Payment Reform, COVID-19 May Derail a Unified Post-Acute Care Payment System

Now that the dust has settled on the Patient-Driven Groupings Model (PDGM), some have returned their attention toward the idea of another major reimbursement overhaul: a unified post-acute payment system.

There had been mounting momentum behind a unified payment model for post-acute care providers headed into 2020. The ongoing COVID-19 emergency has derailed a lot of that momentum, but conversations are starting to pick up again.

Generally, the post-acute care landscape includes skilled nursing facilities (SNFs), in-patient rehabilitation facilities (IRFs), long-term care hospitals (LTCHs) and, of course, home health providers.


Currently, these providers operate under setting-specific Medicare reimbursement mechanisms, such as PDGM in the home health care and the Patient-Driven Payment Model (PDPM) in the SNF space. A unified model would eliminate this separation, creating one payment system for all post-acute providers.

It’s an idea that was originally born out of the IMPACT Act, which was passed in 2014.

“The idea was to flatten payment across the four post-acute care settings,” David Grabowski, a health care policy professor at Harvard Medical School, told Home Health Care News. “Rather than paying different payment rates for four different sets of services, it was an idea that the Medicare program could level the playing field and pay a common rate for patients who might be discharged to any of those four settings.”


In addition to his role at Harvard, Grabowski was appointed to the independent Coronavirus Commission on Safety and Quality in Nursing Homes.

A key benefit of having one post-acute reimbursement system would be having payment tied to a patient’s condition rather than setting, according to Grabowski.

“Currently, we have these distortions where we have individuals that probably could be cared for in lower-intensity settings, [but they’re] unfortunately being discharged to institutional settings or going to an LTCH when they could be at a SNF, or getting discharged to a SNF when they could be at a home health agency,” he said.

As envisioned by the IMPACT Act, there is also a greater emphasis on outcomes as a driver of reimbursement under a unified post-acute payment system, Lisa Grabert, a research professor at Marquette and Georgetown universities, told HHCN.

“It required that all of the data that’s reported to CMS across the four different settings be done in a consistent manner,” Grabert said. “You could potentially make comparisons across the settings.”

Making sense of an ‘anomaly of a year’

Despite perceived benefits, there are a number of potential difficulties in creating a unified post-acute payment model.

“Unifying payment also means unifying regulation,” Grabowski said. “It also means unifying quality measurement across the four settings, and it’s not clear to me that some of the rules that we’ve had in place work very well.”

For example, in the SNF world, the three-day rule requires an individual to have been admitted to the hospital on an in-patient basis no fewer than three consecutive days in order to qualify for fee-for-service reimbursement in a SNF.

Grabowski questioned how a rule such as this one would persist under a new model, especially in relation to home health care, where a number of individuals are receiving services without prior hospitalization. He pointed out that exceptions will have to be made in order to proceed.

There is also the COVID-19 emergency to consider.

In some ways, the public health emergency shifts post-acute care toward a universal payment model, according to Grabowski and Grabert. In other ways, it pushes the segment further away from it.

It’s important to remember that 2020 is an anomaly of a year in terms of the services that the Medicare program has delivered in the four settings of post-acute care. It would be difficult to use information gleaned from this year as the baseline to form the new model, according to Grabert.

Additionally, the comprehensive payment reforms in both the home health and SNF settings may further contribute to these difficulties.

“Those two factors coupled on top of each other mean that it’s really difficult to figure out what were new changes and phenomenons of the new payment system, versus just changes and phenomena associated with the pandemic,” Grabert said. “Those two stacked on top of each other may mean that it will be several years before CMS can figure out if they have accurate enough data to move to that unified payment system.”

Support for a unified model

On the other hand, the spotlight that has been placed on nursing homes throughout the public health emergency may play a role in pushing a unified post-acute payment model.

At the beginning of the month, the Medicare Payment Advisory Commission (MedPAC) had its first meeting of the year and released new data that revealed 80% of COVID-19 deaths are in the Medicare population, and over 40% of deaths are among residents of nursing homes and assisted living facilities.

Many policymakers, in addition to the media, have zeroed in the nursing home space because of this. The public perception of the nursing home industry, as a result of the public health emergency, may be strong enough to give CMS the political cover it needs to use its unified payment authority to implement a big policy change for nursing homes without any legislative barriers, according to Grabert.

“Given that skilled nursing facilities make up nearly half of the overall annual spend in the Medicare post-acute baseline, policymakers may be tempted to take advantage of the unified [post-acute care] model as a policy tool to address SNF, and possibly broader, reform,” she said. “Though actually implementing unified payment may need additional Congressional action, the mechanics to actually develop payment reform and release a detailed plan need no further Congressional action — a tremendous amount of authority already exists within the executive branch.”

If the Trump administration is reelected, it’s likely officials will be looking at looming fiscal pressures. The concept of a unified payment system has been on its radar in the past as a cost-savings tool

In February, the Trump administration released its proposed budget for the fiscal year 2021, which projected that a unified post-acute care payment model would save $101.5 billion from 2021 to 2030.

Even if a new administration is elected, this could still remain a factor.

“If the Biden administration comes into power, they may be looking again at this post-acute care space and the idea of unified payments as a [way] to get some savings out of the Medicare program,” Grabert said.

As of now, CMS has only affirmed its intentions of following the Congressional mandate, according to Grabert.

“There’s nothing really significant, I would say, coming out of CMS on this topic, aside from the fact that they take the current Congressional mandate of coming up with this unified prototype seriously, and they plan on issuing a report to Congress on time, as is required under current law of the IMPACT Act,” she said.

Congress has also begun to posture that it would like the agency to do some oversight and report to them on how the implementation has been going and possibly slow things down on the timeline.

“The evidence of that is a recent letter that came out from [Senators Pat Toomey (R-Pa.) and Michael Bennet (D-Colo.)] to CMS on the IMPACT Act timeline,” Grabert said. “There’s this Senate letter requesting some oversight of how CMS has implemented the underlying law, and certainly suggest that a delay should be considered at this time due to the pandemic and comprehensive home health and SNF payment reform.”

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