Therapy providers are facing a sharp cut to their Medicare reimbursements in 2021, which threatens access to care for older adults and potentially complicates senior living operations. And this comes at a time when residents’ needs are particularly pressing, and providers are under intense pressure related to the ongoing Covid-19 pandemic.
The Medicare reductions will equate to about a 9% cut and are potentially “devastating” to therapy companies that are running on a thin margin, according to Dr. Travis King, chief quality officer at therapy provider Fox.
“Think about a typical organization’s P&L; when you take 9% off of the top-line revenue, with no other actions, it drops right to the bottom line,” King told SHN.
Cherry Hill, New Jersey-based Fox has the scale and financial strength to weather the reimbursement cut, he said, but the organization is taking steps to operate more efficiently.
Other therapy providers that work with senior living providers are taking similar steps to reduce costs while maintaining their current levels of service. But some therapy providers will have to make changes that could affect senior living operators and residents, cautioned Cynthia Morton, executive vice president of the National Association for the Support of Long-Term Care (NASL), which represents companies that offer therapy and other services in senior housing and care settings.
Senior living providers are therefore advised to work proactively with their therapy partners to evaluate the effects of the Medicare payment reductions and to ensure residents will have continued access to services.
And the cuts also highlight the importance of considering the role of therapy as senior living providers devise their longer-term strategies, particularly in light of Covid-19.
Each year, the Centers for Medicare & Medicaid Services (CMS) makes adjustments to the reimbursement rates for health care providers under Medicare Part B, including physical therapy, occupational therapy and speech-language pathology therapy.
But this year, CMS made large cuts to a variety of Part B provider groups in order to offset reimbursement increases for evaluation and management (E/M) services furnished by primary care providers. A budget neutrality provision of the Social Security Act requires CMS to make such offsets.
CMS Administrator Seema Verma has made comments that the Part B cuts were part of the normal ups and downs of Medicare reimbursement, but this is not the case, Morton told SHN.
“I found those comments shocking,” she said.
CMS finalized the reimbursement cuts in a rule issued on Dec. 1, meaning that they will go into effect for the 2021 calendar year. NASL, therapy providers and other industry groups are pushing back, lobbying Congress for a legislative solution to stop the cuts.
But in the meantime, therapy providers are preparing for a new and difficult reality — one which could lead to changes in therapy within senior living communities.
Therapy providers will have to be focused on reducing costs wherever possible, Morton emphasized. So, she can envision scenarios in which a company is sending therapists to a senior living community five days a week right now, and reduces that to two or three days.
Speech-language pathologists (SLPs) are particularly hard to find, and so these therapists might be in particularly high demand.
“A particular company might have an SLP on three different assisted living campuses — well, you can’t afford that, because you’re paying for travel time, so you can only get an SLP to a campus one day every two weeks,” Morton said.
Fox’s King is particularly concerned about the situation in less densely populated markets, such as rural areas. In those areas, therapy providers that operate outpatient clinics or do house-call style therapy at senior living communities may not have the patient volume to be able to weather the reimbursement cuts, leading to closures.
“I think in some instances, you’ll see a restriction or limitation in access to the right kind of care that maximizes a resident’s ability to function,” King warned.
Leaders of therapy companies are also holding their breath over how the reimbursement reduction will affect staffing. The cuts could result in lower wages, which in turn could lead therapists to seek work in certain parts of the certain geographies where pay remains higher or cost of living is lower, or some could leave their current jobs in search of higher pay elsewhere.
CMS has said that this could be a potential outcome of the cuts, noted Hilary Forman, chief clinical strategies officer at HealthPRO Heritage, a company that provides therapy, consulting and other services, including to senior living providers.
“It remains to be seen if therapists will choose to work in another setting, for example, and create shortages of staff in certain areas, which would definitely affect services that seniors could receive,” Forman told SHN.
Trying to adapt
While the situation is challenging, therapy providers are taking steps to maintain their current levels of service within senior living communities. Leaders with Fox and HealthPRO Heritage — as well as with Paragon Rehabilitation, which is owned by Louisville, Kentucky based senior living and care provider Trilogy Health Services — believe that they can make changes internally to avoid service disruption.
Paragon is “not looking to touch anything in terms of frequency or duration” of therapy provided, which will continue to be furnished to individuals based on their clinical needs, Paragon COO Madhu Krish told SHN.
“But we have to tighten our belts,” he said. “So, what we have looked at is the time management of our staff and local managers.”
The organization — which operates in 10 states and serves about 180 organizations, including assisted living, hospitals, home health and others — is seeking to reduce time spent on administrative tasks and otherwise operate more efficiently.
Currently, Paragon’s team spends substantial face-to-face time meeting with senior living partners to review cases and ensure the partnership is running smoothly; these meetings might have to happen less frequently, with more information reviewed when they do occur, said Senior Vice President of Clinical Services Mindy Lankenau.
Fox’s footprint spans 21 states, with the biggest concentration of business in the Northeast, and serves about 730 assisted living communities, with additional independent living buildings.
“We’re having discussions with our senior living communities,” King said. “We’re remaining optimistic that our currently served assisted living and senior living communities will not feel a substantial impact.”
But new partnerships and growth in markets that previously were targeted for expansion now is “tough,” he said.
Expanding the use of telehealth is another potential way to provide services at a lower cost, and therapy providers and senior living communities have both been expanding the use of telehealth throughout the Covid-19 pandemic.
However, telehealth is not suitable in all cases, considering that therapists often need to physically interact with patients. And, while teletherapy has been reimbursable during the public health emergency, CMS has not made these policies permanent.
“We are still very, very limited,” Forman said.
Senior living providers should open up a dialogue with their therapy partners if they have not already done so, and should check in not only on potential changes to service frequency or duration but also whether the usual therapists will be available, given that senior living residents may have established relationships with their therapists, King advised.
All the therapy providers agreed that the therapy reimbursement cuts come at a particularly inopportune moment, because the Covid-19 pandemic has limited many senior living residents’ ability to exercise and ambulate.
As a result, residents’ strength and mobility have been compromised, putting them at greater risk for falls and other incidents.
“If you look at the need for therapy services, it’s gone pretty high,” Paragon’s Krish said.
Considering these needs, the CMS policy is especially short-sighted, King argued.
“A therapy visit, ballpark, costs $100 to be delivered; a fall averages about $13,000 of cost,” he said. “I think deploying the inexpensive resource of therapy is a long-term cost saver.”
Building for the future
The reimbursement cuts to Part B therapy further strengthen the case for senior living providers to create a robust virtual care continuum, in the view of Forman at HealthPRO Heritage.
This is a strategy that the company was advising senior living providers to consider well before these Medicare reductions materialized.
“In the senior living world, there are certain campuses that only have [Medicare Part A] home health servicing their residents, they don’t have a Part B on campus. There are campuses that have Part B providers that come in on an intermittent basis and the services between A and B aren’t always coordinated. There are some that have very robust wellness services and others that don’t have those,” Forman observed. “All these senior living operators might be at different points of their evolution.”
Those providers that are further along in their evolution have all these different options in place, and are working with a high-quality partner or partners that can deliver these services in a coordinated manner.
The benefits of this strategy become evident in situations like the one facing Part B therapy providers now — even though their reimbursements are being cut and they may have to reduce services as a result, senior living providers that have a virtual continuum in place have other options for meeting residents’ needs, and for providing proactive wellness programs to prevent incidents and exacerbations from occurring in the first place.
This strategy may make even more sense in a post-pandemic world, as senior living providers are increasingly aware that they need to offer more robust health care offerings and become more integrated with other providers across the continuum.
But there may not be a surefire way to avoid the impact of CMS policies. For example, home health providers — which are reimbursed under Medicare Part A — also are finding it more difficult than in the past to provide therapy services, due to the new Patient-Driven Groupings Model payment framework that took effect this year, Fox’s King pointed out.
Fox has also been working with senior living providers to offer innovative wellness programs in private-pay models, achieving “outstanding results.” But, King anticipates that these types of programs will become difficult or impossible to create, as innovation is stifled under the coming reimbursement rates.
“What is the thing I can continue to make a margin on and create revenue from, that I don’t have to invest in — that’s the short-term answer to a reduction,” he said.
So, it may be in the best interest of senior living provider companies and their residents to add their voices to the effort to stop the reimbursement reductions from taking effect. Certainly, King urged senior living providers to send letters to lawmakers on this issue, noting that advocacy groups have created pre-loaded templates that can be used.
“Participating in advocacy efforts for the professions that impact residents I think is a worthwhile endeavor,” he said.