Member asks: How will value-based payment changes affect post-acute care?

Our quick breakdown of the impact across the industry

Every day, members come to the Advisory Board with questions about issues they face in the health care industry. In the Daily Briefing "Member Asks" series, we share some of these questions and the Advisory Board experts' answers.

Members' question

Members asked the Post-Acute Care Collaborative

    How will forthcoming pay-for-performance and quality reporting trends—a precursor for P4P—affect post-acute care providers? 

Experts' answer

One key trend affecting post-acute care reimbursement—similar to the acute care settings—is the introduction of value-based models that link payment with a range of process and outcomes metrics that reward improved quality and efficiency. As Medicare becomes a purchaser of quality, payment begins to shift from a predominantly fee-for-service structure towards a pay-for-performance model.

As a quick overview, here is a breakdown how skilled-nursing facilities (SNF), home health agencies, hospice care, and long-term care will be impacted by various payment changes:

Skilled Nursing Facilities

Under the Affordable Care Act (ACA), the Medicare value-based purchasing (VBP) program for SNF will be based on the three-year Nursing Home VBP demonstration project (2009-2012) that provided financial incentives to facilities that:

    1. Reduced avoidable hospitalizations;
    2. Achieved quality care; or
    3. Attained improvement as specified in the regulations.

MedPAC also recommends reducing payments for SNF with high risk-adjusted rates of readmission. Lastly, Medicaid incorporates VBP based upon a range of quality indicators in ten states, with five additional states pending.

Home Health Agencies:

The ACA specifies that home health agencies will take part in a VBP program that will build upon quality reporting requirements. MedPAC recommendations include rebasing and revising home health rates and expanding fraud and abuse oversight. This is outlined in more detail under the home health agency section provided by CMS.

Hospice Care:

The ACA established a quality reporting program, as described by CMS, with upcoming penalties for noncompliance. Starting in fiscal year (FY) 2014, failure to submit required quality data will result in a 2% reduction to the market basket increase.

Long-Term Care Hospitals (LTCH):

CMS will also establish quality reporting requirements for LTCH. In FY 2014 and beyond, failure to submit selected quality data will result in a 2% reduction in the annual payment update.
In addition, models 2 and 3 of the CMMI Bundled Payments for Care Improvement Initiative incorporate post-acute care services to increase care coordination across settings and episodic efficiency.

Inpatient Rehabilitation Facilities (IRFs):

The Affordable Care Act establishes a quality reporting program for IRFs using nationally endorsed measures. In FY 2014 and beyond, failure to submit selected quality data will result in a 2% reduction in the annual payment update.

For more information see:

Next in the Daily Briefing

Daily roundup: Sept. 21, 2012

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