In final rules that provide the annual update to Medicare Part A reimbursement for skilled nursing facilities (SNFs), the Centers for Medicare & Medicaid Services (CMS) increases Part A reimbursement by approximately $1.4 billion (4.0%), a higher increase than proposed in April 2023 ($1.2 billion, 3.7%); implements the second phase of the Patient Driven Payment Model (PDPM) parity adjustment recalibration (to restore “budget neutrality” that CMS intended when PDPM replaced the prior reimbursement system, Resource Utilization Groups, or RUGs); and updates both the SNF Quality Reporting (SNF QRP) Program and the SNF Value-Based Purchasing (SNF VBP) Program.
CMS declines to incorporate the CoreQ short-stay discharge measure in the SNF QRP that was developed by the American Health Care Association, the major national nursing home trade association. This decision represents a major victory for residents, whose advocates opposed the industry-developed measure that would overstate residents’ satisfaction and allow facilities to handpick which discharged residents receive the satisfaction survey. CMS remains committed to introducing a resident experience measure in the future.
Troubling, however, is CMS’s decision to make final a rule (originally proposed by the Trump Administration in 2019) that automatically gives a nursing facility a 35% reduction in civil money penalties (CMPs), under a “constructive waiver” process, even when the facility does not inform CMS in writing that it is waiving its right to an administrative appeal of the CMPs, as required since 1994. CMS contends that the constructive waiver process “purely reflects the need to reduce costs and paperwork burden for CMS in order to prioritize current limited survey and certification resources for enforcement actions” and to reduce “excessively burdensome regulations.” It estimates the savings to CMS as $625,315, while the savings to facilities (understated, in the Center’s view) are estimated as $2,299,716. CMS writes that it will consider whether reducing the penalty for a facility that does not appeal a CMP is still appropriate policy.
Under the heading “General Comments” at the beginning of the preamble to the final rules, CMS rejects two public comments about therapy and financial accountability.
CMS acknowledges in the preamble that residents receive less therapy under the new reimbursement system, PDPM, than they received under the old RUGs reimbursement system and that more of the therapy than permitted by the rules is group or concurrent therapy (as compared to individual therapy). Nevertheless, CMS suggests that what matters is “patient outcomes” and that if “facilities are able to maintain or improve patient outcomes, we believe that this supersedes changes in service provision, whether this be in the amount of therapy furnished or the mode in which it is furnished.”
In this analysis, CMS backtracks from its earlier statements about therapy. In 2018, CMS agreed with commenters’ concerns that facilities might reduce therapy under PDPM’s dramatically revised financial incentives and added items to residents’ discharge assessment in order to closely monitor changes in therapy. In 2019, CMS reiterated its view that individual therapy is the “preferred mode” and described its plans for “robust monitoring” of therapy services in order to assess facilities’ compliance with regulatory limitations on group and concurrent therapy. These concerns are missing in CMS’s now-singular focus on “patient outcomes.”
In comments on the proposed rules this year, the Center expressed concern that CMS’s response to Medicare overpayments (resulting from facilities’ providing residents with less therapy under PDPM) was solely recalibration (that is, reduction) of Medicare payments to SNFs. The Center recommended additional strategies to ensure that residents, including residents who need maintenance therapy, as required by Jimmo, actually receive all the medically necessary therapy they need.
The Center also expressed concern about CMS’s using resident assessment (MDS) data to calculate the SNF VBP measure for falls, when research documents the serious inaccuracy in the MDS falls data. Improved resident outcomes are meaningless when they are based on unreliable self-reported data.
CMS also dismisses a commenter’s concern about the need for auditing of Medicare cost reports, imposing penalties for “inaccurate, incomplete and fraudulent SNF ownership and cost data,” and establishing a requirement that facilities spend reimbursement on resident care under a medical-loss ratio. Reiterating that its primary interest is resident “outcomes,” CMS says it focuses “on patient outcomes as the basis for assessing if the care provided to SNF patients is appropriate.”
This CMS response ignores the Secretary’s duty under the 1987 Nursing Home Reform Law (42 U.S.C. §1395i-3(f)) “to promote the effective and efficient use of public moneys.” CMS also sidesteps the repeatedly documented problem of the diversion of public reimbursement to excessive private profit and the grossly substandard care that residents suffer as a direct result, as alleged by the New York State Attorney General in litigation against four of Centers Health Care’s nursing facilities (Petition and Press Release), The Villages of Orleans Health and Rehabilitation Center (Petition and Press Release), Fulton Commons (Petition and Press Release), Cold Spring Hills (Petition and Press Release); in Consumer Voice’s report “Where Do the Billions of Dollars Go? A Look at Nursing Home Related Party Transactions;” in the Empire Center’s report “Following the Money; An analysis of ‘related company’ transactions in New York’s nursing home industry; and in The New York Times’ analysis “Care Suffers as More Nursing Homes Feed Money Into Corporate Webs.”
In March 2023, the Medicare Payment Advisory Commission (MedPAC), the independent commission that advises Congress on Medicare policy, reported that Medicare margins have exceeded 10% for 22 consecutive years (including 2021, during the COVID-19 pandemic, when margins for freestanding skilled nursing facilities were 17.2%). MedPAC recommended that Congress reduce base payment rates to skilled nursing facilities by 3% in fiscal year 2024. The final reimbursement rules provide higher reimbursement rates to skilled nursing facilities, despite MedPAC’s recommendation to reduce excessively generous Medicare payments. They focus attention on value-based payments, which have not been effective in improving nursing home quality for residents. Finally, the rules do not reflect President Biden’s nursing home reform agenda, which, among other provisions, calls for enhancing transparency, accountability, and oversight of nursing facility ownership and finances.
August 17, 2023 – T. Edelman