Though it’s too soon to tell what effect the new Medicare payment model for nursing homes will have on resident outcomes, the head of a leading industry trade group says operators will deserve everything regulators can dream up if changing treatment patterns lead to worse care.

“If we don’t do better, we should be crushed by CMS,” American Health Care Association president and CEO Mark Parkinson said during an interview at the group’s annual conference and expo in Orlando, Fla. last week. “If therapy declines and outcomes decline, we deserve whatever penalty we get. But if therapy minutes decline and outcomes improve, we shouldn’t be criticized, in my view.”

In the immediate wake of the new Patient-Driven Payment Model (PDPM), which took effect October 1, therapists across the country reported layoffs and hour cuts as operators began to adapt to a world where therapy minutes no longer drove outcomes. But multiple voices responded with warnings against taking knee-jerk responses, as the Centers for Medicare & Medicaid Services (CMS) will be monitoring nursing homes for any significant changes in both care plans and outcomes.

SNN sat down with Parkinson, who also last week received a three-year extension on his contract to helm AHCA, to learn more about the group’s outlook on PDPM and other regulatory issues coming from Washington and Baltimore.

What’s your take on the transition to PDPM, and the controversy over therapy volumes? Are we seeing an overcorrection?

First of all, we don’t know yet how much therapy practice is going to change. It’s going to take maybe a couple months. I used to think we’d have this figured out in a month; maybe it’s going to take a couple of months to really know.

By way of background, as you know, the sector’s been heavily criticized for at least 10 years for providing too much therapy. Part of the reason that CMS developed PDPM was to shift the emphasis away from therapy to other parts of care — nursing, restorative, et cetera.

There is going to be a change in therapy practice. The question is how much, and is it done to the detriment of the patient? Our job is to make sure that there’s a transition where care is at least as good as where it is right now — and, ideally, even better.

CMS allowing 25% of the minutes to be group and concurrent is really smart, because group and concurrent — with the right patients and the right challenges that they have — is a good thing. I can tell you from our experience in our buildings, patients like to do rehab together. There’s a socialization effect. There are times where it really makes a lot of sense to do it. I think you’re going to see, very quickly, facilities shift to some group and concurrent — maybe the full 25% that’s allowed by CMS.

If they do that, that means that there’ll be less need for therapists, and so unfortunately, some therapists will lose their jobs. I think the bigger question is: What will happen to overall therapy minutes? Will minutes decline in addition to this shift in group and concurrent? And we don’t know enough yet to know that it will.

But I think the most important point, at least from our perspective, and what we’ve been telling our members is: Of course you need to provide the therapy that you believe is needed for the residents to hit their maximum recovery. We should be judged, not on the therapy minutes that we provide, but on the outcomes that our patients receive.

Hopefully, there won’t be a knee-jerk response if therapy minutes decline or people go to group and concurrent. Instead of just measuring us on that, people will look at outcomes, whether it’s rehospitalization or return to home or whatever the right metric is to look at; hopefully we will do better.

If we don’t do better, we should be crushed by CMS. If therapy declines and outcomes decline, we deserve whatever penalty we get. But if therapy minutes decline and outcomes improve, we shouldn’t be criticized, in my view.

Is 25% a good threshold? I know AHCA and others raised concerns about it when it was first introduced.

Operators are always going to want to have the maximum flexibility that they can. If you historically go back and look at it, at its highest level back in the 2009 or so timeframe, group and concurrent was about 25%. It would be nice if we had more flexibility, like we do with managed care or in an ACO setting, but 25% is probably a workable number.

Multiple states have led pushes to increase transparency around ownership transfers. What’s the national group’s view on these efforts?

We have looked at it over the last year. It’s obvious that in some states, it was too easy to change ownership of nursing homes. The poster child for that would be the Skyline situations that occurred in Pennsylvania, Kansas, South Dakota, et cetera. So states need to be more careful.

Our view is that states need to completely vet a buyer of a nursing home to make sure that they have the financial backing to run the place, that they have some sort of organizational structure that will work, that they have credibility as operators and providers.

They need to be careful that, as they go from basically just rubber-stamping every application to a more credible process, they don’t go so far overboard that nobody can buy a nursing home, or that it takes 12 months to close on it. So that’s critically important.

We reached out to our state execs and said: We’d like to hear from some state execs where they think the approval process is working, where people are being fully vetted, yet it’s not so onerous that it’s taking six months or a year to get it done. We assembled that information and we disseminated it to our state execs, and we said: If you’re in a state that’s just rubber-stamping, you need to really seriously think about affirmatively taking the step to us, as a sector, asking for this regulation — because we don’t want to have a situation occur again where people that shouldn’t be running nursing homes are buying them.

Our position has been that it’s still best to do it at the state level. If you tried to have a congressional committee figure this out and run it through Congress, it’s very likely to go overboard so that no transactions could occur, which would also not be a good thing. Our official position is: It shouldn’t be a rubber stamp. It should be a real vetting, and it should be done at the state level.

We’ve seen a lot of new regulations from CMS in recent months, which I’ve found interesting coming from a Republican administration. What’s your read on the trends from Washington? What do you support and what do you oppose?

We definitely appreciate the overall tone, that provided that we’re doing the right things in our buildings, we shouldn’t face an over-burdensome regulatory environment. We’re appreciative of many of the things that have appeared in the proposed Requirements of Participation rule. It’s important to note that there hasn’t for a long time been a rule that’s been issued that actually eases requirements in skilled nursing facilities. That very rarely happens.

On the negative side, CMS or any agency is going to respond to what’s happening on the Hill. It is ironic that in a Senate that’s controlled by Republicans, you’ve had two pretty negative hearings about skilled nursing facilities that have come out of [Republican Iowa] Sen. [Chuck] Grassley’s committee. The stuff that has come out of CMS that you’ve discussed primarily emanates from those two hearings.

At the first hearing that was held in the spring, Sen. Grassley had two witnesses that talked about tragedies that had occurred to their mothers in nursing homes. Terrible situations — we acknowledged that, and it’s very unfortunate. One of them occurred in a building that I believe was a five-star building, and he was incredulous that there could be a five-star building that had this kind of care.

The recent rule with the icon — and the capping of the survey scores at two stars if you have an icon — appears to be a response to that specific hearing. I don’t think it’s that surprising that, although the overarching message from CMS continues to be patients over paperwork, and we’ve been the beneficiary of that — it’s not that surprising that they’re still going to respond to input from Congress on what they ought to be doing.

You have these two different sort of themes — the overall deregulation theme out of the Trump administration, but then you have the Hill pressure that’s come primarily from the Senate Finance Committee.

It’s been interesting for me to see these two competing urges coming out of the same agency.

Overall, what I would encourage CMS to do — and what we encourage them to do al the time — is to link, whether it’s our reimbursement or our five-star rating, with quality. The members try to improve quality all the time, but if you link these things together, it would really jump-start the efforts.

For example, I think something that CMS could do that overnight would dramatically improve things would be to take the five-star so that our base score isn’t based on survey; it’s based on the quality measures. That would be something revolutionary they could do that I think would dramatically improve quality overnight.

We’ve got a good relationship with CMS. We’re comfortable with the direction they’re headed. But you’re right, there are two different phenomena that are occurring.

What about the new rule requiring hospitals to provide quality data about patients’ post-acute options? What will the effect be for SNFs?

Our view is always that more information is better; more transparency is better. We’re not trying to keep any information from anyone. Any sort of information that’s given out is fine.

We’ve actually advocated for CMS to include in five-star patient satisfaction measurements, which we think are probably the most important thing that potential residents should have access to. It’s not included in five-star right now.

How would you standardize patient satisfaction measures?

You would need to have a National Quality Foundation-certified measuring stick for patient satisfaction. We’ve developed one, and we’re encouraging CMS to develop one and try to get it NQF-approved so everybody’s working off of the same instrument, the same document.

So it’s not just like a Yelp review.

There are multiple different ways that people are being measured right now — that they do for their own companies to make sure they’re hitting their metrics. There would have to be an agreed-to, single instrument that CMS would mandate.

Despite the challenges that would create, the sector has endorsed that, because if you’re trying to figure out where to place your loved one in a nursing home, that to me is the most important thing: What do the people that live there or have loved ones that live there, what do they think about it?

When we decide what restaurant we’re going to go to, we don’t go to the inspection report from the local county. We go to TripAdvisor and see what the hell everybody said about it, or we go to OpenTable and see what the rating is.

Or you ask a friend who lives in that city.

Right. I hope that eventually we get this done. We’ll continue to advocate for it.

How long will it take for PDPM’s changes to shake out and begin to reveal new trends — whether it’s M&A activity or regulatory reactions?

I think initially, people said that there’d be a lot of M&A activity because the smaller operators just wouldn’t be able to figure out PDPM, and wouldn’t want to implement that. That’s just completely incorrect. PDPM is hard and it’s complicated, but our small operators are very sophisticated, and they know what’s going on, and I think that they’re quite well prepared and they’re going to do fine under PDPM.

We will have snippets in the next couple of months about what’s happening with therapy, and how this is working on the revenue side — but it’s going to take a good six months to really get a feel for what’s really happening on the cost side, what’s really happening on the revenue side.

I think it’ll take a year or two to really evaluate the impact on the residents, because outcomes data tends to lag real-time. We’ll know a little bit in two months. We’ll know more than a little bit in six months, and then a year from now, we’ll have a really good idea of whether this was smart or not.

This interview has been condensed and edited for clarity; Maggie Flynn contributed reporting.