The MDS-Reimbursement Nexus

At its core, the MDS is a comprehensive assessment tool used to evaluate the health and functional status of residents in long-term care settings. However, its impact extends far beyond clinical evaluation. MDS data plays a central role in determining reimbursement levels for healthcare facilities, impacting funding from both government programs and insurance providers.

On November 6, 2023, the Office of Inspector General (OIG) released an updated General Compliance Program Guidance (GCPG) manual, the first significant update in 15 years. The updates made provide clearer guidance on what an effective compliance program is, and how healthcare organizations can implement them.  The following seven elements make up an effective compliance program. 

1. Written policies and procedures
2. Compliance leadership and oversight
3. Training and education
4. Effective lines of communication with the Compliance Officer and disclosure program
5. Enforcing standards with consequences and incentives
6. Risk assessment, auditing, and monitoring
7. Responding to detected offenses and developing corrective action initiatives

Written Policies and Procedures
Policies and procedures outline how your organization and employees are expected to behave. In healthcare, policies and procedures are essential for several reasons. They ensure that patient information is handled correctly and secured, help to create a safe work environment for employees while protecting patients, and ensure ethical billing practices by preventing fraud, waste, and abuse.

Earlier this year, CMS announced the start of the Skilled Nursing Facility (SNF) 5-Claim Probe and Educate Review program. This is in response to a 15.1% increase in improper payments for 2022 services, as projected by the Comprehensive Error Rate Testing (CERT) program—likely driven by the change in payment model from Resource Utilization Group (RUG) IV to the PDPM (Patient-Driven Payment Model) in October 2019.

As a result, CMS has directed all Medicare Administrative Contractors (MACs) to conduct a pre-payment review of five SNF claims for all providers nationwide, with few exceptions. Unless your SNF is already under medical review or is considered a low-volume provider (fewer than five Part A claims per calendar year), you will be subject to the Targeted Probe and Educate (TPE) program and may have already received notification from your MAC.

Healthcare organizations have an obligation to patients to protect their sensitive information, which is why HIPAA compliance is vital. Organizations that are HIPAA compliant not only protect their patients but also their business’ reputation. Two recent Office of Civil Rights (OCR) settlements highlight the importance of compliance.

In one case, a medical center came under fire for disclosing patient information to a news reporter. The other case involved poorly implemented security measures, ultimately leading to a ransomware attack that exposed sensitive patient information.

Skilled nursing facilities (SNF) began operating under the Patient-Driven Payment Model (PDPM) on October 1, 2019. Many current SNF employees have only been exposed to the Resource Utilization Group (RUG) model that was retired on September 30, 2019. The RUG model included therapy groups that ultimately trumped almost anything clinical being treated in the SNF. This may have resulted in minimum data set (MDS) assessments under the RUG model that didn’t include all diagnosis, condition, and treatment information simply because it didn’t affect reimbursement.

The MDS assessment was originally created to assist SNFs with developing a comprehensive care plan for residents admitted to a SNF. In the 1990s, the MDS also became a payment tool under the RUG payment model. Consistent focus under the RUG model was on accuracy of therapy days and minutes captured on each MDS assessment. The number of days and minutes of physical and occupational therapy and speech-language pathology services was ultimately the deciding factor regarding RUG group and daily payment amount.

Skilled nursing facilities (SNF) began operating under the Patient-Driven Payment Model (PDPM) on October 1, 2019. Many current SNF employees have only been exposed to the Resource Utilization Group (RUG) model that was retired on September 30, 2019. The RUG model included therapy groups that ultimately trumped almost anything clinical being treated in the SNF. This may have resulted in minimum data set (MDS) assessments under the RUG model that didn’t include all diagnosis, condition and treatment information simply because it didn’t affect reimbursement.

The MDS assessment was originally created to assist SNFs with developing a comprehensive care plan for residents admitted to a SNF. In the 1990s, the MDS also became a payment tool under the RUG payment model. Consistent focus under the RUG model was on accuracy of therapy days and minutes captured on each MDS assessment. The number of days and minutes of physical and occupational therapy and speech-language pathology (SLP) services was ultimately the deciding factor regarding RUG and daily payment amount.

Skilled nursing facilities (SNF) began operating under the Patient-Driven Payment Model (PDPM) on October 1, 2019. Many current SNF employees have only been exposed to the Resource Utilization Group (RUG) model that was retired on September 30, 2019. The RUG model included therapy groups that ultimately trumped almost anything clinical being treated in the SNF. This may have resulted in minimum data set (MDS) assessments under the RUG model that didn’t include all diagnosis, condition, and treatment information simply because it didn’t affect reimbursement.

The MDS assessment was originally created to assist SNFs with developing a comprehensive care plan for residents admitted to a SNF. In the 1990s, the MDS also became a payment tool under the RUG payment model. Consistent focus under the RUG model was on accuracy of therapy days and minutes captured on each MDS assessment. The number of days and minutes of physical and occupational therapy and speech-language pathology services was ultimately the deciding factor regarding RUG group and daily payment amount.

In response to the COVID-19 pandemic, the governors of Illinois and Michigan have issue Executive Orders prohibiting long-term care providers from involuntarily discharging resident’s for non-payment. Other states, such as New York, are under pressure to pass similar prohibitions.

Pursuant to Illinois Executive Order 2020-35, Section 14, the provisions of the Nursing Home Care Act, 210 ILCS 45/3-401(d), MC/DD Act, 210 ILCS 46/3-401, and ID/DD Community Care Act, 210 ILCS 47/3-401, permitting a long-term care facility to initiate an involuntary transfer or discharge of a resident for late payment or nonpayment, is suspended. Full text available here.

Stotler Hayes Group Attorney, Nathan Peters, presented at the Texas Healthcare Association’s Board of Directors meeting on August 21st, 2019. Nathan shared two updates on how Stotler Hayes Group’s (SHG) Texas-based attorneys are successfully fighting to recover every Medicaid dollar available for our clients, and all Texas providers. SHG attorneys have litigated two major issues with the Texas Health and Human Services Commission (THHSC) and both could significantly impact future Medicaid payments in Texas. The issues the cases have dealt with include (1) the THHSC’s denial of an application for failing to exclude inaccessible resources for incapacitated Medicaid Applicants and (2) THHSC’s improper restrictions on Incurred Medical Expenses (IME). By some estimates, the IME payments could alone boost Medicaid provider payments over $40 million annually.

Unlike some state Medicaid agencies, THHSC previously refusing to exclude certain resources when reviewing Medicaid applications for incapacitated individuals. This policy is leading to a significant loss in payments for providers, because affected providers are left without a payor source until the incapacitated resident can secure a guardian with the authority to spend down their resources. Unfortunately for these providers, securing a guardian and spending down resources for incapacitated individuals is often a lengthy and complicated process. However, SHG’s recent victory in the case of Tex. HHS Comm’n v. Marroney, 2019 Tex. App. LEXIS 4298, 2019 WL 2237885 (Tex. App. – Austin May 24, 2019, Pet. Denied) should lead the THHSC to change its policy and start excluding inaccessible resources for incapacitated residents.

Deadline Looming for Mandatory Nursing Home Compliance Programs

Skilled Nursing Facilities have until November 28, 2019 to adopt and implement a compliance program that meets the elements set out by the Center for Medicare and Medicaid Services (CMS). Beginning on that date, state survey agencies will start assessing nursing homes’ compliance programs as an additional condition of participation in Medicare and Medicaid. Issued in 2016 as part of CMS’s revised Part 483 of Title 42 (“Requirements for States and Long Term Care Facilities”), the CMS compliance program elements are functionally identical to those from the Office of Inspector General for Health and Human Services (OIG).¹ Already the standard for effective compliance programs, the OIG elements are used to measure an organization’s culpability when federal fraud and abuse laws are violated. Specifically, the OIG considers “the existence of an effective compliance program that pre-dated any governmental investigation when addressing the appropriateness of administrative sanctions.”

Earlier this month, the Center for Medicare and Medicaid Services (“CMS”) issued a final rule repealing its’ prior rule prohibiting long-term care providers (“LTC”) from entering into pre-dispute, binding arbitration agreements with their residents. This change takes effect September 16, 2019 and comes after years of protracted rule-making efforts, public comment, and litigation that began in October 2016 when CMS issued a final rule prohibiting the agreements in nursing facilities and ended up in the U.S. Supreme Court in May 2017.

This new final rule represents a win, albeit a limited one, for the long-term care industry. On one hand, the ability to pursue arbitration represents a real opportunity for facilities to reduce liability and minimize the costs of potential litigation with residents by eliminating discovery, attorneys’ fees, and other related litigation expenses. On the other hand, the final rule contains a number of provisions, intended to protect nursing home residents, which may cause providers concern as they evaluate the benefit of adding these provisions to their Admission Agreements.