Debbie Stadtler: Hi, I'm Debbie Stadtler, editor-in-chief of Provider Magazine, the flagship publication of the American Health Care Association and the National Center for Assisted Living. I'd like to welcome you to this episode of Perspectives in Long term Care, a monthly podcast produced by AHCA and NCAL. Each month, we'll talk with long term care and assisted living professionals about the opportunities and challenges impacting the long term and post-acute care profession.

My guest today is John Kane. John is the senior vice president of reimbursement policy at AHCA and NCAL. Prior to this, he spent almost 15 years at the Centers for Medicare and Medicaid Services. Welcome, John. Thanks for being with us. 

John Kane: Thank you very much, Debbie. It's a pleasure to be here. 

Debbie Stadtler: We like to start at the beginning.

So tell us how you got involved in long term care. How did your career lead you to where you are today? 

John Kane: A combination of things probably. I think one part of the journey started back years ago when I was studying philosophy of all things... and had every intention of becoming a college professor: teaching, publishing, sipping wine.

And but I found that as I was talking with my colleagues, and I would be asking questions that they didn't seem to really care much about. We would be talking about health policy, and I would ask questions like, "Well, how are we gonna pay for that?" Or "How are providers going to implement this?"

And they didn't really seem to care, and I realized at that point I wanted to do something that was more applied and less theoretical. And at the same time, as a matter of coincidence, I was actually working at a facility in Blacksburg, Virginia, Five Stars Warm Hearth, shout out. Nothing glamorous but very important role.

I worked in the kitchen. And I'll tell you that trying to make a soft liquid diet palatable takes a lot of skill. But my experience there also helped me to see the daily struggle of the people that were working in that industry and the amount of passion that they brought to it and really just dedicating their lives to valuing the lives of seniors.

And I loved being a part of it, even a small part. And as I was there, I felt like there was more that I could do, and I wanted to get deeper into it. And so that eventually led me into the deeper areas of health policy and eventually led me to CMS.

Debbie Stadtler: I love that story. A little hands-on kitchen experience really leads you to your greater purpose in health policy and helping those in long term care.

I love that story. 

John Kane: I like to think that I've done more not burning people's food than- 

Debbie Stadtler: Always important. Your background includes years spent working at the Centers for Medicare and Medicaid Services, what we know as CMS.

What's that like working on the government side of reimbursement, and how did that time kind of influence your views? 

John Kane: My time at CMS was some of the most formative and memorable time of my life, especially my career. I can't speak highly enough about the people that I worked with at CMS and that continue to work within CMS.

They are dedicated public servants, all of them, and it was also just an incredible feeling to be at the genesis of policy development. It was hard to not feel as though you were doing something that was impactful and you were making a difference every day. At the same time, I also felt a certain disconnection from the industry that I had grown to love.

I would go to visit facilities, whether it was because my dad was in a facility or just to get back out in the field and go and visit with residents or visit into the various homes, and it felt different. I was no longer just a person walking through the halls. I was CMS now.

And so conversations became more focused on policy than on people, and I missed it. And moreover, I think being at CMS, you develop a level of specialization that is nurtured by the, the siloed nature of the agency. While I was there, like you said, I was there for about 15 years, and while I was there, I primarily worked on Medicare Part A SNF payment, and every word of that is relevant because if it wasn't SNF, if it wasn't Part A, if it wasn't payment related, that belonged to someone else.

Okay. And good policy just isn't made in a silo. It's made usually at the intersections of those different silos, where quality and payment and innovation come all together. And that's actually something that when I've spoken with my former colleagues at CMS, I've actually tried to emphasize is to begin meeting more at those intersections and to really be thinking about the downstream effects of policies within one silo on, on other areas.

And so it's something again that I've really enjoyed of my time here, being able to think about that in retrospect. 

Debbie Stadtler: That's an interesting point, though. From the government perspective, you really are at a very impactful position to influence the policy. At the same time, there are, layers of bureaucracy and silos because it is the government, and that kind of works against you a little bit.
So it's like a push and pull situation. One of your major accomplishments at CMS was developing the patient-driven payment model, like you said, for the skilled nursing Medicare Part A, all the words are important, benefit. How hard was it to develop this whole new reimbursement model, and what did you learn along the way?

John Kane: Yes, I think I'll start by saying, I am incredibly proud of the work that we did in developing PDPM at CMS, and I was honored to be trusted with leading that effort. The shift under PDPM, away from volume-driven metrics ... and focusing more on patient characteristics and the specific needs of patients that often drove cost.

Couple that with the massive reduction in administrative burden, the realignment with quality, and really just getting the payment model out of the way, if you will, of providers being able to decide how best to care for their residents, rather than any sort of weird artifacts of the payment model. It was incredibly difficult, but it was also very, very rewarding.

I think one of the most rewarding aspects of developing that payment model, though, was the interaction and engagement we had with groups like AHCA and other advocacy groups. It wasn't just us at CMS in a back room crafting policy. It was a dialogue. It was sometimes a tough dialogue with AHCA and other industry advocates, and so much that when I remember back when CMS actually proposed PDPM, most of the comments that I remember reading at that point from the most respected, outspoken members of the community were just basically saying, "Okay, yes, that's the model we discussed. Looks good." 

And it was the best example of collaborative policy development that I'd ever experienced, and I think that the success of PDPM, particularly with how it worked during the COVID pandemic of all things, is a real testament to the value of that collaboration. It's not to say that everything's perfect with the model.

There's definitely room for the model to grow and change but I think it's working well overall, and I think that it reflects the importance of focusing on patient characteristics versus focusing on the volume of services that those patients are provided. 

Debbie Stadtler: That's a really good point, because you're crafting policy and this model that's going to affect the whole industry.
And so by really harnessing that collaboration of industry groups and the government and providers, all of that together really formulated the successful model. So that's, kudos to you. I can only imagine that process, but a great result from it. 

John Kane: Thank you. 

Debbie Stadtler: Now PDPM is being adopted by many states for Medicaid.

How's that going, and where are some of the challenges? 

John Kane: Talk about operating from within a silo and ... the potential downstream effects of that type of approach. Again I feel a great amount of pride for how we constructed and implemented PDPM, but I have to admit a complete and utter blindness to the impact that this was going to have on states.

And I think this really goes back to the structural siloing of CMS and its impact on policy development. To put a really fine point on it, I didn't really have a lot of conversations with the Medicaid side of CMS until PDPM was about to be implemented. The states, I mean, that was someone else's job.

Because it wasn't, it was mine, and it was the responsibility of those of us who were developing this policy. And we were warned. AHCA, other groups did warn us about the potential impact of this change on reimbursement on state programs. 

And in that, I think lies the truth about our sector that I think makes us unique among our partners in the post-acute community. Our providers don't serve a single population, and I think that's what you usually find throughout health care.

There are really two distinct populations that are residing in our facilities. The short-term post-acute population, that was the primary focus of building PDPM, and then there's the long-stay population about whom PDPM was never contemplated. I think PDPM is effective for the post-acute care population, but it doesn't really accurately reflect the needs and relevant characteristics of the long-stay population.

Really, what CMS did was that there were so many states that were basically given a square peg and then forced it to fit it in the round hole that is their Medicaid program, which would be a daunting task before you consider that CMS withdrew support for legacy models and put states on a relatively short clock to come up with a solution to this problem.

That's why I really think it's important that states have the flexibility and really the support to design reimbursement models that reflect their unique populations that are served by their providers within that state and that reflect the population's unique care needs from within that state.

Debbie Stadtler: You could not have said it better about changes on a short timeline, for sure.

And speaking of many changes on a short timeline there are really big changes coming to Medicaid because of the One Big Beautiful Bill Act, or what some are calling the Working Families Tax Cut, H.R.1. What's happening and when, and then how does the long term care sector protect Medicaid funding through all of this change?

John Kane: Absolutely. You could not overstate the massive impact that this new law is going to have on our providers for years to come. And I think it goes without saying that across this country and for far too long, Medicaid has, has short-changed long term care, and any additional cuts within this sector would be devastating.

I think there's a lot of changes that are coming as a result of this new law, but I think that the areas that are probably the most impacted would be restrictions and new regulations for how states finance their Medicaid programs increased scrutiny, burden, risk associated with Medicaid application processing, and I think just a significantly increased workload for state Medicaid agencies at a time when resources are already tight, and our ability for our providers to be able to seek review and relief from those agencies when it comes to issues like change of ownership or other issues around reimbursement are already hampered.

With that said, I do think that there are some causes for optimism. I think that, first and foremost, we were pleased to see that, that Congress saw fit to shield nursing homes and ICFs from the provider tax phase-down that was included in H.R.1. Additionally, I am always heartened to see just how deftly and passionately our affiliates are continuing to engage in conversations with their state policymakers to prioritize long term care residents and the Medicaid resources needed to invest in their caregivers and access to care, and it's something that we will continue to support them in.

It's something that our Medicaid guru, Grant Beebe, often says, that we are always prepared to stand next to and behind our affiliates. 

Debbie Stadtler: Absolutely. And I love that AHCA/NCAL provides that support on several issues, but these payment issues are high priority for sure. Speaking of priorities one of AHCA's policy priorities is reaffirming the promise of Medicare Advantage.

What does that mean, and why has this become a problem? 

John Kane: Yeah, without a doubt Medicare Advantage is appealing to a lot of seniors because it offers a variety of different perks. 

Debbie Stadtler: Absolutely. My mother is enrolled in it. 

John Kane: And there's gym memberships and- 

Debbie Stadtler: Yes ... 

John Kane: I think I heard once at one point tanning option.

There's all kinds of different perks that, that MA plans can offer. Unfortunately beneficiaries, providers face persistent challenges from, especially the larger MA plans, and especially within skilled nursing and post-acute care, and this comes in the form of gaining timely admission to just get into the building, being able to stay in the building for a medically necessary stay, and then for providers to be able to receive appropriate and timely reimbursement once the care has been delivered without subjecting the providers to massive paperwork rules.

Okay. I really feel like seniors have earned the right to make a decision as to how they receive timely access to care, and that in consultation with their doctors, their families, and in consideration of their goals for their overall care, they should be allowed to dictate the course of that care, not an insurer, not certainly some AI program.

As you said we want to be able to reaffirm the promise, the advantage of Medicare Advantage, and make sure that it's fulfilling its promise to our seniors, and this is a very important priority for the work that we do in reimbursement. And we're actually very lucky to have people like Nisha Hammel that are on our team, who's done an amazing job working closely actually with our government relations team here at AHCA to develop and advance meaningful legislation on that front.

There's really not a lot that the parties in Congress agree on but this is one of them, and I think it's something that we're optimistic that we're going to be able to see something passed by Congress, hopefully even by the end of this year. 

Debbie Stadtler: Wonderful. Yeah, that's great news because Medicare Advantage is so popular and has such a large uptake that really making it work for those seniors is such a critical, important aspect to all of this.

I know you're not on the regulatory team, but how can rationalizing the regulatory environment, which is another AHCA policy priority, how can that support reimbursement and quality? 

John Kane: There was a phrase that we often used during my time at CMS, and that was patients over paperwork, which is a laudable goal, it's an important goal, but it's also one that I think is easy to get lost in the pursuit of things like accountability and transparency, which is also an important goal that we do support. We spend a lot of time and resources on reporting things to various state and federal agencies, and that's appropriate, but we need to find a sustainable balance between transparency and administrative burden.

I think this is what we mean when we talk about rationalizing the regulatory environment.

It doesn't mean eliminating all regulations or any measure of accountability. It means having targeted regulatory and oversight mechanisms that are focused on our collective goal of ensuring the delivery of high-quality care to our residents. I think an example of this would be the off-cycle provider enrollment process.

This was an unprecedented attempt to revalidate all 15,000 some-odd nursing homes at the exact same time with new disclosure requirements regarding ownership. And not only did it overwhelm providers under a mountain of administrative burden, it even overwhelmed CMS's own data reporting systems. Yet, we do remain committed to reasonable ownership disclosure, and providers are even now continuing to submit this paperwork to CMS even though CMS had indefinitely delayed the deadline due to all of these various issues.

We need to find some way to streamline reporting to what's important and actually drives quality improvement rather than just becoming overwhelming to our providers. I think ultimately we should be dedicating our time, energy, resources to where it belongs, which is to our patients. 

Debbie Stadtler: It's another one of those push and pull situations.

You need some sort of, you know, framework of paperwork for that accountability and transparency that you're talking about, but it also can't be so burdensome that providers and even CMS itself can't handle that. So it's really a balance is needed there, instead of just trying to do all the things in all the areas.

John Kane: Exactly. 

Debbie Stadtler: Where do you see the SNF and assisted living sectors headed when it comes to reimbursement and financial viability? And what do providers need to do to stay competitive? 

John Kane: We talked earlier about silos, and I think that this is where the silos come crashing down because reimbursement is not simply a matter of just dollars and cents.

Ensuring accurate, adequate reimbursement is a workforce issue. It's an access issue. It's a quality of care issue. Nursing homes cannot provide the level of care that our nation's seniors deserve without the resources to be able to pay competitive wages, maintain appropriate staffing, meet the increasingly complex medical and personal needs of our residents Now, reimbursement in this sector has always relied on a delicate but fairly pivotal balance between higher Medicare payment helping to offset what has traditionally been Medicaid reimbursement that simply does not cover the cost of care.

So let's talk about each of those briefly. I think on the Medicare side, you look at the data, you listen to CMS, you talk to providers, times have changed. Traditional Medicare and its ability to subsidize reduced reimbursement on the Medicaid side of the ledger is shrinking. It is undeniable that the reimbursement paradigm has shifted.

And even just a few months ago at our population health management summit, we were actually told by CMS directly that their goal is to have as many beneficiaries as possible in some form of accountable value-based arrangement. This means ACOs, this means alternative payment models, this means MA.

This means that to survive and to thrive in this new world, providers have to be thinking not only in terms of the time that a patient comes into the building and the care that he or she receives while they're in those four walls, but providers have to be thinking episodically, globally about that patient's care trajectory.

So understanding the alphabet soup of CMS with ACOs, APMs, ISNPS, MSSP, LEAD, understanding how our facilities can participate in this new paradigm and how they can form successful partnerships with up and downstream providers is really the key to this new chapter in reimbursement. To that end, I cannot recommend highly enough that you come to our convention this year in October and our population health management summit next May.

It really is the best chance to make sure that you understand all of these evolving payment models and how you can turn each of those into opportunities for an organization. And then to the Medicaid front, it means fighting to protect every Medicaid dollar. Medicaid is the primary payer for most nursing home residents, and yet in many states, Medicaid reimbursement does not fully cover the cost of providing care.

And when that gap persists, nursing homes face difficult choices. They may struggle to recruit and retain nurses and caregivers, invest in staff training, maintain their buildings, purchase equipment, or even sometimes the ability to continue to serve in their communities. Policymakers need to ensure that Medicaid rates reflect the actual cost of delivering care and are updated regularly to account for inflation, workforce expenses, and changes in resident acuity.

The funding under Medicaid needs to be predictable so that providers can plan, invest, and improve their buildings. Ultimately, strong Medicaid funding is an investment in residents. It's an investment in caregivers, in families, and in the communities. And if we expect nursing homes to deliver high-quality care, we need to provide them with the necessary resources to do so.

Debbie Stadtler: Absolutely, 100%. And what I really appreciate about AHCA and NCAL in this situation is that not only are we advocating with policymakers and stakeholders and regulators to get the systems working in a way that will help long term care, we're also providing education, conferences, explaining what all these payment models mean, what the changes are, when they're coming, and things like that.
So we really strive not only to make it better in the future, but also help you in the moment, for those providers to make sure they're figuring things out and doing things as well as they can. 

John Kane: Absolutely. The worst possible choice that one could make in this environment is to not ask questions and to not be engaged.
You have to stay engaged, ask questions. There's not a dumb question. Ask your questions, ask for information, ask twice. Just be as informed as possible. Yeah, that information is going to pay dividends going forward. 

Debbie Stadtler: Absolutely. This has been a great conversation. Thanks again for joining us, John, and we learned all sorts of things about reimbursement policy and changes that we need to stay aware of.

John Kane: Thank you very much, Debbie. 

Debbie Stadtler: Visit the AHCA/NCAL website for more reimbursement resources, and click on the reimbursement tile. Thanks to everyone for listening to this episode of Perspectives in Long term Care. Join us each month as we discuss issues that impact the long term and post-acute care profession, and be sure to subscribe to this podcast wherever you listen to your favorite podcasts.

Take care.