1 ZIMMET HEALTHCARE SERVICES GROUP, LLC, 2017 ZIMMET HEALTHCARE 2017 LeadingAge New York Financial Professionals 2017 Medicare PPS Payment System Reform: Introduction to Resident Classification System - I ZIMMET HEALTHCARE 2017 Problem with Current PPS • Mispriced therapy – especially at Ultra High level • Incentive to “treat to the minutes” • Does not recognize comorbidities • Non-therapy ancillary costs poorly accounted for • Flawed nursing time studies • ADL inconsistencies & inversions • Not conducive to accurate benchmarking • Minimizes relevance of the Medicare claim as analytics tool The result is a hyper-active audit environment predicated almost exclusively on “Necessity” of therapy services
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1ZIMMET HEALTHCARE SERVICES GROUP, LLC, 2017
ZIMMET HEALTHCARE 2017
LeadingAge New York
Financial Professionals 2017
Medicare PPS Payment System Reform:
Introduction to Resident Classification System - I
ZIMMET HEALTHCARE 2017
Problem with Current PPS
• Mispriced therapy – especially at Ultra High level
• Incentive to “treat to the minutes”
• Does not recognize comorbidities
• Non-therapy ancillary costs poorly accounted for
• Flawed nursing time studies
• ADL inconsistencies & inversions
• Not conducive to accurate benchmarking
• Minimizes relevance of the Medicare claim as analytics tool
The result is a hyper-active audit environment predicated
almost exclusively on “Necessity” of therapy services
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Audit Initiatives
HHS Medicare FFS 2016 Improper Payments Report
• 2015 improper payment rate = 12.09% ($43.3B)
• 2016 improper payment rate = 11.08% ($41.1B)
• 2016 “Improper” SNF payments = $2.8B
• Insufficient documentation and coding errors
• Up 60% from 2014’s improper payment rate• https://www.cms.gov/Research-Statistics-Data-and-Systems/
Concentration remains on Rehab Ultra High (RU)
CMS orders auditing by Supplemental MR Contractor (April 2017)
WPS MAC starts pre-pay review of RU (April 2017)
ZPICs extrapolating therapy denial % for $ million+ recoupments
SNFs routinely being held accountable for actions of their contractors
ZIMMET HEALTHCARE 2017
Recent Therapy Settlements
• Genesis: $52M DOJ settlement for therapy overbilling (2016)
• Kindred: $125M settlement for unnecessary SNF therapy (2016)
• Extendicare: $32M for medically unreasonable and unnecessary
therapy services (plus $6M to 8 state Medicaid programs) (2015)
• Life Care Centers: $145M for unwarranted therapy (2016)
• DOJ: “Life Care carefully tracked the minutes of therapy provided
to each patient and number of days in therapy…”
• Regional operators also targeted: Ohio: $19.5M (2017);
Boston: $2.5M (2016); Missouri: $8.4M (2017)
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ZHSG Audit / Investigations
• Midwest Region: OIG shows up a MDSC house and asks questions about R&N, keeping patients on at specific therapy levels
• Mid-Atlantic Region: Medium size multi-state chain under ZPIC scrutiny for one facility, but quickly expands to dozens (all therapy related)
• Northeast Region: OIG investigating marketing and operating issues of a national contract therapy company – asks SNF for all marketing material used by the company
• Southern Region: Medium size, one-state “in-house” chain under ZPIC for whistleblower relating to excessive therapy (even though their RUGs were below average)
• Southwest Region: OIG penalizes single provider for productivity and RUG level mandates
ZIMMET HEALTHCARE 2017
• IMPACT Act mandated MedPAC to outline a unified payment system
that would replace the four current post-acute care Medicare
payment systems (SNF, HHA, IRF, LTCH)
• Objective is to base payment on patient characteristics rather than setting or
amount of therapy furnished (significant redistribution of PAC dollars)
• IMPACT Timeline: Propose system by 2023, then implement
• MedPAC demonstrated that the system is highly feasible & accurate;
recommends implementation in 2021 with 3-year optional phase-in
• See June 2017 MedPAC Report to Congress, chapter 1 for details
RCS is NOT the Unified Post-Acute Payment System
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About RCS-I
• Advanced Notice of Proposed Rulemaking (5/4/17; CMS-1686)
• Public comment period extended from June 26 to August 25, 2017
• Based on extensive research and TEPs (revisions are likely)
• Target date is October 1, 2018
• Likelihood of implementation?
• Budget Neutrality assumed (Parity adjustments)
• No mention of “phase-in”
• Improvement over RUGs?
• Shift from Volume to Patient Characteristics as $ driver
ZIMMET HEALTHCARE 2017
• No change in Medicare “clinical” or “technical” eligibility requirements
• “Focus on reducing administrative burden for providers”
• MDS remains basis for rate setting, but the 5-day locks the composite score
for the entire benefit period (assuming no discharges or sig. changes)
• Current assessment schedule is eliminated, including COTOs
• Sets up benchmarking mechanism from admission – discharge
• Recognizes disproportionate costs during first days of stay
• Frequency / Amount of therapy does not impact reimbursement
• Therapy is “just another component of the care plan” –
Nursing acuities and Diagnosis coding drive revenue
About RCS-I
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RCS Structure
• RUG-IV contains 3 rate components:
• Therapy, Nursing (including NTAs) and Overhead
• Blended into one of 66 distinct per diem rates
• RCS includes 5 distinct, variable rate components:
• PT/OT (30 categories)
• SLP (18 categories)
• Nursing (43 RUGs)
• Non-Therapy Ancillaries (6 levels)
• Overhead / Non-Case Mix Adjusted (1 rate)
Per Diem RUG
O
N T
1 of 30
1 of 18
1 of 61 of 43
1
Composite
How many possible combinations???
ZIMMET HEALTHCARE 2017
Take Components One at a Time
Each component has its own
grouping process using
different variables and
scoring methodologies
PT/OT• 30 categories
SLP• 18 categories
Nrsng• 43 RUGs
NTA• 6 groups
OH• 1 CBSA
RCS Score
RCS: Where Do We Start?
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Why is the Patient Here?
• 10 “Clinical Categories” capture the “range of general resident
types” found in SNFs
• MDS Section I8000: ICD-10 code
• “Primary reason for SNF stay”
•DRG “Mapping”
Major Joint Rep. or Spinal
Surgery
Non-Surgical Orthopedic/
Musculoskeletal
Orthopedic Surgery (Except
Major Joint)
Acute Infections
Medical Management
Cancer Pulmonary Cardiovascular & Coagulations
Acute Neurologic
Non-Orthopedic
Surgery
ZIMMET HEALTHCARE 2017
The 10 categories are collapsed into 5 for PT/OT
Medical Management
Other Orthopedic
Major Joint Rep. or Spinal
Surgery
Acute Neurologic
Non-Orthopedic
Surgery
2 for SLP
Acute Neurologic
Non-Neurologic
Orthopedic Surgery (Except
Major Joint)
Acute Infections
Pulmonary
Cardiovascular & Coagulations
Major Joint Rep. or Spinal
Surgery
Non-Surgical Orthopedic/
Musculoskeletal
CancerAcute Neurologic
Non-Orthopedic
Surgery
Medical Management
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Major Joint Rep. or Spinal Surgery
Other Orthopedic
Medical Management
Non-Orthopedic Surgery
AcuteNeurologic
14 – 18
8 – 13
0 – 7
Intact or Mildly Impaired
Moderately or Severely Impaired
Physical / Occupational Component Calculation
Clinical Category (5)
FunctionalScore (3)
CognitiveImpairment (2)
MDS Section
Clinical: I8000 Primary reason for SNF stay (ICD-10)
Functional: GTrans, Eating, Toileting: Self Perf only
Cognitive: CCognitive Function Scale
All patients score in one PT/OT group no matter if they receive therapy (or how much)
ZIMMET HEALTHCARE 2017
PT/OT Functional Score
• RCS PT/OT scoring differs from RUG-IV ADL system
• Transfers, Eating and Toileting Self-Performance scores only
• Each ADL scored on a 0 – 6 scale; (v. 4 in RUG-IV)
• 0 – 18 point range
• Higher point totals increase reimbursement but are not linearly correlated with functional performance changes
• “Points assigned to each response mirror the inverse U-shape of the dependence-cost curve for the transfer and toileting items and the monotonic decrease in costs associated with increasing dependence on the eating item.”
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RCS: PT/OT Functional Score v. RUG-IV: Self-Performance Scale
ZIMMET HEALTHCARE 2017
PT/OT Cognitive Function
• New cognitive measure: Cognitive Function Scale (CFS)
• Combines Brief Interview for Mental Status (BIMS) and Cognitive Performance Score (CPS) into one scale
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PT/OT Case-Mix Classification Groups
See handout for complete listing of case-mix groups
ZIMMET HEALTHCARE 2017
Speech Language Pathology Component Calculation
Clinical Category (2)
Swallowing
Disorder or
Mechanically-
Altered Diet (3)
SLP Related
Comorbidity or
Mod. to Severe
Cog Imp (3)
MDS Section
Clinical: I8000 Sw Dis: K0100Z MA Diet: K0510C2 Comorb: Misc.Cognitive: C (CFS)
All patients score in one SLP group no matter if they receive therapy (or how much)
AcuteNeurologic
Non-Neurologic
Either
Neither
Both
Either
Neither
Both
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SLP Related Comorbidities
ZIMMET HEALTHCARE 2017
SLP Case-Mix Classification Groups
See handout for complete listing of case-mix groups