Potential Impacts of New Medicare Payment Models On Skilled Nursing Facility and Home Health Care

The Centers for Medicare & Medicaid Services will be implementing revised payment systems for both skilled nursing facility care (effective October 2019) and home health care (effective January 2020). The Center for Medicare Advocacy has written at length and submitted comments on both the home health and skilled nursing facility payment models. Unfortunately, implementing these payment models will likely result in both greater difficulty in accessing care, and diminished care for Medicare beneficiaries. The Center’s key concerns in both care settings are outlined below.

1. Skilled Nursing Facility: Concerns About the Patient-Driven Payment Model (PDPM), the New Medicare Part A Reimbursement System for Skilled Nursing Facilities (SNFs) (Effective Oct. 1, 2019):

• Nursing home residents will receive less medically necessary therapy (physical, occupational, and speech).

When the Centers for Medicare & Medicaid Services (CMS) announced the new SNF payment system (PDPM) in final rules published Aug. 8, 2018 (83 Fed. Reg. 39162, 39183-39265), it included Impact Analysis Tables (Table 37, for residents; Table 38, for facilities) that expressly stated that reimbursement under PDPM would be higher for residents receiving no therapy and lower for residents receiving any therapy, especially those receiving all three types of therapy.
Even before October 1, 2019, therapists across the country reported to their professional associations and the media that they were losing their jobs, having their hours reduced, and having their benefits reduced.  The provision of therapy by SNFs has already declined.

• Maintenance therapy, which is professional therapy to maintain function or to slow or decline deterioration, will be at special risk.

Jimmo confirmed Medicare coverage of maintenance therapy, but the case has been too often honored in the breach.  SNFs will be less likely to provide medically necessary maintenance therapy to residents going forward.

• Facilities will provide group and concurrent therapy, rather than individual therapy (as 99% of therapy was provided under the prior reimbursement system, Resource Utilization Groups-IV).

CMS says that SNFs can provide up to 25% of each therapy discipline as group or concurrent therapy.  However, SNFs exceeding the 25% cap will just receive a “non-fatal warning edit” – that is, no consequence at all.
Therapists have told their associations that they have been pressured to switch their clients from individual to group or concurrent therapy.

• SNFs may substitute other types of caregivers for professional therapists, jeopardizing Medicare Part A coverage of the resident’s SNF stay.

Residents may not know they are no longer receiving professional therapy services if a non-therapy staff member provides therapy-like services.  However, residents must receive professional therapy services five days a week (or skilled nursing care seven days a week or a combination of the two) in order to qualify for Medicare coverage of their stay.  Receiving therapy-like services will not qualify beneficiaries for Medicare coverage.

• SNFs will change their admissions practices to admit Medicare beneficiaries who will bring in higher reimbursement rates.

Trainings for the industry have advised that ventilator patients bring in a higher rate of reimbursement, although SNFs may not have sufficient nursing staff or good infection control practices to provide appropriate care to these highly vulnerable people.  (The New York Times reported that drug-resistant infections are prevalent for residents in nursing facilities who use ventilators because of insufficient nursing staff and poor infection control practices.  “Matt Richtel, Andrew Jacobs, “Nursing Homes Are a Breeding Ground for a Fatal Fungus, (Sep. 11, 2019), https://www.nytimes.com/2019/09/11/health/nursing-homes-fungus.html?searchResultPosition=7.)
Residents with significant care needs may gain admission to SNFs, but receive poor care and be harmed.

• SNFs may change their assessment practices to increase reimbursement rates.

Trade press articles suggest that identification and treatment of depression can boost Medicare payments by $43 per day and support longer lengths of stay.  Similarly, identification of cognitive impairment can raise reimbursement by $21 per day and support longer lengths of stay.
Financial incentives may lead to inaccurate assessments and inappropriate treatments.

• SNFs may discharge residents too soon.

CMS’s Impact Analysis Tables show that residents with lengths of stay exceeding 15 days will bring in lower rates to SNFs.  When Medicare coverage ends, residents may go home prematurely.

• Residents may convert to Medicaid more quickly.

With Medicare’s covered length of stay shortened (an intentional and predicted result of PDPM) and residents continuing to need institutional care, residents may turn to Medicaid more quickly.  Residents may first need to spend down their private resources until they become financially eligible for Medicaid.  Once using Medicaid, they may have greater financial responsibility for their care, under Medicaid cost-sharing requirements, than if they had remained on Medicare.  States will also feel the financial impact of additional people relying on Medicaid for long-term care.
2. Home Health Care: Concerns About The Patient-Driven Groupings Model (PDGM), the New Medicare Reimbursement System For Home Health (HH) (Effective January 1, 2020)

• Beginning in 2020, home health agencies will receive higher Medicare payment under the new payment system, PDGM for individuals who are admitted to home care after an inpatient hospital or skilled nursing facility (SNF) stay and lower Medicare payments for those who start home health from the community – which will include hospital outpatients and patients in Observation Status. This will likely diminish access to Medicare-covered home care for many beneficiaries with chronic conditions who qualify for coverage and care under the law.
• Home health agencies will provide less therapy for Medicare beneficiaries because therapy service utilization payment thresholds, that increased reimbursements, will be removed under the new payment model. More than 42% of for-profit home health agencies expect therapy to decrease by more than 10%.[1]
• Under the PDGM, payment incentives are high for agencies to serve beneficiaries with short-term post-acute needs and not to serve beneficiaries with chronic longer-term needs.

The CMS description of PDGM, is not, in any meaningful way, “shifting the focus from volume of services to a more patient-driven model that relies on patient characteristics”, as CMS has stated.[2]  CMS gives only token weighting to patient characteristics in PDGM. For example, an agency may receive as much as 60% higher payment for a beneficiary with an “early, institutional” admission to home care than for a beneficiary who avoided hospitalization, with a “late, community” admission to home care, regardless of services needed by either beneficiary[3]. In another example, an agency may receive as much as 25% higher payment for a beneficiary admitted to home care from an institution than for a beneficiary admitted from the community, regardless of services needed by either beneficiary.

• PDGM, the home health payment system for traditional Medicare beneficiaries will likely subsidize low Medicare Advantage (MA) plan payments since home health agencies often lose money when providing care to MA enrollees.
• PDGM will worsen concerns regarding inequities in available care. Consideration of social determinants of health will be more meaningful when CMS develops a payment system that does not discriminate on the basis of illness or injury and when CMS does not allow agencies to cherry-pick beneficiaries to serve based on inequitable policies.
• The fixed dollar loss ratio that determines outlier case payments will be re-adjusted to maintain the 2.5% cap of all payments. Since 2010, outlier payments (for more significant levels of care) have been cut by more than a billion dollars.[4] Most of the reductions have resulted in care not being provided for those who have significant needs.
• Eliminating split-percentage provider payments (partial payment at the beginning of a period of care, and remaining payment at the end), will push smaller home health agencies out of the market if, unlike large home health entities, they cannot afford to wait until after care is provided to receive payments. (proposed to be effective in 2021).
• Current and future quality reporting measures (QRM), value-based purchasing incentives (VBP), and CMS audits are structured to incent home health agency delivery of short-term and post-acute care services and to provide disincentives for delivery of care for patients with longer-term and chronic care needs.

Potential Impact of Medicare’s New Home Health Payment Model

• Medicare beneficiaries who were not recent inpatients and/or need more than 30 days of home health care will experience even greater problems accessing care than currently.
• Beneficiaries with longer-term and chronic conditions who are unlikely to improve will continue to experience a decline in the availability of Medicare home care services.
• Beneficiaries with hospital observation, outpatient, or emergency stays will experience a decline in access to home health care, since PDGM treats them as admissions from “the community” and attaches lower reimbursement rates.
• Beneficiaries who need and qualify for Medicare-covered therapy will receive less therapy.
• Beneficiaries with severe functional impairments and comorbidities will have even greater problems accessing care than currently, as agencies will likely decide they do not receive enough of a payment boost to provide this care.
• Access to home health aide care will continue its precipitous decline and home health aide services for beneficiaries who were not recent inpatients will also decline.
• Home health agencies will increase affiliations to provide home health aide services on a private-pay basis.
• The number of not-for-profit home health agencies will further decline.
• Home health agencies will affiliate with inpatient health care institutions, and/or institutions will acquire home health agencies.
• Inpatient health care institutions will increasingly refer patients to affiliated home health agencies.
• Home health agencies will only hire sufficient staff to serve “profitable” Medicare beneficiaries – people who have had prior inpatient institutional care, and people who need short-term care.
• Smaller, non-affiliated home health agencies will close or only take private-pay patients.
• Home health patients will receive less medically necessary therapy (physical, occupational, and speech).
• For dually eligible Medicare and Medicaid beneficiaries, more necessary home health care for people with longer-term, chronic conditions will be shifted to Medicaid.

Conclusion
For many years, through payment and quality rules, CMS has been moving Medicare benefits toward shorter-term, post-acute care coverage, despite coverage laws that provide equally for individuals with longer term and chronic conditions. These new payment rules will accelerate the discrepancy between services Medicare legally covers and services that beneficiaries are actually able to obtain.

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[1] https://www.nahc.org/wp-content/uploads/2019/06/WebEvent_19-06-04-1200_Handout.pdf
[2] https://www.govinfo.gov/content/pkg/FR-2019-07-18/pdf/2019-14913.pdf, page 34602
[3] See PDGM, example from early admission (first 30 days) with post-institutional admission versus late admission with a community admission.
[4] https://oig.hhs.gov/reports-and-publications/compendium/files/compendium2019.pdf, page 7