Cultural, demographic, regulatory, and financial changes are impacting the post-acute care marketplace like never before. Providers need to navigate through an ever-changing list of obstacles and barriers simply to deliver care to their clients. Although the road may seem tortuous and the barriers insurmountable, there are tools to help providers understand the operational landscape and how best to deal with the necessary “evils” of providing the best-in-class care for some of our nation’s most vulnerable people. These 10 tools position providers for success as the move toward a pay-for- performance system becomes a reality.

Tool No. 1: MDS/CARE

The primary purpose of the Minimum Data Set (MDS) is to work as a functional assessment tool for identifying and addressing potential resident care problems and delivering an individualized care plan for the resident. The purpose of the Resident Assessment Instrument is to develop a care plan for each beneficiary and to provide services, in accordance with that plan, that help the resident attain or maintain the highest practicable physical, mental, and psychosocial well-being.

The CARE (Continuity Assessment Record and Evaluation Item Set) tool was developed as part of the Post-Acute Care Quality Initiatives and the Medicare Post-Acute Care Payment Reform Demonstration (PAC-PRD) for standardized use in both acute and post-acute settings for admission and discharge.

The CARE tool is meant to standardize assessment items based on the scientific literature and experiences with the current mandated assessment items in the Medicare payment system. These assessments include IRF-PAI, MDS, and OASIS instruments, as well as items related to patient severity, payment, and quality-of-care monitoring.

Within the CARE tool, two types of items exist: core Items, which are asked of every patient regardless of condition, and supplemental items, which are only asked of patients having a specific condition. This standardization of language helps clinicians communicate acuity, treatment needs, and outcomes with greater accuracy. The language also allows for measurement of outcomes in physical and medical treatments while controlling for factors that may affect those outcomes, specifically cognitive, social, and environmental factors.

Tool No. 2: PEPPER

Surprisingly, at the date of this publication, nearly 50 percent of U.S. skilled nursing facilities (SNFs) have not downloaded the 2015 Program for Evaluating Payment Patterns Electronic Report (PEPPER) launched mid-April of this year. PEPPER helps SNFs understand where they stand in relation to other SNFs in their state, and nationally with regards to vulnerability for investigation for improper Medicare payments. By understanding its “outlier” status, PEPPER enables the SNF to prepare for investigation, to take corrective actions, and to focus on areas of possible weakness.

By looking at six specific target areas (Therapy Resource Utilization Groups (RUGs) with High Activities of Daily Living (ADL), Non-therapy RUGs with High ADLs, Change of Therapy Assessment, Ultra-High RUGs, Therapy RUGs, and 90+ Day Episodes of Care), the Centers for Medicare & Medicaid Services (CMS) is able to determine whether or not “outlier” SNFs are overcoding expenses (above the 80th percentile) or undercoding and not delivering quality care (below the 20th percentile).

In addition to helping a facility be proactive, take corrective action, and focus on areas of potential vulnerability, understanding the PEPPER helps the facility to improve quality of clinical documentation and educate the clinical staff. Data monitoring should be part of a facility’s quality assurance improvement program.

Tool No. 3: Five-Star Quality Rating

In 2008, CMS enhanced the Nursing Home Compare public reporting website ( to include a set a quality ratings for nursing care centers that participate in Medicare or Medicaid. This website displays a nursing center’s “star rating” in its Five-Star Quality Rating System for the public, enabling it to distinguish itself between high- and low-performing nursing centers.

In February 2015, as part of the president’s executive action, several changes in the ratings system took place. A staffing component and a quality measure (QM) component were added, impacting ratings by potentially as many as two stars. The staffing domain changed how three- and four-star ratings are determined by preventing a four-star rating if both the “registered nurse and all staffing” received a three-star rating, thus giving the facility an overall three-star rating.

The QM domain added new quality measures dealing with the use of antipsychotic medications during short and long stays and reset the cut points to achieve each star rating. Because the QM affects the final Five-Star Quality rating, if the QM domain is one or five stars, facilities need to pay close attention to this domain.

Achieving a Five-Star Quality Rating is no easy task. However, by consistently auditing for MDS accuracy and verifying data, a facility can be on its way to a bright future.

Tool No. 4: Bundled Payments For Care Improvement Initiative

This innovative bundled payment model was launched in 2013. It encompasses financial and performance accountability for episodes of care and is included in the Affordable Care Act (ACA), which specifies  a three-year demonstration project testing four models of bundled payment within Medicare distributed by diagnosis-related group (DRG) algorithms.

By 2014, 232 hospitals/providers were participating in the Bundled Payments for Care Improvement (BPCI) Initiative. Currently there are four broadly defined models of care linking payments for multiple services beneficiaries receive during an episode of care. The four models are: Retrospective Acute Care Hospital Stay Care Only, Retrospective Acute Care Hospital Stay Plus Post Acute Care, Retrospective Post Acute Care Only, and Acute Care Hospital Stay Only. In the first model, awardees agree to provide a standard discount to Medicare from the usual Part A hospital in-patient payments. Models 2 and 3, actual expenditures are reconciled against a target price for an episode of care, and in Model 4 a lump sum payment is made to a provider for the entire episode of care. DRGs are included in each episode, and there are 48 episodes that can be chosen by participants.

Regardless of the BPCI model chosen, this new initiative includes provider-led redesign and enhancements and re-engineered care pathways using evidence-based medicine that result in standardized operating protocols, improved care transitions, and coordination. Gainsharing among provider partners may also become a reality with BPCI. Also, a number of other payment reforms are being vetted—providers should be alert to the new payment models under consideration.

Tool Number Five: IMPACT Act

 In January, CMS initiated the Improving Medicare Post-Acute Care Transformation (IMPACT) Act to improve the reliability of the data on Nursing Home Compare, to help nursing care centers improve nationwide-focused survey inspections, payroll-based staffing reporting, scoring methodology, timely and complete inspection data, and additional quality measures.

The “impact” of the IMPACT Act is geared toward helping patients compare outcomes across different care settings, thereby supporting better choices and  results for patients. The act also funds a key improvement to nursing center oversight—the collection of staffing data—looking at how nursing and other staffing levels “impact” quality of care. Another element is the institution of more routine surveys of hospice providers, ensuring that standards are met for the benefit and safety of patients in end-of-life care.

 Tool Number Six: Value-Based Purchasing

Budgeted to save Medicare $2 billion over the next 10 years, value-based purchasing was included in the Protecting Access to Medicare Act of 2014 (HR 4302). Also known as the “doc fix,” this one-year patch of the sustainable growth rate was a value-based purchasing program for SNFs. By targeting hospital readmissions, value-based purchasing establishes an incentive pool for high-performing SNFs based on their reduction of hospital readmissions. The secretary of Health and Human Services (HHS) will specify a SNF all-cause, all-condition readmission policy by Oct. 1, 2015, and by Oct. 1, 2016, an all-condition, risk-adjusted, potentially preventable readmission rate will be established.

A SNF readmission measure will include a performance standard for SNFs, levels of achievement and improvement, and a scoring methodology to create a ranking system. Medicare’s payment rates will be based on performance scores starting in October 2018. The highest ranked SNFs will receive the highest incentive payments, and the lowest ranked will receive the lowest incentive payments. The lowest ranked 40 percent of SNFs will be reimbursed less than they otherwise would be reimbursed without the SNF value-based purchasing program.

As of this publication, CMS will withhold 2 percent of SNF Medicare payments starting Oct. 1, 2018, and redistribute 50 percent to 70 percent of the withheld payments back to the providers by way of incentive payments. CMS will retain the remaining 30 percent to 50 percent of funds as program savings. HHS will report the performance on readmission measures for each SNF on Nursing Home Compare beginning Oct. 1, 2017.

Tool Number Seven: Compliance

This is the “Year of Compliance” within the profession. Compliance will take center stage as regulations and changes continue to be implemented, creating a paradigm shift of post-acute providers. P-R-E-P-A-R-E is an excellent way to remember the seven elements of a compliance program:

1. Policies and Procedures: Non-retaliatory policy, trusting atmosphere so staff feels safe to disclose and promote commitment to compliance.

2. Reporting and Investigating: Independent third party review and client attorney privilege.

3. Education and Training: The No. 1 reason for noncompliance is lack of training. It is important to develop a mandatory facility compliance process, perform risk assessments by area, and make sure the program is reinforced regularly.

4. Prevention and Response: Establish an anonymous system to seek guidance and report violations; conduct fact-finding program before full investigation.

5. Auditing and Monitoring: Detect, prevent, and deter through a formalized approach headed by a person with no vested interest in outcomes. Independent third-party external auditing and internal monitoring become important tools for providers.

6. Responsibility/Compliance Officer and Committee Oversight: The compliance officer and committee are responsible for developing, operating, and monitoring the compliance program and report to the highest governing body or chief executive officer.

7. Enforcement, Discipline, and Incentives: Investigate quickly and thoroughly, conduct root-cause analysis, apply consistency with discipline, and hold the compliance officer and management accountable.

As compliance becomes center stage, the P-R-E-P-A-R-E approach helps build a program that is part of the fabric of everyday operations.

Tool Number Eight: Therapy Structure

The structure of a rehabilitation department can either be an in-house operation or contracted out. This department can significantly impact the reputation of the facility and the patient outcomes necessary for quality care. As with any other segment of the business, the principles that apply to operating a successful nursing facility—maintain occupancy, give quality care, and manage finances—can be applied to the management of a rehabilitation department as well.

The oversight of a successful rehabilitation department has three categories:

  1. Operational Elements: Staffing, space, signage, equipment, supplies, and marketing.

  2. Clinical Systems: Restorative feeding, functional maintenance, restorative nursing, contracture prevention, wound care, restraint reduction, and positioning.

  3. Standards of Operation: Productivity, efficiency, revenue, payer mix, and expenses.

While the above three categories are not all-inclusive, they do provide a road map to success. However, of the above subcategories, staffing always seems to be the most difficult and the most important. In order to provide services accordingly, it is imperative that the facility identifies the number of therapists required to properly service the facility census.

Simultaneously, deriving the staffing mix between registered- and assistant-level clinicians poses discussion and contemplation. The determining factors include staff availability, cost, state-specific practice acts, and therapist experience. 

Tool Number Nine: Focused Surveys: Dementia/MDS

The collaboration between CMS and Improve Dementia Care, a public-private partnership established in 2011, has begun to transform how patients with dementia receive care in nursing centers across the country. A program focused on the unnecessary use of medications was piloted in five states. Based on the results, CMS has revised the dementia care-focused survey process. CMS also plans to apply the revised version in both traditional and QIS states.

In 2012, CMS launched the National Partnership to Improve Dementia Care, an initiative to improve and expand the use of nonpharmacological approaches to care and to reduce antipsychotic medication use in long-stay nursing center residents. By late 2014, nursing centers in the United States had achieved a 19.4 percent reduction in antipsychotic drug use.

MDS-focused surveys are also taking center stage with a list of concerns with MDS coding. Triggers to the Quality Measure Report, including pressure ulcers, urinary tract infections, antipsychotic drugs, falls with major injuries, urinary catheters, and/or restraints may put the provider at risk. In its initial pilot, CMS found an almost a 100 percent error rate.

Tool Number 10: Sustainable Grow Rate (SGR) ‘Doc Fix’

After 17 “doc fixes” over the past 11 years, Congress finally passed HR 2 to fix a broken payment system and put into place a number of reforms that will create a more sustainable solution. Essentially, the doc fix includes some therapy reforms, including a 33-month extension of the therapy cap exception process (Dec. 17, 2017), which will allow providers to continue delivering therapy if medically necessary, coded, and documented.

The fix also includes targeted relief from the arbitrary Medical Manual Review process, creating a system that is targeted toward providers with a high claims denial percentage and/or aberrant billing patterns, to name a few.

There is also a 1 percent market basket update, meaning providers will receive a 1 percent market basket increase, net of other adjustments. In other words, post-acute providers, such as long term care and inpatient rehabilitation hospitals, SNFs, and home health and hospice organizations, will help finance the repeal, receiving base pay increases of 1 percent in 2018—about half of what was previously expected.

Change Is Necessary (And Can Be Good)

Health care is changing at an alarming rate. Providers are experiencing change that will position the profession for the long haul, with a change in demographics and the need for services. But, with the shift toward a pay-for-performance system focused on value and on quality vs. volume, providers must work now on quality outcomes, compliance, and improving the customer experience to survive in the “new world” of health care.  


Kris Mastrangelo , OTR/L, LNHA, MBA is founder, president, and chief executive officer of Harmony Healthcare, a leader in health care consulting, education and training, and operations and talent management ( Mastrangelo is an internationally known and respected speaker and presenter.​