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1 Executive White Paper Series April 2015 In Cooperation With: This white paper series is produced by the LINK Conference, whose mission is to accelerate productivity and innovation in long term care and senior living through meaningful partner relationships. LINK is for providers and operators who are looking to drive a buying initiative, discover the latest innovations, strengthen vendor relationships and improve operational excellence. LINK July 13-15, 2015 Sheraton Chicago ltclinkconference.com Participation is exclusively for large long term care and senior living provider teams (500+ beds or units) and leading-edge product/ service companies. Submit content for consideration to What s Next? The Evolving Landscape of Rehabilitation in Long Term Care With Proposed CMS Payment and Policy Updates for 2016 Last January, the parent organization of CMS, the Department of Health and Human Services, proclaimed that Medicare payments will increasingly depend on outcomes and the value that is delivered. As a practical matter, this means rather than paying skilled care operators according to set formulas, alternative options will increasingly be employed. The obvious new alternatives include bundled payments and a greater reliance on accountable care organizations. There is much more to the payment reform landscape than those two alternatives. CMS announced that the percentage of Medicare's alternative payments will jump from the current 20% benchmark to 30% in and to 50% by The shift to alternative payment systems is already a reality. While important details are yet to be finalized, there's no doubt that operators who rely on Medicare funding will need to reconsider how they do business. Among the questions that merit special attention: How will our organization embrace new strategies to ensure survival in a reimbursement environment which puts a premium on value-based care? What specific kinds of rehabilitative care do we need to deliver going forward? What will separate us from the competition? Change in the rehabilitation reimbursement landscape is inevitable. Operators must be proactive and purposeful in accommodating the emerging Medicare payment system changes. Outpatient Therapy Payment Reform Policymakers are seeking ways to reform payment systems to achieve greater reporting accuracy, promote quality care, and reduce fraud and abuse. In the Balanced Budget Act of 1997, Congress charged CMS to develop an alternative payment system to impact the Medicare therapy cap - an arbitrary limit that restricts patient access to clinically appropriate services. In 2011, the American Physical Therapy Association (APTA) established guiding principles for transitioning payment systems from fee-for-service/ procedural payment to a per-session system involving identifying severity and intensity. In 2012 an AMA work group was formed with representation from providers who bill under the PM&R code set. This work group was charged to reform the code set with options to include a per session system. Implementation of this alternative payment system could be as early as January

2 In summary, the work group proposed to reform payment for outpatient therapy services by transitioning from the current fee-for-service, procedural-based payment system to a per-session payment system. It is believed that a system that categorizes patients based on the severity of their condition and intensity of the interventions required better reflects the professional clinical reasoning/judgment and decision making by the therapist, improves provider compliance, reduces administrative burdens surrounding current payment models, and is consistent with and enhances payer recognition of the value of therapist-directed care. This bundled approach to the codes could result in more appropriate valuation of therapy services that better reflects the patient s condition and the clinical judgment of the therapist. The alternative payment system (APS) would consist of three evaluation codes and nine examination and intervention codes. Evaluation codes would be differentiated based on the level of complexity of the evaluation to the physical therapist - limited complexity, moderate complexity, and significant complexity. Intervention codes would be differentiated into levels based on the severity of the patient s condition at the time of the visit and the intensity of services provided for the patient during that visit. Example of the three evaluation codes can be seen to the right. Examples of APS Evaluation Codes Clinical Considerations and Complexity of the Examination Evaluation Level of Evaluation Limited/Problem-Focused 1 Moderate/Detailed 2 Significant/Comprehensive 3 Proposed revisions (above) were presented to the American Medical Association s CPT Panel in February The outcome of this proposal have yet to be announced, however there are several potential outcomes: entire proposal accepted, partial proposal accepted, proposal continues to be developed with implementation date pushed to Once code changes are accepted by CPT Panel, the AMA Relative Value Update Committee (RUC) will work to determine values leading to fee schedule pricing for each of the levels of evaluation and intervention codes. These changes will require extensive education of providers, billing services, payers, policy makers, governmental agencies, and regulators. How the Alternate Payment System will Affect You It is not a matter of IF this alternative payment system will be implemented but WHEN. What can you do to prepare? Despite CMS directive for budget neutrality in this payment system, it will have a direct effect on your bottom line. Questions to ask yourself: What are my average codes per visit? What is my mix of patient severity? With what frequency do I use modalities? How will productivity be calculated? (Remember, time will be less of a factor) Most important, what is the quality of my current rehab documentation? Will it support the new evaluation codes that target severity and complexity factors, co-morbidities, cognitive status, stability of clinical condition, safety risks, complexity of clinical decision making, predictability of the condition, use of outcome tools or assessments, body regions impacted, and the amount of coordination or communication with others? 2

3 SNF Therapy Payment Reform In April of 2014, Accumen, LLC under contract by CMS published a report summarizing a year-long effort to identify and evaluate potential alternatives to therapy reimbursement for the skilled nursing facility (SNF) prospective payment system (PPS). Currently, therapy reimbursement under the SNF PPS is based primarily on the amount of therapy provided to a resident. Recommendations to change the reimbursement model have come from the Medicare Payment Advisory Commission (MedPAC) and the Office of the Inspector General (OIG) (MedPAC 2008; Levinson 2012), as well as from research conducted by The Urban Institute that was commissioned by Centers for Medicare & Medicaid Services (CMS) (Liu et al. 2007). These reports advocate for a new model that would consider specific patient characteristics and care needs. In addition, the reports and other sources have faulted the current therapy reimbursement model for the increasing volume of therapy services billed to Medicare by SNFs by creating financial incentives for therapy provision (MedPAC 2008). By identifying and addressing these opportunities for improvement, the project team will develop alternative therapy payment approaches and evaluate how well these changes would strengthen the system. Payment Models Two Likely Alternatives Four payment system concepts were evaluated, and based on each concept s performance on the evaluation criteria, Accumen LLC recommended using the resident characteristics model and hybrid model concepts to inform the specific models that will be developed and tested in the next phase of the project. Each of these two payment models scored within the moderate/strong performance rating for the following six criteria groups: 1. Improves payment accuracy for SNF services 2. Improves incentives to provide appropriate level of care for individuals 3. Feasible to implement in short- to medium-term 4. Minimizes start-up and ongoing implementation costs for CMS 5. Minimizes burden on stakeholders 6. Reduces impacts on or improves consistency with other settings/payers Summaries of these two payment models can be found below. Resident Characteristics Model This payment concept uses resident information, such as medical, functional, or cognitive status, to group residents with similar clinical characteristics and expected cost of care for the purpose of determining reimbursement. In general, this approach uses existing practice patterns to develop an empirical model of the relationship between resident characteristics and expected costs of therapy care. The resident characteristics model performed best, rating strong on all but one criteria group - the ability to reduce the impact on, or improve consistency with, other settings and payers. By shifting the basis of therapy casemix groups solely to resident characteristics, this model addressed many of the opportunities for improvement to the SNF PPS that have been identified in the literature and measured through the evaluation criteria. Because such a model could be implemented without legislation, it is also feasible to implement in the shortto medium-term. 3

4 Hybrid Model This payment concept pairs a case-mix classification system with a resource-based pricing adjustment. This conceptual approach is similar to the current SNF PPS, in that it directly incorporates some measure of resource use into its determination of payment. The specific resource pricing adjustment could take a variety of forms, including a fee schedule add-on, block pricing, or an outlier payment adjustment for costly residents. The hybrid model was the next best alternative. The model rated moderately strong on the criteria group I because the resource-based adjustment links payment to expended resources, which are less objective and verifiable than resident characteristics. It rated moderately strong on criteria group 2 because it minimizes the incentive to under-provide care, but does not minimize the incentive to over-provide care. The need for legislation depends on the nature of the resource-based adjustment, so legislation would be required if the adjustment alters the existing per-diem basis of payment under the Social Security Act. During the next phase Accumen LLC will develop and analyze the two recommended payment model concepts described above. Building on the work conducted over the past year, the project team will develop each concept into a fully specified model suitable for implementation. Accumen LLC will submit a recommendation for which model should be implemented as part of the SNF PPS. Standardized Rehab Outcomes - Post Acute Care Demonstration and The Impact Act During the last ten years, CMS, with direction from Congress, has begun to transform from a passive payer of services to an active purchaser of higher quality, affordable care. Future efforts will certainly link payment to the quality and efficiency of care provided and will shift Medicare away from paying providers based solely on volume of services. This shift is known as Value-Based Purchasing (VBP) and is discussed below in more detail. SNFs have fallen significantly behind other continuum settings in creation, adoption and implementation of quality performance During the last ten years, CMS, with measures, and thus performance has not been direction from Congress, has begun to transform significantly impacted currently. While SNFs from a passive payer of services to an active are mandated to report quality measures purchaser of higher quality, affordable care. by way of the MDS 3.0, they do not incur a Future efforts will certainly link payment to the payment penalty based on the outcomes of quality and efficiency of care provided and will their quality reporting. Currently the following shift Medicare away from paying providers providers incur penalties based on their pay based solely on volume of services. for reporting mechanisms: inpatient acute-care hospitals, long-term care hospitals (LTCHs), inpatient rehab facilities (IRFs), hospice, home health and outpatient. The information below will summarize the roadmap followed to date related to attempts to standardize rehab outcome measures (Post-Acute Care Payment Reform Demonstration), and what to expect to in the years to come (Improving Medicare Post-Acute Care Transformation). 4

5 Post-Acute Care Payment Reform Demonstration AHCA and NASL were jointly engaged in a pilot study to validate several proprietary tools against the same functional mobility and self-care items included in the CMS Post-Acute Care Payment Reform Demonstration (PAC-PRD). The project was heavily influenced by NASL s previous work with The Moran Group, as well as CMS PAC-PRD 1, whose findings point to several functional measures of mobility and self-care that were reliable sources of outcomes data, as well as useful predictors of resource use. The Post- Acute Care (PAC) payment reform demonstration examined the relative costliness and outcomes of patients admitted to different types of PAC providers. A single, standardized assessment data set was used: the Continuity Assessment Record and Evaluation (CARE). Data collection using the CARE Item Set occurred as part of the Post Acute Care Payment Reform Demonstration and included 206 acute and PAC providers 2. It is expected the project results will be used to generate recommendations for potential payment alternatives to help assure that post acute care patients are treated in the clinically most appropriate setting. The demonstration lasted from 2008 to An initial report was submitted to Congress in A second report in November 2012 recommended development of two motor functional status quality metrics, self-care and mobility. These quality metrics would be used across acute and post-acute care providers including IRFs, LTCHs, SNFs and HHAs. The quality metric would use items from the CARE item set. Providers should strongly consider researching the CARE Item set, familiarizing themselves with the tool, and even going as far as implementing the use of this outcome tool proactively. The Impact Act of 2014 Last year, the sitting Chairmen and Ranking Members of the House Ways and Means and Senate Finance Committees invited Medicare post-acute care (PAC) stakeholders to provide ideas for post-acute care reform. The resounding theme across the more than 70 letters received was the need for standardized post acute assessment data across Medicare PAC provider settings. The IMPACT Act signed by President Obama directs the US Department of Health and Human Services (HHS) to standardize patient assessment data, quality, and resource use measures for PAC providers including home health agencies (HHAs), skilled nursing facilities (SNFs), inpatient rehabilitation facilities (IRFs), and long-term care hospitals (LTCHs). The lack of comparable information across PAC settings undermines the ability of policymakers to evaluate and providers to determine appropriate care settings for patients based on clinical evidence and quality metrics while differentiating between PAC providers. The IMPACT Act acknowledges this information gap and requires collection and analyses of data that will enable Medicare to: (1) compare quality across PAC settings; (2) improve hospital and PAC discharge planning; and (3) use this information to reform PAC payments (via site neutral or bundled payments, for example) while ensuring continued beneficiary access to the most appropriate setting of care. 5

6 Highlights of the IMPACT Act The new law requires: PAC providers to begin reporting standardized patient assessment data at times of admission and discharge by October 1, 2018, for SNFs, IRFs, and LTCHs and by January 1, 2019, for HHAs. This will include acute hospitals, cancer hospitals, and critical access hospitals by Quality measure reporting (Oct. 1, 2016, for SNFs, IRFs and LTCHs, and Jan 1, 2017, for HHAs) that will include functional status changes, skin integrity and changes, medication reconciliation, incidence of major falls and patient preference regarding treatment and discharge options. Resource use measures by October 1, 2016, including Medicare spending per beneficiary, discharge to community, and hospitalization rates of potentially preventable readmissions. The Secretary of HHS to provide confidential feedback reports to providers. The Secretary will make PAC performance available to the public in future years. MedPAC and HHS to study alternative PAC payment models, with reports due to Congress in 2016 for MedPAC and for HHS. The Secretary to develop processes using data to assist providers and beneficiaries with discharge planning from inpatient or PAC settings. CMS Proposed Payment and Policy Changes for 2016 On April 15, 2015, CMS released its proposed fiscal year 2016 payment and policy changes for skilled nursing facilities. Based on proposed changes contained within this rule, CMS projects that aggregate payments to SNFs will increase by $500 million, or 1.4 percent, from payments in FY This estimated increase is attributable to a 2.6 percent market basket increase, reduced by a 0.6 percentage point forecast error adjustment and further reduced by 0.6 percentage point, in accordance with the multifactor productivity adjustment required by law. In addition, the Act requires establishing a SNF quality reporting program. Beginning with FY 2018, the Act requires SNFs that fail to submit required quality data to CMS under the SNF Quality Reporting Program will have their annual updates reduced by two percentage points. For the FY 2018 SNF QRP and subsequent years, CMS is proposing to adopt three measures addressing three quality domains identified in the IMPACT Act: (1) skin integrity and changes in skin integrity; (2) incidence of major falls; and (3) functional status, cognitive function, and changes in function and cognitive function. Section 215 of the Protecting Access to Medicare Act of 2014 (PAMA) added new subsections (g) and (h) to section 1888 to the Social Security Act (Act). New Subsection 1888(h) authorizes establishing a Skilled Nursing Facility Value-Based Purchasing (SNF VBP) Program beginning with FY 2019 under which value-based incentive payments are made to SNFs in a fiscal year based on performance. 6

7 The rule proposes to adopt the Skilled Nursing Facility 30-Day All-Cause Readmission Measure (SNFRM) (NQF #2510), as the all-cause, all-condition readmission measure that will be used in of the SNF VBP Program. The Skilled Nursing Facility 30-Day All-Cause Readmission Measure estimates the risk-standardized rate of all-cause, unplanned, hospital readmissions for SNF Medicare beneficiaries within 30 days of their prior proximal short-stay acute hospital discharge. The Act also requires CMS to replace this measure with an all-condition, risk-adjusted potentially preventable hospital readmission rate. CMS intends to address this topic in future rulemaking. Providers should ensure processes are in place to track the quality measures mentioned above in order to avoid potential penalties/reductions in their annual payment updates. References Post Acute Care Payment Reform Demonstration Report to Congress Supplement Interim Report. RTI International. CMS contract No. HHSM I. May 2011 (http://www.cms.gov/medicare/ Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/index.html) Item-Set-and-B-CARE.html SNF Therapy Payment Models Base Year Final Summary Report April 2014; Accumen LLC. gov/medicare/medicare-fee-for-service-payment/snfpps/downloads/summary_report_ pdf An Alternative Payment System for Physical Therapy Services Developmental Draft for APTA Members March 15, Report to Congress: Plan to Implement a Medicare Skilled Nursing Facility Value-Based Purchasing Program. Washington, DC: U.S. Department of Health and Human Services. Fee-for-Service-Payment/SNFPPS/Downloads/SNF-VBP-RTC.pdf. Quality-Initiatives/IMPACT-Act-of-2014-and-Cross-Setting-Measures.html About The Author P.J. Rhoades PT DPT MS CHS holds a Certification in Health Care Compliance, and currently serves as the Director of Corporate Compliance and Reimbursement for Vertis Therapy, as well as a national educator and consultant in the field of rehabilitation compliance management. For more information, conact: Paul Riccio, VP, Finance and Development, Vertis Therapy Thank you to 2014 LINK Innovation Competition Winner Vertis Therapy (formerly Creative Health Solutions), for their contributions to this white paper. The Innovation Competition celebrates the unique products and services that have been recently introduced to the long term care and senior living marketplace. 7

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