Nursing homes that have seen little change in the age or ailments of their patients have increasingly billed Medicare for highly intensive and profitable services at significant expense to the program, according to a new federal report that may spur the government to change how the facilities are paid.
HHS' Office of Inspector General found that more use of intensive physical and occupational therapy for nursing home patients added $1.1 billion to Medicare's $52 billion budget for skilled-nursing care in 2012 and 2013. Of that amount, $900 million was the result of a hike in use of the most intensive therapy, which Medicare determines by the number of minutes of therapy patients receive.
Yet the patients who received care in 2013 were largely the same age, with the same medical conditions, such as joint replacements or strokes, and stayed in hospitals before landing in nursing homes roughly the same number of days as the prior two years.
The findings echo previous research by the OIG and the Medicare Payment Advisory Commission, which also noted high margins and rising use of skilled-nursing therapy services. Though the OIG's latest conclusions aren't surprising, the report and changes underway to how Medicare pays providers suggest “we're moving toward a tipping point,” said David Grabowski, a professor of healthcare policy at Harvard University who studies long-term care.
Medicare has proposed or introduced changes to payments including incentives for hospitals, doctors and nursing homes to reduce healthcare use and spending. New contracts for bundled payments or accountable care allow providers to keep some of money that they save as a result. Some contracts have prompted hospitals to develop preferred networks of skilled-nursing homes with high quality and lower costs.
The CMS has announced plans to increase its use of new incentives, though that shift will be gradual, Grabowski said. In the meantime, the CMS will likely address one of the report's major concerns: Medicare pays too much for skilled-nursing care. “Were bound to see some decease in the generosity of payments,” especially for the highly profitable services, Grabowski said.
The report said skilled-nursing homes increasingly billed Medicare for precisely the number of therapy minutes (720) needed to qualify for the highest-paid therapy category. In 2013, 34% of patients received 720 minutes of therapy compared with 29% in 2012 and 21% the prior year. In 2013, the average payment per day for those in that category was $620 compared with $$362 for those who got the least amount of therapy.
The profit margin for therapy services for skilled-nursing patients was 29% in 2012, down from the peak during the prior decade of 42% in 2010.
The report said the CMS should reconsider how much and how it pays for therapy and increase its oversight of skilled-nursing care. In a written response to the report, CMS officials agreed but said they would need statutory authority to do so. A study is underway to look at how to change payment to skilled-nursing homes as well, the CMS said.
The system now "implicitly provides a financial payment incentive for facilities to provide as much therapy to a resident as that resident can tolerate, regardless of the impact of providing this level of therapy on producing positive patient outcomes," said Andrew Slavitt, the acting CMS administrator, in a response to the OIG.
