Medicare Updates Therapy Rules

A game of cat and mouse:

On October 1, 2011 (the beginning of Fiscal Year 2012), the Centers for Medicare and Medicaid Services (CMS) reduced overall reimbursement to SNFs (nursing homes) by $3.87 billion or 11.1%. The rate reduction was intended to adjust for the untended increase in Medicare outlays that occurred when CMS altered the SNF prospective payment system (PPS) in FY 2010. Additionally, the reduction was achieved by recalibrating rates of payment and by reexamining group therapy. CMS and SNF providers are locked in an eternal struggle not too dissimilar (but with much higher stakes) from mole whacking. Clever SNF providers strive to maximize reimbursement and CMS (upon discovering the SNF's strategies) changes the (PPS) reimbursement methodology. Of course, with Medicare spending (generally) increasing at a faster rate then the overall economy, coupled with the CMS (and MedPAC) determination that Medicare reimbursement to SNFs is too generous, continued refinement of PPS will continue.

Impact of rules changes:

As one would expect, CMS conducts ongoing monitoring of the impact of some of the changes in PPS.  In its recently published Q1 findings to measure the impact of the changes initiated on October 1, 2011, CMS found that essentially no group physical therapy was conducted in skilled nursing facilities. This is a dramatic shift from 2011 when 8% of patients were treated in groups. This outcome is most certainly a direct result of the new rule regarding group therapy. Under the prior standard, if a single therapist provided simultaneous therapy to 4 patients for 60 minutes, the SNF could record 60 minutes of therapy received for each patient (240 minutes of total reimbursed therapy) even though it was only paying the therapist for 60 minutes of work. Since October 1, 2011 if a therapist spends 1 hour with 4 residents in a group therapy session, then only 15 minutes of therapy can be attributed to each patient. Under PPS, less therapy received by the patient (in general) means less reimbursement from Medicare for that patient's stay in the SNF. Now you can understand why SNF patients are now receiving undivided attention from their therapists.

I'm curious if any readers have witnessed the impact of of the rules changes first hand. Let me know.

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    Bruce Lederman has over 25 years experience in the senior care field as a direct care provider and thought leader. Bruce was CEO and president of his own firm that operated skilled nursing facilities in Illinois. He is a former nursing home administrator and has consulted to numerous elder care providers on planning for strategic growth as well as process improvement. Recently he served as board chair of CJE SeniorLife, a leading non-profit elder care provider in the Chicago area. Bruce is currently employed as chief strategy officer for a company providing skilled nursing services in communities throughout Illinois and Missouri.

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