Azar touts new SNF pay model for making long-term care sustainable

HHS Secretary Alex Azar warned nursing homes on Tuesday that his agency will use Medicare to cut down on excessive, expensive care and hospital readmissions to nudge post-acute and long-term services into value-based community care.

In a speech to the American Health Care Association and National Center for Assisted Living, Azar focused on the Trump administration's shift toward the industry after freezing Obama-era regulations that many nursing homes were struggling to comply with before penalties. Azar promised that HHS will continue rolling back those regulations and will use payment models instead to improve quality.

In late April, the Trump administration proposed its new prospective payment model that boosts nursing home Medicare payments by about $850 million from last year but tethers them to patients' health status instead of how many services they receive.

The proposed model also slashes reporting requirements, a move estimated to save nursing homes about $2 billion over 10 years.

"We want to work collaboratively and transparently, which is why we issued an advance notice of proposed rulemaking," Azar said of the proposal. "We will listen to comments from stakeholders. But we aren't afraid of rethinking a whole model of payment if the status quo could be improved for patients."

Some nursing homes have complained about the proposal, which establishes five patient categories to send payments to the correct providers. Facilities claim the model may not categorize patients accurately and also may limit how much the provider can tailor their care.

But Azar said the healthcare system needs an overhaul to deal with the rapid influx of aging patients. From 2000 to 2016, the number of Americans over age 60 jumped by 50% to 69 million. By 2020, the older population will be about 77 million and then will jump again to 102 million by 2040.

He also noted that the second wave of baby boomers, now approaching retirement, have different expectations for their long-term care than their older peers. They want to stay in their homes and are more likely to have expensive chronic diseases like diabetes.

HHS will likely harness community aging and disability networks moving forward as a more value-based system focuses on keeping patients in the lowest-cost setting possible.

Azar also touted the department's big agenda for interoperable health records, which he said is key for the more tech-savvy boomer population getting ready for retirement.

"Today's compartmented system is a huge burden on these patients and a great risk to patient safety," Azar said. "Imagine if patients arriving at a new facility could share their medication list just once, for example. Think about the opportunities for mistakes and inaccuracies that would eliminate—and think about the burden that would lift from both patients and providers."