During a pandemic that has led to an acute workforce crisis, the Centers for Medicare & Medicaid Services (CMS) has seen fit to propose cuts to the Part A payment system for skilled nursing facilities (SNFs) and changes to the Skilled Nursing Facility Value-Based Purchasing (SNF VBP) Program.
Why is CMS proposing these changes, and why now? Providers need to understand the imperatives behind these proposals so that they can realistically prepare to succeed.
What Are the Key Changes Proposed?
In the proposed rule, there are essentially two major changes on the table.
One is a cut to Medicare Part A rates for SNFs of 4.6 percent to maintain budget neutrality with the previous payment system. This would result in a reduction in SNF spending by 4.6 percent, or $1.7 billion, in FY 2023. CMS has consistently stated that the new system must be budget neutral compared to the old payment system. There is controversy about the budget neutrality calculation, however, specifically around measuring the effects of COVID-19 and the impact of the waiver of the three-day prior hospital stay requirements on the calculation. CMS is making the case that it has factored those issues into the budget neutrality analysis. Others disagree.
The other major proposal is to expand the scope of the SNF VBP Program. Currently, the SNF VBP Program penalizes/rewards SNFs based on performance on a single measure of hospital readmissions. (Note: currently the performance metrics of this program are on hiatus due to COVID-19 and will return at some point.) The Consolidated Appropriations Act of 2021 (CAA) authorizes the secretary to apply up to nine additional measures to the program in the coming years.
To begin implementation of these changes, CMS proposes the adoption of three new measures into the SNF VBP Program: two claims-based measures and one payroll-based journal staffing measure. The measure proposals also include three new measures beginning with FY 2026 and FY 2027 SNF VBP Program expansion years, including:
- FY 2026: SNF Healthcare Associated Infections Requiring Hospitalization (SNF HAI) and Total Nursing Hours per Resident Day measures.
- FY 2027: Post-Acute Care Measure for SNFs, which is an outcome measure that assesses the rate of successful discharges to community (DTCs) from a SNF setting.
One needs to look no further than the Home Health Value-Based Purchasing Model for insight as to how an enlarged value-based purchasing program for SNFs might be implemented. That program is set to have its first performance year starting in January 2023. It is based on a set of assessment, claims-based, and patient satisfaction measures. It uses a series of peer groups and measures each agency’s improvement and achievement scores, giving credit for the better of the two.
Many people are not aware that the Medicare Hospital Insurance Trust Fund is projected to be insolvent by 2026, after which it will only be able to pay 90 percent of its benefits absent action by Congress to reduce costs, cut benefits, or increase taxes. Well, you can guess how popular those options are, so it is no wonder we have seen little political discourse on this subject to date. At some point, that will have to change.
Of concern is that the effect of the COVID-19 pandemic has not been fully factored into the solvency calculations, so it remains to be seen if that will make the projections even worse.
Relative to the unpalatable options of cutting benefits and raising taxes (both of which may ultimately need to be done anyway), Congress and CMS will have strong incentives to implement all options to promote value-based care and alternative payment models. The insolvency issues will not go away on their own, and this is what is driving the timing of these proposals.
What Should Providers Do?
First, strategic planning efforts need to be cognizant of these imperatives and be designed for a value-based world. CMS has announced a value-based moonshot to have every Medicare beneficiary in a population-based risk arrangement by the end of the decade. That goal should be a part of your plans, too.
Second, regarding the proposed Patient-Driven Payment Model (PDPM) cuts, there are several steps that can be taken:
- Provide comments to CMS by June 10, 2022. CMS has options to remove or delay the adjustment, or spread it out over several years.
- Conduct a coding review to ensure you are receiving every dollar to which you are legitimately entitled. We have seen attention to coding accuracy and completeness take a back seat to issues of the moment over the last two years.
- Review provision of therapy, including the potential to increase group and concurrent therapy, and review your therapy contract to make sure incentives are aligned between the facility and therapy provider and that payments are at market rates. Many providers negotiated stop-gap contracts back in 2019 which now need to be revisited.
- Have realistic budgeting for 2023 and beyond.
Finally, regarding SNF VBP, the premium will be on managing quality metrics. This will require robust Quality Assurance and Performance Improvement (QAPI) processes, sound IT systems, and increased use of dashboards and quality management strategies. There will be some time to prepare, but the initial performance periods will be here before you know it! Meanwhile, a continued focus on readmissions will be in order.
We can help with these challenges. As a national leader in senior care management and consulting services, Health Dimensions Group (HDG) is uniquely positioned to assist providers with operational, financial, and strategic issues. For more information on how HDG can help you, please contact us at email@example.com or 763.537.5700.