House to vote on skilled nursing facility readmissions penalties, ICD-10 extension

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Skilled nursing facilities could see reimbursements tied to their number of hospital readmissions starting in 2018, under Medicare legislation announced by House and Senate leaders Wednesday. The bill also would delay the transition to the ICD-10 coding system for a year and prevent scheduled payment cuts to physicians.

The House is expected to take up the “Protecting Access to Medicare Act of 2014” today, with the Senate considering the measure soon after. Speaker of the House John Boehner (R-OH) and Senate Majority Leader Harry Reid (D-NV) have agreed on the 123-page proposal, Boehner announced at a press conference Wednesday.

The bill describes a “value-based purchasing” plan for skilled nursing facilities, based on their hospital readmissions. It largely reflects a proposal floated on the Hill by the nation's largest long-term care provider group, the American Health Care Association/National Center for Assisted Living.

Essentially, the government would withhold 2% of SNFs' Medicare payments starting in Oct. 2018, and about 70% of those dollars would then by distributed to high-performing providers with reduced hospital readmissions, AHCA/NCAL spokesman Greg Crist told McKnight's.

The bill is a victory for AHCA, Crist said, because the organization has been pushing for “substantive policy alternatives” to achieve Medicare savings, as opposed to market basket cuts. He also pointed out that under the SNF readmissions item in the recent White House budget, providers only faced penalties, not incentives. Should this bill pass, a SNF could conceivably recover all of its cut of the withheld 2% of reimbursements, plus earn additional payments.

LeadingAge also noted its long-standing support for value-based purchasing for SNFs. However, rigorous risk adjustments should be made for providers serving those more likely to be readmitted to the hospital, the association of not-for-profit providers stressed.

The adjustment should occur at the “nursing home level (e.g.: those homes serving lower socio-economic populations)” and the “beneficiary level (e.g.: patient with a hip fracture and multiple other chronic complex care needs would have a higher expected rate of return to the hospital than a patient with a hip fracture who is otherwise relatively healthy),” said Cheryl Phillips, senior vice president of public policy and advocacy at LeadingAge.

The “Protecting Access” bill also would delay the transition from ICD-9 to ICD-10 from Oct. 1, 2014, until Oct. 1, 2015. ICD stands for the International Classification of Diseases, which is the diagnosis code set used by U.S. healthcare providers.

Long-term care providers almost certainly would cheer the additional time, given that ICD-10 is a much more extensive code set than the current version. They also might be heartened to hear that this bill would extend by one year the Medicare therapy cap exceptions process, which is set to expire at the end of the month.

However, the bill has provoked some grumbling that Congress is just kicking the can, because it represents yet another temporary “patch” for the Sustainable Growth Rate — the formula Medicare uses to calculate physician payments. Congress has repeatedly put in place short-term “doc fixes” to prevent steep reimbursement cuts called for by the SGR, and this bill would enact another 12-month fix.

Momentum has been building to repeal and replace the SGR, and Boehner said that work would continue on this front. However, legislators have not yet agreed on a repeal bill, and with doctors facing a 24% pay cut as of March 31, action must be taken now, he told reporters.

Sen. Ron Wyden (D-OR), chairman of the Finance Committee, spoke out against another temporary fix. “There is no reason to wait” to get rid of the SGR, he said in a prepared statement.