Predicting the Post-Pandemic Landscape for Nursing Homes: Three-Day Rule Will Return, I-SNPs Prove Worth

The federal authorities that regulate skilled nursing facilities issued a slew of changes to the rules governing nursing home care in the early months of spring as part of efforts to curb the spread of COVID-19 in the facilities.

Some of those changes, such as the loosening of restrictions around the use of telemedicine, are likely to stay even after the public health emergency from the coronavirus lifts. Others, such as the waiving of the requirement of a three-day hospital visit for Medicare to cover a SNF stay, are not.

“I know there’s a lot of attention on the three-day waiver,” David Grabowski, a professor at Harvard Medical School, said at Skilled Nursing News’ RETHINK virtual conference, held September 30. “This was not a popular rule prior to the pandemic; it was obviously waived. … I do think it was a good rule to waive, and I think it’s been overall effective for the pandemic. [But] I don’t think we’re going to see this waived in a post-pandemic world. I do think we’re going to go back to a three-day rule.”

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The rule was eliminated specifically for people who needed to be transferred due to the emergency, while some Medicare beneficiaries whose skilled nursing coverage had recently lapsed could have their coverage renewed without having to start a new benefit period.

The goal, Centers for Medicare & Medicaid Services administrator Seema Verma said at the time, was to reserve hospital beds for “the most severely ill patients.”

But according to Grabowski, there’s concern among policymakers about whether that change is “encouraging low-value care by simply being able to flip basically anyone from a long-stay resident to a short-stay pos-acute patient with that higher reimbursement.”

For that reason, he doesn’t foresee it remaining after the COVID-19 emergency passes.

The other panelist — Fred Bentley, managing director at the Washington, D.C.-based consulting firm Avalere Health — agreed, pointing out that the three-day rule had been in place for some time.

But one possible silver lining might be that since CMS is gathering data on the care during this time — and could combine it with data from Next Generation accountable care organizations (ACOs) and other entities that can waive the three-day requirement — it will at least be assessing the outcomes of the rule being waived, Bentley pointed out. This will be especially true to the extent any unnecessary hospitalizations are avoided, he noted.

On another front related to care in place, Grabowski joined other experts in predicting that telehealth and telemedicine are here to stay for SNFs, even if some of the regulations around it vary from those of the pandemic.

“Obviously pre-pandemic, the rural SNFs could deliver telemedicine and bill that to Medicare,” Grabowski said. “I imagine we’re going to see a set of rules where all SNFs can can bill some telemedicine. And having worked and done research on telemedicine in the past, and really seeing how payment was a a real barrier for future adoption and growth, I think it’s really going to take off in SNF settings.”

PDPM turns 1

The Patient-Driven Payment Model, which overhauled Medicare reimbursement for skilled nursing patients and turned 1 year old on October 1, was one of the biggest changes the SNF industry had seen to its system of operations prior to COVID-19.

COVID-19 changed all of that overnight, specifically shredding all calculations around therapy minutes as group activities were banned by CMS in March.

Before the pandemic, assessments of how operators might be faring under the new system tended toward the positive, with a tinge of concern about whether it would result in changes by CMS.

The new system was meant to be budget-neutral, meaning that under PDPM, CMS would not spend more or less than it had under the old Resource Utilization Group (RUG) system — but early analyses showed a greater percentage of operators with revenue gains than those suffering losses.

Still, PDPM is a much better system for dealing with a pandemic, even allowing for some confusion around certain conditions related to cohorting new SNF admissions.

“PDPM is actually better designed than the prior RUG system in terms of dealing with the needs of a high-needs population,” Grabowski pointed out “Given COVID, where we know these patients have lots of co-morbidities, lots of needs, paying on patient characteristics versus therapy is actually a good thing. So although it wasn’t designed to focus on a pandemic, PDPM is actually somewhat well-matched.”

In terms of the data emerging from SNFs pre-COVID-19, there were some declines in therapy, Grabowski said, and some changes in the kinds of patients who were being admitted in that their needs were increasingly acute. However, none of the changes were major, he noted.

Interest in value-based models remains strong

One of the hottest topics in the skilled nursing sector in terms of payment and payment changes in the months before the pandemic was the institutional special needs plan (I-SNP) model, under which SNFs could move into the insurance space by essentially becoming Medicare Advantage providers.

But other options for SNFs to move into Medicare Advantage or otherwise gain some control over their payer dollars exist. Before the pandemic, Avalere had seen several SNF clients express interest in forming their own ACOs, where several providers across the care continuum band together to provide care to Medicare fee-for-service beneficiaries. Genesis HealthCare (NYSE: GEN), for instance, used its physician group to launch a physician-led Medicare Shared Savings Program ACO geared exclusively to long-term care residents.

The pandemic has both upsides and downsides for providers who moved into this arena, Bentley said during the Rethink panel. Any SNF operator with any kind of guaranteed, per-member-per-month payment has a “golden ticket to survive through COVID-19, and the pandemic, and the shutdown and significant downturn in utilization,” he explained.

Providers in risk-bearing arrangements, and those in I-SNPs, would still be receiving a per-member-per-month fee, allowing for stability.

In that respect, these risk-bearing models are more attractive during the pandemic, he explained.

“The downside, and this is really just borne out by some of our SNF clients who have invested heavily in I-SNPs, is if you are managing an I-SNP for your ‘captive population,’ your patients in your facility, and your facilities have a COVID-19 outbreak, you’ve got some serious costs you have to absorb,” Bentley said.

The rates from Medicare are not going to automatically adjust to cover the higher costs, and so many I-SNPs have “really, really got hurt,” he said.

But in sum, he believes the pandemic has made these models more attractive.

Grabowski presented another point in their favor: The fact that they bring clinicians on site and allow for better treatment in place, pointing to an admittedly pre-pandemic study with the I-SNP provider Optum that found much lower hospital and emergency department use, along with higher SNF utilization.

“We learned very early in this pandemic that many nursing homes didn’t have good clinical infrastructure on site, and doctors couldn’t always be there,” he said. “I agree with Fred’s point about the financial issues … but I think on the upside, having that nurse practitioner there on site is really powerful.”

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