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18 1201 L Street, NW, Washington, DC Main Telephone: Main Fax: Neil Pruitt, Jr. CHAIR UHS-Pruitt Corporation Norcross, GA Leonard Russ VICE CHAIR Bayberry Care Center New Rochelle, NY Lane Bowen SECRETARY/TREASURER Kindred Healthcare Louisville, KY Ted LeNeave EXECUTIVE COMMITTEE LIAISON American HealthCare, LLC Roanoke, VA Robert Van Dyk IMMEDIATE PAST CHAIR Van Dyk Health Care Ridgewood, NJ Orlando Bisbano, Jr. AT-LARGE MEMBER Orchard View Manor Nursing & Rehabilitation Center East Providence, RI Tom Coble AT-LARGE MEMBER Elmbrook Management Company Ardmore, OK Phil Fogg, Jr. AT-LARGE MEMBER Marquis Companies Milwaukie, OR Robin Hillier AT-LARGE MEMBER Lake Point Rehab & Nursing Center Conneaut, OH Richard Kase AT-LARGE MEMBER Cypress Health Care Management Sarasota, FL Tim Lukenda AT-LARGE MEMBER Extendicare Milwaukee, WI Frank Romano AT-LARGE MEMBER Essex Health Care Rowley, MA Gary Kelso NOT FOR PROFIT MEMBER Mission Health Services Huntsville, UT Mike Shepard NCAL MEMBER Shepard Group Mena, AR Steve Ackerson ASHCAE MEMBER Iowa Health Care Association West Des Moines, IA Shawn Scott ASSOCIATE BUSINESS MEMBER Medline Healthcare Mundelien, IL Mark Parkinson PRESIDENT & CEO October 25, 2012 Medicare Payment Advisory Commission (MedPAC) 425 Eye Street, NW Suite 701 Washington, DC Dear Commissioner: The American Health Care Association and the National Center for Assisted Living (AHCA/NCAL) represent nearly 11,000 members including profit and not-for-profit skilled nursing facilities (SNF), nursing facilities (NF), assisted living residences, post-acute centers, and homes for persons with intellectual and developmental disabilities. Our members are dedicated to continuous improvement in the quality of supports provided daily to more than 1.5 million of our nation s older adults, persons who are medically fragile, and persons with disabilities. I am responding to the draft recommendations made by MedPAC at the October 2012 meeting. I am asking you not to finalize certain of these recommendations; specifically those that (1) call for lowering of the outpatient therapy cap and impose medical manual review for requests that exceed the cap; and (2) apply an Multiple Procedure Payment Reduction (MPPR) reduction of 50% to the practice expense (PE) component of outpatient therapy fee schedules. I note that Congress asked MedPAC to conduct and provide a report to it by June 2013 that would include recommendations on how to reform the payment systems such that the benefit is better designed to reflect individual acuity, condition, and therapy needs of the patient. Up until the October 5 th, 2012 MedPAC meeting, the Commission appeared on its way to responding to that request. Among the proposals that were discussed by MedPAC was one focused on the development of outpatient therapy episodes and a payment system based on such episodes. AHCA and the National Association for the Support of Long Term Care (NASL) have been simultaneously working toward that goal. However, on October 5, the Commission changed course dramatically and recommended the above referenced cuts. This action does not appear to be responsive to Congress original mandate for recommendations for reform or MedPAC s own framework for evaluating potential policy changes. In particular, I do not see how it will either improve beneficiary access to care or improve the quality of care, two fundamental evaluation recommendation criteria that MedPAC commissioners have held to be very important. I am reaching out to you specifically on behalf of beneficiaries who reside in nursing facilities. These are among the oldest and frailest of Medicare beneficiaries, and rehabilitation therapy is considered key by Congress in the services provided to these beneficiaries. Nursing facility As the nation s largest association of long term and post-acute care providers, the American Health Care Association (AHCA) advocates for quality care and services for frail, elderly and disabled Americans. Compassionate and caring employees provide essential care to one million individuals in our 11,000 not-for-profit and proprietary member facilities.

19 residents often need specialized rehabilitative services to restore lost abilities caused by strokes, broken bones and other conditions. The nursing facility must provide needed therapy services, no matter who is paying for the nursing home stay. 1 Federal law requires that a resident receive the therapy needed to reach his or her highest practicable level of functioning. 2 The nursing facility must provide or arrange needed therapy services such as, but not limited to, physical therapy, occupational therapy, speech-language pathology and mental health rehabilitative services USC 1396r(c)(4)(A).(attached) In exchange for Medicare payments, certified nursing facilities agree to give each resident the best possible care. Specifically, they are required to help each resident attain or maintain the highest practicable physical, mental and psychosocial well-being. 4 Unless it is medically unavoidable, nursing facilities must ensure that a resident's condition does not decline. 5 Care, treatment and therapies must be used to maintain and improve health to the extent possible, 6 subject to the resident's right to choose and refuse services. 7 To my knowledge, these requirements are unique to the nursing home context and render the facilities, clinicians and therapists with enormous responsibility for the quality of life of their residents. Lowering The Therapy Cap Amount And Imposing Medical Manual Review For Requests That Exceed The Cap Is Not Clinically Justified The original cap of $1500, imposed in 1999, had no clinical basis. It was a crude tool that slapped a limit on services no matter what the effect on access. The arbitrary quality of the limit was immediately recognized. Congress implemented temporary moratoria on the therapy caps for several years and in the Deficit Reduction Act of 2005 required CMS to establish an exceptions process to the therapy caps for services furnished in Subsequently, the Tax Relief and Health Care Act of 2006 and later legislation extended this exceptions process. It does not seem reasonable to yet again simply reduce the cap without any clinical rationale. We fully understand the drive to reduce Medicare expenses. We question, however, whether in fact, a cut in the cap will reduce Medicare expenses by reducing services. Some elderly in nursing facilities in need of Part B therapy may forego therapy when they hit the cap and become at risk for full payment responsibility. Such decisions could lead to deterioration, risk of falls, broken bones and the myriad of illnesses that surface with physical and mental deterioration. As for manual review, I hope that you have been advised of the disaster regarding the current manual review process at the $3,700 threshold. The manual review just imposed has had horrific consequences. CMS has now made three attempts with Open Door Calls to straighten things out but to no avail. The horror stories of administrative chaos and complexity keep coming USC 1396r(c)(4)(A) USC 1396r(b)(4)(A)(i) CFR (a) USC 1396r(b)(2) CFR USC 1396r(b)(4) CFR (b)(4), Title 22 CCR 72527(4). 2

20 As you can well imagine, the situation in nursing facilities is especially difficult because of the age and health of the beneficiaries, the quantity of manual reviews, the lack of unified Medicare Administrative Contractor (MAC) instructions, and the inability of facility staff to cope with masses of photocopies, faxes and mail. In addition, as can be surmised from the third and latest CMS Open Door Call on manual review, the MACs too are inundated and struggling to cope with the avalanche of manual reviews and new procedures. Applying An MPPR Reduction Of 50% To The Practice Expense (PE) Component Of Outpatient Therapy Is Not Clinically Justified MedPAC should not increase the MPPR policy for therapy services to 50%. There is no basis for doing so and it could limit beneficiaries access to care. A study by the Moran Company found that the MPPR policy disproportionately affects those receiving multiple therapies in skilled nursing facilities. The Moran Company found that patients receiving therapy from multiple disciplines tended to have more complex diagnoses indicating conditions that were somewhat different from those receiving a single therapy. Therefore, the MPPR policy disproportionately targets those receiving multiple therapies in skilled nursing facilities. In addition, we continue to believe that CMS has never demonstrated that there is duplication of services when therapists bill under multiple Current Procedural Terminology (CPT) codes. CMS initially applied the MPPR policy to therapy services based on a simple analogy to imaging services. CMS concluded that there must be duplication of services even though it had only identified a few specific instances when such duplication occurs. The Moran Company analysis showed duplication ranged between 0-15% and was always 0% when therapy was delivered by more than one discipline on the same day. The current 25% MPPR exhausted and exceeded any duplication that was ever present. Increase of the MPPR will function strictly as a cut to payments unsupported by any evidence of additional duplication. AHCA s Efforts DOTPA AHCA over the past few years has put enormous effort and resources into support for reform of Part B Therapy. We early supported the CMS research project entitled Developing Outpatient Therapy Payment Alternatives (DOTPA) awarded to Research Triangle Institute (RTI) in At the request of the contractor, we met with the RTI researchers and assisted them with various aspects and components of their assessment design. We also reached out to our nursing facility providers to volunteer to be part of the demonstration. The project was conceived to address that lack of therapy-related information tied to beneficiary need and the effectiveness of outpatient therapy services. In order to collect the needed data, the project involved (1) the development of a data collection strategy, including the recruitment of therapy providers to participate in data collection, (2) analysis of the resulting data to identify payment alternatives to therapy caps, and (3) close engagement with the stakeholder community throughout the project. The project is due to provide its report in STATS AHCA provided therapists and other members for the array of work groups pulled together by CMS for the Short-Term Alternatives for Therapy Services (STATS). The contractor 3

21 was tasked to provide professional services that would build upon the prior studies and perform follow-on analysis that provide CMS with tools required to fulfill Congressional direction and implement CMS policy. CMS indicated that this additional study was needed to develop shortterm alternatives to outpatient therapy caps including both systems changes and manual guidance that encourages payment for therapy services that are medically necessary. The required study was intended to supplement data with input from research and clinical experts in the fields of physical therapy, occupational therapy, speech-language pathology, statistical analysis, and outcome measurement and analysis. The purposes of this study were to identify characteristics of patients who needed therapy services and to develop specific payment policy applications that could be used in the short-term with the physician fee schedule to limit payments for covered outpatient therapy to medically necessary services. AHCA provided the experts, indicated above, for all three STATS workgroups: the Clinical Workgroup, the Assessment Workgroup and the Policy Workgroup. The project ran for many months. It was very time consuming for the volunteer experts, but everyone felt that it was worthwhile and would help lead to payment reform. Episodic Systems In addition, AHCA has supported the efforts of the National Association for the Support of Long Term Care (NASL) in its efforts over the years to undertake its own research into alternative payment models. Their work with the Moran Company in 2008 showed that a prospective payment system for Medicare Part B therapies could be created and it could be based on episodes of care. NASL shared that study with Med PAC this summer and provided the documentation requested. NASL and AHCA continue to work with the Moran Company to develop alternative approaches and presented the latest model to MedPAC staff on October 19, The model provides for a transition to an episodic approach. An episode of therapy services would be defined and a limit set based on a percentile of the distribution of duration based on days of therapy. The episode may be limited to a single therapy discipline (i.e. PT, SLP or OT) or may include a combination of two or all three disciplines into a complex episode. At the duration limit, a degree of risk sharing would be imposed to encourage efficiencies and provide incentives. A second limit would be set at a high percentile of the distribution of duration at which medical review would be required for payment to continue. If approved, payment would continue with risk sharing. There is also the potential for inclusion of both an outlier policy and a pay-for-performance mechanism within the episode framework. Physician certification of the need for therapy services would be required as it currently is - at defined intervals. V-codes could be rejected, and NASL and AHCA would work towards better defining diagnosis codes. Additionally, a standard assessment and outcomes measures may be used to ensure accountability and could be linked to episodes of therapy in the payment system. The proposal is still undergoing refinements but NASL and AHCA believe that the approach could be instituted very quickly. Quality Outcome Measures During the September MedPAC meeting, it was noted that CMS lacks data on functional outcomes. We are pleased that together with NASL, we have undertaken an initiative to develop 4

22 outcome measures for therapy. We share the concern on the need for outcome measures and are working quickly to develop measures that build on the Continuity Assessment Record and Evaluation (CARE) tool. Our work with NASL has been shared with CMS and MedPAC staff. We anticipate being ready to recommend some measures in early We believe that any payment model should include a linkage to outcomes. Conclusion Again, we ask that you do not bend to any purely budget driven demand to provide a swift and, unfortunately, inadequately considered set of recommendations. These recommendations are cuts without a clinical basis and will do only great harm to the most elderly and frail. We look to MedPAC for true reform and again, as we have done for many years, offer our efforts and resources to help achieve that goal. Sincerely, Mark Parkinson President and CEO cc: Mark Miller 5

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