AHCA Chief Blasts ‘Offensive’ Skilled Nursing Commentary from CMS

The Centers for Medicare & Medicaid Services (CMS) explicitly pointed to the potential for therapy fraud under its old rules while rolling out its updated payment structure for nursing homes — and the head of a leading trade group says that’s a slap in the face to the industry.

Mark Parkinson, president and CEO of the American Health Care Association, said CMS went further than a simple rejection of industry requests surrounding the new Patient-Driven Payment Model (PDPM) in its final rule on the subject, issued last week.

“They really went beyond just saying no,” Parkinson told SNN. “In the rationale for saying no, they had a very long discussion that basically said the sector had abused therapy by providing too much therapy. We find that offensive for a number of reasons.”

Under the current Resource Utilization Group, Version IV (RUG-IV) system, skilled nursing facilities do have an incentive to provide a heavy volume of therapy services, as Medicare reimbursements are linked to the number of hours provided. Under the new PDPM, operators will instead see their reimbursements based on the complexity of the therapy required, reducing the potential for unscrupulous SNFs to game the system by providing unnecessary therapy services.

While such fraud certainly has occurred under the system, Parkinson pushed back by noting that Medicare oversaw a payment structure that placed a premium on therapy hours for the last 20 years, and that the resulting increases in therapy services has led to stronger outcomes — including lower rehospitalizations and more residents who were able to return home after SNF stays.

“They have created a system that is heavily focused on therapy, and then are complaining about the inevitable result it would create,” he said.

Therapy cap

The PDPM also includes a 25% cap on group and concurrent therapy services, which CMS has positioned as a way to ensure residents continue to receive quality care. But CMS first floated the PDPM in a proposed rule in April, AHCA lobbied to raise or remove that cap, with Parkinson arguing that decisions surrounding therapy settings should rest only with providers.

“Therapy minutes are no longer relevant to determining payment, and so our view is that the way that the therapy minutes are delivered should be up to the clinicians,” he said.

When the PDPM was first proposed, the potential for increased group and concurrent therapy was seen as something of a positive, with Genesis Healthcare (NYSE: GEN) CEO George Hager saying those services were “significantly undervalued.”

But CMS enforced the cap in the final rule, preventing any individual patient from receiving more than 25% of his or her total therapy hours in the group and concurrent settings. In rejecting the calls to either remove or raise the cap, CMS specifically pointed to the potential for fraud.

“Given the stakeholders’ comments that individual therapy is the most costly form of therapy, along with the evidence of therapy being furnished to SNF patients on the basis of financial considerations rather than patient need, the extremely high prevalence of individual therapy would indicate that the amount of individual therapy, despite being the most costly, is the most effective for beneficiaries, which would comport with our reasons for supporting either the limit we proposed or a lower such limit,” CMS wrote in the final rule.

By contrast, under the never-released Resident Classification System, Version I (RCS-I) — the therapy model that was originally supposed to replace RUG-IV before the introduction of PDPM — group and concurrent therapy could have accounted for half of a resident’s overall care.

“There are many situations where the residents prefer to do their rehab with another resident,” Parkinson said. “There’s a socialization effect, and kind of an encouragement effect, and it’s totally appropriate.”

Parkinson, a former senior care owner-operator who went on to serve as governor of Kansas, also repeatedly framed the 25% limit as a government intrusion into physicians’ and residents’ overall care plans.

“We believe that it’s in the best interest of patients for the clinical decisions relating to their care under the new system to be made by the doctors, the therapists, the nurses, the patients, and their families, rather than folks in Baltimore,” he said.

Parkinson emphasized that AHCA and the industry remain grateful for the 2.4% market basket increase that CMS included in the new payment rule, which the government estimates will result in an $820 million boost in reimbursements for the coming year.

“We are appreciative to receive the 2.4%. The sector is struggling. We need additional funds,” he said, adding that the group intends to “reset” its relationship with CMS as it continues to sort out the effects of the new rule.

Written by Alex Spanko

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Alex Spanko on Twitter
Alex Spanko
Alex covers the skilled nursing and reverse mortgage industries for Aging Media. Outside of work, he reads nonfiction, yells at Mets games from his couch, and enjoys pretty much any type of whiskey or scotch — often all at once.

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