Value-Based Reimbursement May Not Bring Benefits for SNF Care

March 11, 2016 - CMS has released the Skilled Nursing Facility Utilization and Payment Public Use File, a dataset on the care skilled nursing facilities (SNF) provided to Medicare beneficiaries in 2013.  The data raises questions about the effect of value-based reimbursements on care quality improvements in the skilled nursing environment.

The data includes information on payments, charges, and utilization based on state, provider, and resource utilization group (RUG). It includes results from 15,055 skilled nursing facilities and more than 2.5 million stays in 2013, totaling an estimated $27 billion in Medicare payments.

“The Skilled Nursing Facility data released today is yet another example of our commitment to greater data transparency,” said CMS Chief Data Officer Niall Brennan. 

“CMS believes that when information flows more freely, the health care system functions more efficiently.  This leads to better care, smarter spending, and healthier people.”

The report found that for all SNFs in 2013 the average standardized payment amount per stay was $10,919 and an average stay was 28 days.

In an accompanying fact sheet, CMS highlighted results from two RUGs, Ultra-High (RU) and Very High (RV), as areas of improvement for value-based reimbursement incentives.

Skilled nursing facilities may have pushed patients into a higher tier RUG than necessary for billing purposes.

To qualify for Ultra-High RUG, patients must receive a minimum of 720 minutes of therapy per week and Very High RUG patients must receive a minimum of 500 minutes. 

These tiers of RUGs are noteworthy because Medicare pays skilled nursing facilities per diem based on the amount of therapy minutes and payment amounts.  The RV and RU RUGs can generate higher payments than other categories by 25 percent.

The Ultra-High Rehab RUG ranked as the highest total Medicare payment at $7.77 billion.

The data recorded a trend that the therapy time provided to Ultra-High and Very High patients was close to the minimum time required to qualify for the RUG category.  CMS calculated that providers delivered an average of just ten minutes of extra therapy above the minimum threshold.

Researchers found that 51 percent of RV results showed therapy time between 500 and 510 minutes and 65 percent of RU results were between 720 and 730 minutes.

Additionally, for 88 skilled nursing facilities, all of their RV results displayed therapy times between 500 and 510 minutes while 215 skilled nursing facilities had all of their RU results show a therapy time between 720 and 730 minutes.

Texas, Indiana, and several Southeastern states had the highest average standardized payments per stay and higher rates of therapy time at the required minimum or within a 10 minute threshold.

States such as Alaska, Iowa, and other Mountain states maintained lower standardized payments and rates of therapy time.

Based on the findings, CMS acknowledged that Medicare payments for SNFs will be reviewed to determine if value-based reimbursement incentives are improving the quality of care in therapy.

In recent years, skilled nursing facilities have been scrutinized for high Medicare payments.  In September 2015, HHS released a report urging CMS to reevaluate the billing system for SNF.

HHS found that SNFs billed Medicare for a higher level of therapy than what the beneficiary needed.  They also reported that Medicare payments exceeded the SNFs’ therapy costs.

“CMS strives to ensure that patient need, rather than payment system incentives, are driving the provision of therapy services,” said Deputy Administrator for Program Integrity and Director of the Center for Program Integrity, Dr. Shantanu Agrawal.

“These concerns have prompted us to refer this issue to the Recovery Auditor Contractors (RAC) for further investigation, and our hope is that data transparency will facilitate real changes.”

For more information and to view the full report, please visit the CMS webpage.