Authored by Kristine A. Schaan, M.A., CPG, NHA, Consultant

The Centers for Medicare & Medicaid Services (CMS) recently released a statement that the Bundled Payments for Care Improvement (BPCI) initiative will extend to September 30, 2018 for Models 2, 3, and 4 episode initiators. Awardees that began participation in October 2013 as well as those awardees that joined in 2014 have the opportunity to extend their participation by two years, into 2018, as opposed to the scheduled end date of September 30, 2016.

The voluntary program is part of CMS’s broader initiatives through the its Innovation Center which tests innovative payment and service delivery models with the goal of achieving the Triple Aim. CMS hopes that extending BPCI will provide more time to evaluate and determine the initiative’s effectiveness.  “By extending their participation, CMS will be able to provide a more robust and rigorous evaluation of the initiative and determine whether the efforts of bundling payments are successful in providing better care while spending healthcare dollars more wisely,” Dr. Patrick Conway, CMS Acting Principal Deputy Administrator. Early insights by industry experts believe that many existing awardees will pursue extending their participation in the BPCI Initiative as a number of the frustrated awardees have already terminated their participation.

Link to CMS Fact Sheet: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-04-18.html

This past week the Medicare Payment Advisory Commission (MedPAC) released its report to Congress which highlights a number of fee-for-service payment recommendations.  Key MedPAC recommendations specific to post-acute care providers include:

• Eliminate market basket update for skilled nursing facilities (SNFs).  This recommendation is for both 2017 and 2018 and directs the Secretary to revise the prospective payment system (PPS) for SNFs.
• Eliminate payment update for home health agencies (HHAs) in 2017 with implementation of two-year rebasing of payment beginning 2018.
• Eliminate payment rate update for inpatient rehabilitation facilities (IRFs) in 2017.  The Secretary should also conduct audits of IRFs with unusual patterns of case mix and coding as well as expand the outlier pool to redistribute payments more equitably across cases and providers.
• Eliminate payment rate update for long-term care hospitals in 2017.
• Eliminate the update to hospice payment rates in 2017.

An update was also provided on the status of a unified payment system for post-acute care and will be presented to Congress in June.  MedPAC and HHS would develop the new payment system to replace the current post-acute care prospective payment systems. These recommendations support site neutral payment policy with a goal that payment to post-acute providers be based on patient clinical characteristics rather than care setting based.

A quest for skilled nursing facility (SNF) providers is to stay competitive and in the game of providing exceptional skilled care while experiencing solvent financial outcomes. As challenging as it may sound, there are strategies a SNF provider must have in their defensive and offensive plans to achieve optimal operational and financial performance.

SNF providers are well aware that the Centers for Medicare and Medicaid Services (CMS) has made many revisions to the prospective payment system, such as refining case mix indexes (CMI), shifting dollars towards nursing care and away from therapy services, and basing payments on the cost associated with the care residents received. Although CMS has made these revisions, MDS coding and activities of daily living splits continue to be key revenue drivers.

With the emergence of alternative payment models and commercial health plans entering into the Medicare replacement scope of business, SNF providers must closely monitor contract terms, revenue drivers, and revenue pitfalls. Revenue drivers within the commercial plans may vary, while revenue pitfalls can be associated with shortened length of stay, reduced rates, and high-cost outliers. Contract terms, if not adhered to, can be very costly and an administrative nuisance.

Now more than ever, nursing care delivery, nurse staffing, and quality metrics drive facility five-star quality ratings and play an integral role in payor and resident relationships. With CMS’s recent announcement of the quality metrics that go into effect in April 2016, more emphasis will be needed to monitor the outcomes of short-stay residents related to hospital readmission, emergency department visits, and improvement in resident function. For long-stay residents, a SNF provider’s five-star quality rating will be ranked on the ability of residents to move independently and on the use of antianxiety or hypnotic medications.

Savvy SNF providers will determine their game plans through strategic planning efforts; however, strategic plans that do not address the top-line operational performance levers may leave a provider’s operations on the sidelines and unable to meet performance goals necessary to survive. SNF providers can take on a defensive role by becoming sound operational stewards that stay fully engaged in the game. SNF providers can achieve the goal line by assuming the overall responsibility in seeking and securing strategic partnerships, having an efficient and effective skilled work force, and employing departmental responsibility and standardization, as well as having the ability to deliver an advanced clinical platform.

As the game becomes more competitive and revenues become more restrictive, SNF providers must seek solutions to secure their business portfolios. The game forecast indicates game changers to be: reduced readmissions, increased employee and resident satisfaction, coordinated care alternatives, and continued adherence to regulatory compliance. By embedding the game changers into the SNF value proposition and integrating the game changers into the operational strategic plans, providers will secure solutions for optimizing operational and financial performance.

Overall, the operational game plan must effectively include fiscal stewardship and resident advocacy in tandem to secure the win and to successfully navigate the daily challenges for skilled nursing care providers.