Medicare recently finalized and implemented new payment rules that will impact the bottom line for skilled nursing facilities. Many of them are struggling to put the new rules into place in their business, and the regulations are changing the way that nursing homes provide care for their residents. The skilled nursing facility has already been criticized for putting profits first, and the new Medicare program threatens to make this even worse.
Based on the new reimbursement rules, nursing homes have less incentive to give extensive therapy to residents since it will impact the facility’s bottom line. This may lead to an overall deterioration of the condition of the average nursing home resident who depends on therapy to maintain their health and well-being.
On October 1, 2019, Medicare finalized a new program called the Patient Driven Payment Model (PDPM). Previously, Medicare reimbursements were determined based on therapy minutes. Now, the basis for reimbursement is the patient’s condition as well as their anticipated needs during their stay. Under the new rules, nursing homes must determine the level of care that is necessary for a patient and will then have to deliver care in accordance with the resident’s needs. The facility will have to first determine the resident’s needs and then must make sure not to overdeliver care.
The thought behind the new reimbursement rules is that nursing homes will not be getting paid to provide more services that are not necessary and will then not receive inflated payments from the government for care that is not necessary. The government is concerned about widespread fraud and abuse in nursing home reimbursements and is attempting to crack down on what is perceived to be waste. The Centers for Medicare Services wants nursing homes to focus on efficient care as opposed to providing care with reimbursement in mind.
Now, nursing homes will need to focus on the proper level of care as opposed to being able to expect reimbursement for the care that they provide even if it is not required to improve the resident’s health. The theory of the rule change is that nursing homes can decide how to effectively allocate resources and would then step up nursing care if they were not being paid for unnecessary and redundant services.
This is a dramatically different payment regime that will change the way that care is provided at nursing homes.
However, the changes will not necessarily be positive for nursing home residents. Oftentimes, they may end up being the victims of this new policy. Besides not receiving enough therapy to help both maintain and improve their condition, they will also be at the mercy of the nursing home that is looking to maximize their profits at the expense of their health.
For-profit nursing homes already have been known to cut back on resident care in the name of profits. Of course, there are “good” nursing homes out there that do right by their residents when it comes to providing the right level of care and prioritize the well-being of their residents. However, there are also “bad apples” that provide substandard care while trying to maximize their bottom line.
This is true even under the old payment rules, and it may now grow worse now that nursing homes have even more of an incentive to be stingy with the care that they provide. Many nursing homes may simply pocket the reimbursement money and not use the money saved on less therapy to improve nursing.
While PDPM is supposed to be budget-neutral, in reality, the nursing homes will decide how to allocate care dollars under this model. In other words, skilled nursing facilities will need to optimize the care dollars that they receive. For many nursing homes, expecting them to maximize their resources is an invitation for them to cut corners in the name of them increase their profits. Now, these nursing homes will have a prompt to further cut back on therapy while not investing the money elsewhere.
Therapy is a vital service for nursing home residents. Often, it helps them maintain their ability to perform their activities of daily life. Without therapy, seniors’ strength and movement may decline. However, the new payment rules do not incentivize nursing homes to provide the therapy necessary for seniors to either regain or maintain their strength and dexterity. At worst, these rules further misalign the interests of the resident and the nursing home.
In fact, the empirical data from the days after the new rule was implemented to confirm the worst fears. Therapy utilization plummeted after October 1. There have been widespread layoffs of therapy providers that have been reported. Skilled nursing facilities cannot let these professionals go fast enough as they are afraid that they will not be able to recoup their salaries in reimbursements from Medicare.
The reality of the situation now is that nursing homes will even further ration care more than they were previously. In the meantime, while nursing homes transition to complying with the new rules, it will be residents who suffer most often since they may not be receiving the care that they need.
There will be many costs for nursing homes as they adjust to these new rules. Even if their reimbursements do not fall as a result of PDPM, they will have to find the money in their budgets to change the way that they do business since implementing these changes will require dramatic alterations in their business. The skilled nursing facilities will then have to take the costs from somewhere as they seek to adjust to the new rules.
While the new rules were designed to prevent facilities from artificially increasing therapy treatments in order to hike their reimbursements, there is a strong chance that necessary and needed therapy will also go by the wayside. This will mean that nursing home populations may be sicker and more vulnerable going forward. If nursing homes transition staff to increase actual care, the new rules may have a silver lining, but given many nursing homes’ propensity to understaff their nursing function, we are likely looking at PDPM as a way of further degrading nursing home care in the U.S.