The Future of Medicare: strategies for SNF Success

1. The Future of Medicare: strategies for SNF Success Brian Hickman CPA Sherri Robbins BSN, RN,LNHA, CLNC, RAC-CT Eric Rogers MEd. RT(R)

2. Outline Regulatory & reimbursement changes and impact on operations Quality Measures and Quality Reporting Payment reform Data analytics Strategies for success

3. Regulatory & Reimbursement • SNF PPS Final Rule – effective 10/1/17 • 1.0% market basket update • Would have been net market basket increase of 2.3% • Limited to maximum increase of 1.0% • Result of last year’s “permanent doc fix”, which required all post-acute care (PAC) providers to receive max of 1.0% increase for FY 2018

4. Regulatory & Reimbursement • SNF PPS Final Rule – effective 10/1/17 • Cape Girardeau 1.69% • Columbia 1.41% • Jefferson City 6.25% • Joplin (1.26%) • Kansas City 0.44% • St. Joseph 0.77% • St. Louis 1.02% • Springfield 2.84% • McDonald County 0.64% • Rural MO 0.39%

5. Regulatory & Reimbursement • SNF PPS Final Rule – effective 10/1/17 • Beginning in FY 2018, SNFs that do not satisfy SNF Quality Reporting Program (QRP) reporting requirements would have penalty of 2.0% reduction in Part A rates: • Results in net negative (1.0%) for FY2018 for affected providers

6. Regulatory & Reimbursement • SNF PPS Final Rule – effective 10/1/17 • CMS specified several elements of the SNF Value-based Purchasing (VBP) program • 2% Part A withhold (rate cut) beginning 10/1/18 • 60% of withhold available for incentive payments back to qualifying SNFs, based on rehospitalization rate and level of improvement

7. 5 STAR and Quality Measures • Increased focus from hospital providers to the 5 STAR Nursing Home Compare. • It is publicly reported information so it must be correct, right? • Acute providers discouraging Medicare beneficiary discharge to SNFs with less than a 3 star rating. • Acute providers do not necessarily understand the STAR rating. • SNF providers must continue to educate referral sources and include current QAPI PIPs and outcomes data. • SNF providers should continue to focus on MDS accuracy, PBJ reporting (staff in correct categories) and survey outcomes. • Assessment based Quality Measures come directly from the MDS assessments and accuracy is key. • Timing of interventions (Part B therapy services, pain management programs, etc.) will have little impact on MDS data if they are not scheduled appropriately.

8. Programs requiring SNF operational challenges

9. Programs requiring SNF operational challenges

10. Requirements for Participation in Medicare & Medicaid

11. Resident classification system (Rcs-1) • ANPRM- Advanced Notice of Proposed Rule- RCS-1 Resident Classification System (Would replace MDS 3.0) https://s3.amazonaws.com/public-inspection.federalregister.gov/2017-08519.pdf?utm_campaign=pi%20subscription%20mailing%20list&utm_source=federalregister.gov&utm_medium=email • Potentially in effect FY2019 (Oct. 2018) • Public comments on the proposed rule & ANPRM were accepted until June 26, 2017 NOW WE WAIT….

12. Why rcs-1?

13. Rcs-1 • Simplified MDS Process • Would have a 5-day MDS • SCSA • Discharge MDS *Essentially 1 RUG code billed for the entire stay

14. Rcs-1 3 day Readmission

15. Rcs-1- 5 payment classifications

16. Rcs-1- 5 payment classifications

17. Rcs-1 case mix adjusted payment

18. Rcs 1- other items

19. Rcs-1-thoughts • Billing may be less complex from an MDS perspective • Not sure of impact of non-therapy ancillaries (NTA) capturing ancillaries on claims • Payment calculation may increase in complexity • Payment reduction every 3 days after day 15 • 3 day readmission issue • Difference in calculation depending on payment classification WILL SOFTWARE VENDORS BE ABLE TO CALCULATE THIS? • Diagnosis coding will be more & more important • Impact of comorbidities on payment, accuracy of ICD-10 codes • Nursing/therapy documentation reviews may be more important • Reviews for miscoded items that impact payment • Reviews to ensure therapy complies to the 25/25/50 rule

20. Payment Reform • Obama’s ACA focused on two key items: • Accessto care which remains politically problematic • Deliveryof care which is making steady progress • Despite congressional uncertainty, CMS presses forward with transitioning from volume to value (code word for RISK) • ACOs, NextGen ACO (VT APM), CJR, CPC+, chronic care management, MACRA • Impacting all payer sectors • Medicare • Medicaid • Commercial/MA plans

21. Payment Reform How?

22. Payment Reform

23. Payment Reform Mandatory cardiac bundle approved by Tom Price May 2017. Change of tune Mandatory cardiac bundle cancellation proposal August 2017. Question: How will CMS reduce the growth of health care costs while promoting high-value, effective care? Answer:Mixed Signals

24. Payment Reform • Large increase in ACO applications for PY2018. Extended application deadline. • Addition of Track 1+ and other incentives for participation More evidence:

25. Payment Reform ACOs are being used widely by commercial payers • Commercial ACOs cover some 17.2 million beneficiaries, more than twice as many as Medicare ACOs.¹ • The total number of ACOs in the US is estimated at 200-300 • Seven of the ten largest ACOs in the US are commercial ACOs.² 1 Muhlstein D and McClellan M; “Accountable Care Organizations in 2016. Health Affairs blog April 21, 2016 2 SK&A “Top 30 ACOs” SK&A Market Insight Report 2014.

26. Payment Reform • Commercial health plans and private payers are accelerating the path toward value-based reimbursement and have developed hundreds of accountable care organizations. • In 2014, two dozen insurers and health care providers announced their commitment to move 75% of their business to value-based contracts by 2020. • Private payers are actively implementing the medical home model

27. Data Analytics

28. Data Analytics

29. Data Analytics

30. Data Analytics

31. Data Analytics Discharged Home/Home Health Discharged SNF/ IRF

32. Data Analytics

33. Data Analytics

34. Strategies for Success • Regulatory and Reimbursement • Avoid or limit rate cuts • Proper reporting under QRP • Monitor rehospitalization rates under VBP • INTERACT programs • Appropriate SNF coverage of patients • Still opportunities under Medicare for most SNFs – margins subsidize Medicaid/private pay shortfalls • Monitor staffing/other costs • Effective budgeting and staff utilization • Accounts Receivable – proper billing and collection

35. Strategies for Success • Payment Reform • Leverage data analytics to understand market share and trends • Understand total cost of care (from payer’s perspective) and how this compares to peers for similar episodes of care • Work to develop a new value proposition to referring hospitals who are narrowing post-acute networks- be a “preferred provider” • Develop episode-specific care plans “transitional care plans” in collaboration with referring hospitals

36. Strategies for Success • Quality • MDS personnel trained to accurately complete all sections of the MDS. • This will remain a key factor if the RCS-1 is implemented. • Management team routinely reviews CASPER reports (9 total) • It is the submission of quality data, not performance on the QMs that determines compliance with the QRP. • Take advantage of the Review and Correction periods and pay attention to deadlines for payment determination. • QAPI program includes Performance Improvement Plan (PIP) to improve accuracy of MDS coding and compliance with billing Medicare claims. • QAPI program includes PIP for each Quality Measure determined to be above or below threshold.

37. Questions? Brian Hickman bhickman@bkd.com Sherri Robbins slrobbins@bkd.com Eric Rogers erogers@bkd.com 417.865.8701

38. Thank you FOR MORE INFORMATION// For a complete list of our offices and subsidiaries, visit bkd.com or contact: Brian Hickman CPA // Partnerbhickman@bkd.com// 417.865.8701