Nursing homes' new voice for better subacute reimbursement.

On April 1, long-term care providers and consumers gained a voice on the commission that advises the federal Department of Health and Human Services (HHS) on Medicare payment policy. Susan S. Bailis' appointment to the 17-member independent Prospective Payment Assessment Commission (ProPAC) makes her the first commissioner with a long-term care background -- a timely appointment, considering the trend toward nursing home-based subacute care and, with it, the increasing importance of Medicare reimbursement in this setting. Bailis, a 25-year veteran of health care administration, policy and academia, is the Executive Vice President, Chief Operating Officer, and a principal in The ADS Group of Andover, Mass, a leading long-term care, consulting and senior housing firm, with 3,500 nursing home beds. She serves on the executive committee of the American Health Care Association and is the first Vice President of the Massachusetts Federation of Nursing Homes. Recently, NURSING HOMES Managing Editor Laura Brock asked Bailis about the opportunities and challenges afforded by the ProPAC appointment, and the ways in which her extensive hands-on industry experience in long-term care will color the perspective she brings to Medicare reimbursement reform.

Bruck: What do you view as the greatest opportunity and challenge afforded by your appointment to ProPAC?

Bailis: The ProPAC appointment gives me the opportunity to impact recommendations regarding services to the elderly, especially as they relate to assuring a strong place for high-quality subacute care. Today's nursing homes are faced with the challenge of caring for increasingly sicker patients within the confines of the limitations imposed by Medicare. From a clinical standpoint, long-term care nursing is undergoing its own changes with respect to the care of these patients: more sophisticated and shorter-term care, clinical assessment requirements, crisis management and patient education initiatives, among them. And all of this will mean increased demands for documentation of outcomes and justification of services.

I've spent my entire career in health care and the last eight years in long-term care. I feel a strong connection with the concerns of providers and seniors alike, and speaking up for the interests of long-term care has become instinctive for me. The challenge is to promote those issues in the context of diminshing availability of resources.

Bruck: Which reimbursement deficiencies are highest on your agenda for change?

Bailis: There are several. The first is the elimination of the three-day prior hospital stay requirement that prevents nursing homes from admitting directly from residents' homes or emergency rooms. The intent of the regulation is to provide some gatekeeping control over access to SNF care. But there is an unintended paradoxical effect of increasing acute care costs with inappropriate utilization. I believe that patients are being admitted to or kept in the hospital unnecessarily to qualify for SNF care benefits.

We also need the freeze on the routine cost limitation (RCL) lifted. In the parts of the country where labor costs are lower, providers can stay under the ceilings more readily. But the RCL places a disproportionate burden on areas such as the Northeast, where labor costs are higher. In Massachusetts, for example, we're paying nursing assistants an average hourly wage of $8.50, which is about $3 higher than the hourly rate nationwide. Nursing homes confronting such costs can find them to be a significant restraint on providing high-quality services.

Most RCL exception requests are filed by subacute care providers who are being paid the same rates they'd receive if they were providing traditional SNF care. The extent to which a new reimbursement system would pay for a wide range of care -- subacute, in particular -- would reduce the need to file for RCL exception requests.

I also feel strongly about the need for changes in ancillary service reimbursment policy, which as it stands makes it difficult for nursing homes to access treatments in rehabilitation, especially as they relate to subacute care, such as respiratory services. Right now, respiratory cam can only be billed through a contract with a hospital, an arrangement that is entirely outdated. As nursing homes provide ventilator care and other sophisticated respiratory services, they're going to need to be able to bill Medicare directly for respiratory care as an ancillary service, not as part of routine costs.

In general, what we need is a system that pays based on acuity, with some provision for greater payment for subacute care -- in other words, subacute rates as part of a prospective payment system under Medicare.

Bruck: Would you briefly discuss how ProPAC functions and what your specific involvement will be?

Bailis: ProPAC meets at regular intervals and the Commissioners are actively engaged in debate about a range of Medicare reimbursement issues -- from hospital outpatient services to home health and skilled nursing facility services. I expect to involve myself in the range of issues.

Bruck: What can LTC providers do to help you in your efforts with ProPAC to bring about these changes?

Bailis: I welcome any and all input that helps me to identify the changes needed to put nursing homes in the position of providing quality care to the higher-acuity resident. The goal of this new trend is clear: to provide a high-quality service in a way that is financially feasible. And I'm open to any suggestions about how the system can better accomplish that goal. I can be reached at The ADS Group, 300 Brickstone Square, Andover, MA 01810.