On April 1, 2014, the Protecting Access to Medicare Act of 2014 was signed into law by President Obama. Most commonly, this legislation is known for providing a one-year patch to the physician Medicare sustainable growth rate – otherwise known as the ‘doc fix’ – but it also includes other important provisions including the extension of the Part B Therapy Cap exceptions process and the establishment of a value-based purchasing (VBP) program for skilled nursing facilities.

In more common terms, the legislation creates hospital readmission reduction program for all patients cared for in nursing centers nationwide. In order to incentivize improvement in preventable admissions to short term hospitals, the legislation establishes an incentive pool for high performers.

In crafting the legislation, policy makers recognized that it will take time for the Department of Health and Human Services(HHS) to identify the most appropriate hospital readmission and for nursing facility providers to prepare for the new policy.

 Source: American Health Care Association Source: American Health Care Association


How will this all work?

After the Secretary of HHS identifies the readmission measure – prior to October 2015 – the Secretary will then establish a performance standard that identifies achievement of a low readmission rates as compared to all SNFs and a performance standard that recognizes individual facility improvement in readmission rates. Based on both standards, the Secretary will then develop a scoring methodology in order to create an annual ranking system.

In order to fund the incentive pool based on performance, beginning on October 1, 2018, two percent of the SNF Medicare payment will be withheld. Of the incentive pool, the law dictates that 50-70 percent of the funds collected are used to reward the highest performers.

Based upon the ranking system, the highest performing centers will receive the highest incentive payments – potentially earning more than the two percent that had been withheld – and the lowest performers would receive no incentive payment.

The performance of all nursing facilities would be publicly reported on the Nursing Home Compare website.

The American Health Care Association has created an issue brief that provides greater detail of the new provision.

What does this mean for Kindred Nursing and Rehabilitation Centers?

Kindred has been committed to reducing unnecessary rehospitalizations for the past several years. As we reported in our 2013 Quality and Social Responsibility Report, from 2009 to 2013 our centers reduced rehospitalizations by 15 percent.

While the methodology and risk adjustment for the HHS rehospitalization measure still has to be determined, the American Health Care Association Quality Initiative uses national MDS 3.0 data from CMS, calculating the 30-day, risk-adjusted readmission rate for all nursing centers using the PointRight OnPoint 30™ rehospitalization measure. Kindred outperformed the national average in 2013 using this same measure.