Medicare Part A SNF Payment System Reform: Introduction to ...

ZIMMET HEALTHCARE 2018

Medicare Part A SNF

Payment System Reform:

Introduction to

Resident Classification System - I


Introduction to the

Resident Classification System - I

ConceptsStructure

Implications


• IMPACT Act mandated MedPAC to outline a unified payment system

that would replace the four current post-acute care Medicare

payment systems (SNF, HHA, IRF, LTCH)

• Objective is to base payment on patient characteristics rather than setting or

amount of therapy furnished (significant redistribution of PAC dollars)

• IMPACT Timeline: Propose system by 2023, then implement

• MedPAC demonstrated that the system is highly feasible & accurate;

recommends implementation in 2021 with 3-year optional phase-in

• See June 2017 MedPAC Report to Congress, chapter 1 for details

RCS is NOT the Unified Post-Acute Payment System


About RCS-I

• Advanced Notice of Proposed Rulemaking (5/4/17; CMS-1686)

• Public comment period extended from 6/26 to 8/25/17 and left open ended

• Based on extensive research and TEPs (possible refinements)

• Target date is October 1, 2018

• Likelihood of implementation?

• Budget Neutrality assumed (Parity adjustments)

• No mention of “phase-in / blend-in” but possibility

• Improvement over RUGs?

• Shift from Volume to Patient Characteristics as $ driver


• NO CHANGE IN MEDICARE “CLINICAL” / “TECHNICAL” ELIGIBILITY REQUIREMENTS

• “Focus on reducing administrative burden for providers”

• MDS remains basis for rate setting, but 5-day sets the “Composite score”

for the entire benefit period (assuming no discharges or sig. changes)

• Remaining PPS MDS schedule is eliminated, including COTOs

• Sets up benchmarking mechanism from admission – discharge

• Recognizes disproportionate costs during first days of stay

• Frequency / Amount of therapy does not impact reimbursement

• Therapy is “just another component of the care plan” – Nursing

acuities, Diagnosis coding & certain Ancillaries drive revenue

About RCS-I


RCS Structure

• RUG-IV contains 3 rate components:

• Therapy, Nursing (including NTAs) and Overhead

• Blended into one of 66 distinct per diem rates

• RCS includes 5 distinct, (4 variable) rate components:

• PT/OT (30 categories)

• SLP (18 categories)

• Nursing (43 RUGs)

• Non-Therapy Ancillaries (6 levels)

• Overhead / Non-Case Mix Adjusted (1 rate)

Per Diem RUG

O

N T

1 of 30

1 of 18

1 of 61 of 43

1

Composite

How many possible combinations???


Possible RCS Rate Combinations

PT/OT: 30

SLP: 18

Nursing: 43

NTA: 6

Overhead: 1

139,320

• While there are technically

139,320 possible composite

combinations, many are

“mutually exclusive”


One step at a time…

Each component has its own

grouping process using different

variables and scoring

methodologies

PT/OT• 30 categories

SLP• 18 categories

Nrsng• 43 RUGs

NTA• 6 groups

OH• 1 CBSA

RCS Composite

RCS: Where Do We Start?


Why is the Patient Here?

• 10 “Clinical Categories” capture the

“range of general resident types”

found in SNFs

• MDS Section I: ICD-10 code

• “Primary reason for SNF stay”

• DRG “Mapping”

Major Joint Rep. or Spinal

Surgery

Non-Surgical Orthopedic/

Musculoskeletal

Orthopedic Surgery (Except

Major Joint)

Acute Infections

Medical Management

Cancer Pulmonary Cardiovascular & Coagulations

Acute Neurologic

Non-Orthopedic

Surgery


The 10 categories are collapsed into 5 for PT/OT

Medical Management

Other Orthopedic


Surgery

Acute Neurologic

Non-Orthopedic

Surgery

2 for SLP

Acute Neurologic

Non-Neurologic

Orthopedic Surgery (Except

Major Joint)

Acute Infections

Pulmonary

Cardiovascular & Coagulations


Surgery

Non-Surgical Orthopedic/

Musculoskeletal

CancerAcute Neurologic

Non-Orthopedic

Surgery

Medical Management


Major Joint Rep. or Spinal Surgery

Other Orthopedic

Medical Management

Non-Orthopedic Surgery

AcuteNeurologic

14 – 18

8 – 13

0 – 7

Intact or Mildly Impaired

Moderately or Severely Impaired

Physical / Occupational Component Calculation

Clinical Category (5)

FunctionalScore (3)

CognitiveImpairment (2)

MDS Section

Clinical: I8000 / I0020Primary reason for SNF stay (ICD-10)

Functional: GTrans, Eating, Toileting: Self Perf only

Cognitive: CCognitive Function Scale

All patients score in one PT/OT group no matter if they receive therapy (or how much)


PT/OT Functional Score

• RCS PT/OT scoring differs from RUG-IV ADL system

• Transfers, Eating and Toileting Self-Performance scores only

• Each ADL scored on a 0 – 6 scale; (v. 4 in RUG-IV)

• 0 – 18 point range

• Unlike RUGs, higher point totals represent lower dependence;

• Fully functional residents are reimbursed at the highest rates

• Greater need reduces PT/OT rate but increases RCS Nursing RUG

• The difference in net impact varies for each component score

• Nursing increase may or may not exceed PT/OT increase

• Any inflexible capture strategy may be counter-productive


RCS: PT/OT Functional Score v. RUG-IV: Self-Performance Scale

RCS-I Scoring


PT/OT Case-Mix Classification Groups

See handout for complete listing of case-mix groups


Speech Language Pathology Component Calculation

Clinical Category (2)

Swallowing

Disorder or

Mechanically-

Altered Diet (3)

SLP Related

Comorbidity or

Mod. to Severe

Cog Imp (3)

MDS Section

Clinical: I8000 Sw Dis: K0100Z MA Diet: K0510C2 Comorb: Misc.Cognitive: C (CFS)

All patients score in one SLP group no matter if they receive therapy (or how much)

AcuteNeurologic

Non-Neurologic

Either

Neither

Both

Either

Neither

Both


SLP Related Comorbidities


SLP Case-Mix Classification Groups

See handout for complete listing of case-mix groups


PT/OT & SLP: Cognitive Function

• New cognitive measure: Cognitive Function Scale (CFS)

• Combines Brief Interview for Mental Status (BIMS) and Cognitive Performance Score (CPS) into one scale

Note:

Impairment reduces PT/OT but increases SLP component.

PT/OT rate reduction exceeds SLP enhancement (almost always).


Nursing Case-Mix Classification

• 43 “nursing RUGs”

• RUG-IV Reimbursement drivers, ADL scoring & splits and hierarchy remain intact

• Minus Rehab RUGs

• Reweighted indices

• 19% HIV/AIDS rate enhancement only applies to this component

• Triggered by ICD-10 code B20 on the UB-04

See handout for complete listing of case-mix groups and comparison of RUG-IV to RCS CMI weights


NTA Group Classification

• Non-Therapy Ancillaries

• Based on the number of services

and conditions

• Hospital look-back as allowed in

RUG-IV

• Greatest rate impact for days 1 - 3

See handout for complete listing of NTA service / condition drivers and related Points


RCS Rate Composite Calculation

• 5-day MDS (ARD 1 – 8) establishes Composite for the entire

benefit period with limited exceptions

• Significant Change / Readmissions

• Each component has a “Base Rate” adjusted by CBSA

• Multiply each Base Rate by respective CMI weight

• “Variable Per Diem Adjustment Factors”

• PT/OT and NTA components decrease as the benefit period

progresses (see handout for detail on Base Rates & VPDA)


Significant Change Assessments / Readmissions

• SCSA would change the resident’s RCS-I classification but NOT

reset Variable per diem adjustment schedule

• Interrupted Stay Policy:

• Resident discharged from SNF and returns to same SNF within 3

calendar days: Stay is treated as a “continuation” for purposes of RCS

classification and VPDA

• Resident readmitted to the same SNF more than 3 calendar days after

discharge, or in any case where resident is readmitted to a different

SNF: Resident receives a new 5-day; RCS and VPDA are reset to Day 1

• PPS Discharge Assessment required (CMS to add items to track

therapy minutes over the course of a resident’s stay)


• Technical & Clinical Eligibility (7 day/week Nursing, 5/Therapy)

• No therapy “levels” to audit – cannot be “excessive”

• “Rationing” therapy (too little?)

• Nursing RUG drivers and “end splits”• “Lock & Drop” patterns

• ADL scoring

• NTA drivers • Medical necessity, method of administration, supporting documentation

• Justification for Significant Change assessments

• DRG – ICD-10 assignment (“Mapping”)

Possible RCS Audit Scope


DRG – ICD-10

DRG Mapping

• 757 active MS-DRGs in 2017

• Medicare Severity – Diagnosis Related Group:

• The system of clinically classifying a Medicare patient’s hospital stay into groups in order to set payment

• Diagnoses drive variable RCS components

• Link to MDS: ICD-10 Coding

• Section I: Primary reason for SNF stay

• Secondary & Tertiary codes


RCS Operations Implications

• Admissions decisions• Profitability profiles change

• Target length of stay

• Billing and corrections; time limitations?

• Financial modeling / revenue projections

• Revenue allocations

• Impact on managed care contracts / rates / APMs

• Hospital-based resurgence?

• Assessment burden – MDS staffing & qualifications • No margin for error on 5-day

• We need “New Analytics”


Therapy Implications

• No treatment minimums, but ANPRM specifies limits of 25% each for Concurrent and Group of whatever formal therapy is provided

• No RUG / COTO management

• Department staffing requirements and ratios (% Assistants, Techs)

• Development of therapy-centric programs under the direction of licensed staff (Activities, Restorative Nursing)

• Alternative modalities (Acupuncture, Therapeutic Massage, Chiropractic)

• Outsource v. In-House management considerations:• “Pricing” therapy component: no direct link to reimbursement may

incentivize over/under-utilization depending on contract structure

• Reconciling Dx to need, inverse ADL / Cognitive revenue issues


RCS Reimbursement Implications

• Facility-specific revenue transition analysis: • Budget neutral redistribution creates “Winners & Losers”

• Comparison to RUG-IV transition projections

• Changes in Provider behavior

• Parity adjustment / Recalibration risk

• Relative values among rate components

• Realizable value of non-therapy payment drivers• Reimbursement-sensitivity & documentation requirements

• Diagnosis mapping & coding

• Understanding NET revenue impact of ADL & Cognition coding

• Timing of NTA drivers


• Non-medically complex post-knee replacement

• Moderate ADL assistance

• No co-morbidities or NTA services

• 2 hours of therapy per day, 6 days per week

• RUG-IV score = RUB $730.96

Simplified examples using

2017 NYC rates

RCS rate simulator available at

zhealthcare.com


• Dialysis

• Moderate ADL assistance

• Wound, IV meds, Transfusion

• 65 minutes of therapy per day, 5x per week

• RUG-IV score = RHB $491.79


2017 NYC ratesRCS rate simulator available at

zhealthcare.com


• Impact of capturing Respiratory Therapy and Depression


2017 NYC ratesRCS rate simulator available at

zhealthcare.com

Medicare Data Analysis

Market Analysis

238,056FFS

BENEFICIARIES

10,879SNF

USERS

88SNF

PROVIDERS

123.6AVG. USERS PER

PROVIDER

4.6%USERS OF FFS

BENEFICIARIES

2,150

1,913

1,875

1,545

1,214

1,191

998

898

852

851

DRG 871

DRG 291

DRG 872

DRG 470

DRG 190

DRG 292

DRG 373

DRG 870

DRG 247

DRG 194

Hospital Medicare Claims Submitted Facility CBSA

Market Saturation and Utilization, by Facility County

26.1%

32.2%

34.9%

25%

27%

29%

31%

33%

35%

37%

2015 2016 2017

Medicare Advantage Penetration

County State Nation


Hospital Referral Sources

201190

7562

45

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

0

50

100

150

200

250

Hospital 1 Hospital 2 Hospital 3 Hospital 4 Hospital 5

Hospital Referrals to ABC Care Center

Referrals Medicare Payments


SNF Part A Referrals by Hospital

SNFReferrals

(#)Referrals

(%) ALOS Cost per Admit 5 Star Re-Hosp (%)D/C

Community (%)

Facility #1 254 17.7% 31.5 $20,349 **** 23.5% 58.2%

Facility #2 246 17.2% 33.6 $21,874 *** 18.2% 60.5%

Facility #3 201 14.1% 27.1 $17,615 ***** 17.9% 61.4%

Facility #4 192 13.4% 28.9 $19,508 ** 22.5% 57.6%

Facility #5 150 10.5% 30.2 $19,328 ***** 21.0% 60.1%

Facility #6 104 7.3% 34.6 $22,075 *** 20.4% 59.7%

Facility #7 88 6.2% 35.7 $23,276 **** 17.7% 57.9%

Facility #8 76 5.3% 28.1 $18,518 *** 18.9% 52.2%

Facility #9 60 4.2% 30.9 $19,745 * 26.4% 54.5%

Facility #10 58 4.1% 36.9 $24,871 *** 23.4% 57.8%


Referring Hospital “Pain Points”

1,1561,058

998 970901 865

800 798

0%

5%

10%

15%

20%

25%

30%

35%

0

200

400

600

800

1,000

1,200

1,400

DRG 871 DRG 291 DRG 470 DRG 190 DRG 373 DRG 194 DRG 885 DRG 690

XYZ HospitalDRG Volume & Re-Hospitalization Rate

Medicare Claims Re-Hospitalization


Episodic Cost Competitive Analysis

Clinical Category

Facility

Episodes

Facility

Episodic

Cost

Competitor

Episodes

Competitor

Episodic

Cost

Sepsis 75 $14,987 66 $15,874

Major Joint 68 $8,512 101 $9,254

CHF 64 $11,521 74 $13,654

Stroke 62 $17,085 52 $16,958

UTI 55 $14,954 40 $17,878

AMI 49 $10,098 61 $12,568

Pneumonia 46 $12,545 42 $12,085

Respiratory 41 $13,654 38 $11,097 $0 $3,000 $6,000 $9,000 $12,000 $15,000 $18,000

Sepsis

Major Joint

CHF

Stroke

UTI

AMI

Pneumonia

Respiratory

Episodic Cost Comparison

Competitor Episodic Cost Facility Episodic Cost

Medicare Part A SNF Payment System Reform: Introduction to ...

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