CMS Proposed SNF Payment System -- Resident Classification System: Version I (RCS-1)

CMS Proposed SNF Payment System -- Resident Classification System: Version I (RCS-1) Ohio Health Care Association Mike Cheek, Senior Vice President, Reimbursement Policy October 3, 2017 Background 1

FY18 Could Entail Two Rules and Two Sets of Comments, Again Notice of Proposed Rulemaking (NPRM) August: Begin Work on Rule October: Open Discussion Ends and Formal Drafting Begins January: Drafts Shared with OMB March: Final Draft Goes to OMB April: NPRM Published June: Comments Due July: Final Rule Released Advanced Notice of Proposed Rulemaking (ANPRM) - Comment Period Closed on August 25 th - 200 Comments Submitted All Negative - CMS not required to respond in Writing to Public Comments - Next steps for CMS could be nothing, proposed rule at any time, interim final rule at any time Background: How? Currently, therapy payments under the SNF PPS are based primarily on the amount of therapy minutes provided to a patient, regardless of the specific patient characteristics and care needs. Current CMS initiatives have moved towards paying providers based on resident characteristics and assessing value rather than paying directly for input use. Move from payment based on volume to payment based on patient characteristics 2

Why is CMS Focused on Reforming SNF Payment Policy? SNF PPS Demonstration Evaluations Identified Payment Challenges Years Ago Nursing Home Casemix and Quality Demonstration (NHCQD) (1995-1998) CMS Implements SNF PPS in 1998 CMS Attempts Adjustments by Adding RUGs and Changes in MDS to Address Therapy and NTA Concerns 2003-2010 Balanced Budget Act of 1997 Includes SNF PPS Framework NHCQD Evaluation and CMS Preliminary Experiences Point to Problems in 2001-2002 3

Congressional and CMS Concern About Existing SNF Prospective Payment System Medicare Payment Advisory Commission (MedPAC) March 17 Report to Congress: Almost since its inception, the SNF PPS has been criticized for encouraging the provision of excessive rehabilitation therapy services and not accurately targeting payments for nontherapy ancillary (NTA) services. [CMS should] base therapy payments on patient characteristics (not service provision), remove payments for NTA services from the nursing component, [and] establish a separate component within the PPS that adjusts for payments for NTA services. Top 10 RUGs in 2014 by Claims Analysis RUG RUG Description Total Days 2014 Distinct Beneficiaries Per RUG Payment Per Payment Per Day Beneficiary Total Payment Percent Percent Total Total Days Payment RUB Ultra-High Rehab - ADL 6-10 16,644,445 666,158 $496 $12,382 8,248,162,662 24.8% 30.4% RUC Ultra-High Rehab - ADL 11-16 12,287,311 444,153 $486 $13,444 5,971,130,303 18.3% 22.0% RUA Ultra-High Rehab - ADL 0-5 8,353,064 420,764 $395 $7,846 3,301,240,841 12.5% 12.2% RVB Very-High Rehab - ADL 6-10 5,854,556 344,329 $339 $5,756 1,981,956,637 8.7% 7.3% RVC Very-High Rehab - ADL 11-16 5,568,466 290,308 $391 $7,499 2,177,103,687 8.3% 8.0% RVA Very-High Rehab - ADL 0-5 4,236,631 266,643 $333 $5,296 1,412,053,163 6.3% 5.2% RHC High Rehab - ADL 11-16 2,108,567 132,839 $320 $5,085 675,540,352 3.1% 2.5% RHB High Rehab - ADL 6-10 1,761,114 126,267 $285 $3,980 502,503,820 2.6% 1.9% RHA High Rehab - ADL 0-5 1,445,325 106,842 $243 $3,291 351,643,341 2.2% 1.3% RMC Medium Rehab - ADL 11-16 1,075,592 73,013 $263 $3,876 283,006,447 1.6% 1.0% Source: AHCA Analysis of CMS Skilled Nursing Facility Public Use File 4

Percent of RU MDS Assessments Between 720-730 Minutes, 2013 Source: CMS Analysis of MDS Assessments Advanced Notice of Proposed Acumen Proposal Rulemaking 5

Offers Overview of Acumen Resident Classification System (RCS) Version 1 Concept Five year research project Four technical expert panels (TEPs) held Therapy, Nursing, and two final TEPs on the overall payment revision design Framework for Research Remain within existing statutory authority Use existing data sources Develop an approach which is readily implementable Proposed Revised PPS Essentially is a New PPS RUGs and minutes replaced by mutually-exclusive resident groups based on resident characteristics and additional adjustments Technically defined as per diem odaily payments based on % of stay of care costs within each resident group Per-diem payments taper by PT/OT and NTA components over course of stay Per-diems would vary by components resident groupings set for stay at admission Per diem would be based on the sum of five components 6

The Impact of Data Analyses How was historical claim data used when developing the RCS-I? Claims data was analyzed for all sections in the proposed payment system including: Which sections of the MDS align with increased or decreased use of PT, OT and SLP services? How do therapy disciplines provide care during the course of the stay in regards to frequency and intensity? How do therapy providers relate to each other in trends for providing care? Which diagnoses do we treat as relates to acute care DRG? Why the focus on DRG Dx? SNF claims data are missing specific dx info on residents with more than 40% of residents being assigned generic V codes under ICD-9 Principle diagnoses from the inpatient stay is predictive of therapy costs and more predictive of NTA costs than the SNF claim. Challenge How long does it take the SNF to receive the acute care DRG? 7

Skilled Nursing Facility Level of Care Definition Has NOT Changed Care in a SNF is covered if all of the following four factors are met: 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 (see 30.2-30.4); are ordered by a physician and the services are rendered for a condition for which the patient received inpatient hospital services or for a condition that arose while receiving care in a SNF for a condition for which he received inpatient hospital services; The patient requires these skilled services on a daily basis (see 30.6); and As a practical matter, considering economy and efficiency, the daily skilled services can be provided only on an inpatient basis in a SNF. (See 30.7.) 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. Other Key Requirements and Programs NOT Impacted by RCS-1 Requirements of Participation IMPACT Act Quality Reporting Program PAMA SNF Re-Hospitalization Value-Based Purchasing Program Payroll-Based Journal Reporting Requirements 8

RCS-I Structure Current SNP Prospective Payment System None Minutes Individual Length Of Stay Impact Payment Unit of Measure Modes of Treatment Allowed Concurrent Group capped at 25% MDS Assessment to Determine RUG RUG level based on: Scheduled assessments: 5, 14, 30, 60 and 90 day. Rolling 7 day checkpoint to determine any increase or decrease in total therapy minutes 9

Resident Classification System, Version I Length Of Stay Impact PT/OT incremental payment decrease after day 14 NTA adjustment factor for days 1 to 3 at 3.00 and then setting it at 1.00 Individual Modes of Treatment Allowed Concurrent capped at 25% (this may be made discipline specific) Group capped at 25% (this may be made discipline specific) MDS Assessment to Determine RCS 5-day SNF PPS scheduled assessment to classify into RCS level. No additional assessments/change to RCS level unless criteria for a significant change hit MDS Schedule Fundamentally Changes Proposed MDS Schedule 5 Day Unclear how IMPACT Act requirements for a Comprehensive Person- Centered Plan of Care will interact Discharge Current MDS Schedule 5 Day 30 Day 90 Day 14 Day 60 Day Discharge 10

Other Important features Only two required MDS admission and discharge but may request a Significant Change assessment as needed Concurrent therapy would be limited to 25% of total therapy minutes, in addition to the existing 25% limitation on group therapy leaving 50% for one-to-one Envisioned to be a budget neutral change at this point but subject to final decision Creates an interrupted stay policy </= 3 days following a discharge and readmit is counted as same stay > 3 days following a discharge and readmit is counted as a new stay and requires a new five day assessment Operational Considerations and Issues Require SNFs to obtain on admission, hospital diagnosis, treatment, and other clinical and possibly patient demographic information that is not currently available, and that hospitals are not otherwise mandated to provide to SNFs Require CMS to significantly update The MDS 3.0 assessment instrument, RAI manual, and provider training materials Require CMS to update policy guidance and educational materials CMS Claims Processing Manual guidance CMS Benefit Policy Manual CMS Medicare Learning Network (MLN) and other educational materials related to SNF PPS Significant changes to Fiscal Intermediary (MAC) operations 11

5-Day Assessment Becomes Critical RCS-I considers the possibility of reducing the administrative burden on providers by concurrently revising the assessments that would be required under the RCS-I model Specifically, they are considering the possibility of using the 5-day SNF PPS scheduled assessment to classify a resident under the RCS-I model under consideration for payment purposes for the entirety of his or her Part A SNF stay, except as described below (SCSA, interrupted stay) Errors in the 5 day assessment could have notable implications particularly for low volume providers Significant Change Assessment Importance RCS- I also considers permitting providers to reclassify residents from the initial 5-day classification using the Significant Change in Status Assessment (SCSA), which is a Comprehensive assessment (that is, an MDS assessment which includes both the completion of the MDS, as well as completion of the Care Area Assessment (CAA) process and care planning), This would only be used in cases where the criteria for a significant change are met in cases where an SCSA is completed, considering an approach in which this assessment could reclassify the resident for payment purposes, but the resident s variable per diem adjustment schedule would continue rather than being reset on the basis of completing the SCSA. 12

Model RUGs IV RCS-I Payment Resident Resource Classification Utilization Group(RUG) System, Version I Structure MDS Assessme nts Impact of Length of Stay on Reimburse ment Therapy Treatment Modes Allowed with 23 Therapy levels and 43 Nursing levels RUG level based on scheduled assessment periods: 5, 14, 30, 60, and 90 day rolling 7-day checkpoint to determine any increase or decrease in total therapy minutes Reimbursement is based on volume of services received with assessment periods determining rate Individual, Concurrent, and Group (capped at 25%) Case Mix Groups with 30 PT/OT levels; 18 SLP levels; 43 Nursing levels; 6 Non- Therapy Ancillary (NTA) levels; and a Non- Case Mix Level (room and board) 5- day SNF PPS scheduled assessment to classify into the RCS case mix level for each of the 5 areas above. No additional assessments/changes to RCS case mix unless criteria are met for a significant status assessment Initial reimbursement rate determined by clinical categories on the MDS with consistent rate for SLP, and Nursing during course of care. A reduced rate is proposed after day 14 for the PT/OT case mix; and after day 3 for NTA. Individual; Concurrent and Group potentially capped at 25% Case Studies 13

Resident Example 1- Rehab Patient Component PT/OT SLP Data sources for resident characteristics and groupings vary by component Resident Characteristics and Groupings Clinical Category: Major Joint Replacement/Spinal Surgery Functional Score: 14-18 Moderate to Severe Cognitive Impairment: No Clinical Category: Acute Neurologic Swallowing Disorder: No SLP Comorbidity or Cognitive Impairment: No Nursing Behavioral Symptoms and Cognitive Performance* NTAS Comorbidity/Extensive Service: Tier Very High** (IV Medication) *Presence of behavioral or cognitive symptoms identified. Final group determined by ADL score and number of restorative nursing services **Recommended comorbidity score is a weighted count of comorbidities and extensive services Resident Example 2 Medically Complex Component PT/OT SLP Resident Characteristics and Groupings Clinical Category: Medical Management Functional Score: 14-18 Moderate to Severe Cognitive Impairment: No Clinical Category: Non-Neurologic Swallowing Disorder: No SLP Comorbidity or Cognitive Impairment: Neither Nursing Special Care Low* Data sources for resident characteristics and groupings vary by component NTAS Comorbidity/Extensive Service: Tier Medium (Multiple Sclerosis) *Presence of behavioral or cognitive symptoms identified. Final group determined by ADL score and number of restorative nursing services **Recommended comorbidity score is a weighted count of comorbidities and extensive services 14

Different Per-Stay Payment Patterns: Rehab vs. Medically Complex Resident Ex. 1 - Rehab Resident Ex. 2 - Medical Days 1-3 Days 4-14 Day 30 Day 40 Day 100 PT/OT SLP Nursing NTAS Days 1-3 Days 4-14 Day 30 Day 40 Days 100 PT/OT SLP Nursing NTAS Possible Payment Implications Therapy Payment system redesign goal is to reduce therapy component margins Likely would see decreases in payments for traditional RU and possibly RV patients by reallocating nursing and NTA dollars Nursing Acumen appears to have re-weighted to favor nursing for complex patients Nursing payments are intended to be higher Unclear due to use of old STRIVE approach and cost-to-charge ratio data Non-Therapy Ancillaries (NTA) Acumen proposes to use 43% of the current nursing component funding to finance the NTA component Acumen uses Part D drug data as a proxy in its NTA component design Intended to more accurately reimburse for these costs but as yet unclear 15

Key Comment Areas Key AHCA Comments Coordinated with SNF Coalition SNF Stakeholders AHCA Interdisciplinary Work Group Reimbursement Clinical Practices Legal Quality Major Comment Areas Impact Analysis Diagnosis & Classification MDS Redesign Staff & Operations Post-Discharge Follow Along Component Analysis Compliance and Program Integrity Patient Protections LeadingAge Therapy Associations (ASHA, AOTA, APTA) NASL AMDA Beneficiary Groups Consultant Pharmacists AHA 16

More Information on Proposal and Rationale Advanced Notice of Proposed Rulemaking Acumen RCS Version 1 Technical Report SNF Public Use File Data CMS Therapy Utilization Memo OIG Report on Need for SNF Payment Overhaul 17