May 1, 2018

Our take: CMS' new payment rules are good news for skilled nursing facilities

Daily Briefing

    Read Advisory Board's take on this story

    CMS on Friday released proposed rules increasing payments for skilled nursing facilities (SNFs), inpatient rehabilitation facilities (IRFs), hospice providers, and inpatient psychiatric facilities (IPFs) for fiscal year (FY) 2019.

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    CMS said the proposed rules include "transformative changes to the payment systems." It continued, "These payment policy proposals for [FY] 2019 further advance the agency's priority of creating a patient-driven health care system that fosters innovation of efficient and accountable programs while removing waste, fraud, and abuse."

    CMS is accepting public comments on the proposed rules through June 26.

    Skilled nursing facilities proposed rule

    Under CMS' proposed rule for SNFs, SNF Medicare payments for FY 2019 would increase 2.4%, or $850 million, when compared with FY 2018. CMS said the payment update is required under the Bipartisan Budget Act of 2018.

    In addition, CMS proposed replacing the SNF Prospective Payment Systems' (SNFPPS) existing case-mix classification system with the SNF Patient-Driven Payment Model (PDPM) in FY 2019. CMS said the newly proposed model "is designed to improve the incentives to treat the needs of the whole patient, instead of focusing on the volume of services the patient receives, which requires substantial paperwork to track over time." Under the proposed model, Medicare payments to SNFs would be adjusted "based on each aspect of a resident's care, most notably for Non-Therapy Ancillaries …, which are items and services not related to the provision of therapy such as drugs and medical supplies, thereby more accurately addressing costs associated with medically complex patients." The new model also would adjust per diem payments SNFs receive to reflect cost variations that occur throughout a beneficiary's stay "and incorporate safeguards against potential financial incentives to ensure that beneficiaries receive care consistent with their unique needs and goals," CMS said.

    According to Modern Healthcare, CMS estimated that the new model will save SNFs an estimated $2 billion over 10 years.

    CMS did not propose any changes to measures used under the SNF Quality Reporting Program. However, CMS proposed changing the way it evaluates SNF quality measures for removal to include costs associated with measures used under the program and how they compare with associated benefits.

    Inpatient rehabilitation facilities proposed rule

    Under CMS' proposed rule for IRF payments, IRFs would see their Medicare payments for FY 2019 increase by 0.9%, or $75 million, when compared with FY 2018. CMS said that increase is based on a 0.4% payment reduction related to outlier payments, as well as "an IRF market basket update of 2.9%, reduced by a 0.8 percentage point multifactor productivity adjustment and a 0.75 percentage point reduction required by law."

    CMS also proposed changes that aim "to reduce regulatory burden on rehabilitation providers and physicians." For instance, CMS beginning in FY 2019 proposed:

    • Allowing post-admission physician evaluations to qualify as a face-to-face physician visit;
    • Allowing rehabilitation physicians to lead interdisciplinary teams remotely without requiring any additional documentation; and
    • Removing the admission order documentation requirement.

    In addition, CMS proposed eliminating two quality measures IRFs must report under the IRF Quality Reporting Program (IRFQRP):

    • CDC–Methicillin Resistant Staph Aureus Infection; and
    • Patient Influenza Vaccination Measure.

    CMS said it is proposing to remove the measures because they "either have significant operational challenges with reporting or the measure performance among IRFs is so high and unvarying that meaningful distinctions in improvements in performance can be no longer be made."

    The proposed rule also would change the methods by which the agency notifies IRFs of noncompliance with IRFQRP and, beginning in FY 2020, would display data on the program's four assessment-based function outcome measures.

    Hospice provider proposed rule

    Under CMS' proposed rule for hospices, the facilities would receive a 1.8%, or $340 million, increase in Medicare payments for FY 2019. CMS said the proposed increase "is based on an estimated 2.9% inpatient hospital market basket update, reduced by a 0.8 percentage point multifactor productivity adjustment and by a 0.3 percentage point adjustment set by the Affordable Care Act."

    CMS proposed a cap of $28,689.04 for hospices in FY 2019, in accordance with requirements under the Improving Medicare Post-Acute Care Transformation Act of 2014.

    In addition, the proposed rule includes regulatory language that would change the definition of an "attending physician" for hospices as called for under the Bipartisan Budget Act of 2018. The language included in the proposed rule would broaden the definition of "attending physician" to include physicians, nurse practitioners, and physician assistants.

    CMS also proposed a new factor for officials to consider when deciding whether to remove a measure from the Hospice Quality Reporting Program: whether the costs associated with a measure outweigh the benefits of continuing to use it in the program. For instance, CMS said, "It may be costly and burdensome for health care providers to report a measure for which our analyses show that there is no meaningful difference in performance or there is little room for continued improvement."

    In addition, CMS proposed changing the information it displays on its Hospice Compare website. Under the proposed rule, CMS would no longer "directly displa[y]" seven component measures that are used to calculate composite measures on Hospice Compare once the composite measures are displayed. However, CMS said users still will be able to access the component measure data "in an expandable/collapsible format under the composite measure itself."

    Inpatient psychiatric facilities proposed rule

    CMS said the proposed rule for IPFs would increase Medicare payments by 0.98%, or $50 million, in FY 2019. CMS said the payment adjustment is based on "a 2.8% IPF market basket update less the productivity adjustment of 0.80 percentage point and less the 0.75 percentage point reduction required by law, for a net market basket update of 1.25%." In addition, CMS said IPF payments would be reduced by 0.27 percentage points because of an update to "the outlier fixed-dollar loss threshold amount."

    CMS also proposed removing eight measures from and adding two measures to the Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program effective for the FY 2020 payment determination and subsequent years. CMS proposed removing quality measures for:

    • Alcohol use screening;
    • Hours of physical restraint use;
    • Hours of seclusion use;
    • Influenza vaccination coverage among health care personnel;
    • Tobacco use screening;
    • Tobacco use treatment provider or offered at discharge; and
    • Tobacco use treatment at discharge.

    CMS proposed adding quality measures for:

    • Assessment of patient experience of care; and
    • Use of an EHR.

    Request for feedback on advancing My HealthEData

    CMS on Friday also released a request for information seeking "positive solutions to better achieve interoperability or the sharing of health care data between providers" under the agency's My HealthEData initiative. CMS said it is specifically looking for feedback "on the possibility of revising conditions of participation related to interoperability as a way to increase electronic sharing of data by providers" (Baker, "Vitals," Axios, 4/30; Dickson, Modern Healthcare, 4/27; Belliveau, RevCycleIntelligence, 4/27; Marselas, McKnight's Long Term Care News, 4/27; Spanko, Skilled Nursing News, 4/27; Baxter, Home Health Care News, 4/27; Pittman, "Pulse," Politico, 4/30; CMS release, 4/27; CMS skilled nursing facilities fact sheet, 4/27; CMS inpatient rehabilitation facilities fact sheet, 4/27; CMS hospice fact sheet, 4/27; CMS inpatient psychiatric facilities fact sheet, 4/27).

    Advisory Board's take

    Jared Landis

    Jared Landis, Managing Director, Post-Acute Care Collaborative, Philanthropy Leadership Council and Monica Westhead, Senior Consultant, Post-Acute Care Collaborative

    Overall, this announcement is good news for SNFs—and not just because of the overall rate increase for those providers. PDPM's reporting requirements are simpler than those associated with the previously proposed RCS-1 model, and PDPM also allows for more rate flexibility based on how patient needs change throughout a patient's stay.

    PDPM should also represent good news for health systems in their partnerships with SNFs. The proposed model sets payments for SNFs based on five components that measure the level of care a patient needs, including nursing, therapy, and ancillary services. This will help to increase reimbursements for treating high-cost patients, including high-acuity patients and those with complex medical needs—the types of patients whom health systems increasingly send to SNFs.

    PDPM is currently scheduled to go into effect Oct. 1, 2019, but you shouldn't wait until then to get ready. To learn what you need to know about how to position your organization to succeed in an ever-changing post-acute industry, join our four-part summer webconference series, "Mastering the Post-Acute Continuum":

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