When you ask providers to name the biggest Medicare change they’ve encountered, the answer is almost always the same: the advent of prospective payments.
But we’re not hearing much about a potentially bigger reimbursement shift that is quietly taking hold.
In late January, the parent organization of the Centers for Medicare & Medicaid Services made what may very well prove to be a historic announcement. The Department of Health and Human Services proclaimed that Medicare payments will increasingly depend on outcomes and the value that is delivered.
As a practical matter, this means that rather than paying skilled care operators according to set formulas, alternative options will increasingly be employed. The obvious new alternatives include bundled payments and a greater reliance on accountable care organizations. But that’s hardly the whole enchilada.
And by the way, the shift is already in progress. CMS announced that the percentage of Medicare’s “alternative payments” will jump from the current 20% benchmark to 30% in 2016 — and to 50% by 2018. From a long-term care operator’s perspective, that’s not a tweak. That’s revamping the playbook.
According to people who watch such developments for a living, the change will fuel consolidation of both hospitals and skilled care facilities. In fact, we’re already starting to see that shift play out.
While important details are yet to be finalized — such as exactly what kind of bundled payments SNF operators will receive — there’s no doubt that operators who rely on Medicare funding will have to reconsider how they do business. Among the questions that merit special attention:
• How will our organization embrace new strategies that ensure survival in a reimbursement environment that puts a premium on value-based care?
• What specific kinds of care do we need to deliver going forward?
• What’s going to separate us from the competition?
To be sure, these are matters that many long-term care operators are already grappling with. The difference now is that the clock is running.
Which brings to mind two contradictory pieces of advice that need to be kept in mind.
This first: Look before you leap. Providers can’t just rush in; plans for the next part of the journey need to be sensible and likely to succeed.
The second: He (or she) who hesitates is lost. Yes, providers need to be smart while accommodating the emerging Medicare payment system. But they darn well better get moving. Or you can be sure they’ll be paying a hefty price.
John O’Connor is McKnight’s Editorial Director.