Reimbursement Recalibration

Reimbursement Rates

CMS announced plans to lower nursing home Patient Driven Payment Model (PDPM) rates by 4.6% to account for unintentional overpayments. PDPM reimbursements were intended to be budget neutral. However, the nursing home industry exploited the new model and  total spending increased by 5.3%, or $1.7 billion when compared to the old Resource Utilization Groups model.

It went up $1.7 billion but will only be decreased $320 million. The rule calls for a 3.9%, or $1.4 billion, payment boost for the sector. That includes a 2.8% market basket update and a 1.5 percentage point forecast error adjustment, as well as a 0.4% lower productivity adjustment. The 3.9% Part A adjustment is significantly more than CMS has proposed in recent years. A great deal for the industry.

The nursing home pay rule is an attempt to compensate for overpayments that started with the Patient Driven Payment Model in late 2019. The industry also received billions in bailout money during the pandemic.

Minimum Staffing

President Biden’s minimum staffing initiative will establish minimum staffing requirements that “will need to meet to ensure all residents are provided safe, high-quality care, and nursing home workers have the support they need.”

“It seems like now is the moment,” Steven Littlehale, industry apologist and data analyst with Zimmet Health Care Services Group, said during a McKnight’s podcast. “It seems like the planets are aligning in that we may actually see real, authentic minimum staffing requirements that go beyond the hard-to-define terms such as ‘sufficient’ staffing.”

CMS, in a report issued to Congress in 2001, established a daily minimum standard of 4.1 hours of total direct care nursing time per resident: 2.8 hours from certified nursing assistants; 0.75 hours from RNs; and 0.55 hours from licensed practical/vocational nurses.

CMS referred to the 4.1 figure repeatedly in its 2023 proposed pay rule, but changes in the patient mix since then may increase the minimum safe level of 4.1. HPPD. Residents sicker and require much more intensive care than the once-typical, long-stay resident. Charlene Harrington, R.N, Ph.D., is the leading staffing expert and professor emeritus at the UCSF School of Nursing. She told McKnight’s:

“That study showed that for long-stay residents, if they didn’t meet that minimum, there was harm or jeopardy to residents. For 20 years, we have been arguing that CMS needs to set minimum staffing standards. … Facilities, if they’re trying to make money, they just have too much of an incentive not to meet what we know the standard should be.”

Value-Based Purchasing Program

CMS intends to add three new metrics to its value-based purchasing program. The program rewards compliant providers but penalizes those who fail to meet safety benchmarks. CMS will add total nursing hours per resident, per day (HPPD) to its value based purchasing program. Linking payments to safe staffing is essential for better compliance. Harrington added:

“There’s every evidence that the case-mix has increased over time since 2001, so as the acuity increases, the minimum standard probably needs to be higher than the 4.1. You can’t just look at what nursing homes do. You have to look at what nursing homes should do.”

Staffing hours is one of three proposed VBP additions. The other is Healthcare Associated Infections Requiring Hospitalization. This outcome measures assesses performance on infection prevention and management. The last is Discharge to community which will reward successful discharge of patients back to the community.

The 256-page rule was released. A CMS fact sheet outlined the numerous changes. The agency wrote in requesting comment:

“Greater RN presence has been associated in research literature with higher quality of care and fewer deficiencies. Increasing the number of hours per day that a LTC facility must have RNs in the nursing home would alleviate concerns about LPNs engaging in activities outside their scope of practice in the face of resident need during times when no RN is on site.” 

It is about time. Safe staffing saves lives.