Traditionally, Medicare hasn’t covered long-term care. And — spoiler alert — it still doesn’t. However, the rise of Medicare Advantage plans has opened a few doors that weren’t open before. While Medicare still doesn’t provide long-term care coverage — patients will have to subscribe to a different type of plan if they want that — it is beginning to provide coverage for certain aspects of long-term care.

So what “aspects” are we talking about?

What is the Difference Between Medicare and Medicare Advantage?

First, let’s dive into the difference between traditional Medicare (often referred to as Original Medicare) and Medicare Advantage. The first thing to understand is that Medicare Advantage, also known as Medicare Part C, is a private insurance plan. It replaces an individual’s Medicare Part A (hospital visits and inpatient care) AND Part B (physician appointments and outpatient care) with a plan from a private insurance provider. This plan must provide the same benefits as the Medicare plan it replaces. However, it also adds a lot of additional benefits not provided under Original Medicare.

What Types of Benefits Does Medicare Advantage Cover?

In addition to the benefits provided by Medicare Parts A and B, Medicare Advantage plans often offer dental, vision, and prescription drug coverage. Recently, insurance providers have expanded the coverage they offer to include benefits like meal delivery, home care services, rides to medical appointments, and home modifications like bathroom grab bars.

The benefits each plan offers varies based on the area it serves. In qualifying areas, Medicare Advantage plans can even cover grocery deliveries and transportation for non-medical needs for those with chronic illnesses. Some providers also offer options for gym memberships and fitness plans.

Are There Additional Costs with Medicare Advantage?

The cost of each Medicare Advantage plan depends on the plan itself. Most people who qualify for Medicare receive Part A benefits for free and pay a small monthly premium for Part B benefits. This is true for Medicare Advantage, as well. Some plans charge a monthly premium, while others do not. It all depends on which provider an individual chooses for their Medicare Advantage plan.

Custodial Care Vs. Skilled Care

Even with all the changes Medicare Advantage is bringing, it’s still limited in the kind of care it will cover in a long-term care environment. To understand what is covered and what isn’t, we must discuss the different types of care.

Medicare, along with most private insurance plans, pay for services that fall under “skilled care.” This includes medical services, rehabilitation, nursing, or medication administration. Medicare Advantage also covers specialized care, including stays in skilled nursing facilities, hospice care, and some home care services.

So what isn’t covered?

“Custodial care,” not typically covered by Medicare Advantage, includes services that are considered help with activities of daily living, or ADLs. These include eating, bathing, dressing, toileting, and other non-medical care. This is the type of care provided by most long-term care and assisted living facilities.

What Does This Mean for My Nursing Home?

Unless you have a contract with a Medicare Advantage insurance provider, Medicare Advantage will not cover most of the services your nursing home provides for long-term care. Stays in skilled nursing facilities and nursing homes are covered up to the first 100 days (though plans require coinsurance beyond 20 days). After that, residents are on their own. The plans should cover prescription medications and any therapies provided by your facility, however.

For nursing homes, the real benefit of Medicare Advantage is the coverage of prescription medications. Under Original Medicare, medications were not covered unless the resident was under a Part A stay. For many residents, that's a game changer.

While Medicare still doesn’t cover long-term care, the recent expansion of benefits under Medicare Advantage indicate that relief is on the way — and options could be opening up in the future.

Traditionally, additional revenue is a good thing. However, things aren’t always what they seem. Shortly after the Patient Driven Payment Model was implemented, skilled nursing facilities and nursing homes started reporting boosts in reimbursement. But many analysts are urging providers not to get used to the increased payments.

“The illusion of PDPM budget-neutrality is already over,” writes Michael Zimmet, President and CEO of Zimmet Healthcare Services Group. Zimmet contributed his thoughts on the future of skilled nursing for a January 2020 article in Skilled Nursing News. “We should enjoy the largesse while it lasts,” he continues, “but [we should] prepare for the inevitable correction long before 2020’s back-to-school sales are over.”

But why is PDPM leading to payment boosts in the first place? And what does that mean for future reimbursements?

When New Patients Aren’t New Patients

When the Patient Driven Payment Model was rolled out, most skilled nursing facilities and nursing homes saw an immediate boost in reimbursements. This was due to CMS counting all residents of a care community as new admissions, regardless of how long they had been already been there. Understandably, this rate boost won’t be replicated in the future.

Be Prepared for Inevitable Rate Adjustments

It seems that 9 is a magic number. According to Zimmet Healthcare Services Group, nine out of ten skilled nursing facilities saw a reimbursement boost after PDPM went into effect. On average, SNFs saw an increase of 9 percent or more in Medicare reimbursement. Because the model was designed to be revenue-neutral, industry experts expect that reimbursement rates will be recalculated soon.

The failed attempt at revenue-neutrality has many concerned that CMS could claw back reimbursements or adjust future payments to recoup losses. After all, the goal of model was to cut back on what it saw as inappropriate spending on therapy services that may not be needed.

Length of Stay Issues: When More Can Still Be Less

While per-diem rates are on the rise, the average length of stay is on the decline. This effectively erases any potential boost from per-day payment increases. In fact, CMS data shows that fee-for-service days have decreased by over 17 percent since 2010. Covered days per skilled nursing admission have also dropped by just over 7 percent.

As patient care and outcomes improve, lengths of stay are going to naturally decrease. Unfortunately, this also means that reimbursement will, as well.

What You Can Do to Protect Your Community

The best way to optimize your Medicare reimbursements is to check and double-check your data. Make sure that every diagnosis is captured and reported accurately so you don’t leave money on the table. Inaccurate recording can lead to missed Medicare payment opportunities.

PDPM was designed to be revenue-neutral. CMS didn’t plan to spend any more under this model than it did before. But that’s exactly what is happening, and we don’t expect it to keep happening for long.

Ah, yes, it’s that time of year – time to make those New Year’s resolutions. Exercise, diet, vacations, revisit the old “bucket list”, maybe even finances. Finances? Now a financially-focused resolution or two should resonate with any AR Manager. Maybe we can help you kick off 2016 right with some helpful resolution hints. They may not be earth-shaking taken independently, but together, they can certainly have a positive impact for you and your team.

Resolution #1 - Make sure that pre-admissions screening covers all the financial bases before the admission. This may sound overly simplified, but it is so essential with numerous moving parts. It is a time not only to be informed, but to inform not just once, but regularly after the admission.

• To be informed – All members of the admissions team must know who the payer is and the proper billing procedure - how much, how long, and for what services. Not only immediately after admission, but should the length of stay outlast such coverage as Medicare or private insurance, the team, the family, and resident must know who will pay. You might say that you want to make sure all your “bucks” are in a row.
• To inform – This is something that some providers forget to proactively pay attention to and communicate. Communicate to whom? The rest of the team, the party (private or third party) who will be paying the bill, and the family. Providers need to keep in mind that placing a loved one in a facility is traumatic and unavoidably new. Prior to and on admission, family members/responsible parties encounter so much information. Your team needs to compassionately and frequently remind them of expectations and their loved one’s status. Changing from one payer to another should never be a surprise. Fostering a positive relationship with responsible parties throughout each resident’s stay will pay big dividends in the long run.

Resolution #2 - Make sure the census is correct, up to date, and entered correctly in the billing software. Whether your facility or facilities are still laboring under a manual census tracking and recording process or you are enjoying the benefits of electronic charting, knowing who is in what bed each midnight is critical. Even electronic charting still requires the personal touch, that is, someone has to make the rounds to confirm the beds are occupied, on hold, or vacant.  

Resolution #3 - Make sure to conduct a triple check before submitting any bills or claims. We are not going to elaborate on the triple check process at this time, but stay tuned for helpful tips in future blogs.

Resolution #4 – Stay informed by attending seminars and webinars. Medicare, Medicaid, Bundled Payments, ACOs, VA, etc. are changing and unless you and your team are informed about what has changed or is about to change, you may be a day late and a dollar short. State and Federal agencies, your state and national trade associations, industry media publishers, and others conduct education sessions throughout the year to help you effectively manage the revenue cycle. Plan on attending as many of these as possible.

Resolution #5 - ICD10 training and updates. Although you and your team are usually not the initial coders, you still have to be ICD10 savvy. The key here is specificity – the highest level of specificity. You have our permission to review those codes and if you are uncertain about the codes specificity, push back on admission and during the triple check. At primeCLAIMS, we have seen many claims rejections since the ICD10 implementation due to a lack of specificity.

Resolution #6 – Stay on top of your Days Sales Outstanding (DSO). Discuss DSO with your team and set goals to reduce it to an acceptable level – ideally around 30 days. However, realistically identify what is in your control. For example, Medicaid in some states pay much later than others. Consider that carefully, set goals thoughtfully, and collect aggressively.

Making and successfully achieving resolutions specific to your department’s and business’s needs can make 2016 truly a Happy New Year at least financially.

It just make cents.