FY 2023 Prospective Payment System for Skilled Nursing Facilities (CMS-1765-P)
Skilled Nursing seems resigned to the inevitability of Medicare's 4.6% “ Parody Adjustment ” scheduled for October 1, 2022. CMS is accepting public comments through June 10, and providers are encouraged to express how Recalibration will impede industry recovery. Instead of focusing on conceptual flaws of the adjustment, stakeholders are advised to request a three-year phase-in to mitigate destabilizing “Rate Shock” and disruption to patient care.
We take a very different position
Objectively, CMS’ proposal to reduce reimbursement against the backdrop of unprecedented hardship seems a moral obscenity. There is no denying Skilled Nursing’s unique risk profile in the post-pandemic healthcare continuum; no doubt the public comments will contain moving tales of caregiver heroics and patient distress. Unfortunately, no expression of emotion will soften CMS’ statutory obligation to effectuate Recalibration. Administrator Chiquita BrooksLaSure explained to Skilled Nursing News,
Well... yes and no.
Yes, CMS is mandated to identify and correct unintended overpayments, but the method used to calculate overage is not prescribed by Congress. As first explained last year , I take exception with how CMS benchmarks PDPM’s spending relative to RUGs. After exhaustive analysis , we find CMS’ approach inequitable, myopic, and effectively arbitrary. In other words, no, parity adjustment should not be a fait accompli.
The case against Recalibration is that the fundamentals of Skilled Nursing have changed; CMS’ attempt to remove COVID-distortion from 2020 – 2021 claims ignores that reality completely. If we concede the point today, we’ll be looking at a much bigger reduction next year (and beyond) when COVID claims are no longer excluded from CMS’ calculation and CMMI further suppresses average length of stay, artificially increasing per diem rates.
The damage will cascade and further destabilize the SNF revenue model, leaving providers in a spiral of accretive cuts. Moreover, many Medicare Advantage plans peg SNF rates to a percentage of PDPM, further eroding already discounted reimbursement. If CMS does not accept that patients are sicker, everyone loses – SNFs, hospitals, patients.
Precedent v. Pandemic
There is no precedent for measuring resource needs across a seismic shift in patient acuity, let alone when an entire model of care is upended just as a new payment system comes online. Nursing time studies, painfully outdated and flawed to begin with, were never designed for a pandemic-distorted population. The closest comparable to the COVID-PPS dynamic is CMS’ allowance for HIV/AIDS, as most recently addressed in the 2019 Rule:
I may not be a clinician, but it stands to reason that a similar statistical outlier applies to COVID, the only difference being HIV/AIDS is a patient-specific condition with decades of clinical research, whereas COVID uprooted every protocol in long-term care. Nevertheless, after two years of clinical, economic and political chaos , CMS has solved the “nature v. capture” equation? This is beyond reason.
Comment v. Concession
The takeaway from these pages is that CMS’ analysis failed to account for underlying changes in the entire SNF population and by extension, the impact on Skilled Nursing’s model (and cost) of care for Medicare beneficiaries not directly clinically compromised by COVID. We recommend the data-driven insights on the following page be included with comments to CMS. Most importantly, inform CMS how the overall acuity of SNF patients changed since the start of the pandemic, and how the facility’s cost of care was impacted as a result. Remember, the staffing crisis and inflation are not unique to Skilled Nursing; these challenges are outside the scope of PDPM recalibration and would not be addressed through the PPS rulemaking process. Recalibration is intended to neutralize changes in provider behavior (i.e., reimbursement management). Science and sacrifice unequivocally dictate that sicker patients explain the spending increase
As applicable, we recommend the following data-driven considerations be included with comments to CMS.
Explain how overall patient acuity has increased since the start of the pandemic. Are admissions generally sicker than those prior to the Public Health Emergency?
Report how many patients were kept in isolation to control the spread of infection. Central to the argument against Recalibration is that patients were appropriately assigned private rooms even when a COVID diagnosis was not yet confirmed.
Furthermore, explain how often isolation was warranted per CDC guidelines, even when it could not be appropriately captured on the MDS. Highlight the number of two-bedded rooms that effectively became privates because of the need to isolate patients. Taking beds out of service does not lower fixed costs. CMS can quantify this impact using 2020 & 2021 Medicare cost reports.
The pandemic’s psychological impact on SNF residents is well-documented. Describe how visitor restrictions effected the mood of all patients; explain how PHE-induced sadness likely drove PHQ scores higher, not changes in the assessment process.
Describe how complex respiratory symptoms were treated. How much more did your facility spend on respiratory therapy?
Tell CMS how Medicare Advantage plans accommodated the facility. Did they offer relief? How much less do plans pay relative to fee-for-service? Do you expect plans to lower rates because of Recalibration?
Inform CMS how Accountable Care Organizations are driving down average length of stay. Remember, shorter stays increase PDPM average rates and add to Recalibration.
Are more of your admissions dual-eligible now, relative to pre-pandemic? Most states do not cover Medicare coinsurance, effectively imposing a $67 rate reduction for days 21 – 100.
Most of all, explain how the industry welcomed PDPM’s promise to finally tie reimbursement to patient acuity. If the pandemic resulted in more complex medical admissions, ask CMS why SNFs are now being penalized for it!
Save the drama. Use your data.
Marc Zimmet
Supplemental Comments for Providers:
FY 2023 Prospective Payment System for Skilled Nursing Facilities (CMS-1765-P)
Skilled Nursing seems resigned to the inevitability of Medicare's 4.6% “ Parody Adjustment ” scheduled for October 1, 2022. CMS is accepting public comments through June 10, and providers are encouraged to express how Recalibration will impede industry recovery. Instead of focusing on conceptual flaws of the adjustment, stakeholders are advised to request a three-year phase-in to mitigate destabilizing “Rate Shock” and disruption to patient care.
We take a very different position
Objectively, CMS’ proposal to reduce reimbursement against the backdrop of unprecedented hardship seems a moral obscenity. There is no denying Skilled Nursing’s unique risk profile in the post-pandemic healthcare continuum; no doubt the public comments will contain moving tales of caregiver heroics and patient distress. Unfortunately, no expression of emotion will soften CMS’ statutory obligation to effectuate Recalibration. Administrator Chiquita BrooksLaSure explained to Skilled Nursing News,
Well... yes and no.
Yes, CMS is mandated to identify and correct unintended overpayments, but the method used to calculate overage is not prescribed by Congress. As first explained last year , I take exception with how CMS benchmarks PDPM’s spending relative to RUGs. After exhaustive analysis , we find CMS’ approach inequitable, myopic, and effectively arbitrary. In other words, no, parity adjustment should not be a fait accompli.
The case against Recalibration is that the fundamentals of Skilled Nursing have changed; CMS’ attempt to remove COVID-distortion from 2020 – 2021 claims ignores that reality completely. If we concede the point today, we’ll be looking at a much bigger reduction next year (and beyond) when COVID claims are no longer excluded from CMS’ calculation and CMMI further suppresses average length of stay, artificially increasing per diem rates.
The damage will cascade and further destabilize the SNF revenue model, leaving providers in a spiral of accretive cuts. Moreover, many Medicare Advantage plans peg SNF rates to a percentage of PDPM, further eroding already discounted reimbursement. If CMS does not accept that patients are sicker, everyone loses – SNFs, hospitals, patients.
Precedent v. Pandemic
There is no precedent for measuring resource needs across a seismic shift in patient acuity, let alone when an entire model of care is upended just as a new payment system comes online. Nursing time studies, painfully outdated and flawed to begin with, were never designed for a pandemic-distorted population. The closest comparable to the COVID-PPS dynamic is CMS’ allowance for HIV/AIDS, as most recently addressed in the 2019 Rule:
Comment v. Concession
The takeaway from these pages is that CMS’ analysis failed to account for underlying changes in the entire SNF population and by extension, the impact on Skilled Nursing’s model (and cost) of care for Medicare beneficiaries not directly clinically compromised by COVID. We recommend the data-driven insights on the following page be included with comments to CMS. Most importantly, inform CMS how the overall acuity of SNF patients changed since the start of the pandemic, and how the facility’s cost of care was impacted as a result. Remember, the staffing crisis and inflation are not unique to Skilled Nursing; these challenges are outside the scope of PDPM recalibration and would not be addressed through the PPS rulemaking process. Recalibration is intended to neutralize changes in provider behavior (i.e., reimbursement management). Science and sacrifice unequivocally dictate that sicker patients explain the spending increase
As applicable, we recommend the following data-driven considerations be included with comments to CMS.