No Repeal and Replace: Value-Based Purchasing Moves Forward into a New Arena with Skilled Nursing Facilities

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Original story posted on: April 10, 2017

First, I want to clarify something about a term used by Medicare for healthcare providers. Value-based purchasing, or VBP, can sound like a good idea unless you realize that it’s actually the purchaser getting the value, along with the Medicare program, and not the provider or patient. It would be less popular but more accurate for Medicare to call it “You’re Spending Too Much” instead.

On Oct. 1, 2016, Medicare started to provide a new type of data for skilled nursing facilities, more commonly called SNFs.

Medicare began providing data for SNF patients readmitted to acute-care hospitals at that time. The readmissions included both patients readmitted directly from the SNF and patients that had gone home or to other healthcare providers after leaving the SNF and then returned to the hospital.

The new data could be considered helpful, but it had an ominous undertone. 

The data is being collected in order to compute penalties for SNFs that have too many patients readmitted to the hospital.

Patients who are readmitted to acute-care hospitals are very expensive. What Medicare is trying to say is that because the patient was readmitted after treatment at the SNF, Medicare feels that the SNF did something wrong that eventually caused the readmission. In other words, Medicare clearly believes it did not get good “value” for the service it paid for.

To make this determination, Medicare came up with a measurement for SNFs: the SNF 30-Day All-Cause Readmission Measure. It has some exclusions. You do not have to count a readmission if:

·   The patient was treated at the acute hospital for cancer before coming to the SNF.

·   The patient did not have Medicare Part A for the 12-month period before the hospital discharge to the SNF.

·   The patient went to another SNF within the 30-day period after discharge.

·   There was more than one day from the day the patient was discharged from the acute hospital and admitted to the SNF.

·   The patient left the SNF against medical advice.

·   The principal diagnosis in the acute hospital was for rehabilitation, fitting of prosthetics, or adjustment of devices.

·   The hospitalization was for pregnancy (very unlikely).

Like many of Medicare’s other cost-cutting measures, Medicare is using the “frog in a pot” method to reduce public outcry. Data collected for 2017 will be used to compute penalties starting Oct. 1, 2018.

For those not aware of the “frog in a pot” analogy, let me explain.  A frog dropped into a pot of boiling water will jump out. A frog placed in a pot of cool water slowly heated to boiling will let itself be turned into a frog legs dinner.

Since SNFs do not face an immediate penalty, they are tending to ignore the data collection or complain about the regulations.

As VBP becomes more and more ingrained in payment system, issues related to VBP also will become compliance issues. If an unusually high number of patients are being readmitted to an acute-care hospital after a SNF stay, did that stay really meet the requirements of care as spelled out by Medicare? 

What Can You Do?

SNFs can download listings of patients that were readmitted to an acute-care hospital after discharge from a Medicare-secure website. Once they have the data, they can:

·   Appeal patients that should have been excluded based on the exceptions listed above.

·   Compare the number of readmissions to the SNFs around them and see whether they are doing better or worse than their peers.

·   Perform root cause analysis of the readmissions. Is it a particular hospital, physician, or referral partner driving the problems?

 A Silver Lining

Every patient in a SNF that is directly readmitted to an acute-care hospital costs the SNF in both direct cost and lost revenue. Reducing readmissions makes you money. Reducing readmissions also makes your SNF more attractive to reffering hospitals facing their own readmission penalties and issues. Make it a win-win situation and use the data to improve your dialogue with your referral sources.

Disclaimer: Every reasonable effort was made to ensure the accuracy of this information at the time it was published. However, due to the nature of industry changes over time we cannot guarantee its validity after the year it was published.
Timothy Powell, CPA

Timothy Powell is a nationally recognized expert on regulatory matters, including the False Claims Act, Zone Program Integrity Contractor (ZPIC) audits, and U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) compliance. He is a member of both the RACmonitor and ICD10monitor editorial boards and a national correspondent for both Monitor Mondays and Talk Ten Tuesdays.

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