- HHS Secretary Alex Azar identified value-based purchasing as the key to reducing hospital readmissions and moving skilled nursing facilities and other post-acute care providers to coordinated community care.
In a speech to the American Health Care Association and National Center for Assisted Living, Azar emphasized the Trump Administration’s focus on bringing value-based purchasing to skilled nursing facilities, with the proposed Patient Driven Payment Model (PDPM) being a staple in that effort.
“The PDPM would be a significant shift in how SNFs are paid, and we believe, a very positive one,” he said. “It reflects our belief that we should not be paying providers in ways that drive overuse of services. Instead, we should pay providers based on the patients they treat, while assessing quality fairly. We know quality reporting can be a complex task, and we have strived to make SNF quality assessments as simple as possible while still gathering the necessary, meaningful data.”
CMS proposed the PDPM in April 2018. The prospective payment system would reimburse skilled nursing facilities based on patient conditions and healthcare needs rather than the volume of services provided. The model would increase payment to nursing homes by about $850 million.
The proposed payment model would replace the Resident Classification System, Version I (RCS-1). The RSC-1 was CMS’ attempt to push skilled nursing facilities away from fee-for-service payments by potentially reimbursing nursing homes based on a case-mix model.
Stakeholders concerns that the complexity of the proposed RSC-1 model would create financial and clinical challenges prompted the federal agency to develop the Patient-Driven Payment Model, which would reduce the number of payment group combinations in the RSC-1 by 80 percent.
Some industry groups and nursing homes have questioned if the proposed PDPM will sufficiently reimburse skilled nursing providers for treating patients.
However, Azar emphasized that value-based purchasing and alternative payment models, like the PDPM, are necessary as long-term care becomes more important to the population. The number of aging and disabled individuals continues to grow, with projections slating the population of individuals 60 years or older to reach 77 million people by 2020.
“[A]s our country ages, the systems we have for caring for older Americans must change,” Azar said. “One reason is that the finances simply will not work. We need higher quality, lower-cost settings for caring for older Americans with serious health conditions.”
Value-based purchasing initiatives can help to direct Baby Boomers and other post-acute care patients to the appropriate care setting and reduce hospital readmissions, thereby reducing costs, he added.
Hospital readmissions cost Medicare about $26 billion each year, with about $17 billion of that spent on avoidable readmissions.
“We know there can be disagreements among hospitals, payers and post-acute care providers about when it’s appropriate for a patient to leave the post-acute care facility. We understand getting patients the right rehabilitation services helps keep them out of the highest cost settings: hospitals or inpatient rehab facilities,” he said.
“But a system that pays for value will aim to move patients into the lowest-cost appropriate setting. We are interested in ways that Medicare and Medicaid can better support the kind of coordination and integration needed for these transitions.”
These Medicare and Medicaid models for care coordination and integration may involve more community-based care, he added.
“This will likely involve stronger connections between the healthcare and human services sides of HHS,” he said. “There may be potential for making more use of community aging and disability networks, which are supported by HHS’s Administration for Community Living.”
While HHS has set its sight on post-acute care for value-based purchasing, Azar noted that the federal department also intends to ramp up technology in the post-acute care space.
“[T]he federal government has not always paid the same level of attention to advancing electronic health records in your industry as in traditional healthcare settings,” he told the post-acute and long-term care groups. “But the potential for a truly interoperable health records system, spanning all settings of care, is huge.”
HHS already issued a Request for Information (RFI) notice as part of the new skilled nursing facility payment policies regarding interoperability incentives and the Trump Administration’s efforts to engage patients with their own health data.
The federal department also proposed to make public the data for four skilled nursing facility quality measures. Publicizing the information should help to reduce hospital readmissions, according to HHS.
These proposed post-acute care reforms may not be well-received by all stakeholders, Azar concluded. But moving the space to value-based purchasing and coordinated, connected care will help the industry support and care for the changing population.