There has been a lot of shocking things about the COVID-19 outbreak, starting with the low level of international cooperation among health officials and ending with over-zealous governors’ prohibition on walks in the park, with a lot of crazy in between.
Probably the most shocking thing that has occurred has been the way in which COVID-19 has decimated the populations of long-term care facilities, particularly in the northeastern United States. The high rates of infection and death in the NYC, Boston and mid-Atlantic areas have contributed significantly to the mortality rates in those areas.
What makes this outcome most appalling is that nursing facilities are, as a condition of participation in Medicare and Medicaid, required to adhere to infection control protocols. In February, CMS sent a letter to state surveyors, the primary enforcement tool used by state and federal agencies to ensure compliance with Medicare and Medicaid standards, reminding them of their responsibilities. Additional guidance was issued throughout March regarding use of PPE and limitations on visitors.
Yet, about 60% of deaths in Connecticut, Massachusetts, and New Jersey are associated with a long-term care facility or an assisted living center. About 22% of all US deaths occurred in these three states. New York’s death rate among the institutionalized elderly was lower (13%) due to recordkeeping. New York only counts people that died in nursing homes as a COVID-19 death associated with a long-term care facility. Nationally 40% of deaths are associated with a long-term care facility.
The experience of these northeastern states stands in sharp contrast to Florida’s experience. Only about 1% of residents and staff in Florida’s long-term care facilities tested positive for SARS-CoV-2. Total fatalities for the disease are about 2,800, a tenth of New York State’s, despite similar size populations.
The difference, according to Florida state officials was the rapid and early response that prohibited hospitals from discharging COVID-19 positive patients to long term care facilities. Patients were either held at the hospital or sent home. Florida adopted a risk-adjusted approach that has allowed much of the state to operate without too many restrictions, while protecting those most likely to get seriously ill.
When the COVID-19 fog lifts, which considering last week’s events, is likely to be sooner rather than later, we expect most governors to adopt Florida’s risk-based approach. The public health efforts to slow the spread of disease among the general population will be relaxed and the focus will move to people who are at real risk; health care workers, and people living in congregate housing situations like nursing and long-term care facilities. A further area of focus will be people with co-morbid conditions, especially diabetes, hypertension and coronary disease and those over 65.
That means that low and moderate risk activities like returning to office work, dining in a restaurant, attending a concert are going to return to normal – at least to the extent people are willing and able to do those things. High risk activities that involve large crowds like concerts, professional sporting events and conferences are going to have some restrictions – although that is in some doubt after last week. In all cases and absent any liability protections from Congress, employers are going to do what is necessary to protect their employees from contracting the disease.
Health care will be different. Health care, by its very nature is and will continue to be a high-risk activity long after people have returned to dining out and going to concerts. The high fatality rates at Long Term Care Facilities means they will be avoided by patients, physicians and discharge planners.
What does that mean to the post-acute?
Keep in mind always that crises like a pandemic tend to drag forward trends that were already underway. Post-acute reform has been a priority of Congress and the White House going back 20 years in fits and starts. The latest effort was the IMPACT Act of 2014 which mandated that MedPAC (remember them?) make recommendations to Congress for a unified post-acute payment system.
In 2019 and 2020, by regulation, CMS imposed new payment systems for SNFs and HHAs that set the stage for a unified reimbursement system. Both of those providers’ margins were highly dependent on delivering therapy, such as physical, speech or occupational services, until October 2019 for SNFs and January 2020 for HHAs. Now, reimbursement is tied to patient acuity.
Additionally, the Trump administration has included adopting of a unified prospective payment system for post-acute providers in its annual budget. All of Medicare PAC FFS costs the government about $60 billion a year. A unified PAC payment system would save about $100 billion over 10 years.
Onto that rather robust policy platform steps COVID-19 and its devasting effects on residents of at least one post-acute provider, skilled nursing facilities. In the pre-COVID world, the distinctions between home health care and institutional skilled nursing care had begun to blur. The incentives – delivery and payment for therapy services- were reduced.
In the post-COVID world, skilled nursing facilities find themselves between a rock and a hard place. On the one hand the most appropriate Medicare patients will be those in good health whose risk of death from COVID-19 is lower. On the other hand, these patients are more likely to be admitted for therapy after a joint replacement, for example. The new payment system at a SNF no longer provides the incentives to offer this sort of care as it did before.
A patient that is older or frailer, recovering from a stroke, for example, is most at risk for mortality from COVID-19 and discharge planners will recommend home health care whenever possible. Patient and family preference will also be a factor.
It is no surprise, amid the pandemic, nursing home occupancy has dropped.
It is likely to continue to drop and probably never recover as care shifts to the home, enabled by waivers that reimburse more widely for remote monitoring.
Medicare patients provide most of the margin for nursing facilities and offset negative margins for Medicaid patients. MedPac, in the March 2020 report to estimated Medicare margins at about 10% while Medicaid margins are at -3%. As Medicare patients are diverted to home care, nursing facilities will experience a shift in mix toward Medicaid.
States are in no position, absent federal intervention, to increase payments to nursing facilities, as a result, margins will be compressed even further, and job losses will persist.
All these trends add up to reduced nurse demand and an acceleration of reduced demand for therapy services at America’s 12,000 nursing facilities.
Emily Evans
Managing Director – Health Policy
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