale from skilled nursing).  The salient pages are available at this link: Kindred Investor Pres 2 18 . Fundamentally, I think the underpinnings of the argument beginning with the public policy and reimbursement dynamics which are extrapolated against a “worse-case” backdrop (MedPac recommendations don’t equate to Congressional action directly nor do tax cuts equate directly to Medicare reimbursement cuts) get lost to the real reason Kindred exited: excess leverage.  Kindred was overly leveraged and as we have seen with all too many like/analogous scenarios, excessive overhead and fixed costs in a tight and competitive market with sticky reimbursement dynamics and risk concentration on Medicare beget few strategic options other than shrink or exit.

With the backdrop set, the home health environment is at an evolutionary pass – the fork-in-the-road applies for many providers: bigger in scale or focused regionally with more network alignment required (aka strategic partnerships).  I think the following is safe to conclude, at least for this first half of 2018.

  • The M&A driver today is strategy and market, less financial.  While financial concerns remain due to some funky (technical term) policy dynamics and reimbursement unknowns, the same are more tame than 12-18 months ago.  To be certain, financial gain expectations are part of every transaction, just less impactful in terms of motivation.
  • The dominant strategic driver is network alignment: being where the referrals are.  The next driver is “positioning” as a player managing population health dynamics.  Disease management focus is key here.
  • Medicare Advantage penetration is re-balancing patient flow in many markets.  As the penetration escalates above 50% (half or better of all Med A days coming from Med Advantage), the referral flows are shaping to more demand for in-home care (away from institutional settings), shorter lengths of stay across all post-acute segments, increasing complexity and acuity on transition, and pay-for-performance dynamics on outcomes (particularly, re-hospitalization).
  • Market locations are key and very, very strategic.  With home health, being able to channel productivity, especially in a low labor supply/high demand environment, is imperative.  Being proximal to referrals, being tight with geographic boundaries, being able to lever staff resources, and being able to deploy technology to enhance efficiency is operationally, imperative.
  • Partnerships are synergistic today and in-flux.  It used to be that a key partner was an acute hospital.  Today, the acute hospital remains important but not necessarily, primary.  With physicians starting to embrace ACOs and Bundled Payment models, the referral relationship most preferred may be direct agency to doctor.  In fact, the hospital partner may not be anywhere near as valuable as the surgical center partner, owned and controlled by physicians.
  • Capacity and capability to bear risk from a population management perspective and to accept patients with higher acuity needs (in-home) and broader chronic conditions.  Effectively, home health agencies are going to continue to feel pressure to take patients with multiple chronic needs and comorbidities and to coordinate these care needs across perhaps, two to three provider spectrums (outpatient, specialty physicians, hospice if required, etc.).

 

May 23, 2018 Posted by | Home Health, Hospice | , , , , , , , , , , | Leave a comment