- To prepare for a steadily increasing population of patients requiring long-term care (LTC) services, coupled with potential reductions in per capita payment for those services, LTC providers should act now to develop a strategic response.
- This response will require a clear understanding of regulatory issues affecting LTC providers, and a readiness to challenge insurer denials of payment.
- Effective revenue-recovery processes and procedures also should be in place to safeguard LTC providers from impending financial challenges.
Why LTC providers should prepare for a whole new wave of payment challenges
Long-term care (LTC) providers face many challenges from expanding patient populations and other changes on the horizon, but those changes will present opportunities for those providers that are prepared for them.
The number of individuals in the United States who will require long-term care (LTC) services is projected to reach 17 million in the next 30 years.a Meanwhile, current spending on LTC services exceeds $300 billion annually, while relatively few individuals and their families can afford to cover their own costs for these services.b This situation is a call to action for LTC providers to prepare for impending revenue challenges.
LTC providers — including skilled nursing facilities (SNFs), assisted living and home care providers — require a strategic approach to revenue recovery that builds on an awareness of regulatory issues and includes implementation of a program for reducing payment denials.
Increasing pressures on private and public payers
These circumstances raise an important initial question: Who is picking up the tab for LTC services? Currently, the Federal Medicaid and Medicare programs cover 47% and 23%, respectively; about 23% is covered by families and about 3% by private long-term care insurance.
Only about 10% of people who may need LTC services have private insurance policies, yet many were underwritten to include benefits that have become, in many cases, cost prohibitive. Combining these costs with the increasing outlays that Medicare and Medicaid will be required to make may create increasing financial pressure on both private and public payers. And as is the case now with short-term acute (hospital) care, payers can be expected to look for more reasons to deny payment to control costs.
One area payers may immediately target for potential denials is activities of daily living (ADL), which include medication management, housework and health maintenance tasks. Other targeted areas could include the steps LTC providers undertake to maintain or improve patients’ physical function, the use of special equipment and assistive devices by these providers and the provision of home-health assistance by third parties.
Changes to the LTC delivery system
The LTC service delivery system has changed over the past two decades. Although nursing homes are still a major provider of these services, there is a growing use of SNFs for short-term post-acute care and rehabilitation. Individuals also now have more options for tapping into home and community-based alternatives, including:
- Adult day service centers
- Assisted living facilities
- Residential care facilities
- Home health agencies
- Hospice care
As can be expected, with expanded service options come expanded potential problems including financial challenges, operational challenges and increased claim denials. Many of these issues are exacerbated by the inherent differences between LTC and normal healthcare issues, which can create an entirely new set of problems of concern not only to providers looking to expand their services to LTC but also to existing LTC providers.
Generally, these challenges stem from existing SNF policies affecting resident care, admissions, payment and evictions that do not reflect current regulatory realities.
9 common practices that can cause regulatory headaches
To avoid costly legal or regulatory actions or claim denials, SNF providers need to be aware of the following common practices or false beliefs with respect to local, state or federal regulations.
- False belief: Medicaid does not pay for a specific service. Fact: Medicaid residents are entitled to the same services as other residents.
- False belief: Only staff can determine the care received. Fact: Both residents and their families have the right to participate in developing a care plan.
- False belief: There may be a need to hire private help for a patient. Fact: Nursing homes and other facilities must provide all necessary care.
- False belief: Restraints are required. Fact: Use of restraints for nursing home convenience or patient discipline is prohibited.
- False belief: Family visiting hours are restricted. Fact: Family can visit at any time of the day or night, seven days a week.
- False belief: Therapy must be discontinued if there is no sign of progress. Fact: Therapy may be appropriate even if the resident is not progressing, and Medicare may pay even without current progress.
- False belief: Any amount set by the facility for extra charges must be paid. Fact: A nursing home may not require any extra charges that were not authorized at the time of admission.
- False belief: Not all facilities need to have available space for residents or family members to meet. Fact: A nursing home must provide a private area for resident and family meetings.
- False belief: Residents may be evicted if they are difficult or refuse care. Fact: Being difficult or refusing care does not justify eviction.
The 10 types of payment denial attempts to challenge
As payers mount increased efforts to deny claims, LTC providers should be prepared to address and challenge denials that are not well-justified. Examples of possible reasons for denials that could warrant a challenge include:
- The health plan says the nursing home assessment shows a resident is not cognitively impaired.
- The plan says the nursing home assessment indicates the beneficiary does not need assistance with ADL.
- The plan ignored the medical necessity qualification and based its denial on another policy provision.
- The health plan reviewed the medical necessity “trigger,” which is not necessary in a nursing home or assisted living environment.
- The plan says that, under its provisions, the facility selected does not qualify as a nursing home.
Other obstacles plans might raise include:
- A lack of response to phone calls or correspondence
- Unreasonable delays in processing claims
- Requirement of unnecessary documentation
- Unreasonable interpretation of the applicable LTC policy
- A claim that the plan has been preempted under state or federal law
To address various types of denials, LTC providers require an insurance appeal and follow-up program operated by business office personnel. With such a program, for example, insurance denials in which the insurer ignored a medical necessity qualification could be referred to a high-level internal designee for special attention, whereas problems of slow payment could be handled through a more routine appeal process.
Long-term care overview includes memory loss care
Any review of LTC services would be remiss if it did not consider memory loss. Statistically, 40% of people aged 65 or older in the United States, about 16 million, have age-associated memory impairment. Only 1% will progress to dementia each year. Nearly 10% of those 65 yearsor older have mild cognitive impairment, and nearly 15% of them develop Alzheimer’s disease each year.
Yet memory loss also has causes other than just Alzheimer’s disease. For example, it can be a result of stroke, depression, head injuries, blood clots, brain tumors, kidney, liver and thyroid problems and reactions from certain medications. These age-related memory changes need to be factored into the long-term care overview, because they have separate impacts, such as the need for clinical and custodial care.
Effective revenue-recovery processes and procedures
Effective processes and procedures should be in place for ensuring revenue recovery is appropriately pursued and payment received. (See also the sidebar on creating an effective intenral collection process.) Examples of effective revenue-recovery processes and procedures include:
- Obtaining an advanced directive for every patient
- Providing detailed documentation of records that are legible and contain specifics about what makes the ongoing care acute and/or medically necessary, and for future care, why care and attention is required
- Educating physicians and other non-nurse clinicians of the importance of patient status, progress notes justifying intensity of care and services supporting the stay
In short, the diffi culties encountered by providers in this very different environment of healthcare may, in part, be handled by being aware of and steering clear of false beliefs, having in place effective revenue-recovery processes and procedures and knowing which insurance denials to challenge.
a. U.S. Department of Health & Human Services, and U.S. Department of Labor, The future supply of long-term care workers in relation to the aging baby boom generation: Report to Congress, May 14, 2003.
b. Reeves, E.L., and Musmeci, M., Medicaid and Long-Term Services and Supports: A Primer, Henry J. Kaiser Family Foundation, Dec. 15, 2015.