CMA Alert – SNF Payment Proposal Would Gut Therapy; Short-Term “Junk” Insurance Plan Harm; Home Health Highlight

1. Health Care Sabotage: More on Short-Term Limited-Duration “Junk” Plans
2. Home Health Highlight: People Can Leave Home and Still Receive Medicare-Covered Home Care
3. CMS Tries Again: Another New Skilled Nursing Facility Medicare Reimbursement System Proposed – If Implemented, Would Gut Therapy

Health Care Sabotage: More on Short-Term Limited-Duration “Junk” Plans

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In a New York Times article this week, Robert Pear reported on a study done by the chief actuary of the Center for Medicare & Medicaid Services, which shows the devastating impact of expanding access to short-term, limited-duration plans, as proposed by the Trump Administration. According to the Times, the study finds that as many as 1.4 million people could enroll in these plans during the first year. The study also finds that these plans could increase federal spending by as much as $1.2 billion next year and $38.7 billion over ten years. These numbers are in direct contradiction to what the Administration has said about the number of enrollees and cost to the government.

Just last week, in a hearing on Capitol Hill, Health and Human Services Secretary Azar defended the Administration’s proposal on these junk plans. Azar is quoted as saying “…expanding short-term health plans will not harm the insurance marketplace.” He also stated that “People are not going to be leaving subsidized insurance,” even as repeated studies show the opposite to be true.

For months now, the Center for Medicare Advocacy has been highlighting the impact of these misguided proposals on the individual marketplace and on older and disabled consumers. These plans were never meant to provide long-term insurance. At best, they serve as a stopgap coverage in limited situations. It is important to remember that this sort of short-term coverage has high out-of-pocket costs, doesn’t have to cover essential health benefits, may discriminate based on age or gender, may impose lifetime and annual limits, and doesn’t protect people with pre-existing conditions. In fact, one insurer specifies that “A pregnancy existing on the effective date of coverage will also be considered a preexisting condition.”  

While such plans will attract younger, healthier consumers, those who are older or disabled will face higher and higher costs – essentially being penalized for remaining in the marketplace, which, for now, will be the only place they can get the actual coverage that meets their needs.

Below are just a few of the reports that clearly show that these short-term plans will wreak havoc on the marketplace and give consumers a raw deal.

• Short-Term Plans Could Bring Long-Term Risks to California’s Individual Market: https://www.chcf.org/wp-content/uploads/2018/04/ShortTermInsuranceRiskCA.pdf.  
• Effects of Short-Term Limited Duration Plans on the ACA-Compliant Individual Market: https://www.communityplans.net/policy/effects-of-short-term-limited-duration-plans-on-the-aca-compliant-individual-market/.    
• Non-ACA-Compliant Plans and the Risk of Market Segmentation: http://healthyfuturega.org/wp-content/uploads/2018/03/Non-ACA-Compliant-Plans-and-the-Risk-of-Market-Segmentation.pdf. 
• Insurers Remaining in Affordable Care Act Markets Prepare for Continued Uncertainty in 2018, 2019: https://www.rwjf.org/content/dam/farm/reports/issue_briefs/2018/rwjf444308.  
• The Trump Administration Wants to Expand Access to Insurance That Discriminates Against Women: https://rewire.news/article/2018/03/28/trump-administration-wants-expand-access-insurance-discriminates-women/.  
• Updated: The Potential Impact of Short-Term Limited-Duration Policies on Insurance Coverage, Premiums, and Federal Spending: https://www.urban.org/research/publication/updated-potential-impact-short-term-limited-duration-policies-insurance-coverage-premiums-and-federal-spending.

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Home Health Highlight: People Can Leave Home and Still Receive Medicare-Covered Home Care

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The Center for Medicare Advocacy hears from Medicare beneficiaries throughout the country who are living with serious illnesses and injuries without the home care they need – and that should be covered by Medicare. There are many reasons for these access problems. Patients are told they don’t meet the qualifying criteria because they aren’t “homebound,” they don’t need skilled nursing or therapy, or they “only need maintenance care,” since they aren’t improving. Increasingly, they are told home health aides only provide bathing, for only a few days a week. None of this is accurate. All of it is harmful. 

Recently people have reported being denied access to Medicare home health care due to restrictive interpretations of the homebound standard, which must be met in order to qualify for coverage. To meet this standard,

• The individual must require assistance of another person or supportive device to leave home; or
• It is contraindicated for him/her to leave due to his or her medical, cognitive, or psychological condition; and
• There is a normal inability to leave home; and
• It requires a “considerable and taxing effort” to leave home.[1]

Unfortunately, too many Medicare providers and contractors misunderstand or distort this requirement.  For example, we received the following question from a woman who has ALS:

I cannot speak [due to my ALS] but I have a question. I was discharged a year ago from my home health agency because after the long winter of being home bound, I went to see a movie with my adult son. [The home health agency] said "You must admit, your case of ongoing care with our agency is unusual!" I didn’t fight their treatment. My question is this: living in Wisconsin with our harsh winters, making going out considerably more difficult, could I get the help I need for the winter months? My doctor has never hesitated to give me an order for needing skilled care and a plan of care. …

This kind of experience is untenable. The individual is clearly homebound, in fact, without help from another person, she would be bedbound...  She is not required to be a prisoner in her own home in order to meet the Medicare homebound requirement.

As the Centers for Medicare & Medicaid Services’ own policy manual states,

“… occasional absences from the home for nonmedical purposes, e.g., an occasional trip to the barber, a walk around the block or a drive, attendance at a family reunion, funeral, graduation, or other infrequent or unique event would not necessitate a finding that the patient is not homebound if the absences are undertaken on an infrequent basis or are of relatively short duration and do not indicate that the patient has the capacity to obtain the health care provided outside rather than in the home.”[2]

The intent of the homebound standard is to provide Medicare-covered care at home for people who don’t ordinarily have the capacity to leave home to obtain the health care they need. We urge advocates, providers, and CMS to help ensure the standard is not restrictively interpreted to bar access to reasonable and necessary care for people who qualify under the law.

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CMS Tries Again: Another New Skilled Nursing Facility Medicare Reimbursement System Proposed – If Implemented, Would Gut Therapy

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Proposed changes to nursing facility payment under consideration by CMS would reduce financial incentives to provide therapy, and would do so with such force – providing higher reimbursement to skilled nursing facilities (SNFs) that provide residents fewer types of therapy over a shorter period of time, or no therapy at all – that it would actually encourage facilities not to provide therapy. Further, the Jimmo v. Sebelius mandate to cover maintenance therapy would be ignored.

Comments on the NPRM are due June 26, 2018.  More details on the proposed changes below.

Ever since the prospective payment system for Medicare coverage of skilled nursing facilities (SNFs) was first implemented in 1998, the system has faced ongoing criticism.  Critics, including the Medicare Payment Advisory Commission[1] and the Department of Health and Human Services’ Office of Inspector General,[2] report that the reimbursement system encourages over-utilization of therapy services and provides insufficient payment for nursing services and inaccurate payment for non-therapy ancillary services (chiefly prescription drugs).  In May 2017, the Centers for Medicare & Medicaid Services (CMS) published an Advance Notice of Proposed Rulemaking (ANPRM) to solicit comments on options under consideration for revising the reimbursement system.[3]  CMS set out a proposed framework for a new Medicare payment system for SNFs, called Resident Classification System, Version I (RCS-I).

This May, as part of the annual update to Medicare SNF reimbursement, CMS abandoned RCS-I.  Instead, CMS proposes a different revised reimbursement system for SNFs, now called Patient-Driven Payment Model (PDPM).[4]  However, although CMS describes PDPM as different from RCS-I, in fact, many of the most troubling features are identical, if not worse.  Concessions to the nursing home industry (including requirements for fewer resident assessments and permission to use group and concurrent therapy for up to 25% of a resident’s therapy services) do not improve care for residents, and encourage gaming.

As described in detail in the NPRM (and illustrated in the chart below), PDPM dramatically changes the financial incentives for SNFs.  Under PDPM, as under RCS-I, SNFs would receive higher reimbursement if they provided 15 or fewer days of Medicare coverage and no therapy.  Medicare reimbursement would also be higher if 50-75% of a SNF’s Medicare days were billed as non-rehabilitation.  In contrast, Medicare reimbursement would be lower for SNFs providing care to the oldest residents (age 90+), residents receiving three types of therapy, and residents having 31 or more days of care paid by Medicare.

Current Medicare Reimbursement System for SNFs

The current system, called Resource Utilization Groups (RUGs), uses a case-mix component and a non case-mix component (which reflects room and board and various capital costs).  The case-mix component uses resident assessment information to determine a resident’s classification for payment purposes.  RUG-IV has two case-mix categories – nursing (which includes non-therapy ancillary services) and therapy (which includes physical, occupational, and speech therapy).  A resident’s RUG classification is based on the higher of the two case-mix categories.  Payment for residents in therapy groups reflects the amount of therapy that a SNF reports providing.  There are now 66 RUG-IV classifications based on resident assessment information.  At this time, more than 90% of residents are assigned to a rehabilitation-based RUG.[5]

PDPM

Instead of the RUG-IVs’ two components (nursing and therapy) for case-mix adjustment, PDPM creates six federal base payment rate components, five that are case-mix adjusted and one that is not.  As described below, these components are used to determine the per diem rate:

Case mix-adjusted component (5 parts)

Nursing

1. Nursing (57% of current nursing component)
2. Non-therapy ancillary (43% of current nursing component)

Therapy

3. Physical therapy
4. Occupational therapy
5. Speech-language pathology                     

Non case-mix-adjusted component (1 part)[6]

Case-Mix Adjustments under PDPM

• A decline of 2% every 7 days after day 20 (0.3 * 7 = 2.1) for PT and OT.[12]  Table 30 indicates, for example, an adjustment factor of 0.88 for Medicare payment days 56-62, up to a 0.76 adjustment factor for days 96-100.
• A decline of 3% beginning on day 4 of a Part A stay for NTA.[13] 

(In contrast, RCS-I used a variable per diem adjustment that it applied to the rate as a whole, not to three portions of the per diem rate.[14]) 

To determine the per day rate for a particular resident, PDPM

• Classifies the resident into the five case-mix adjusted components (physical therapy, occupational therapy, speech and language pathology, nursing, and non-therapy ancillaries),
• Calculates the payment for each component by multiplying the case-mix index by the component federal base payment rate,
• Further calculates the payment for each component by applying the specific day in the variable per diem adjustment schedule, and
• Adds these five separately-calculated components to the non-case-mix adjusted component payment rate.[15]

Another significant change from RUG-IV is the proposal to use the 5-day assessment for the entirety of a resident’s Part A stay.[16]  Under RUG-IV, payments are adjusted to reflect scheduled assessments that are conducted on days 15, 30, 60, and 90.[17] 

An Interim Payment Assessment (IPA) may be used to change a resident’s classification in order to reflect a significant change in a resident’s condition.[18]  The Discharge Assessment collects information on amounts of therapy provided during the Medicare-covered stay.[19]  CMS also proposes allowing facilities to use group therapy and concurrent therapy, for up to 25% of the therapy provided to a resident.[20]

Discussion of nursing in the NPRM is extremely limited.[21]  Acknowledging that it was “unable to construct a measure of nursing utilization based on current data because facilities do not report resident specific nursing costs,”[22] CMS used the STRIVE methodology (developed between 2005 and 2009 and used to establish RUG-IV)[23] and the newer assessment rules (Section GG of MDS 3.0).[24]

Winners and Losers Under PDPM

As for RCS-I, CMS provides two Tables identifying the impact of the proposed reimbursement system on reimbursement rates for individual residents and for facilities.  Although some of the specific changes are different from those that would have resulted if CMS had gone forward with RCS-I, the changes are in fact more pronounced in PDPM. Some key changes are highlighted.

Impact Analysis, Resident-Level[25]

The NPRM identifies the impact of PDPM on reimbursement rates for facilities.

Impact Analysis, Facility-Level[26]

As demonstrated by the charts above, the proposed revision to Medicare reimbursement for SNFs dramatically alters the Medicare benefit, encouraging less therapy and shorter Medicare-covered stays.  PDPM does not necessarily improve nurse staffing levels. 

Does PDPM Improve Reimbursement?

The short answer is no. 

First, PDPM does not more accurately pay SNFs for providing care to residents who are in a Medicare Part A-covered stay; it simply reallocates payments.  PDPM does not necessarily pay SNFs appropriately for providing the care and services they are required to provide under the federal Nursing Home Reform Law.[27]  The revised Requirements of Participation are not reflected in the proposal. 

Second, PDPM’s overzealous reduced payments for therapy – giving higher reimbursement to SNFs that provide residents fewer types of therapy over a shorter period of time, or no therapy at all – actively encourage facilities not to provide therapy.  Jimmo’s[28] mandate to cover maintenance nursing and therapy is completely ignored.  People in need of this important care will be in jeopardy.

Finally, while PDPM eliminates what SNFs consider paperwork burdens (additional resident assessments) and reduces the number of case-mix categories (as compared to RCS-I), for purposes of reimbursement, it does little or nothing to increase reimbursement for nursing services.

Submitting Comments

Comments must be submitted by June 26, 2018.  When commenting, refer to file code CMS-1696-P.  Comments may be submitted electronically, at http://ww.regulations.gov, by regular mail, by express or overnight mail, or by hand or courier.[29]  Contact the Center for Medicare Advocacy if you would like help with comments.