Discern Helps PAC Clients Succeed in Value-Based Programs

August 2018

The year, 2018, is a pivotal year for the implementation of value-based payment (VBP) programs for skilled nursing facilities (SNFs) and other post-acute care (PAC) and long-term care (LTC) providers. CMS has directed stakeholders throughout the health care industry to improve patient experience and population health while reducing costs. As the sector that serves many of the highest-cost and highest-need patients, PAC is often described as the next frontier for the transition from volume to value in health care.

PAC providers have begun to engage in payment innovations such as the Bundled Payments for Care Improvement (BPCI) initiative, the Comprehensive Care for Joint Replacement (CJR) model, and ACOs and other partnerships that link payment to cost savings or quality performance. Due to external pressures and industry inroads, many PAC and LTC providers feel overwhelmed by the prospect of payment tied to value and do not know when, where, or how to pursue value-based arrangements. Likewise, PAC partners such as hospitals, health systems, and health plans are challenged to manage downstream costs and align incentives within their networks.

Two recent regulatory changes will accelerate the move toward value-based payment for SNFs:

  • First, in October 2018 the SNF Value-Based Purchasing Program will go live, and for the first time most SNFs across the United States will be held financially accountable for their performance. As described in the Medicare Prospective-Payment System (PPS) SNF Final Rule for 2019, the SNF VBP Program withholds 2 percent of Medicare payments and redistributes them based on each SNF’s performance on an all-cause risk-adjusted hospital readmissions measure.
  • The second change, finalized August 8 in the SNF Final Rule for 2019, establishes a Patient-Driven Payment Model (PDPM) to be implemented in October 2019. For years, Resource Utilization Groups (RUGs) have been used to determine “patient acuity,” and subsequently Medicare dollars, for SNF reimbursement. Residents were assigned RUGs, in large part, based on the days and minutes of therapy they received. The PDPM aligns reimbursement more squarely with resident characteristics and removes a financial incentive to increase the volume of therapy services. The PDPM also sets the foundation for an eventual unified payment system for PAC services (PAC-PPS) because payment for other PAC care settings already relies more heavily on patient characteristics.

The pending implementation of these changes, along with CMS Administrator Seema Verma’s vocal support for value-based care models, sends a clear message that VBP will continue to be a priority for the foreseeable future. The importance of VBP is compounded by the continued increase in Medicare Advantage enrollment. As PDPM, VBP, and population health models proliferate, providers can no longer afford to exist within traditional silos. Rather, they are proactively beginning to establish partnerships, build networks, and design innovative programs to impact patient care within and beyond their organizations.

Discern Health has been assisting clients in these efforts by delivering education, facilitating strategic planning and priority setting, analyzing data, supporting the establishment of partnerships, and helping to design effective programs related to transitional care, care management, and population health. Discern staff have broad and deep experience in post-acute, long-term serious illness, and end-of-life care and can work with providers and their partners to answer the most critical strategic questions for succeeding in VBP. Discern’s work has increased our clients’ abilities to successfully navigate quality programs and payment models and thrive in the new value-based health care landscape.

For more information in these areas, please contact Theresa Schmidt at tschmidt@discernhealth.com.

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