Re­ha­bil­i­ta­tion care re­im­burse­ment un­der re­newed fire from OIG

Modern Healthcare - - POST-ACUTE CARE - By Me­lanie Evans

A ma­jor­ity of frail Medi­care pa­tients who en­ter nurs­ing homes in need of re­ha­bil­i­ta­tion ther­apy now re­ceive higher-pay­ing in­ten­sive ther­apy be­fore they leave, a ma­jor shift from just years ago, de­spite no ev­i­dence that such ther­apy is needed. The shift makes the re­hab arena an at­trac­tive tar­get for Congress and fed­eral health of­fi­cials look­ing to save bil­lions of dol­lars.

HHS’ Of­fice of In­spec­tor Gen­eral last week called on fed­eral pol­i­cy­mak­ers to cut re­im­burse­ment for skilled-nurs­ing fa­cil­i­ties that de­liver re­ha­bil­i­ta­tion ther­apy, which “could save Medi­care bil­lions of dol­lars.”

The OIG said the use of in­ten­sive ther­apy, which is trig­gered when phys­i­cal, oc­cu­pa­tional, speech or cog­ni­tive re­hab reaches 720 min­utes per week, rose sharply from 2011 to 2013.

While pol­i­cy­mak­ers have been look­ing at a fun­da­men­tal over­haul of how Medi­care pays for skilled nurs­ing and other post-acute care, many observers now be­lieve Congress could move to make cuts long be­fore those ef­forts bear fruit. “We’re mov­ing to­ward a tip­ping point” for re­form, said David Grabowski, an ex­pert in long-term care and a health pol­icy pro­fes­sor at Har­vard Univer­sity. Yet more im­me­di­ate cuts are likely. “We’re bound to see some de­cease in the gen­eros­ity of pay­ments,” es­pe­cially for highly prof­itable, in­ten­sive ther­apy ser­vices.

In re­cent years, gov­ern­ment in­ves­ti­ga­tors have doc­u­mented how Medi­care over­pays for re­ha­bil­i­ta­tion ther­apy in nurs­ing homes af­ter hos­pi­tal­iza­tion. Last week’s OIG re­port echoed pre­vi­ous con­clu­sions and could pose an im­me­di­ate fi­nan­cial threat to ma­jor skilled-nurs­ing com­pa­nies like HCR ManorCare, Life Care Cen­ters of Amer­ica and Ge­n­e­sis HealthCare.

Some firms al­ready face civil chal­lenges for the al­leged over­pay­ments. The U.S. Jus­tice Depart­ment in April said it would join a civil law­suit that ac­cused HCR ManorCare of pres­sur­ing em­ploy­ees to de­liver more ther­apy than pa­tients needed to boost rev­enue. HCR ManorCare de­clined to com­ment last week. Of­fi­cials de­nied the al­le­ga­tions ear­lier this year. Other nurs­ing homes have set­tled sim­i­lar cases in re­cent years.

The latest re­port adds ur­gency to calls for re­form in a sec­tor with well-doc­u­mented vari­a­tions in qual­ity and spend­ing, much of which are be­lieved to be avoid­able. Use of ag­gres­sive ther­apy added $1.1 bil­lion to Medi­care’s $53 bil­lion skilled-nurs­ing bud­get in 2012 and 2013.

The OIG re­port at­trib­uted the ris­ing use of in­ten­sive ther­apy to a loop­hole in Medi­care pol­icy, which bumps up pay­ments once the 720-minute re­hab thresh­old is crossed. The re­port noted that nurs­ing homes “in­creas­ingly pro­vided ex­actly 720 min­utes” to qual­ify for the higher re­im­burse­ment and then cut off ther­apy. The OIG called for the CMS to slash pay­ments and change how it pays for skilled nurs­ing.

Medi­care cur­rently pays $231 a day for in­ten­sive ther­apy, com­pared to $37 per day for pa­tients who re­ceive the least amount of ther­apy. (There are in­cre­ments where rates in­crease be­tween 45 min­utes to 720 min­utes.) The av­er­age nurs­ing home saw prof­its of $66 per day at the higher rate, which ther­apy pa­tients re­ceived for more than half the days (57%) in 2013. That’s com­pared with 7% in 2002, the Wall Street Jour­nal re­ported ear­lier this year.

The ad­vo­cacy group AARP called the in­quiry’s re­sults trou­bling. “Medi­care should pay ap­pro­pri­ately to en­sure that ben­e­fi­cia­ries who need ther­apy have ac­cess to qual­ity ther­apy ser­vices, but it should not over­pay or in­ap­pro­pri­ately pay for ser­vices ben­e­fi­cia­ries do not need,” said Rhonda Richards, se­nior leg­isla­tive rep­re­sen­ta­tive with AARP. “The pay­ment sys­tem should en­cour­age im­proved qual­ity, value and ap­pro­pri­ate use of ser­vices.”

Changes to how Medi­care pays skilled-nurs­ing homes are likely, although the shift away from pay­ment tied to vol­ume will be grad­ual if the in­dus­try con­tin­ues to get its way on Capi­tol Hill. Un­der leg­is­la­tion passed last year, nurs­ing homes must be­gin re­port­ing Medi­care spend­ing per ben­e­fi­ciary, hos­pi­tal­iza­tion rates for po­ten­tially pre­ventable read­mis­sions and

other qual­ity mea­sures, but the first re­ports aren’t due un­til next Oc­to­ber.

The Im­prov­ing Medi­care Post-Acute Care Trans­for­ma­tion Act of 2014 also called on the Medi­care Pay­ment Ad­vi­sory Com­mis­sion to study al­ter­na­tive pay­ment mod­els for the post-acute sec­tor. But that re­port isn’t due to Congress un­til 2022.

That slow pace of re­form has been wel­comed by the skilled-nurs­ing in­dus­try, which has lagged other healthcare sec­tors in its ef­forts to stan­dard­ize and col­lect data on care qual­ity and pa­tient out­comes. Of­fi­cials with the Amer­i­can Health Care As­so­ci­a­tion, a nurs­ing home trade group, urged Congress and the CMS to de­lay mak­ing pay­ment changes un­til fed­eral of­fi­cials can an­a­lyze new pa­tient and qual­ity data af­ter it comes in next year.

“The ques­tion is, do we have the right in­for­ma­tion to make a sur­gi­cal ad­just­ment cut at this time, and I am not sure there is,” said Dan Ci­olek, se­nior di­rec­tor of ther­apy ad­vo­cacy for the AHCA. Fund­ing cuts made with­out the latest in­for­ma­tion risk harm to the most ef­fi­cient providers, he said. The data will help an­swer ques­tions about whether nurs­ing home pa­tients re­ceive too much re­hab ther­apy or too lit­tle.

How­ever, the in­dus­try could be­come a tar­get if Congress de­cides it needs money to pay for other pri­or­i­ties, such as re­peal­ing the so-called Cadil­lac tax or de­vice tax, which helps pay for in­sur­ance ex­pan­sion un­der healthcare re­form. “Pay­ing less is eas­ier than pay­ing dif­fer­ently,” said Dan Men­del­son, CEO of con­sult­ing group Avalere Health. For health pol­i­cy­mak­ers and Congress, the healthy Medi­care mar­gins for skilled nurs­ing are an at­trac­tive tar­get.

Over­all, skilled-nurs­ing mar­gins un­der Medi­care were more than 10% be­tween 2002 and 2012. But they were sig­nif­i­cantly higher (25% to 42% over the decade) for pa­tients who re­ceived ther­apy ser­vices, ac­cord­ing to the OIG re­port.

Not ev­ery­one fears that pa­tients re­ceive too much ther­apy, a cen­tral con­cern of the OIG re­port. Some ar­gue that many nurs­ing home pa­tients don’t re­ceive enough re­ha­bil­i­ta­tion ther­apy. “I don’t see skilled nurs­ing do­ing enough ther­apy, and they’re cer­tainly not giv­ing it to peo­ple who don’t need it,” said Cindy Hasz, a geri­atric nurse care man­ager who founded Grace Care Man­age­ment in San Diego.

But the latest OIG re­port has raised the odds of near-term pay­ment changes and clearly has the in­dus­try wor­ried. “We re­viewed the re­port and we will con­tinue to closely mon­i­tor changes in re­im­burse­ment that may come from the OIG’s sug­ges­tions,” of­fi­cials with Brook­dale Se­nior Liv­ing, Brent­wood, Tenn., said in a state­ment.

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