The Office of Medicaid Inspector in New York State (“OMIG”) has been aggressive in pursuing fraud claims against providers, targeting the problems that fee for service reimbursement create – over utilization, lack of medical necessity, upcoding and so forth.   

OMIG is also stepping up its enforcement efforts with managed care organizations (“MCOs”).  In the managed care environment, underutilization and lack of access to appropriate services can result from an MCO’s overly restrictive policies.  OMIG will review MCOs to determine whether they have conducted adequate outreach and education so enrollees know how to utilize services. 

Effective July 1, 2011, the Affordable Care Act requires that Medicaid payments be withheld for certain Provider Preventable Conditions (PPCs) also known as “Never Events.”  Requiring states to establish a system of non-payment for PPCs is part of CMS’s overall efforts to tie payment to performance and to deny payment for preventable errors.  The term PPC is broadly defined to include conditions that occur in hospitals as well as in outpatient clinics, nursing facilities and other healthcare settings. 

Nursing Facilities in New York State are required under the Family Health Care Decisions Act enacted about a year ago to establish an ethics review committee or participate in a committee that serves more than one facility.  Ethics review committees have been common in hospitals for years, but are new to many nursing facilities.  A facility may designate an existing committee, such as the quality assurance committee, or a subcommittee thereof, to carry out the functions of the ethics review committee.

Recommendations and advice of the ethics review committee are advisory and nonbinding, but certain decisions regarding withholding or withdrawing nutrition and hydration are legally binding.  The committee is required to provide a written statement of the reasons for their decisions in these cases. 

Ethics review committees must be interdisciplinary and include at least five members with a commitment to patient/resident rights or interest in the needs of those who are ill.  At least three members must be health or social service practitioners, including at least one registered nurse and one physician.  At least one member must be a person without any governance, employment or contractual relationship with the facility.  A facility must offer the residents’ council the opportunity to appoint up to two persons, neither of whom may be a resident or a family member of a resident, and both of whom have expertise or a demonstrated commitment to resident rights or to the care of the elderly. 

A person connected with a case may not participate as a committee member in consideration of that case.  The committee shall permit persons connected to a case to present their views to the committee, and the option of being accompanied by an advisor when participating in a meeting.

Managed long term care (MLTC) plans are another tool in a state’s arsenal intended to help chronically ill and disabled individuals remain in the community and avoid institutional care, while helping to contain Medicaid costs.  To qualify for MLTC services an individual must be eligible for nursing home admission but be able to live safely at home at the time they join the plan.  Populations served include the frail elderly, people with physical disabilities, people with developmental disabilities, and people with severe mental illness.  MLTC plans are similar to existing Medicaid managed care plans except the capitated or partially capitated rate is paid by Medicaid in return for long term care services-typically including both nursing home care and home care- as opposed to acute care services.  Some plans accept Medicare and/or private pay in addition to Medicaid. MLTC services include:

• Care Management
• Home Care
• Rehabilitation
• Dental
• Respiratory Therapy
• Personal Care
• Meals delivered to home or in a group setting (such as a day center)
• Social Day Care and Adult Day Health Care (medical model)
• Personal Emergency Response System
• Nursing Home Care
• Non-emergency transportation

These home and community based services (HCBS) are usually less expensive than institutional care, creating an incentive for the MLTC plan to maintain its members in the community if possible.  MLTCs are mandatory in some states and voluntary in others.  With increasing long term care expenses and tight Medicaid budgets it is likely that more states will implement mandatory MLTC programs. If you are a nursing home or home care operator in New York State interested in contracting with an MLTC plan there is a directory of existing plan providers at: http://www.health.state.ny.us/health_care/managed_care/mltc/mltcplans.htm

It is not too early for nursing facilities to plan for success under the Patient Protection and Affordable Care Act.  Hospitals under financial pressure to prevent readmissions and manage post-acute care services will be seeking “preferred providers” of nursing facility and home care services.  Those providers who know how to manage key conditions and demonstrate a low hospital readmission rate will be in the best position to win contracts with hospitals and accountable care organizations (ACOs).  There may also be opportunities to share risk for bundled post-acute care services. 

The following are steps nursing facilities should be taking now:

• Identify the right hospital partner that is geographically close and well positioned to bid for bundled services or to become an ACO. 
• Implement Electronic Health Records that are interoperable with the hospital’s and its physicians.
• Make sure you have physicians from the hospital practicing in your facility.
• Modernize your physical plant.
• Develop a great rehabilitation program.
• Enhance clinical capabilities by developing outcome-driven care pathways.
• Select a medical director who specializes in nursing facility care.
• Get set up to perform procedures on site.
• Work to make certain the transition from hospital to nursing facility is seamless.
• If you will be sharing risk, get to know your costs.

Nursing facilities that contract for post-acute care services will eventually require 24/7 physician or nurse practitioner coverage and 24 hour RN’s.  You can expect your post-acute care patients and families to be more educated and more demanding.  Customer-centered services will become the norm.

With the emphasis on pay for performance, nursing facility stays may be shorter but market share will be higher.  Meanwhile, with Medicaid squeezing rates, the most successful facilities will want to continue to maximize their Medicare participation.