Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Policy & Regulation News

CMS Reports SNF Payment Incentives May Cut Medicare Spending

CMS says Medicare spending will drop and hospitalization rates across skilled nursing facilities will decline — if the right strategies are put into place.

By Jacqueline DiChiara

- Medicare spending is falling, according to an annual report from the Centers for Medicare & Medicaid Services (CMS) that assessed how to reduce avoidable hospitalizations for long-stay nursing facility residents.

Medicare spending skilled nursing facilities

Well-targeted interventions could reduce hospitalizations among nursing facility residents by about half, confirmed CMS.

Preventable hospitalizations for long-stay residents are especially “dangerous, disruptive, and disorienting,” said Patrick Conway, MD, CMS Principal Deputy Administrator and Chief Medical Officer.

Skilled nursing facilities (SNFs) payments are anticipated to go up by a whopping $500 million, CMS reported last year.

Nonetheless, one of CMS’s primary objectives for this payment model testing initiative is to deliver an improved care experience that is cheaper than when a patient is admitted to a hospital.

CMS tested its model with the help of 144 nursing facilities across various Enhanced Care and Coordination Providers (ECCPs) over a three-year period. 

Seven states participated: Alabama, Indiana, Missouri, Nebraska, New York, Nevada, Pennsylvania. 

These states delivered on-site training staff, offered preventative services, and worked to improve medical condition managing.

“This Initiative has the potential to improve the care for the most frail, most vulnerable Medicare-Medicaid enrollees — long term residents of nursing facilities,” stated Tim Engelhardt, Director of the Medicare Medicaid Coordination Office. 

“By aligning financial incentives, we can improve the quality of on-site care in nursing facilities and the assessment and management of conditions that too often now lead to unnecessary and costly hospitalizations,” he added.

Ninety-five percent of over 100 survey respondents confirmed their facility introduced policies and procedures aimed at lowering the number of avoidable hospitalizations among long-stay residents, CMS reported.

“As we plan for new Medicare payment incentives to reduce hospital readmissions from skilled nursing facilities, these results provide early indications that when the right strategies are in place, they may effectively reduce hospitalization rates and reduce overall Medicare spending,” Conway stated.

“We anticipate gaining an even more complete understanding of the initiative’s impacts as additional results from this initiative become available.”

Readmissions a leading facet of Medicare spending 

Preventable hospitalizations are a primary driver of unnecessary medical spending, costing Medicare a reported $26 billion annually, according to data from the Center for Health Information and Analysis (CHIA).

“Reducing readmissions requires careful planning and communication among each of a patient’s providers and caregivers, as well as with community social services and patients themselves,” CHIA reported.

SNFs face heavy reimbursement pressure based on readmissions, said Bryan Cote, Managing Director at Berkeley Research Group, to, so much so they are actually being held accountable on the same level as their hospital counterparts.

“If you go in for one thing, and then with a week later, it's the same thing, you’re not going to get paid.”

“They often don't get a full picture when the patient gets to the SNF of why the patient was there and what went on in the hospital. That's a problem.”

Focusing on the various causes of preventable readmissions — such as whether a subsequent hip fall was caused by mere accidental coincidence, dementia, or anxiety — is essential to prevent patients from returning.


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