Hospital Readmission Penalties for SNFs are Right Around the Corner

Looking into my crystal ball shows that we should expect nursing homes, just like hospitals, to be penalized for excessive avoidable hospital readmissions in the future. The question has always been: when? This week I saw an article by Alyssa Gerace in Senior Housing News, Like Hospitals, Skilled Nursing Facilities Now Face Readmission Penalties identifying that date as 2017.

The Department of Health and Human Services (HHS) included the Medicare Payment Advisory Commission’s (MedPAC) recommendation to Congress in its fiscal year 2014 budget proposal. If you recall, the MedPAC report recommended additional cuts in Medicare for SNFs, along with other provisions. HHS builds on this by proposing a reduction in “payments by up to 3% for skilled nursing facilities with high rates of care-sensitive, preventable hospital readmissions beginning in 2017 in a bid to promote high quality care and potentially save $2.2 billion over 10 years.”

As I look to the future, it’s clear that cuts will not be coming to an end and the operators are not as prepared as they should be. One of the main problems I see is that the community at large has not yet responded with possible solutions that could help them better survive the current constrained financial conditions. The time and luxury of remaining in denial is quickly coming to an end. Smart operators will take a four-part approach to weather the storm.

• First, evaluate every expense in their budgets, trimming the fat (what they have deemed as fat) and instituting cost-reduction policies.
• Second, focus more on optimizing their workforce through education and programs that will enable them to improve the quality of care, while reducing cost and ultimately impacting the rate of unnecessary hospital readmissions.
• Third, help to transform their business by specializing and expanding their value-add, lucrative, services.
• And finally, improve the collaboration and relationships with surrounding hospitals to ensure their access to census remains healthy.

This type of a multi-faceted approach will give operators the best chances of operating successful businesses as the financial and operational constraints being imposed by government continue to grow.

The measure is not approved yet, but smart facilities should start getting ahead of the curve in making sure they are prepared for change.