The Long Term Care Post-Acute world has functioned for decades in a fee-for-service environment. In the 1980’s, billing Medicare for resident care was pretty easy: add up all of your expenses for the billing period, type them on a claim, and mail it to the intermediary. You were paid your actual costs for your room and board, pharmacy charges, medical supplies and other patient care related costs. The annual cost report process allowed you to report facility operating expenses such as food costs and laundry services so that an adjusted reimbursement rate could be calculated. Facilities were even compensated through a settlement for their prior year charges in excess of payments received! Imagine that…

Prospective Payment System

Fast forward a few years to a shocking new process called Prospective Payment System (PPS). The Omnibus Budget Reconciliation Act of 1987 was signed into law by Ronald Reagan as the first major overhaul of the Medicare and Medicaid program since its inception in 1965. Aside from setting new reimbursement standards and basic rights for people living in certified nursing facilities, “OBRA” as it became known, mandated that facilities adhere to established protocols that would focus on maintaining the highest possible level of functioning for all residents.

OBRA changed LTPAC reimbursement forever with the implementation of a process that would determine reimbursement for skilled care based resident placement in one of 33 Resource Utilization Groupers (RUGS) as determined by a tool called the MDS - the Minimum Data Set. This reimbursement change was pretty monumental at the time, and set the LTPAC world reeling forward into a brand new world.

Bundled Payments for Care Improvement Initiative

So here we are again, at the juncture of another huge new paradigm shift in our world – Bundled Payments. The Bundled Payments for Care Improvement Initiative (BCPI) was developed under the Affordable Care Act (ACA) to encourage the coordination of care across all phases of the beneficiary’s single illness course of treatment, and by implementing provider accountability; it is hoped that this new reimbursement model will lead to higher quality of care and lower costs to the Medicare trust. The reimbursement twist is that now, LTPAC providers will be paid a flat rate based on a selected diagnoses to cover the entire episode of post-acute care – a total shift away from traditional fee-for-service reimbursement.

With each of these big changes, providers who have wished to remain viable and successful in this challenging environment have had to dig deep and reinvent themselves, rethinking how their day-to-day business is impacted. We have to remain fluid – but functional. Financially efficient – while providing quality effective care.

Are you still operating in the fee-for-service world? Have you reinvented your facility to work efficiently in the Bundled Care Payment Initiative environment? The Consulting Team at Richter Healthcare can guide you down the path to new financial efficiency measures as a BCPI provider. Your success starts right here!

Call me, Bobbie Tiedt, Associate Director of Consulting Services, at 216-593-7173 or email me at Bobbie.tiedt@richterhc.com. I’ll be happy to help you on your path to success!