My McKnight’s Article: RCS1 v. RUG4

The Centers for Medicare & Medicaid Services is proposing to radically change how they pay skilled nursing facilities to care for Medicare patients after hospital stays. Today, under the RUG IV rule and formula, the economic engine of the facility is the rehab department and the fuel for that engine is the volume of minutes of therapy provided by physical, occupational, and speech therapists.

The more minutes of therapy, the higher the payment. Are there unintended consequences from the current model? Of course. I think we’ve all sadly seen examples of cringeworthy decisions and care plans made to capitalize on the current model. With the possible replacement of RUG IV with RCS-1, CMS is not looking to fix the engine. They’re removing it.

As I’ve talked with administrators, nurses, and therapists about RCS 1 over the past couple weeks, the reaction has been consistent:

  1. Blank Stares followed by
  2. Disbelief followed by
  3. Minds Racing to predict the consequences.

Why?

1. BLANK STARES – Because it’s a paradigm shift

Most of us have a general idea how the RUG4 formula works for rehab patients: take the minutes and adjust based on some of the ADL (activities of daily living) scores found in the MDS.

The RCS1 formula to determine a daily PPS rate is, at a high level, this is to determine why the patient is admitted to the SNF.

  1. Why is the patient here?
    10 categories: Major Joint or Spinal, Non-Orthopedic, Acute Neurologic, Non-surgical orthopedic/Musculoskeletal, Orthopedic Surgery (Except Major Joint), Cancer, Acute Infections, Pulmonary, Cardiovascular & Coagulation, Medical Management
  2. What is the functional status of the patient?
    Higher functioning, less dependent = higher score/payment
  3. What is the cognitive function of the patient?
    Higher cognition = higher score/payment
  4. Is the patient depressed?
    Depressed patients = higher score/payment
  5. What non-therapy ancillary things are going on with the patient?
    IV med, Feeding tubes, Dialysis, etc. = higher score/payment
Why pay less for patients that are more dependent? That runs counter to what we’re used to. I speculate the rationale is that the more independent and cognitively sound a patient is, the more therapy they are able to receive.

2. DISBELIEF – What about therapy minutes?

Notice there is zero input for therapy minutes. As RCS-1 is drafted today, the daily rate for that patient is the same whether s/he received 10 minutes or 1,000 minutes of PT/OT/ST.  Re-read that sentence as many times as you need to until your mind starts racing. Then read on …

3. MINDS RACING – How will we adapt?

Could RCS-1 mean an unintended windfall for operators?  Maybe.

Let’s compare the RUGIV and RCS1 payment for a couple common Medicare SNF patient types. Let’s choose Kansas City as our market.

Slide1

The source for the RCS-1 rate is from the Zimmet Healthcare Services Group online calculator. I highly recommend Zimmet to anyone in the industry who wants to learn in depth about this and wants to stay on top of the latest changes to reimbursement/regulations. (I have no financial interest in Zimmet.).

CMS is notorious for underestimating operators’ ability to pivot to the changing goal posts. Can you imagine a replay of 2011/2012 when the change to RUG4 resulted in a windfall for savvy operators followed by an immediate cut by CMS to fix it (see Medicare rate chart)?  I can.

Slide2

Keeping the minutes static, the daily profit increases by $177 and $342 for the stroke and joint replacement patients respectively. But the RCS-1 formula begs the question: why would you keep the minutes static? The minutes/RUG thresholds are artificial constructs by CMS. When those thresholds disappear, what does care planning by the PT/OT/ST look like? Will they give more or less? What will the directives be from management?

Can you see the pendulum swinging too far for some organizations that try to cut therapy to the bone since it will become a cost center (financially speaking)? I can.

Plus: How will rehab companies and/or rehab departments change how they care plan? More group/concurrent therapy? More use of aides in the states that allow it? More use of RNAs? More intense rehab during the first half of the stay?

Here’s the thing, love them or hate them, the minutes thresholds provides everyone (management and clinicians) with a framework that encourages therapy to be given but also provides a “governor” on how much therapy is given. What’s the governor or regulator under RCS-1? Patient outcomes. Is that it?  Looks that way to me.  

Any operator who wants to maintain or grow their Medicare market share must earn it today. Bagels are being replaced by data — length of stay, readmission rates by diagnosis, episodic cost of care, star ratings — to determine short-term patient market share.

RCS-1 doesn’t change that reality. How can you possibly attract short-term patients and deliver optimal outcomes on those data points without exceptional (sufficient & effective) PT/OT/ST?  I don’t see it. Nevertheless, I would anticipate rehab companies and rehab departments to drive more efficiency — cutting out the gray-area treatments that milk the minutes but are not the most effective/efficient methods. How are outsourced rehab companies preparing for this?  Are they going to continue to charge the same way or will they develop new metrics?

I think we’ll develop new rules of thumb for rehab hours and dollars per patient day (PPD) like we have for nursing today. Nursing minutes are not part of the reimbursement formula today, like rehab minutes are not part of the formula under RCS1. Today, we see some Medicaid-dominant facilities staffing nursing at 2.8 hours ppd. High-acuity, short-term facilities may staff around 4.5 hours ppd. What’s the regulator for staffing the cost-center known as Nursing? Patient need/outcomes. I believe we’ll see rehab staffing in facilities in a similar way.

What about investors & valuation?

My focus so far has been at the operator/facility level. But how will underwriting and valuations of facilities change in 2018 and 2019? I think it’s safe to say, our current underwriting models will need major updating if RCS-1 goes through as proposed.

This article was originally published on McKnight’s here: http://www.mcknights.com/guest-columns/rcs-1-says-goodbye-to-rehab-yes-no/article/695499/ 

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Wind of Change

Over 440,000,000 views on Youtube?!  The Scorpions’ Wind of Change music video (below) has been viewed a lot. It’s probably not the best anthem for the post-acute world, but the title sure seems to fit.  If there’s anything that’s constant for skilled nursing providers, it’s that things are always changing.


BPCI/CJR Loses Steam

Last year, I wrote about how the best operators are able to adjust or “change tack” to shifting winds/regulations. (mixing boating metaphors)

I also wrote specifically about one such shift that was causing a lot of concern for providers (and investors), Bundled Payments.

In recent days, we’ve seen the wind change direction again.  And, while nobody should be surprised, I think most of us are surprised.

  1. CMS is Overhauling the Medicare Fraud Audit Process
  2. CMS is canceling the expansion of CJR
  3. CMS is eliminating the Mandatory nature of CJR
  4. CMS is reducing the number of CJR markets from 67 to 34

It’s critical that operators who are currently being affected by the CJR program to get in touch with their hospitals to discuss what, if any, impact this will have on how the hospital is operating or is preparing to operate vis-a-vis these patients.

Skilled Nursing groups are applauding the news.  IF this gives providers more time to get their BPCI act together, then that’s great.  But, the point is … they still need to act like BPCI is coming.  BPCI behavior that better health plans and hospitals are looking for is:

  • Proactive communication around readmission and outcomes
  • Integration of hospital’s modalities into the SNF
  • Strong reporting systems
  • Proactive cost containment (shortening length of stay if possible)
  • Partnering with the best home health agencies who understand BPCI as well

Investors are looking for operators who are not just fluent in BPCI but has already (or is actively) implemented those BPCI Behaviors.


RUG IV to RCS1

In my opinion, a much bigger wind of change, if implemented on October 1, 2018 as targeted, is the shift from RUG IV to RCS1.  I attended a conference on that last week by Zimmet Healthcare Services Group in Atlantic City, NJ.

According to Mark Zimmet (https://www.zhealthcare.com/), the announced pre-rule for RCS by CMS (https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html) earlier this year will dramatically change the way SNFs are operated — specifically replacing the REHAB/Minutes economic engine of operations with a Patient Characteristics economic engine.  Now, Medicare A reimbursement is driven mostly my rehab minutes (type and quantity).  In the proposed RCS 1 model, rehab minutes are completely excluded from the calculation. There is a PT/OT and an ST component in the formula.  But, minutes are NOT part of it.  In other words, under RCS 1, the facility will be paid the same amount for Patient John Doe whether the SNF provides 10 minutes of therapy or 1,000 minutes.  Panelists predict therapy spend will shrink AT LEAST 50%.

The driver of reimbursement shifts away from rehab minutes to patient clinical characteristics. RCS starts with WHY is the patient here.  Which of the 10 categories?

  1. Major Joint or Spinal
  2. Non-Orthopeadic
  3. Acute Neurologic
  4. Non-surgical orthopedic/Musculoskeletal
  5. Orthopedic Surgery (Except Major Joint)
  6. Cancer
  7. Acute Infections
  8. Pulmonary
  9. Cardiovascular & Coagulations
  10. Medical Management

Then, it looks at the functional and cognitive scores, co-morbidities, non-therapy ancillaries.

Remember …

  1. The change isn’t final and may very well change before it’s implemented.
  2. There’s time to recalibrate your structure and competency to hit the ground running if/when the change is made.
  3. I would be talking now with your rehab provider about this.  The message from this conference is that Rehab Co’s in skilled nursing are Dead Man Walking.
  4. Stay up to date on the CMS conference calls, updates.

Goodbye Therapy?

If RCS 1 is implemented as structured today, I would expect the use of therapy services to change and be reduced.  In a word, I believe therapy will be more EFFICIENT. Unfortunately, CMS now incentivizes inefficiency since providers are paid for the minutes they take to deliver therapy.  Does this get abused?  Sadly, yes.  Do we sometimes see a patient who needs rest to recover from illness get dragged into the rehab gym to get our minutes in?  Sadly, yes. I’m totally open to viewpoints on this …  Is this better for the patient or worse?  Can you see operators cutting the newly labeled “cost center” of rehab and giving less than what the patient could benefit by since Medicare isn’t paying for minutes anymore?  I can.  But, I can also see operators providing a lot of therapy (but still less than before) under RCS 1 since they’re ultimately judged based on outcomes.  Almost all admissions to SNFs now are for short-term rehab to get strong enough to go home.  If you cut rehab to save money, you might benefit in the very short-run, but after a couple months, your readmission rate and patient satisfaction and length of stay will suffer.  I can’t imagine a world without Rehab being an essential part skilled nursing, RCS 1 or not.

So, look at Nursing under the RUGs system.  Nursing minutes/hours are not currently reimbursed — like rehab won’t be in the future.  The way operators staff their nursing departments, I believe, will be a predictor of how they staff their rehab departments under RCS 1.  Some Medicaid shops run as lean as possible b/c there simply isn’t enough revenue to support more.  Yet, short-term rehab shops, staff way higher than state minimums because quality care/outcomes/readmission rates/etc. demand it. I believe that will be the case for Rehab.

CMS is infamous for unintended consequences.  They consistently underestimate operators ability to quickly adapt to the moving goal posts.  So, while CMS predicts this will be budget neutral, I wouldn’t be surprised if it resulted in an increase in Medicare spend (and bottom line performance for SNFs), resulting in quick adjustments like we saw in 2011 and 2012.


Here are 3 videos I took of the presenter going through the calculator that shows the new formula at work (note: no input in the new calculator for minutes):

IMG_4619.jpg
This ballroom was packed for both days of presentations. Highly recommend Zimmet for learning about the latest changes to reimbursement & regulation in LTC

Mothers in long-term care

I was asked to speak in church today.  Mother’s Day.  No pressure.

As I prepared for my talk, I remembered a classic, inspiring, true story of a taxi driver who picked up somebody’s elderly mother late one night to take her to a hospice facility.  It didn’t end up fitting into my talk, but I wanted to share it here.  I’ll be sharing it with the staff at the two facilities in Denver I’ve been helping with this week.  Enjoy.  And, pass it on.

“Twenty years ago, I drove a cab for a living. One time I arrived in the middle of the night for a pick up at a building that was dark except for a single light in a ground floor window.

Under these circumstances, many drivers would just honk once or twice, wait a minute, then drive away. But I had seen too many impoverished people who depended on taxis as their only means of transportation. Unless a situation smelled of danger, I always went to the door. This passenger might be someone who needs my assistance, I reasoned to myself. So I walked to the door and knocked.

“Just a minute,” answered a frail, elderly voice.

I could hear something being dragged across the floor. After a long pause, the door opened. A small woman in her 80’s stood before me. She was wearing a print dress and a pillbox hat with a veil pinned on it, like somebody out of a 1940s movie. By her side was a small nylon suitcase.

The apartment looked as if no one had lived in it for years. All the furniture was covered with sheets. There were no clocks on the walls, no knickknacks or utensils on the counters. In the corner was a cardboard box filled with photos and glassware.

“Would you carry my bag out to the car?” she said. I took the suitcase to the cab, then returned to assist the woman. She took my arm and we walked slowly toward the curb. She kept thanking me for my kindness.

“It’s nothing,” I told her. “I just try to treat my passengers the way I would want my mother treated.”

“Oh, you’re such a good boy,” she said. When we got in the cab, she gave me an address, then asked, “Could you drive through downtown?”

“It’s not the shortest way,” I answered quickly.

“Oh, I don’t mind,” she said. “I’m in no hurry. I’m on my way to a hospice.”

I looked in the rear view mirror. Her eyes were glistening.

“I don’t have any family left,” she continued. “The doctor says I don’t have very long.”

I quietly reached over and shut off the meter. “What route would you like me to take?” I asked.

For the next two hours, we drove through the city. She showed me the building where she had once worked as an elevator operator. We drove through the neighborhood where she and her husband had lived when they were newlyweds. She had me pull up in front of a furniture warehouse that had once been a ballroom where she had gone dancing as a girl.

Sometimes she’d ask me to slow in front of a particular building or corner and would sit staring into the darkness, saying nothing.

As the first hint of sun was creasing the horizon, she suddenly said, “I’m tired. Let’s go now.”

We drove in silence to the address she had given me.

It was a low building, like a small convalescent home, with a driveway that passed under a portico. Two orderlies came out to the cab as soon as we pulled up. They were solicitous and intent, watching her every move. They must have been expecting her. I opened the trunk and took the small suitcase to the door. The woman was already seated in a wheelchair.

“How much do I owe you?” she asked, reaching into her purse.

“Nothing,” I said.

“You have to make a living,” she answered.

“There are other passengers.”

Almost without thinking, I bent and gave her a hug. She held onto me tightly.

“You gave an old woman a little moment of joy,” she said. “Thank you.”

I squeezed her hand, then walked into the dim morning light. Behind me, a door shut. It was the sound of the closing of a life.

I didn’t pick up any more passengers that shift. I drove aimlessly, lost in thought. For the rest of that day, I could hardly talk. What if that woman had gotten an angry driver, or one who was impatient to end his shift? What if I had refused to take the run, or had honked once, then driven away?

On a quick review, I don’t think that I have done anything more important in my life. We’re conditioned to think that our lives revolve around great moments. But great moments often catch us unaware—beautifully wrapped in what others may consider a small one.”

– http://kentnerburn.com/archives/391

The EnsignPrize! home stretch

At Ensign’s 2011 annual meeting I spoke about some personal feelings re: hitting 10 years with the organization and in skilled nursing. It was a time of deep reflection. It was then that I developed some of the thoughts I’ve shared here about burn out, empathy, and a hunger to do more after surviving industry-common career crushing experiences. Some of those thoughts are found here.

As “luck” would have it, while I was in that very reflective mood, I was hit by some new, related ideas during a couple early morning rides. I love to listen to NPR podcasts during those runs/rides and back then I listened to a Freakonomics podcast that was like lighting a fuse in my mind. When I got to the office that morning, ideas started to crystalize, as seen on my whiteboard:

I don’t expect you can follow the train of thought there. But, with the help and input of my colleagues at Ensign, what started as some 10-year angst turned into the eprize! … our organization’s $150,000 competition to transform the industry by transforming the day-in-the-life of our residents. At that 2011 annual meeting, I shared with my friends and colleagues the story of how the idea of the eprize! was born and then challenged them to run with it. And … they did.

The executive directors and directors of nursing upped the ante to $150k and all agreed to put money into the ‘pot’ from their own facilities to fund the award. For more details about the competition and why we did it the way we did it, see this “halftime talk” I gave to the organization about it:

Well … the applications are finally in and uploaded onto the EnsignEprize.com website and the contestant facilities are lobbying their communities hard to have them ‘vote’ for their application. The eprize! award winner will be announced in early April. As I’ve read through and watch the videos of some of the applications I’ve gotten emotional to see the small and big improvements in the systems we use to care for our residents and patients with more dignity, humanity, and choice. I hope you take a minute to go to the website and see what we’ve been up to for the last year as a group. And, please, by all means … share this with your friends. Better yet, challenge your own organization to do something similar!

Nursing Home Institution vs. Resident Centered Approach

The Next 10 years …

This all started about 2 months ago when my wife and I were on a walk, talking about my short career in long-term care.  I marveled that I had been with the same company (The Ensign Group) for 9 years.  AIT-Administrator of 3 facilities-AIT Program/Leader Development/Support guy …

That walk/talk stimulated a lot of reflection in what I want out of my next 10 years.  A strong desire (maybe need?) has risen to the surface to take my (and our company’s) experience and do something transformative with it for the benefit of today’s and tomorrow’s long-term care residents.  That could sound a little quixotic (side note: Don Quixote: One of my all time favorite stories/inspirations and a great motivating tool for staff) but I think it’s actually a pretty common experience for people in long-term care.  As I looked in the 9 year mirror I see myself on this curve:

Empathy Curve in Healthcare
Empathy Curve in Healthcare

 

As an AIT I started out like most — fired up, wanting to treat each resident like family, eager to learn and improve this embattled industry.  The empathy I felt was very high.  Feeling sorry for a lot of the long-term residents who had no family support.  Feeling a bit shocked at the scene of a resident being wheeled down on a PVC pipe roller chair to the shower room covered only with a sheet — leaving a trail of diarrhea.  Feeling nauseated by the smells during certain procedures.  How do I, having never worked in a nursing home before, get used to that?!  Feeling pretty impotent to change things for the better until I learn why they’re done this way in the first place.  What have I gotten myself into?

So what happens/happened?

You start to cope.  I suppose we all cope differently.  But as you cope, you ‘fall’ not just on the empathy curve but into a too-casual relationship with the profession.  Some signs of the coping fall …

  • You call Virginia in room 24 bed A by a different name: 24-A, ‘the hip’, Medicare Patient, etc.  This dehumanizing of ‘Virginia’ helps you cope with all of the residents you’ve let down some way.  It also speeds up communication with the others at the facility who don’t really know Virginia.
  • You are less shocked by the sights, sounds, and realities of life as a nursing home resident.
  • You rationalize away your loss of empathy as not a loss of empathy but as a better understanding of why things are always done that way.
  • You spend your time on delivering the things your company measures regardless of how in line with your values or vision those measurements are.
  • You don’t smell the smell that first-timers do.  🙂

You survive for a while and then you begin to thrive.  Your experience and success builds confidence to experiment, to find YOUR VOICE.  You begin to need more than simple survival.  Maslow’s Hierarchy of Needs illustrates a theory of the different levels of human need that you see in yourself as an administrator.  This analogy is a bit forced but you’ll get the idea.

You first need to survive.  That ‘Physiological’ need means you have to not lose your job 🙂  You need to learn, perform to how your measured, fit in, etc.  With some time and success your needs graduate to the ‘Safety’ need.  Here you pass some surveys; you put a team together; you learn from your mistakes; you change your style to be more effective.  You start to float between Safety and ‘Belonging’ as you find some balance in your life. you perform well financially; you’re recognized in your organization as an important partner.  The trouble is … this is the bottom of the Empathy Curve.  You may stay here for the rest of your career, quite comfortable.

Maslow's Hierarchy of Needs
Maslow’s Hierarchy of Needs

But with time, you start to feel a need to do more with what you’ve received.  You feel a need to not only run an outstanding facility, but to transform long-term care in the eyes of the residents.  You wrestle with some tough questions as you confront the brutal facts …

  • What truly makes us different from our competition (in the eyes of the community)?  Wouldn’t our competitors say that they are nice and caring just like we say?  What can only we say about being a resident here that our competition cannot?
  • Is it a significantly better experience to be a resident in my facility than at an average facility elsewhere?  In other words, is sleeping, waking up, getting dressed, eating breakfast, going to activities, going to therapy, receiving medications, etc. a significantly better experience than your average facility?

You feel a higher need pulling you up from the coping gravity to see things (again) from the residents’ perspective.  You are extremely proud of surviving and then succeeding at one of the most difficult jobs anywhere.  You are proud of how you’ve treated your employees (for the most part).  You are proud of the company you’ve helped grow.  You are proud of the facilities that have improved qualitatively and quantitatively under your leadership.  Now what?

Now you feel a new, familiar need to change the industry.  You feel a need to fight the CALF PATHS and the gravity that limits our vision of what we can and should do.

The difference between that need/empathy today vs. when you began is that now you have the knowledge and wherewithal (what a great catch-all word) to do something about it.

There are a handful of companies and leaders in long-term care that are ‘ahead of the curve’ (get it?) when it comes to changing the industry.  BUT, it seems like the movement is way too slow.  One major initiative is the resident-centered approach as illustrated here.

Nursing Home Institution vs. Resident Centered Approach
Nursing Home Institution vs. Resident Centered Approach

I love the concept.  I think it is on target to where we need to take long-term care.  But, the cultural, financial, and regulatory obstacles are real and in many cases prohibitive for an administrator to experiment with.

For my next 10 years I want to work at clearing those obstacles away.  AND, more importantly, I want to figure out how to lessen the slope and duration of the drop and bottom of the empathy curve for others.  Skilled nursing companies have to find the right people, find the right measurements and establish a culture of entrepreneurship and innovation in order to do more than simply survive.  We and our residents ‘need’ it.

Technology, Part 2

In Part 1, I subtly (in huge print) wrote:

We identified a problem.  We looked outside our industry for a solution.  It looks high-tech but is actually low-tech analog.  You might be tempted to do this too.  If you did, you very well maybe throwing your money down the toilet.

Captain Kirk w/ an evolved Secret Service radio

So, before you go Captain James Kirk on me (I don’t refer to Star Trek nearly enough) and start incorporating the latest tech, consider what another Jim says on the subject …

Jim Collins’ Good to Great is used by many companies today for obvious reasons.  Its a compelling premise … what do these companies have in common that went from good to great?

G2G Page 152:

“This brings us to the central point of the chapter.  When used right, technology becomes an accelerator of momentum, not a creator of it.  The good-to-great companies never began their transitions with pioneering technology, for the simple reason that you cannot make good use of technology until you know which technologies are relevant.  And which are those?  Those–and only those–that link directly to the three intersecting circles of the Hedgehog Concept.”

When it comes to the secret service radios I’ve seen facilities throw money down the toilet as they hope for the internal and external momentum described in part 1 from the radios without going through a Hedgehog type conversion BEFORE bringing in the new technology.

BEFORE introducing the ‘math’ or before dreaming of increased census or community buzz that can and has come from the secret service investment, you MUST wrestle together with your staff to identify your identity.  Defining your culture and then drawing a line in the sand CULTURALLY speaking.

That is the basis for the an enduring momentum to build and without it whatever ‘pop’ you experience from the technology will be short-lived and after 3 months your radios will be in a closet somewhere in your facility and you will curse my name.

Idaho Healthcare Association

I thoroughly enjoyed the Idaho Healthcare Association convention in Boise during in  July.

I was invited to speak on how to create your own unique culture within your facility or company.

Thank you to Robert & Jill for the invite and warm welcome.  I was totally impressed with the organization and our colleagues in Idaho … making a difference!

My presentation consisted of a few case studies on the topic.  We discussed what we learned from each and ended with a how-to-map for repeating the steps at your company/facility.

The phrase, “I’m passionate,” is certainly over-used.  Nevertheless, I’m passionate about this topic.  It goes far beyond theory or academics for me.  I’ve seen amazing results from getting serious about owning the culture for myself and for others.  I shared cases at USA Olympic Hockey (The Miracle), The Ensign Group’s (my company) ‘anti-corporate’ office, my most recent facility, and we ran out of time to share the Johnson & Johnson case.  All these cases teach us …

  • The How-To: Pain, Engage, Define, Commit, Flywheel.
  • The culture starts and stops with ‘the’ leader.
  • Cultural transformation requires hard work and pain.  There are no shortcuts.
  • Team chemistry is better than a group of individual all-stars.
  • You have to draw lines in the sand and commit to not cross (or let anyone else cross) that line.
  • Cultural transformation is too-often treated (by the leaders and the employees) like a new program.  Programs fade in 2 to 3 months.  For the transformation to ‘take root’ it must be treated more like a conversion to a new religion.  The most outstanding organizations are those who have a fanatical commitment to their stated culture.
Download presentation PDF here