Joshua Buckingham, CPA and Principal at TD&T gives updates on changes in Medicare reimbursements for Skilled Nursing Facilities.

On July 31, 2017 the Centers for Medicare & Medicaid Services (CMS) issued a long-expected final rule explaining Medicare payment rates and quality programs for skilled nursing facilities (SNF) for the upcoming fiscal year, FY 2018. Among the changes, CMS outlined the agency’s “commitment to shift Medicare payments from volume to value, with continued implementation of the SNF Value-based Purchasing (VBP) program.”

What Does this Mean for The Prospective Payment System?

CMS projects that overall payments should increase by $370 million, up one percent over FY 2017. This increase also comes with some potential downside. Dependent on the rehospitalization rate of skilled patients, facilities with high rehospitalization could see a decrease in their Medicare rates by 2%.

Quality Reporting Program Changes

The CMS also announced changes to its Skilled Nursing Facility Quality Reporting Program (QRP). However, this also comes with some downside, nursing homes that do not provide their data to CMS will receive a two percentage point reduction to their applicable annual market basket percentage update for the fiscal year.
The final rule also includes some specific changes relating to quality of care. This includes replacing the current pressure ulcer measure with an updated measure.

CMS also announced changes that affect subsequent years. The Center stated it will begin reporting six new measures for 2018. In addition, it reported that additional measures will start in subsequent years:
• Residents or patients with pressure ulcers that are new or worsened (short stay)
• Application of percent of long-term care hospital patients with an admission and discharge functional assessment and a care plan that addresses function
• Changes in skin integrity post-acute care: pressure ulcer/injury

Medicare Initiates Value-Based Nursing Home Reimbursement

CMS wants to move from the Fee for Service to the Value Based Purchasing Program because they view this as a way to save a significant amount of money by encouraging a decrease in length of stays and suboptimum outcomes such as rehospitalization or other declines in the patient, such as pressure ulcers. The CMS website states, “We’ll pay participating skilled nursing facilities for their services based on the quality of care, not just quantity of the services they provide in a given performance period.” It appears CMS ultimate goal will be moving to paying more money for early parts of the Medicare stay, and decreasing in a step ladder approach as the length of stay continues, to where the final Medicare rates will be slightly higher than current Medicaid rates.

Final Take Away

It will be important for facilities to be careful in the admission process to limit the risk of rehospitalization. Patients with more complex cases can increase RUG’s and ultimately payment levels, but with the new system they have a higher rehospitalization rate. It will be important for facilities to work with their Therapy Team, Nursing Department and Physicians on the types of patients the facility would like to focus on, and the need to treat the majority of the patients’ needs at the facility if at all possible to decrease the hospitalization rates.

TD&T Can Help You Understand The CMS Changes

TD&T professionals can help you recognize how these changes will affect your facilities. Please contact us for assistance in understanding this or any other change that affects your SNF operations.