Significant Changes Ahead for SNFs

At the beginning of the year, we hosted a webinar on the top trends for SNFs to be aware of going into 2018. Now that we’re three-quarters of the way through the year, we’re revisiting this topic to provide updated guidance to SNFs on what to expect as we close out 2018 and look forward to 2019. In the new year, SNFs will face new payment models and government regulations, some of which we didn’t discuss in the winter webinar. Not only will SNFs need to continue to provide value to their acute partners in 2019, but they will also need to demonstrate their quality relative to other SNFs and even PAC providers in other settings such as LTCH, IRF, and HH.

Three Major Changes on the Horizon

  1. Patient Driven Payment Model: On October 1, 2019, CMS will replace the long-standing Resource Utilization Group (RUG) based Medicare fee-for-service (FFS) reimbursement model with the new Patient Drive Payment Model, or PDPM. The RUG-based model, which has been in place since the 90s, is often criticized for overly basing reimbursement on the volume of therapy services provided. The new PDPM will not consider the number of minutes or days of therapy services provided to the patient, but rather will be based on the patients’ needs for five case-mix components: physical therapy (PT), occupational therapy (OT), speech language pathology (SLP), nursing, and non-ancillary services (NTA). The determinants of these case-mix components will be based on the patient’s primary reason for the SNF care, functional status, cognitive status, comorbidities, and extensive services required, among other things. Unlike the RUG-based payment model, which provides a constant per diem payment for each RUG, the PDPM model will introduce variable per diems that decrease over the patient’s length of stay (LOS). This will further incentivize SNFs to reduce their patient’s LOS.
  2. Interoperability of PAC Quality Measures: There is a whole slew of new measures that are going to be posted on Medicare’s Nursing Home Compare website this fall, pertaining to CMS’s Quality Reporting Program, or QRP, which was born out of the 2014 IMPACT Act. The aim of the QRP is to create quality measures that are standardized across PAC settings – IRF, LTCH, SNF, and HH. Unlike quality measures that have been publicly reported in the past, which could be used to compare one SNF to another, the QRP measures will be used to compare SNFs to other PAC providers in their market. As CMS takes steps to move patients to the lowest cost care setting that’s clinically appropriate, these new measures may shape referral patterns of hospitals looking to reduce SNF utilization.
  3. Changes to ACO ProgramsAs discussed in this recent Skill Nursing News article, CMS is scrutinizing the risk structures of current ACO programs and considering a move toward increased downside risk for all programs, not just the Next-Generation ACO program. Although this change is not as specific to SNFs as the PDPM or quality measures, it underscores the overall increase in the pressure on SNFs to demonstrate their value to a growing number of partners. As value-based programs evolve they continue to require higher and higher levels of accountability from stakeholders across the continuum.

In light of the changing payment and regulatory landscape, SNFs need to develop new strategies for financial success. In addition to continuing to provide high-quality care, gaining an understanding of how quality is measured and learning how to demonstrate that quality to stakeholders is more important than ever.

Keep your eyes on our blog for continuing coverage of changes to SNF regulations and guidance on how to comply. We’ll be sharing an analysis of the new QRP measures this fall as soon as they are finalized and published.

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