Most skilled-nursing facilities penalized by CMS for readmission rates

The vast majority of skilled nursing facilities will receive a penalty on their Medicare payments for fiscal 2019 for poor 30-day readmission rates back to hospitals, according to new CMS data.

Of the 14,959 skilled nursing facilities subject to the CMS' Skilled Nursing Facility Value-based Purchasing Program, 73% received a penalty while 27% got a bonus. The data also show that the SNFs on average got worse at managing readmissions the longer they were in the program.

The penalties, which went into effect for the first time on Oct. 1, were mandated by the Protecting Access to Medicare Act of 2014 in an effort to transition SNFs from fee-for-service to value-based payment. Under the program, SNFs can see up to a 1.6% bonus in their Medicare Part A payments or up to a 2% cut.

The CMS has been providing SNFs quarterly confidential feedback reports since October 2016 regarding how they are doing on the readmission measure, but fiscal year 2019 was the first time the CMS penalized providers on performance.

To calculate the payment or penalty SNFs receive, the CMS compared their readmission rates in calendar year 2017 to calendar year 2015. The 30-day readmission rate for SNFs is the 30-day window after a patient is discharged from a hospital and admitted to a SNF. The SNF is still on the hook for a readmission penalty even if the patient is discharged before the 30 days are over.

Only 3% of SNFs received the maximum bonus of 1.6% for fiscal year 2019 while about 20% of the SNFs got the maximum penalty of 2%.

The data show that SNFs on average struggled under the program as time went on. The average risk-standardized readmission rate for SNFs increased by .4% in calendar year 2017 compared to calendar year 2015.

"That's the take home thing people will be surprised at, historically when the CMS starts measuring something and ties it to payment, usually things get better," said Tom Martin, director of post-acute care analytics at CarePort Health, a software company part of Allscripts that helps providers on transitions of care.

SNFs may be performing worse on readmissions because they are facing pressure from providers to shorten length of stay so "a lot of the time a patient is re-hospitalized is outside the SNFs' control," Martin said.

Adding to the pressure to lower length of stay is the Patient Driven Payment Model, which will go into effect in fiscal year 2020 and replaces the long-standing fee-for-service reimbursement model, Martin added. The new model will actually decrease payments over the course of the patient's stay depending on their reason for admission.