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SNFs’ refusal to accept high-cost patients creating medical gridlock’
The continuum of care concept has long been held as an ideal in the health care community, a model in which care is coordinated seamlessly across different settings. But what happens when things go wrong, when one link in the chain snaps under the pressure of changing federal regulations? According to some experts, we’re in the process of finding out, as the troubles now plaguing skilled nursing facilities (SNFs) start to have a major impact for hospital discharge planners.
"Some skilled units in local nursing homes are closing," says Deborah Hale, CCS, president of Administrative Consultant Service Inc. in Shawnee, OK. "They were just opening in our part of the country in every nursing home" — at least before new federal rules regarding skilled facilities hit. Now, says Hale, "In the Midwest, many of the facilities are either closing their skilled beds or being very particular about which patients they accept. Of course, that tends to slow down the discharge planning process for the hospitals."
Indeed, faced with dwindling reimbursement and a spate of federal investigations, nursing homes across the country are folding in record numbers, and an increasing number of SNFs are refusing to accept high-cost patients who have been discharged from the hospital but may still require extensive care. Meanwhile, the home health industry has been similarly besieged, reducing the number of slots available for patients needing discharge to home care.
At Providence General Medical Center in Everett, WA, the problem has already hit home. Recently, members of Providence’s care management team were able to discharge one patient to a nursing home only after the hospital agreed to continue paying for the patient’s costly antibiotic.
The problem stems in part from the new Prospective Payment System (PPS) for SNFs, says Chris Karam, chief operating officer of Christus St. Michael Health Care Center in Texarkana, TX. Before last year, Medicare reimbursed nursing homes based on the actual cost of providing care. Last July, however, SNFs were switched to a fixed-rate system that many experts predicted would force SNFs to beef up cost-containment efforts. Even so, because Medicare doesn’t cover long-term care, the federal government typically covers less than 15% of the patients in nursing homes anyway.
The real hit for SNFs came in January, when Congress imposed a $1,500 cap per patient in coverage for physical therapy, occupational therapy, and speech-language therapy. That cap effectively cut reimbursement for some types of outpatient rehabilitation services literally in half. Typically, as much as 30% of a SNF’s revenue derives from such rehabilitation services.
With SNFs’ increasing unwillingness to take high-cost patients, some discharge planners are having to scramble to find appropriate facilities in which to place patients who need ongoing care. Inevitably, some of these patients end up lying in hospital beds while this process takes place, driving up the hospital’s length of stay.
"Of course, the longer the length of stay, the greater the financial impact," Hale says. "You’re looking at a variable cost of about $290 a day for every day you wait to place a patient. You’re going to add up some costs."
The costs increase even more when the Medicare patient you’re unable to place requires a ventilator. At Suburban Hospital in Bethesda, MD, some ventilator patients have had their inpatient lengths of stay increased by two to three weeks because no nursing home in the area would take them, says Sharon George, RN, utilization and discharge manager at the hospital. With ventilator patients costing an average of $1,600 per day, an extra two weeks tacked onto the end of a normal acute care stay could cost the hospital $22,400 per patient.
And the problem of placing ventilator patients isn’t likely to go away soon: Just recently, the only nursing home with a ventilator unit in Montgomery County, MD, stopped accepting new ventilator referrals altogether.
Nursing homes in George’s area have become so cost-conscious as a result of the new PPS that they’ve begun sending staff to the hospital to "screen" patients prior to discharge. Much of the screening involves assessing how much the patient will cost to treat. "They want to know things like how often the patient is going for physical therapy and for how many minutes," George says. "It’s all based on that $1,500 cap. They want to make sure there aren’t any surprise charges when they get the patient."
While few of the nursing home representatives will admit outright that they’re there to assess potential cost as well as acuity, a few have let their true motives slip, George says. "A few have said that the antibiotic the patient is on is going to cost too much, for example."
The end result, George says, is that inpatient lengths of stay for Medicare patients will ultimately increase, perhaps across the board. And it won’t just be the hospitals that are affected. "I feel bad for these patients and their families," George says. "It’s difficult enough for someone in the industry to understand. Try explaining to a family member why their father can’t be placed."
Health systems that own both hospitals and SNFs are also feeling the pinch. For example, Karam expects that his system will lose $1.4 million in fiscal year 1999 alone thanks to the PPS changes. Meanwhile, nursing home companies themselves continue to lose money. Two months ago, Sun Healthcare Group, which owns 390 nursing homes across the country, announced that it had failed to make a $7 million interest payment on a $150 million loan. Meanwhile, Vencor Inc., based in Louisville, KY, lost $12.4 million on its nursing home business in the second quarter of 1999. Kennett Square, PA-based Genesis Health Ventures Inc. posted second-quarter losses of $10.8 million.
To minimize losses, Christus St. Michael is working with its case management staff and with the medical directors on the system’s utilization management committee to make sure the most appropriate venue for care is being used for each patient, Karam says. The system includes an 80-bed rehab hospital, a 239-bed acute care hospital, long-term care programs, day rehab programs, home health subsidiaries, and a hospice.
The hospital also is developing a request for proposals to build a referral relationship with a local nursing home in the community, Karam says. St. Michael hopes to enter a contract relationship with a nursing home that spells out expectations for quality of care and patient satisfaction. "It might be that they could take care of [some of] these patients less expensively because their cost structure is less than ours," he explains. "And it could be a win-win for them [the nursing home] to enhance their reputation in the community."
At Warm Springs Rehabilitation System in San Antonio, the hospital has brought two of its three freestanding clinics into the hospital because of the expected impact of the $1,500 cap, says James Ashbaugh, CHE, formerly regional director of operations for the hospital and now vice president of product management. Because these two clinics are now physically located at the hospital, they are no longer subject to the $1,500 cap. That strategy isn’t feasible for the third center, which is located in Del Rio, TX, a rural community. The hospital has installed a computer system to help track spending on Medicare patients so patients can be warned if they are approaching the cap limit.
In addition, the system has talked with a nearby physical therapy practice about the possibility of referring patients to the practice once the cap is reached. The $1,500 limit is a per-facility limit, not a per-patient limit, Ashbaugh points out.
So far, patient advocacy groups have remained fairly silent about the plight of nursing homes, particularly in light of a recent General Account ing Office report that was sharply critical of the quality of care provided by nursing homes. A spokes woman for the Washington, DC-based American Association of Retired Persons says only that her organization hasn’t yet received any complaints about members having trouble getting access to nursing home care.
But that situation could change soon. Sen. Charles Grassley, who’s worked in the past for home health and nursing care reform, estimates that a full 13% of Medicare beneficiaries will surpass the $1,500 therapy cap this year. That’s about 750,000 people, many of whom may not be able to make up the difference out of pocket.
Jerry Connelly, senior vice president of the Alexandria, VA-based American Physical Therapy Association, says his organization has evidence that 1% of Medicare beneficiaries already had exceeded the cap by early March. "This cap will backfire on Congress," he says, "because it will ultimately end up costing them more money. Patients who exceed the cap will take up space in nursing homes and hospitals if they don’t get the therapy they need to become functionally independent."
Hope may soon be on the horizon, however. In early June, the powerful Medicare Payment Advisory Commission (MedPAC) in Washington, DC, a government body charged with advising Congress regarding Medicare issues, blasted the $1,500 cap on physical therapy benefits, calling it "arbitrary" and detrimental to the quality of patient care. MedPAC’s chair, Gail Wilensky, released a statement saying she agreed with hospitals that Medicare is "paying too little for outpatient services."
For more information, contact the following:
James Ashbaugh, CHE, vice president of product management, Warm Springs Rehabilitation System, 5101 Medical Drive, San Antonio, TX 78229. Telephone: (210) 616-0100.
Jerry Connelly, senior vice president, American Physical Therapy Association, Alexandria, VA. Telephone: (703) 684-2782.
Chris Karam, chief operating officer, and Sharon George, utilization and discharge manager, Christus St. Michael Health Care Center, 2600 St. Michael’s Drive, Texarkana, TX 75503. Telephone: (903) 614-2115.
Deborah Hale, CCS, president, Administrative Consultant Service, P.O. Box 3368, Shawnee, OK 74802. Telephone: (405) 878-0118.