PDPM, Secret Lists, and New Rules: The Top Skilled Nursing Stories of 2019

In perhaps the least surprising news of the year, the new Medicare payment model for nursing homes dominated the list of most-read stories on Skilled Nursing News in 2019.

But the Patient-Driven Payment Model (PDPM), for all its impact on the post-acute and long-term care space over the last 12 months, wasn’t the only story that our readers found vital.

A quick trip through our top pieces reveals a year full of new strategies for success, so-called secret lists becoming public, transactions with hefty price tags, and even more updates from the federal government.

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As we head into the holiday week, SNN will highlight the news that shaped 2019 for operators, investors, and vendors in the industry.

Today, we’re featuring selections from the most-read stories of the year. On Monday, before we take a publishing break until January 2, we’ll share some of the under-the-radar stories that reporter Maggie Flynn and editor Alex Spanko think deserve one more glance before the calendar turns to 2020.

PDPM 101: What Skilled Nursing Providers Need to Know Now

Far and away SNN’s most-read story of 2019, this rundown of PDPM basics caught on with readers when it was published in late March — and then again during the frantic lead-up to the payment model’s implementation at the beginning of October, when it would routinely pop up in our top stories of the week.

While operators should be far beyond the 101-level lessons on the payment model by now, this piece remains a handy reference for those both inside and outside the industry, with tips for navigating the changes — as well as cautionary words from leaders who stress that for every factor that changed, there’s probably a counterpart that remained the same.

‘CMS is Watching’: Changing Therapy Patterns Raise Concerns About Skilled Nursing Audits, Care Quality

Almost immediately after the PDPM shift on October 1, news of therapy layoffs began flooding SNN’s inboxes as operators faced the reality of rehab becoming a cost center, and not a revenue driver.

Most prominently, Genesis HealthCare (NYSE: GEN) acknowledged the elimination of 585 therapist positions, or just under 6% of its total rehab staff, with anecdotal reports of layoffs and conversions to on-call status sent in from individual therapists around the country.

In response to the news, Kara Gainer, director of regulatory affairs at the American Physical Therapy Association, issued a stern warning to providers considering significant therapy staffing changes without solid clinical backing: Just as they did under the old system, the Centers for Medicare & Medicaid Services (CMS) and other regulators will not tolerate care decisions motivated purely by profit.

“I think it’s really short-sighted that these companies are doing this, because they know CMS is watching, and they know if they have a dip in outcomes or dip in utilization, CMS is probably going to audit them,” Gainer said.

Robert Lane, a director at consulting firm BKD, echoed that sentiment.

“Certainly, this is going to draw attention from CMS,” Lane said of the early changes to care patterns.

ICD-10 Coding Will Be Crucial Under PDPM — But SNFs Don’t Need to Become Experts

Of all the PDPM preparedness tips that consultants and operators discussed in the lead-up to October 1, ICD-10 coding probably seemed the most daunting. Previously the domain of hospitals, the diagnosis classification system system encompasses tens of thousands of potential codes — a huge swath of which don’t actually map to any PDPM reimbursements.

At the start of 2019, 63% of respondents to SNN’s annual outlook survey identified a greater emphasis on coding as a a key PDPM strategy. But toward the end of January, reporter Maggie Flynn poked holes in the idea that ICD-10 mastery was a necessity.

“There’s a lot of ‘Oh my god, oh my god, we’ve got to train our billing team on all this detail!’ and the answer is: No, you don’t,” Mike Cheek, senior vice president of reimbursement policy at the American Health Care Association, told Skilled Nursing News at the time. “You need to train them on what they need to know, and what they need to know is not that.”

Senators Release ‘Secret’ List of Troubled Nursing Homes Considered for Special Focus

A pair of U.S. senators shook the skilled nursing world back in June with the release of a document they billed as a secret list of properties considered for Special Focus Facility designation.

The SFF list represents the nursing homes in need of the most improvement, as determined by CMS, but it’s limited to about 88 buildings out of around 15,700 across the nation. Federal officials for years had maintained a list of SFF candidates, which they did not make public — until Democratic Sen. Bob Casey and Republican Sen. Pat Toomey, both of Pennsylvania, released it to the media.

“While the vast majority of nursing homes provide high-quality care, there are some that are consistently failing to meet objective standards of adequacy,” Toomey, said in the statement. “To date, CMS has arbitrarily excluded from public disclosure a subset of these underperforming nursing homes. Moving forward, I hope CMS will give the public this particular list, as well as all relevant information about nursing home quality.”

The bipartisan duo’s gambit worked: CMS agreed to begin releasing the list, updated on a monthly basis, directly to the general public. The New York Times also probed the prevalence of SFF candidates with Department of Housing and Urban Development-backed loans, meaning Toomey and Casey’s spring surprise could have long-lasting effects on nursing home regulation and financing.

CMS to Crack Down on Staffing, Separate Short- and Long-Term Stays in SNF Star Rating Overhaul

In 2018, the New York Times and Kaiser Health News teamed up to report that nursing operators appeared to have been inflating their staffing levels for years, a bombshell story that prompted CMS to penalize nearly 1,400 nursing homes with one-star staffing ratings.

The federal government took things a step further this past March, rolling out stricter standards for achieving top staffing marks — while also for the first time breaking out individual buildings’ quality ratings into separate measures of short- and long-stay services.

Under the new rules, nursing homes automatically receive a one-star staffing rating if they report for our more days per quarter without registered nurse coverage; the previous threshold had been seven.

“Nurse staffing has the greatest impact on the quality of care nursing homes deliver, which is why CMS analyzed the relationship between staffing levels and outcomes,” the agency said at the time. “CMS found that as staffing levels increase, quality increases.”

In addition, CMS implemented a kind of curved-grading system to encourage nursing homes to focus on continued improvement: For quality measures, the agency will raise the bar for each star threshold based on overall industry improvements every six months.

“For example, if there is an average rate of improvement of 2%, the QM threshold would be raised 1%,” CMS wrote. “Similar to setting new thresholds, this action also aims to incentivize continuous quality improvement. Additionally, it will reduce the need to have larger adjustments to the thresholds in the future.”

Omega to Buy 58 Skilled Nursing Facilities in $735 Million Deal

In a year that didn’t register quite as many mega-deals as the one that preceded it — it’s hard to top Welltower Inc. (NYSE: WELL) and ProMedica’s $4.4 billion play for HCR ManorCare in 2018 — Omega Healthcare Investors (NYSE: OHI) still made its mark on the 2019 mergers-and-acquisitions landscape.

The Hunt Valley, Md.-based real estate investment trust (REIT) in late July pulled off this $735 million deal, which saw Omega pick up 58 skilled nursing facilities and two assisted living properties with a total of 6,590 beds across eight states. Omega laid out $345 million in cash, with Department of Housing and Urban Development (HUD)-backed loans accounting for the remaining $390 million.

The identity of the primary operator involved remained a mystery until the deal formally closed in November, when SNN confirmed that the Florida-based Consulate Health Care was in control of 57 of the 60 properties.

Editor’s Note: An earlier version of this article gave an incorrect first name for Kara Gainer of the American Physical Therapy Association. SNN regrets the error.