Since the onset of the pandemic, and more especially over the last two years, regulators have been cracking down on skilled nursing facilities. Research has shown that between 2015 and 2023, the share of facilities with serious deficiencies has gone up significantly, with a 53% increase during that same period.

With increased scrutiny and higher levels of severity, it is no wonder that the Special Focus Facility (SFF) list has become an important tool for the government.

The SFF program was ostensibly designed to target facilities with a “‘yo-yo’ compliance history rarely addressing underlying systemic problems.” 

The methodology for selecting facilities that are placed on the list is points-based, with each state having a minimum of five nursing homes on the list and a maximum of 30. To say that you don’t want your facility to end up on this list is an understatement.

Once placed on the list, facilities will “enjoy” an even greater level of regulatory oversight, with a full, onsite Centers for Medicare & Medicaid Services inspection every six months until the facility graduates from the program – or shuts down. Failure to improve comes with increased and progressive enforcement in the way of civil penalties and reimbursement denial. 

But, there’s a second level of “unwritten” costs that come with being placed on the SFF list that providers may not initially grasp.

Our team analyzed the last 12 months of SFF data as provided by CMS in their monthly reports. Consistently, facilities averaged between 18 and 19 months on the SFF. So, the chance that a facility is going to join the list and be removed in a single six-month period is low. 

As of January 2023, the facility with the longest tenure on the SFF had notched up 53 months of inclusion. This was only surpassed in January 2024 by an organization that topped 55 consecutive months on the SFF — and they are still on the list today. 

Just imagine what 12, 18, or even 55 months of additional CMS scrutiny would do to your community and its financial health. What impact would this have on your team and their morale? 

The cost of an SFF case

While these items are difficult to measure, there is one metric that I can attest to. In most SFF cases, communities find they need to hire an outside consultant to assist in righting the ship. A skilled consultant is likely to cost about $225 an hour (if not more.) Then, you will need to factor in travel and other expenses. 

For simplicity’s sake, let’s call this a total expense of roughly $2,000 per day per consultant. If your facility requires an average of two days of consulting per week, you’re already on the hook for $16,000 a month. Compound that by the average length of stay on the list – 18 months – and the organization could be on the hook for nearly $230,000 in consulting time. Of course, this doesn’t consider the additional time required by internal resources or the potential loss of reimbursement from enforcement actions. The actual cost of being placed on the SFF could easily soar to the $1 million plus range!

There’s a secondary impact to this financial crunch as well: where does the money come from? The Department of Housing and Urban Development uses several metrics in determining risk when lending money to long-term care facilities. 

One of the major pieces of criteria is star rating. Analysts tend to look at star ratings over time as both an indicator of current performance and leading indicator of future improvements. The longer one spends on the SFF list, the more scrutiny lenders are going to apply in their decision making process.

As a youth, I remember the adage, “an ounce of prevention is worth a pound of cure.” In my professional work as a registered nurse, I can attest to this advice. I’ve also learned that it can apply to compliance and risk management in the healthcare space. 

I implore the readers of this column to take a hard look at their operations. Spending a bit of money to improve your operations and management today could spare your organization in the future. Even if you aren’t in danger of being placed on the SFF, the return on a preventative investment could be massive if it helps to avoid additional scrutiny. 

Annette Sanders, MSN, RN, CLNC, ICP, QCP, RAC-CT, is a Senior Consultant with LW Consulting, Inc. As a registered nurse with nearly 40 years of experience, Annette has served in multiple roles, including clinical and quality oversight, risk mitigation, regulatory compliance, and financial compliance.

The opinions expressed in McKnight’s Long-Term Care News guest submissions are the author’s and are not necessarily those of McKnight’s Long-Term Care News or its editors.

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