CMS Requirements of Participation Facility Assessment

HEALTHCARE I N S I G H T S May 2017 THE NEWSLETTER FROM LOEB & TROPER FOR NURSING HOMES AND HOME CARE AGENCIES CONTENTS CMS Requirements of Participation Facility Assessment Managed Care Contracts and Related Issues 1 5 CMS Considering Replacement of RUG-IV Case Mix Classification System 7 Post-Pay Audit of SNF Claims 12 Loeb and Troper at LeadingAge New York CMS Requirements of Participation Facility Assessment The 2016 CMS Requirements of Participation mandate that all skilled nursing facilities (facilities) conduct and document a facility wide assessment to identify the resources required to care for its residents competently, during both day to day operations and in emergencies. This individualized comprehensive assessment must be completed by November 28, 2017 and updated whenever there is a change in the skilled nursing facility s operations that would require a substantial modification in the assessment or at least on an annual basis. Required Components While there are no explicit CMS guidelines detailing the acceptable format of the assessment document, the regulations identify the required components which include, but are not limited to: Resident population served Care requirements of the resident population, based on diagnosis, physical and cognitive disabilities and overall acuity Facility staffing and staff competencies Ethnic, cultural and religious needs of the residents Facility resources Services provided Contracts/agreements with third parties to provide services Health Information resources Facility and community based risk assessment, utilizing an all hazards approach

2 Required Components... facilities will be required to provide evidence of a formal documented process demonstrating that the resident population has been assessed and that the resources needed to provide the necessary care are assessed and documented CMS has indicated that facilities should not take a cookie cutter approach to documenting the facility assessment, but that it should reflect the individuality of the facility s programs and services. It should not only provide justification of the current operations of the facility, but also provide an opportunity to evaluate the rationale for the operational plan of the facility. It is important that facilities utilize available internal data to support the facility assessment, particularly in the areas of resident demographics including ethnic, religious, and cultural needs. For example, Minimum Data Set (MDS) data can support the identification of the care requirements of the resident population and the master staffing plan for each of the direct care departments can be utilized to support the staffing component of the assessment. Implications for Annual Survey The initial facility assessment document is required to be completed by November 28, 2017. For surveys occurring after this date, facilities will be required to provide evidence of a formal documented process demonstrating that the resident population has been assessed and that the resources needed to provide the necessary care are assessed and documented. As previously noted, a specific methodology has not been required for this assessment. Facilities are provided with the flexibility to determine how the assessment is conducted. However, of primary importance is the accuracy of the assessment. Sub-regulatory guidelines have yet to be developed by CMS and additional information detailing the determination for compliance with the requirements will be published at a later date. In Phase 3 of the implementation (November 28, 2019), the facility assessment document will be utilized by surveyors as the basis for evaluating compliance in areas such as staffing levels, proficiency of staff in the delivery of care specific to the resident population, staff education and training, and the availability of appropriate direct care resources to provide competent care to the specific population admitted to the facility. In the same manner that facilities can currently receive a deficiency based on non-compliance with their own stated policies or procedures, facilities can be cited for not meeting their own requirements as documented in the facility assessment as of the start of Phase 3. Therefore it is vital that the assessment be reflective of facilities actual operations. Key Implementation Dates ACTION DATE NOVEMBER 2017 Facility Assessment Document Completed NOVEMBER 2019 28 28 Link of the Facility Assessment to Outcomes During Annual Survey

3 Developing the Assessment Many facilities already have processes in place to assess the resident population and the resources necessary to care for the population. However, a formal written articulated and documented process may not have been prepared. It is important to review your current assessments and determine the modifications necessary to meet the identified requirements. Facilities should build on existing tools and processes and avoid duplication of information. In reviewing the requirements, it is also important to consider input from other sources. At a minimum, the Administrator, Director of Nursing, Medical Director and Plant Operations Director should participate in the development of the assessment. Finally, in development of the assessment, it is important to demonstrate available data to support the assessment e.g., the percentage of admissions in a calendar year with a specific diagnosis or from a specific ethnic background. With the use of facility-specific data aligned with the services provided, the facility clearly demonstrates the rationale for decisions regarding programs and services and the utilization of resources to that end. The following are examples of an approach and the supporting data that could be utilized in the development of the facility assessment document. It should be noted that these approaches are not exhaustive, but are intended to reflect the types of information that can serve as a basis for responding to the requirements. With the use of facility-specific data aligned with the services provided, the facility clearly demonstrates the rationale for decisions regarding programs and services and the utilization of resources to that end. 1Resident Population Served and Care Required When developing a profile of the resident Staff population, review the census trends for the previous 12 months, identify the presenting primary and secondary diagnosis of the population and the acuity of the residents served. Specifically, identifying the specialty populations served will assist in defining the special care and considerations necessary for service provision. 3 Physical Environment Describe the layout of the facility and the equipment provided for the care and treatment of the resident population. Review current operational tracking and inventory systems for inclusion in the facility assessment document. This may include the biomedical maintenance listing or the fixed asset equipment ledger. Also consider specific building services necessary for the care and services i.e., building security systems, oxygen and ventilation systems. 2 Competencies Necessary to Provide Care The intent of this requirement is to ensure that all staff are equipped with the skills and competencies needed to provide effective, person centered care for the resident population. It is helpful to identify the level and scope of care required by the resident population and the competencies by profession/job title and the specific programs of care required. When addressing this requirement, it is important to outline the competency assessment process for the facility to include the skills to be assessed; the frequency of assessments; and the assessment methods e.g., preand post-tests, self-assessment, return demonstration. 4Ethnic, Cultural and Religious Needs Identify the specific religious affiliations and ethnic origins of the resident population. The specific and descriptive information regarding the demographics of the residents provides the basis for the special recreational programming and nutritional services provided. This would also include the training and skills required and cultural and language capabilities of the staff providing care.

4 To demonstrate compliance with the new requirements, nursing homes must implement a process to review current practices and develop the practices for effective and efficient adherence to the new standards While the facility assessment requirement includes specific elements that a facility must address that relate to the resident population and the staff and services provided, there are other sections within the Requirements of Participation that relate back to the facility assessment. The other sections specifically require that the facility determine the resources necessary for services provided. For example: 483.95 Training Requirements Amount and types of training necessary based on a facility assessment 483. 40 Behavioral Health Sufficient direct care staff with the appropriate competencies and skillsets in behavioral health for the residents in accordance with the facility assessment 483.80(a) Infection Prevention and Control Program An established infection prevention and control program based upon the facility assessment Therefore, in developing the facility assessment it is imperative to be aware of all Requirements of Participation as illustrated above and to link the assessment to other programs. The facility assessment can be a very useful tool for improving care and specifically in QAPI, Antibiotic Stewardship and Infection Control and Prevention. Planning Now It is important that facilities begin the planning and development process for responding to the new facility assessment document requirement. The facility assessment addresses a variety of issues and processes for nursing facilities. Facility staff must assess and document the facilities capabilities in providing care that allows each resident to attain and maintain their highest practicable physical, mental and psychosocial wellbeing and that reflects the individuality of the facility. Loeb & Troper can provide a wide range of regulatory and operational support, customized to your facility s needs, including: identification and development of information required, outlining the structure and process for structuring the assessment, developing new policies and procedures with stakeholders and mock survey support. To learn more, please contact Deborah Lynch, RN, LNHA, Principal, at dlynch@loebandtroper.com or at 212-697-3000, ext.116.

5 Managed Care Contracts Utilizing Your Managed Care Contracts as a Planning Resource...both Medicaid and Medicare managed care contracts are likely to become more complex to administer as value based payment arrangements are implemented across the Skilled Nursing Facility industry. It has been over two years since the New York State (NYS) Department of Health (DOH) began the mandatory transition of the long term/custodial Skilled Nursing Facility benefit from Medicaid fee-for service to managed care (Mainstream Medicaid Managed Care and Managed Long Term Care). By all accounts, the transition is in full swing with Skilled Nursing Facilities seeing a significant increase in Medicaid managed care utilization which will continue until the majority of Skilled Nursing Facility long term, custodial residents are enrolled in a managed care plan. This transition has been accompanied by multiple challenges including, but not limited to, increased managed care accounts receivable and related cash flow issues. In addition, NYS rounds out the top 10 States with the highest penetration of Medicare Advantage enrollment. NYS is tracking with national Medicare Advantage growth trends of about five percent year over year, and as such, the importance of properly managing Medicare Advantage and Medicaid MCO contracts should not be underestimated. Finally, both Medicaid and Medicare managed care contracts are likely to become more complex to administer as value based payment arrangements are implemented across the Skilled Nursing Facility industry. In fact, NYS s recent extension of Medicaid rate protections (to December 31, 2020) indicate that DOH may require Skilled Nursing Facilities to meet value based payment benchmarks as a condition of continuing the Medicaid rate protections. Active Management Opportunities Effective managed care contract management includes coordinated and active involvement of multiple departments including admissions, social work, direct care and billings/receivable. Further successful contract management includes an enterprise wide and systematic understanding of each managed care contract s provisions, definitions, terms, billing requirements, appeal timeframes, etc. With an active management approach providers will be able to achieve the following: Development of dashboard reports with key indicators to facilitate access for stakeholders (e.g., finance, administration, case management); Ensure reimbursement is aligned with services provided; Manage turnaround time - MCOs will exert pressure on payment time frames, claims and billings, the admission and length of stay process, as well as the ability to access referrals; Ensure staffing is aligned with new requirements; Enhanced procedures regarding billing and collection of receivables.

6 Active Management Opportunities Develop a strategy to focus on contractual and operational nuances as managed care plan reimbursement terms grow in sophistication (capitation, risk sharing); Implement operational changes to comply with regulatory reforms; Build a differentiation and outcomes driven performance strategy to facilitate participation in payment models such as bundles or value based payments. Successful Transition to a Multiple Payer Environment With Loeb & Troper s extensive knowledge of both the post-acute care and managed care industries, we are uniquely positioned to assist providers transition successfully to operating in a multiple payer environment with varying terms and conditions. Areas of support include: Readiness Assessments Identify gaps in infrastructure and resources Customized Strategies Based upon local market demographics Contract Management Tool Our proprietary post-acute care managed care contract inventory tool developed with a leading software vendor to serve as a repository of contracts and provide dashboard reports and other relevant data. To learn more about how contract management can help your business and other Loeb & Troper managed care services, please contact Steven Herbst, Principal at sherbst@loebandtroper.com or at 212-697-3000, ext. 119. Our proprietary post-acute care managed care contract inventory tool developed with a leading software vendor to serve as a repository of contracts and provide dashboard reports

7 CMS Considering Replacement of RUG-IV Case Mix Classification System On May 4, 2017, the Centers for Medicare and Medicaid Services (CMS) published both the FFY 2018 Prospective Payment System (PPS) and Consolidated Billing for Skilled Nursing Facilities (SNF) proposed rule as well as an Advanced Notice of Proposed Rule Making (ANPRM) that could have an impact on the SNF PPS case mix methodology as early as FFY 2019. In our next edition, we will focus on the PPS Proposed Rule. At this time, we would like to bring to your attention the dramatic changes reflected in the ANPRM. The ANPRM outlines the Resident Classification System, Version 1 (RCS-1) which is being considered as a replacement to the Resource Utilization Groups, Version 4 (RUGS-IV). An ANPRM is a preliminary step before CMS issues a proposed rule. As a result, RCS-1 is subject to modifications based on public feedback. While the ANPRM is not binding, the RCS-1 is the result of the SNF Payment Model Research (PRM) project, which is part of a CMS effort to improve the accuracy of Medicare Part A SNF payments. Further, CMS notes in the ANPRM that it is their intention to propose case mix refinements in the FFY 2019 SNF PPS proposed rule. CMS Concerns In part, RCS-1 is in response to CMS observed trends as well as issues raised by the Office of the Inspector General (OIG) and MedPAC. Some key concerns cited by CMS include: RUGS-IV is based primarily on the amount of therapy the SNF provided to a SNF resident. CMS noted that over 90% of Part A covered SNF days are paid using a rehabilitation RUG-IV category. CMS has observed an increase in residents classifying into the Ultra High therapy categories, including residents receiving just enough therapy to qualify for the Ultra High and Very High categories. OIG reports of SNF billing errors including, claims up-coding, in particular for Ultra High Therapy. OIG and MedPAC recommend that CMS change the method of paying for therapy. Long-standing concerns that RUGS-IV does not appropriately account for variations in nursing and non-therapy ancillaries (NTA).

8 RCS-1 Goals In general, the goals of RCS-1 are as follows: Better account for resident characteristics and care needs; Better align SNF PPS payments with resource use; Eliminate therapy provision-related financial incentives; Better ensure that resident care decisions reflects resident s needs; and, Remove, to the extent possible, service based metrics from SNF PPS and derive payment from objective resident characteristics. RUGS-IV Proposed FFY 2018 Unadjusted Federal Rate Per Diem Urban RCS-1 Unadjusted Federal Per Diem - Urban Remove, to the extent possible, service based metrics from SNF PPS and derive payment from objective resident characteristics Nurse Case Mix $177.16 Nurse Case Mix NTA Case Mix $100.91 76.12 Therapy Case Mix Therapy Non-case mix 133.44 17.58 PT/OT Case Mix SLP Case Mix 126.76 24.14 Non-Case Mix 90.42 Non-Case Mix 90.35 RCS-1 Overview & Categorization Summary Below summarizes RCS-1, as described in the ANPRM. RUGS-IV assigns a resident into one of sixty-six categories based on scoring in two case mix adjusted components therapy and nursing. For a resident with both rehabilitation and nursing needs, the higher of the two RUGS-IV categories determines the Part A payment. By contrast, RCS-1 assigns a resident separate scores in four case mix adjusted categories (as applicable) and combines the score for Part A reimbursement purposes. The four categories are Physical Therapy/Occupational Therapy (PT/OT), Speech Language Pathology (SLP), Nursing and Non-Therapy Ancillaries (NTA). It should be noted that while CMS is considering a new case mix methodology, CMS is not proposing a new federal base payment. The base payments would be reorganized from the current RUGS-IV to RCS-1 as illustrated in the table that follows:

9 Implications of the RCS-1 categorization are summarized below: A. PT/OT and SLP Primary Reason for SNF Stay To determine the PT/OT and SLP case mix grouping, the resident is first categorized based on the primary reason for the SNF stay. For this purpose, CMS created a set of ten clinical categories that are believed to capture the range of general clinical/ primary reasons for a SNF stay. These were consolidated into 5 categories for the PT/OT case mix grouping and 1 was identified applicable the SLP grouping. These general categories and associated PT/OT and SLP groupings are summarized in the table that follows. General Categories PT/OT Categories SLP Category Major Joint Replacement or Spinal surgery Major Joint Replacement or Spinal surgery Non-surgical Orthopedic /Musculoskeletal Orthopedic Surgery (Except Major Joint) Other Orthopedic Combines: Non-surgical Orthopedic /Musculoskeletal Orthopedic Surgery (Except Major Joint) Non-Orthopedic Surgery Non-Orthopedic Surgery Acute Neurological Acute Neurological Acute Neurological Medical Management Acute Infections Cancer Pulmonary Cardiovascular and Coagulations Medical Management Combines: Medical Management Acute Infections Cancer Pulmonary Cardiovascular and Coagulations

10 Other Clinical Characteristics For the PT/OT group additional factors that contribute to the case mix are: The resident s functional status based on the self-performance items of three ADL areas: transfers, eating and toileting. The presence of a cognitive impairment based on a new cognitive function scale (CFS) that combines scores from MDS data contained in the Brief Interview for Mental Status (BIMS) and the Cognitive Performance Scale (CPS) into a scale that can be used to compare cognitive functions across all residents. For the SLP group additional factors that contribute to the case mix are: Presence of a swallowing disorder or mechanically altered diet; and, The presence of an SLP-related co-morbidity or cognitive impairment. B. Nursing RCS-1 would assign a resident into a nursing category using the existing nonrehabilitation RUGs methodology. However, CMS would modify nursing payment so that a resident s non rehabilitation RUG classification is always a factor in a resident s payment calculation. While there is no change to the nursing assignment methodology, CMS is considering revising the existing nursing case mix indexes. RCS-1 would also add 19 percent to the nursing component for residents with HIV/AIDS. This along with provisions of the NTA component would replace the current 128 percent temporary add-on for HIV/AIDS residents. C. Non Therapy Ancillary (NTA) RCS-1 would assign a resident into an NTA category based on a combined score of comorbidities and the use of extensive services. Co-morbidities and extensive services are grouped and scored in Ultra-High, Very High, High, Medium and Low groupings.

11 D. Other Key Provisions RCS-1 proposes per diem adjustments to the PT/OT and NTA components to account for the effect of length of stay on per diem costs. The PT/OT adjustment is based on 100% for days 1-14 with decreasing percentages over the course of a 100 day stay. The NTA adjustment would triple the NTA component for days 1-3 of a SNF Part A stay. As part of this provision, CMS is considering options and seeking comments relating to how to handle hospital and SNF discharge and readmissions. To reduce administrative burdens, CMS seeks comments on the potential to reduce the number of required assessments from the current 5, 14, 30, 60, 90-day to a 5 day assessment, significant change in status (as needed) and a PPS discharge assessment. CMS is considering limiting concurrent therapy to no more than 25 percent of a SNF resident s therapy minutes, consistent with the existing 25 percent limit on group therapy. CMS would retain an administrative presumption mechanism. Next Steps Additional details are available in the ANPRM, including information from the SNF Payment Model Research initiative, which served as the basis for RCS-1 as well as specific grouping criteria, case mix index values, examples and potential impacts. At the same time, the ANPRM requests input and comments on all aspects of RCS-1, including but not limited to logistic and lead time concerns, potential behavioral changes, potential impact on Medicaid reimbursement systems, etc. CMS formally solicits public comments on all matters under consideration by June 26, 2017. Loeb & Troper will continue to monitor updates and development. Please feel free to contact Koy Dever, Principal, at kdever@loebandtroper.com or Deborah Lynch, RN, LNHA, Principal at dlynch@loebandtroper.com with questions.

12 Post Pay Audit of SNF Claims As the Supplemental Medical Review Contractor (SMRC) selected by the Centers for Medicare and Medicaid Services (CMS), StrategicHealthSolutions, LLC (Strategic) will perform and/or provide support for a number of tasks that are designed to lower improper payment rates and increase the efficiencies of the medical review functions of the Medicare and Medicaid programs. One of the primary tasks is conducting nationwide medical reviews, as directed by CMS. Focus Areas On March 16, 2017, CMS directed Strategic to conduct a post-pay review of Medicare Prospective Payment System (PPS) claims with a focus on reviewing medical record documentation to ensure that it demonstrates the necessity for skilled services provided. The focus of the review is to assess that the four factors outlined in the Medicare Benefit Policy Manual are met, which includes: The patient requires skilled nursing services or skilled rehabilitation services, i.e., services that must be performed by or under the supervision of professional or technical personnel; are ordered by a physician and are rendered for a condition for which the patient received inpatient hospital services or for a condition that arose while receiving care in a Skilled Nursing Facility for a condition for which they received inpatient hospital services. The patient requires these skilled services on a daily basis. It is reported that a focus of the reviews will be on therapy services As a practical matter, considering economy and efficiency, the daily skilled services can be provided only on an inpatient basis in a Skilled Nursing Facility. The services delivered are reasonable and necessary for the treatment of a patient s illness or injury, i.e., are consistent with the nature and severity of the individual s illness or injury, the individual s particular medical needs, and accepted standards of medical practice. The services must also be reasonable in terms of duration and quantity. This post-pay review is in addition to any medical record review that is conducted by the Medicare Administrative Contractor (MAC). Strategic will be conducting this medical record review based on the analysis of national claims data for the period of January 1, 2014 through December 31, 2015. It is reported that a focus of the reviews will be on therapy services.

13 Timing and Implications While there is no published timeline for when the letters will be issued, the medical record information must be submitted within 45 days of the date of the individual facility letter requesting the documentation. Failure to submit the requested records will result in recoupment of payment for the undocumented services. An example of the Additional Document Request letter (ADR) is located at https://strategichs.com/2014wp/wpcontent/uploads/2017/03/w2016-0445snfcmadrletter021517f.pdf and is summarized below. Documentation that will be requested in the ADR includes: Copy of the claim bill Acute Care Hospital discharge summaries/transfer forms Documentation to support each of the Health Insurance Prospective Payment System (HIPPS) code(s) billed, including notes related to each of the Assessment Reference Dates (ARD) and the look back period The look back or observation periods to support the ARD may fall outside of the billing period and may include documentation 30-45 days prior to the dates of service under review Minimum Data Set (MDS) documentation to include a hardcopy version of each MDS related to the billing period being reviewed Physician documentation to include: Physician certifications and re-certifications for skilled care including physician signature and date Re-certifications must include the need for continued skilled care Physician orders, including admission orders Physician progress notes Physician history and physical Nursing documentation to include: Nursing notes and admission assessment Patient care plans Vital sign records Activity of Daily Living (ADL) charting/logs Medication and Intravenous (IV) administration records

14 Guidance Regarding Signatures Strategic provided specific guidance regarding the signature requirements for any requested documentation. Medicare requires that medical record entries for services provided/ordered be authenticated by the author. The method used shall be a legible handwritten or electronic signature. Stamp signatures are not acceptable. Beneficiary identification, date of service, and provider of the service(s) should be clearly identified on the submitted documentation. For documentation with a missing or illegible signature, a signature log or signature attestation may be submitted additionally as part of the ADR response. If signature requirements are not met, the reviewer will conduct the medical review without considering the documentation with the missing or illegible signature. This could lead the reviewer to determine that medical necessity for the service(s) billed has not been substantiated. Detailed guidance regarding signature requirements is available in the Medicare Program Integrity Manual, Publication 100-08, Chapter 3. It is important that Providers review their documentation prior to submission and ensure that all medical record entries and orders are signed appropriately. Providers may be required to contact the hospital or other facility where services were provided to obtain signed progress notes, plan of care, discharge summary, etc., which may be used to support Medicare payment. When the review is completed, the findings will be sent and will indicate whether any underpayments or overpayments were identified. Of note, claims may be subject to extrapolation.

15 Identifying Risk Areas While the specific metrics to be used for the selection process have not been published, facilities can identify their potential risk for selection by analyzing their Provider Utilization and Payment (PUF) data which are available on the CMS website at https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and- Reports/Medicare-Provider-Charge-Data/SNF.html The most current data available on the website is for Calendar Year 2014. The data will provide the volume of residents and days within the highest therapy RUG groups, as well as the percentage of assessments that reflect therapy minutes provided within 10 minutes of the threshold for Rehab Very High and Rehab Ultra classifications. Based on the data provided, the national average for therapy minutes, within 10 minutes, is as follows: Rehab Very High threshold: 54% Rehab Ultra threshold: 67%... facilities can identify their potential risk for selection by analyzing their Provider Utilization and Payment (PUF) data Next Steps Reviewing your utilization of therapy services compared with other facilities, particularly at the high therapy RUG categories, may indicate a need to conduct a review of therapy records as part of a corporate compliance program. A review by internal staff or external consultants could identify potential opportunities for improvement in your documentation of the medical necessity for services that are provided and billed to the Medicare program. A coordinated team approach to any ADR request is essential to assure that negative findings do not occur as a result of untimely or incomplete submission of requested documentation. Reviewing the records before submission to verify that all records that support the medical necessity of the skilled services are included becomes critical. Verifying that the appropriate signatures are in place will reduce the potential of denied claims/services. If you have any additional questions about your facility s PUF data or how to manage a post-pay audit please contact Joanne Jones, RN, Director of Clinical Services at jjones@loebandtroper.com or at 212-697-3000. ext. 102.

Loeb & Troper LLP at LeadingAge NY We are pleased to exhibit at the annual LeadingAge NY Conference and speak at the sessions noted below: Strengthening Your Quality Assurance Program in Assisted Living Nancy Lisy, RN, Senior HealthCare Consultant Joanne Jones, RN, Director of Clinical Consulting Changing Times for Assisted Living Preparing Your ALP for Success in a Managed Care Market Steven Herbst, Principal Deborah Lynch, RN, LNHA, Principal The information contained within this publication is the property of Loeb & Troper LLP and may not be used or reproduced without permission. This information should be considered general in nature and not construed as advice or an opinion about an organization s specific circumstances. Copyright Loeb & Troper LLP 2017.