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August 5, 2016

Mr. Laurence Wilson
Chronic Conditions Policy Group
Center for Medicare & Medicaid Services
7500 Security Boulevard
Baltimore, MD  21244 

Ms. Jeanette Kranacs
Acting Deputy Director
Chronic Conditions Policy Group
Center for Medicare
Centers for Medicare & Medicaid Services
7500 Security Boulevard
Baltimore, MD  21244

Dear Mr. Wilson and Ms. Kranacs:

As a member of the three Technical Expert Panels (TEPs) that were convened by the Centers for Medicare & Medicaid Services (CMS) and Acument in 2015 and 2016 to revise the Medicare reimbursement system for skilled nursing facilities (SNFs), I want to express several concerns about the project.  I am not critical of the Acumen team, whose members are extremely capable and impressive researchers.  My concern is with what I now infer to be their charge.  Although I agree with many of the points raised in the July 29, 2016 letter submitted by other members of the third TEP, particularly about Acumen’s scope of work, and I would like to participate in any in-person or telephone meetings that are held to address their concerns and mine, my focus in this letter is a little different. 

I attended the TEPs with a significantly different understanding of the purposes and goals of the TEPs. 

I assumed that the purpose of the TEPs was to develop a new system for reimbursing SNFs under Medicare that would both respond to problems identified since the prospective payment system (PPS) was first implemented and move the reimbursement system in a new and substantially different direction.  Three key problems with PPS are its encouragement of high-payment therapy, its underpayment of skilled nursing care, and its failure to develop a methodology to pay appropriately for non-therapy ancillary services. 

Over the past 20 years, the Government Accountability Office, the HHS Inspector General, and the Medicare Payment Advisory Commission have documented abuses in therapy, such as facilities’ inappropriately classifying large percentages of their residents as needing the highest, most expensive levels of therapy and facilities’ identifying a high number of minutes of therapy during the reference period and then providing fewer actual minutes of therapy to residents.  Insufficient nurse staffing levels in SNFs and the poor quality of care that results have also been repeatedly documented in the research literature.  The STRIVE nurse staffing data, which are now more than a decade old, were based, even then, on practices that existed, not on the standard of care required by the 1987 Nursing Home Reform Law.

Unfortunately, the Acumen scope of work, as I now understand it, does not appear to see correcting long-identified problems in the reimbursement system as its mission.

My second assumption was that the TEPs would seek to incorporate new understandings of the care and services that are currently coverable under Medicare – for example, recognition of Jimmo v. Sebelius, whose Court-approved settlement in 2014 confirmed that Medicare pays for nursing and therapy services that are necessary to maintain a resident’s status and to prevent a resident’s avoidable decline or deterioration when the services must be provided by professional nurses or therapists (as opposed to paraprofessional staff).  Too many providers believe, and act on the belief, that Medicare pays for skilled nursing and therapy services only if a resident is expected to improve.  Jimmo has obvious implications for Medicare payment policy that the TEPs are failing to implement in the program’s redesign. 

At the third TEP, Acumen staff indicated that they would incorporate Jimmo only if we could present hard data documenting which facilities properly implement the settlement and how much their implementation costs.  Since that task is impossible to meet, Acumen’s position was that the requirements of Jimmo could be added at a later time to any revised reimbursement system they develop.  But Jimmo is in effect now – the federal district court approved the settlement more than two and a half years ago – and the Settlement needs to be recognized in the Medicare reimbursement system, both now and going forward.

A third assumption was that the TEPs would recognize and implement the statutory directive to pay for the services that SNFs are required to provide.  Since CMS is about to promulgate final rules establishing new Requirements of Participation (RoPs) for SNFs, I assumed that the requirements set out in these new RoPs would be incorporated into the new reimbursement system.  Again, Acumen did not describe that purpose as within its scope of work.

As described at the TEPs, Acumen’s data-drive review is focused on identifying new payment policies and approaches that are able to more accurately predict residents’ current use of nursing, therapy, and non-therapy ancillary services. 

My final concern is that delivery system reforms and ongoing payment changes – such as bundling demonstrations, Accountable Care Organizations, and other approaches being tested by CMS that require more coordinated care for Medicare beneficiaries as they move within and through the health care system – make the TEPs’ focus on SNF reimbursement, in isolation, seem backward-looking and obsolete, not forward-looking.  At the very least, it is not apparent how the new system would accommodate the changes that are otherwise in progress and rapidly being implemented.

As Carol Carter said at the end of the third TEP meeting, nursing homes respond very quickly to reimbursement incentives.  It is therefore critically important that the Medicare reimbursement system appropriately support, and be consistent with, the standards of care that facilities must meet, as defined by the statute, regulations, and caselaw, in order to be eligible for Medicare reimbursement.  It is also important that a new reimbursement system be compatible with, and supportive of, delivery system reforms and other ongoing payment changes that are rapidly taking place. 

I hope that we can meet soon, preferably in person, to discuss the charge of the TEPs and how Acumen’s expertise can be used to help improve and strengthen the Medicare reimbursement system for SNFs in order to assure that all residents receive the care and services they need and are promised by federal law.

Thank you.


Toby S. Edelman
Senior Policy Attorney

cc: Alice bell, Christine Bishop, Tara Cortes, Peggy Gourgues, Renee Kinder, Andrew Kramer, Judi Kulus, Natalie Leland, Cari Levy, Deanna Okrent, Mary Ousley, William Scanlon, Aaron Trip, Douglas Wissoker

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