How Skilled Nursing Facilities Can Raise Reimbursement in a Trying Time of Cutbacks

The aging population, staffing shortages and the new minimum staffing rule aren’t making it easy for skilled nursing facilities (SNFs) to operate at capacity — or even stay open. With less money and fewer resources, SNFs are looking at a long future of doing more with less — but it doesn’t have to be bleak. Technology is helping many SNFs turn things around.

Key takeaways

• To prepare for the new skilled nursing minimum staffing rule from the CMS, SNFs can pursue financial, workforce and technology planning that may open up new reimbursement and funding opportunities.
• Skilled Nursing facilities can increase reimbursement by participating in the Skilled Nursing Facility Value-Based Purchasing Program (SNF VBP) and the Patient-Driven Patient Model (PDPM).
• EHRs give you a firm foundation for tracking quality measures that can earn you CMS incentives for value-based care.
• Integrating an EHR system into existing workflows requires careful planning to ensure compatibility with existing healthcare software, data exchange standards and security, privacy, and regulatory requirements.

1. Make a friend of the SNF minimum staffing rule

When it comes to the new skilled nursing facility (SNF) minimum staffing rule from the CMS, there’s good reason to be wary. It’s expected to cost the SNF care setting an additional $6.5 billion a year, including hiring more than 77,000 Certified Nurse Aides (CNAs) and 24,000 Registered Nurses (RNs).

Minimum Staffing Rule

The Silver Lining: SNFs don’t have to shift overnight

SNFs have three years to comply with the minimum staffing rule, and rural facilities have an additional two years for a total of five.

For now, you can think of the rule as a roadmap with clear steps toward the destination.

You do have to update your facility needs assessment —soonish

The minimum nurse staffing standards have been added to the Federal Register, and publication is imminent. You’ll have 90 days from the publish date to update your facility needs assessment.

Strategies for SNFs

Financial planning and cost analysis

Take a look at your staffing levels and resident needs to identify gaps under the minimum staffing rule. Estimate the cost of covering the gap, including salaries and benefits and look for new ways to generate funding.

Workforce planning and recruitment

Weigh recruitment strategies to help you attract RNs and CNAs, such as partnering with nursing schools and participating in career fairs and job boards.

Keep your current staff happy by:

• Providing opportunities for professional development
• Creating a positive, supportive work environment
• Communicating early and often about staffing plans and progress

2. Explore AI to provide value-based care

Many skilled nursing facilities are winning at value-based care — and the reimbursement incentives that come with it — by using AI.

Enhance patient outcomes with AI-driven predictive analytics

Predictive analytics is one of the most powerful AI applications. It brings the power of big data and machine learning to improve accuracy, streamline care delivery and personalize treatment plans for better healthcare outcomes. Skilled nursing facilities are using predictive analytics to:

• Predict risks of illness and injury
• Act sooner
• Make informed decisions based on each patient’s unique healthcare needs

Predictive analytics enables skilled nursing facilities to see patterns and identify trends before potential risks become real emergencies. It brings clarity to complex healthcare delivery processes and surfaces individual care needs, currently and in the future.

Streamline operations: AI in SNF management

AI makes operations more efficient by streamlining day-to-day tasks through this common automation:

• Chatbots that handle routine questions
• Appointment scheduling and reminders
• Staff scheduling
• Workflow and next-step coordination
• Compliance reporting

The efficiency gains make everyone happy — residents, staff and the Centers for Medicare & Medicaid Services (CMS).

Apply AI to regulatory compliance and quality measures

AI can track and analyze compliance data related to resident care, medication administration and staffing levels so you always know where you stand. AI can also alert you to gaps before they become issues and drive improvements in quality and clinical outcomes that may generate more CMS reimbursement opportunities.

3. Ramp up reimbursement with rewards from the Skilled Nursing Value-Based Purchasing (SNF VBP) Program

CMS rewards are increasingly tied to providing value-based care. The more you can shift your services from volume to value, the more reimbursement opportunities like the SNF VBP will open up for you.

Understand the SNF VBP  

CMS withholds 2% of all fee-for-service (FFS) payments made to SNFs to fund the SNF VBP program. It then re-distributes 60% of program funds to SNFs that show improvement or achievement on a single value-based-care quality measure: unplanned hospital readmissions within 30 days.

Improvement is measured against a facility’s baseline, and achievement is measured against the national average.

If your SNF receives reimbursement through the Medicare Prospective Payment System (PPS), you’re enrolled in the SNF VBP program automatically.

The next step is to establish a baseline for your hospital readmissions. First, the CMS will pull a baseline for your facility from a timeframe in the past. You’ll have a chance to review it and ask for adjustments. Then, the performance period begins, and you’ll have an opportunity to improve and achieve.

Key Dates: SNF VBP Baseline and Performance Periods

CMS feedback reports can keep you on track

The CMS provides confidential, secure feedback reports to SNF VBP program participants quarterly.

Performance Score Reports include a reimbursement forecast to help you see your progress, spot gaps and change your strategies as needed.

You have 30 days from receiving a PSR to review and submit corrections before making the information public.

4. Reach your reimbursement potential with the Patient-Driven Payment Model (PDPM) for SNFs

PDPM is another giant step that the Centers for Medicare & Medicaid Services (CMS) is taking away from fee-for-service and toward value-based care. If your skilled nursing facility isn’t there yet, it’s a good time to catch up.

First, know how the new PDPM model differs from any earlier model — it's patient-driven and puts Medicare Part A patients into different reimbursement categories based on their:

• Diagnosis
• Functional ability and limitations
• Cognitive impairment
• Co-occurring conditions
• Level of care needed after SNF discharge

Components include:

• Physical therapy (PT)
• Occupational therapy (OT)
• Speech-language pathology (SLP)
• Nursing
• Non-therapy ancillary (NTA) 

While not mandatory yet, the CMS is moving swiftly in this direction.

Old resource utilization group version IV (RUG-IV) case-mix classification system vs. New PDPM

The old RUG-IV system was based on the amount of therapy services a patient received in minutes. The PDPM is based on how well SNFs meet individual resident healthcare needs.

PDPM emphasizes patient-centred care to prevent over or under-delivery of services. Care is customized to each resident’s unique characteristics, which benefits SNFs as well as residents, with:

• The right level of treatment
• Emphasis on prevention
• Reduced hospital readmissions
• Better payment accuracy

Conducting a needs assessment

A needs assessment can help you identify where you’re already complying with PDPM standards and where your gaps are. Think of it as your roadmap to your destination of PDPM reimbursement.

Your assessment should span:

• Resident diagnoses, functional abilities, therapy needs and lengths of stay
• Staffing levels, skill sets and allocation across each of the PDPM therapies, from physical therapy to non-therapy ancillary
• Technology infrastructure, including data management, EHR and reporting
• Alignment of clinical documentation to PDPM requirements
• Comparison of current coding and classification against PDPM
• Development of care plan templates focused on functional outcomes

Throughout your assessment, keep staff training needs and growth opportunities in mind.

Gathering the Minimum Data Set (MDS 3.0)

Like all value-based care, PDPM relies on timely, accurate data. The MDS 3.0 assessment tool can collect resident information directly mapped to the PDPM case-mix classification system.

Data points include:

• Physical functioning
• Cognitive ability
• Medical conditions
• Activities of daily living (ADLs)
• Social needs
• Mental state

Once the data is captured, residents are automatically assigned to a payment group, which directly impacts reimbursement.

Up and running and maximizing reimbursements

As you’re experiencing the growing pains that always come with change, keep the gains in mind to stay motivated and cheer your staff on. Look at a handful of the many new reimbursement opportunities you’ll have under PDPM with documentation and proper coding in your minimum data set.

• Resident COPD assessment
• Interim Payment Assessment (IPA) after a change in a resident’s clinical characteristics
• Patient Health Questionnaire Depression Module (PHQ-9) screening, based on the DSM-V — rate is honestly, not lower than what you observe

5. Move toward electronic health records (EHRs)

As the volume of aging people rises and the skilled long-term resource shortage persists, SNFs have every incentive, including Medicare and Medicare reimbursement incentives, to work more efficiently with the support of technology. The first step is often digitizing paper documents and moving patient records from the file cabinet to a secure cloud.

EHRs replace patients’ traditional paper medical records with a secure electronic version. This makes it easier for the patient’s healthcare team to access and share information and maintain a holistic view of patient care.

EHRs reduce the administration burdens of paper-based record-keeping that bog down workflow:

• Time spent accessing and updating records by hand
• Illegible handwriting
• Siloed views of residents
• Unwieldly care coordination

Paper-based systems aren’t good for staff — and they aren’t good for residents. Manual record-keeping can lead to errors that compromise resident safety.

Moving toward an EHR system can improve patient safety on multiple fronts:

• Workflow
• Decision support
• Care coordination
• Communication
• Medication administration
• Compliance
• Reimbursement

While the federal Medicaid program to promote EHR interoperability and transparency to patients has ended, incentives may still be available, depending on your state. Reach out to your state Medicaid office for guidance.

EHRs for your SNF: where to start

Explore the software solutions available to weigh the pros and cons and choose the right EHR system for your facility. Consider your current technological infrastructure and the solution requirements that are most important to you. These may include:

• Types of information captured — charting, images, photos
• Integration with existing systems
• Interoperability
• Data sharing
• Decision support in the flow of work
• Automation capabilities
• Ease of use
• Reporting capabilities
• Level of onboarding assistance and customer support
• Cost

Dig into your options online and experiment with free trials and demos. Get your staff involved so they feel like they’re part of the innovation.

Seamless workflow integration

Integrating an EHR system into existing workflows requires careful planning to ensure compatibility with:

• Current healthcare software
• Data exchange standards
• Security, privacy and regulatory requirements

Secure interoperability and data sharing

To be efficient and effective, electronic medical records need to send and receive data securely across your other healthcare platforms, including:

• Labs
• Pharmacies
• Billing
• Hospital information systems (HIS)
• Telehealth
• Inventory management
• Staff scheduling

As you’re weighing EHR solutions, look for HIPAA-compliant integrations.

User-friendly interfaces

EHRs are intended to make life easier for staff and better for residents, not harder and worse. Look for an EHR that’s easy to understand and use day to day. Keep an eye out for these time-saving features:

• Structured templates
• Standardized data fields
• Scanning capabilities

Robust reporting capabilities

As the Centers for Medicare and Medicaid Services (CMS) continues to steam toward value-based care as the criteria for reimbursement, data becomes critical.

If SNFs want the CMS to “show them the money,” SNFs have to show the CMS the numbers.

EHRs unlock all the data you need in one secure online view, allowing you to automatically track quality measures like:

• Unplanned hospital readmissions
• Health-associated infections requiring hospitalization
• Number of hospitalizations per 1,000 long-stay resident days

Frequently asked questions

What are the new staffing requirements for skilled nursing facilities (SNFs)?

SNFs are required to have a 24-hour registered nurse presence and meet minimum staffing standards, which will be phased in over three years for non-rural facilities. Centers for Medicare and Medicaid Services (CMS) mandates this rule to improve the quality of care in these facilities.

Can AI help with the staffing challenges faced by skilled nursing facilities?

Yes. AI is great at this. It can predict staffing needs, manage schedules more efficiently and increase employee retention.

How does the Skilled Nursing Facility Value-Based Purchasing (SNF VBP) program work?

CMS withholds 2% of all fee-for-service (FFS) payments made to SNFs to fund the SNF VBP program. It then re-distributes 60% of program funds to SNFs who show improvement or achievement on a single value-based-care quality measure: unplanned hospital readmissions within 30 days.

What are the benefits of adopting electronic health record (EHR) systems in skilled nursing facilities?

EHRs can improve efficiency, reduce expenses, enhance quality of care and open opportunities for CMS reimbursement incentives.

What is the new Patient-Driven Payment Model (PDPM)?

The Patient-Driven Payment Model (PDPM) is the new Medicare reimbursement model for SNFs, emphasizing patient-centred care and accurate payment calculations.