MedPAC: SNFs, Other Post-Acute Providers Base Assessments on Payments, Not Resident Need

A top government watchdog and advocate for Medicare payment reform on Friday accused post-acute care providers of using mandatory functional assessments to boost payments instead of accurately recording patient needs.

As part of its sprawling annual report to Congress on reimbursement issues, the Medicare Payment Advisory Commission (MedPAC) probed the differences between individual residents’ functional assessments as they passed through the continuum, determining that the patterns they found indicated attempts to artificially boost payments.

For instance, among individual patients admitted to a home health agency 2017, 26% had functional scores that were two or more levels lower than their SNF discharge assessment indicated, versus just 1% that were two levels higher than when they left the SNF.


The pattern held for people sent from an inpatient rehabilitation facility (IRF) to a SNF: About 21% had functional assessments that were two or more levels lower when they arrived at the SNF, compared to 1% in the other direction.

“Reasonably consistent assessments would include similar shares of mismatches in both directions between the discharge and admission assessments,” MedPAC noted in its analysis. “The much higher share of lower assessments at admission suggests that the function data recorded by providers are biased toward raising payments.”

Source: MedPAC June 2019 Report to the Congress

MedPAC, a non-partisan agency that advises Congress on Medicare matters, has long advocated for a site-neutral payment model for post-acute care, criticizing the current site-specific structure as wasteful and not receptive to individual resident needs. In the case of functional status assessments — which, for SNFs, consists of the Minimum Data Set (MDS) — MedPAC argued in the June 2019 report that the varying and payment-sensitive nature of the documents makes them rife for potential fraud.


“Functional status and changes in function are used to establish care plans for patients, set payments, and measure quality of care,” MedPAC wrote. “However, when payment is tied to patients’ functional status, providers can report this information in ways that raise payments rather than capture patients’ actual clinical care needs.”

MedPAC cited the 20% boost that SNFs currently receive when an ultra-high rehabilitation resident jumps from a function score of 5 to 6 as an example of the incentives for nursing homes operators to manipulate assessment data; the agency also pointed to general increases in ultra-high therapy days between 2000 and 2017 as a more macro-level symbol of operators attempting to secure the highest reimbursements allowable under current law.

“CMS found that for a given case-mix group, the number of therapy minutes provided was concentrated near the ‘floor’ of the range in minutes required for the days to be assigned to a case-mix group,” MedPAC wrote. “Providers appear to provide just enough therapy to qualify the days for the particular case-mix group.”

Partially in response to these trends, the Centers for Medicare & Medicaid Services (CMS) changed the incentives for therapy under the upcoming Patient-Driven Payment Model (PDPM), shifting them from volume to resident need; however, the eventual payments will still be based on facilities’ self-generated data regarding patient acuity.

MedPAC additionally noted that providers may inaccurately report higher resident function at discharge in order to portray a sense of improvement, while intake coordinators at the next stop along the continuum artificially depress function scores to give themselves space to improve — and thus perform well on quality measures.

“In addition, some providers may report improvements in function to potential or contracting partners,” MedPAC noted. “Appearing to have achieved large improvements in functional status may help secure referrals from them.”

The agency offered several potential solutions to the perceived problem, including increased auditing of assessments and civil monetary penalties (CMPs) for offenders; mandating that providers use the assessment from the previous care setting as their intake benchmark; and relying on patient-reported outcomes data.

While Congress requires MedPAC to submit two reports per year, the House of Representatives and Senate are under no obligation to take the agency’s advice and frequently ignore it. For instance, MedPAC has routinely argued that Medicare reimbursements for nursing homes are too high and should be reduced, while Congress continues to approve annual market-basket increases for Medicare SNF rates.

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