Senior Living News Wire

The senior care industry can expect increased Medicare fraud scrutiny in the next couple years as the Obama administration seeks to recoup program dollars to help fund health insurance coverage expansion, according to a senior member of a law firm’s Healthcare Practice Group. 

“[Because of] healthcare reform, President Obama will try to find any Medicare fraud or abuse they can to reclaim money,”  said John Durso, JD, partner at Ungaretti and Harris, at Life Services Network’s annual meeting and expo in May. “[The administration] is focusing on that in our Medicare programs, in nursing homes and hospitals, to try to fund the expansion of healthcare reform to those who are currently uninsured.”

Under healthcare reform, more than 21 million people will become eligible for Medicaid-funded insurance coverage if all states participate in the program expansion, according to the Kaiser Family Foundation. While state spending is only expected to increase by about 3%, federal spending on the Medicaid program would rise 26% to nearly $1 trillion. 

The federal government has promised to cover 90-100% of care costs for the expected millions of new Medicaid beneficiaries at a time when state and federal Medicaid budgets are already strained. It’s led the Obama administration to look for ways to redistribute or recoup dollars from its other programs, such as through cracking down on fraud, said Durso. 

“It’s real money if they find people doing something wrong. They can hit them up for [re]payments out of their next Medicare payment,” he said. “It could be a huge money source.”

In fiscal year 2012, the Department of Health and Human Services and Department of Justice reported recovering $4.2 billion in taxpayer dollars from individuals and companies that had been fraudulently billing Medicare for reimbursements. Durso expects that amount to rise in fiscal year 2013 as the government redoubles efforts to prevent and halt Medicare fraud and crack down on fraudsters. 

Already in 2013, The Ensign Group (NASDAQ:ENSG) has reached an agreement with the Department of Justice to resolve Medicare overpayment allegations in a settlement that could reach $48 million. 

Life Care Centers, the nation’s third-largest nursing home chain, is currently under federal investigation, accused of overbilling Medicare millions of dollars for unnecessary or excessive therapy. 

Grace Healthcare LLC, a Chattanooga, Tenn.-based nursing home manager, has also been a False Claims Act target accused of billing for medically unnecessary rehabilitation therapy. The company and its affiliate have agreed to pay $2.7 million to resolve the allegations.

Another False Claims Act recouped $700,000 from Fairfax Nursing Center, a Virginia-based skilled nursing facility accused of billing Medicare for providing “excessive and medically unnecessary” therapy services to Medicare beneficiaries. 

Skilled nursing providers aren’t the only care providers facing scrutiny. 

“Opportunity for fraud is more prevalent in hospital settings than in nursing home settings,” Durso said. But skilled nursing facilities, like hospitals, chase referrals allowing them to bill for certain revenue-producing services, such as rehab. 

To avoid Medicare’s hammer of justice, he cautions, know the rules—and follow them.  

Written by Alyssa Gerace

Extendicare Inc. (TSX: EXE) will split up its U.S. and Canadian businesses, the company announced in its first quarter 2013 results .

The company’s board of directors cited contrasting regulatory environments between the two nations have “long presented challenges to the market.”

“This divergence has been emphasized by the significant change in the U.S. operating environment due to U.S. health care and regulatory reform with its related federal and state spending cuts,” Extendicare said in its first quarter earnings report. 

Extendicare’s board is currently reviewing strategic alternatives relating to the separation of its businesses.

Last year, the company appointed a Strategic Committee to focus on this initiative, which is already in the process of evaluating a specific technique of the separation, which it says may take the form of a sale of the U.S. business.

Alternatively, the split could involve a distribution of the Canadian and U.S. businesses, in which shareholders would have the flexibility to participate in two companies. The board expects to complete the process later in the year.

For the first quarter, revenue came in at $497.9 million, a decline of $21.5 million from a year prior, which resulted from the planned exit from Kentucky in 2012.

Written by John Yedinak

Skilled nursing facilities (SNF), like hospitals, have recently been subject to federal scrutiny for avoidable hospital readmissions, and new reports and data show that quality improvements are taking hold.

The 30-day re-hospitalization rate for post-acute skilled nursing patients showed significant decline from 21.6% in FY 2007 to 20.9% in FY 2011, according to new analysis from the the Alliance for Quality Nursing Home Care.

Detailing quality of care trends in SNFs nationwide, the Alliance’s report takes into account specific indicators and conditions that could make certain patients susceptible to hospitalization. 

Between 2003 and 2010, SNFs showed improvement in eight chronic care measures related to pain, high-risk pressure ulcers, catheters, restraints, activities of daily living decline, weight loss, depression and pneumonia vaccination. 

An increase in the average number of hours worked by nurse aides and licensed nurses were also found to contribute to improved quality outcomes as the percentage of contract staff decreased from 2003 to 2011. 

“Incorporating other metrics into this evaluation of SNFs—such as survey outcomes and staffing—offers a better look into quality,” said Steven Littlehale, chief clinical officer of PointRight, a national long-term care analytics firm that prepared the report analysis.

Measuring quality of care progress is essential not only for providers of long-term care, but for the nation as a whole, according to Alan G. Rosenbloom, president of the Alliance.

“Consumers, lawmakers and facilities themselves need to know where quality is improving, where performance has reached a plateau, and where quality challenges persist,” said Rosebloom.

While there have been real and continuing successes, says Rosenbloom, improvement must continue to be a significant focus for the skilled nursing sector as well as collaborating stakeholders.

The American Health Care Association (AHCA) has made significant headway in improving skilled nursing quality outcomes for many of its members since announcing its Quality Initiative in February 2012. 

In 2012, AHCA members were able to reduce the use of off-label anti-psychotic drug use by 6.7% in skilled nursing facilities, according to Neil Pruitt, Jr., AHCA board chair during a conference call Monday.

Additionally, 38.3% of AHCA members were able to achieve a 15% reduction in the use of anti-psychotic medications in skilled nursing facilities. 

The 6.7% antipsychotic reduction rate combined with the 38.3% of AHCA members who achieved higher-than-average readmission reductions led to a better total reduction rate for AHCA members compared to the national average of 5.9% in 2012. 

Much of this effort, said Pruitt, included engaging consultant pharmacists, nursing staffs as well as educating administrators and behavioral health coordinators about the impacts these off-label drugs pose for elderly residents.

“We are quite pleased with the 6.7% reduction in anti-psychotic drug use in the last four quarters,” said Dr. David Gifford, AHCA senior vice president of Quality & Regulatory Affairs. “With 11,350 fewer people taking these medications, there has been great benefits to individual outcomes.”

Similar to the Alliance, AHCA—some of whose members overlap—is also encouraging its members to reduce hospital readmissions.

Analyzing data through a risk-adjusted re-hospitalization measure, 25% of AHCA members have been already been able to achieve the three-year goal of a 15% reduction rate. 

These reductions in 30-day hospital readmissions have equated to about 14,000 individuals, in turn saving Medicare approximately $140 million, according to AHCA’s findings.  

Ensuring there is communication between skilled nursing staff and doctors, as well as identifying early warning signs that might make a patient susceptible to readmission helped AHCA achieve its results, said Pruitt. 

While AHCA’s conference call only discussed results of two aspects of the trade group’s Quality Initiative to limit off-label medication use, reduce hospital readmissions, increase staff satiability and consumer satisfactions, the agency remains hopeful for future outcomes. 

“Bringing the best practices is what this initiative has been about,” said Pruitt. “We are very pleased with the progress AHCA has made in addressing these initiatives.”

Written by Jason Oliva

The Ensign Group, Inc. (Nasdaq: ENSG) announced today that it has acquired three senior care properties—an assisted living community and two skilled nursing facilities. 

Cascade Plaza, a 90-unit assisted living community in Redmond, Washington and its sister facility Cascade Vista, 110-bed skilled nursing center will both be acquired by Ensign.

“This is a strategic acquisition that extends our growing footprint in the Seattle area’s vibrant healthcare community,” said Ensign President and CEO Christopher Christensen. 

Ensign’s Northwest-based subsidiary of Pennant Healthcare, Inc. will operate Cascade Vista, and Cascade Plaza will be operated by Ensign’s assisted living-based portfolio subsidiary, Bridgestone Living, Inc. 

In a separate transaction also disclosed on Tuesday, Ensign announced it has acquired Omaha Nursing Center, a skilled nursing facility based in Omaha, Nebraska. 

“This strategic acquisition offers tremendous operating synergies for Ensign’s existing operational base in Nebraska and Iowa,” said Christensen.

Omaha Nursing will be operated by a subsidiary of Gateway Healthcare, Inc., Ensign’s Nebraska-based portfolio subsidiary.

The purchases were made with cash and bring Ensign’s growing portfolio to 116 healthcare facilities, 93 of which are Ensign-owned, seven hospice companies and nine home health businesses across 11 states.

Ensign affiliates hold purchase options on two of its 23 leased facilities. Christensen reaffirmed that Ensign is actively seeking additional opportunities to acquire both well-performing and struggling skilled nursing, assisted living and other healthcare related businesses across the United States.

Written by Jason Oliva

Kindred Healthcare, Inc. (NYSE: KND) announced today that it has signed an agreement to sell 17 of its facilities to an affiliate of Vibra Healthcare, LLC, for $187 million.

The facilities consist of 15 transitional care hospitals containing 1,052 beds, one inpatient rehabilitation facility containing 44 beds and one skilled nursing facility (SNF) containing 135 beds. 

Six of Kindred’s transitional care hospitals and the lone SNF are owned, whereas the remaining facilities are leased—each facility is outside of the company’s 21 designated integrated care markets. 

“We believe that this transaction significantly advances our repositioning strategy, strengthens our financial position and immediately enhances shareholder value,” said Kindred CEO Paul J. Diaz.

This transaction will allow Kindred to sharpen its focus on the company’s integrated care markets, while also providing further capital to expand its home health and hospice operations, said Diaz.

Together, the facilities generated revenues of approximately $289 million and earnings before interest, income taxes, depreciation and amortization (EBITDA) of $20 million for the year ended December 31, 2012. 

Kindred expects to complete the transaction through multiple closings occurring during the third and fourth quarters of 2013. In connection with the transaction, the company said it expects to record a pretax loss that could reach $100, including a significant write-off of both goodwill and other intangible assets.

RBC Capital Markets served as the exclusive financial advisor to Kindred on the transaction. 

The deal is subject to Vibra finalizing its financing for the purchase and to regulatory  approvals and other conditions, the company announced. 

Vibra Healthcare, LLC is a specialty hospital provider based in Mechanicsburg, Pennsylvania that is focused on the development, acquisition and operation of freestanding long-term acute care hospitals, inpatient acute medical rehabilitation hospitals and outpatient physical rehabilitation centers. 

The company currently owns and operates over 50 of these specialty hospitals and outpatient centers in 12 states.

Written by Jason Oliva

National Health Investors, Inc. (NYSE: NHI) announced today that it will acquire a total of 254 skilled nursing beds in two Texas facilities for $26.3 million. 

The facilities, each less than two years old, are located in Canton and Corinth, Texas. 

“These two newly-constructed, strong-performing assets are a great fit for NHI’s diversified portfolio,” said Justin Hutchens, NHI’s CEO and president. 

Funding for the acquisition came from borrowings on NHI’s revolving credit facility, said the REIT. 

The company’s investments include independent living, assisted living, senior living campuses, skilled nursing facilities, medical office buildings and hospitals. 

Written by Jason Oliva

Skilled nursing facilities could soon share responsibility—and accompanying penalties—with hospitals for avoidable readmissions, as the Department of Health and Human Services (HHS) included the Medicare Payment Advisory Commission’s (MedPAC) recommendation to Congress in its fiscal year 2014 budget proposal. 

About 14% of Medicare patients discharged from hospitals to skilled nursing facilities are rehospitalized for conditions that potentially could have been avoided, according to MedPAC analysis. 

HHS’s proposal reduces payments by up to 3% for skilled nursing facilities with high rates of care-senisitve, preventable hospital readmissions beginning in 2017 in a bid to promote high quality care and potentially save $2.2 billion over 10 years.

The Affordable Care Act places emphasis on hospitals and their ability to provide quality care while achieving cost savings for Medicare and reducing preventable hospital readmissions, but the skilled nursing industry has “considerable opportunities” to improve the care they provide and arrangements made for post-discharge care, MedPAC said in its Congressional report.

“If facilities faced rehospitalization penalties, they would be more inclined to ensure that patients were physically ready, to see that their families were adequately educated (e.g., about medication management, advance directives, and hospice care), and to partner with high-quality community services to avoid readmission to the hospital,” says the report regarding last year’s recommendation to reduce skilled nursing facility payments for high readmission rates. 

For the 2013 report, MedPAC staff worked with a contractor to develop a risk-adjusted measure of rehospitalization during the 30-day window following discharge from a skilled nursing facility. 

The method considered patients’ comorbidities, ability to perform activities of daily living, whether the patient and a surgical procedure during a prior hospital stay, and the number of times the physicians’ orders were changed as a reflection of patient instability. 

Discharges from skilled nursing facilities, excluding direct hospitalizations and deaths, were to long-term nursing home care 31% of the time, to home health care services 45% of the time, and back to the community with no services, or some other type of care such as hospice, 24% of the time.

The average risk-adjusted rate of rehospitalization after discharge from the skilled nursing facility for five potentially avoidable conditions factored into the method was 10%, MedPAC found, and compared with the rates while the beneficiaries were in the skilled nursing facility, there was more variation across facilities. While about one-fourth of facilities had readmission rates of 7% or lower, another quarter had rates of 12.5% or higher.

“When the separate rehospitalization rates are considered together, they indicate that over 28% of beneficiaries were rehospitalized (for any one of the five conditions) either during or after a SNF stay,” MedPAC writes in the report. “This finding suggests considerable opportunities for SNFs to improve the care they provide and the arrangements they make for beneficiaries after discharge. It also represents considerable program spending for those hospitalizations that could have been avoided.”

Beginning in 2018, the HHS budget also proposes implementing a bundled payment system for post-acute care providers, including skilled nursing facilities, home health providers, and inpatient rehab facilities. Rates would be based on patient characteristics and other factors producing a permanent and total cumulative adjustment of rates, bringing them down 2.85% by 2020 and resulting in an estimated $8.2 billion in savings over 10 years. 

View MedPAC’s March 2013 report to Congress or HHS’s 2014 budget proposal. 

Written by Alyssa Gerace

Senior care providers have begun to see substantial results in their efforts to improve quality of care in the months following the American Health Care Association’s (AHCA) Quality Initiative announcement in February 2012. 

By December 2012, AHCA members have safely reduced the number of hospital readmissions within 30 days during a skilled nursing facility stay by 15%, according to a Long Term Care Leader blog post.

After measuring risk-adjusted rehospitalization data, AHCA members analyzed data through the third quarter of 2012. Comparing the baseline period of fourth quarter 2011, 54% of AHCA members saw a decrease in their rates readmission rates, with 25% already reaching their three-year reduction goal. 

Regarding the off-label use of antipsychotics, nearly 30% of AHCA members were able to achieve a reduction of 15% form fourth quarter 2011 to third quarter 2012. 

Similar to hospital readmissions, more than half (55%) of AHCA members were able to achieve a reduction in their rates. However, data for fourth quarter 2012 will not be available until later in April, notes the blog post.

As for AHCA’s last two goals of staff stability and customer satisfaction, the association says it does not yet have the data to assess its progress in those areas. Although the 2011 survey was just released, AHCA  says that it is now beginning to collect data for the calendar year 2012, which it will use to report on its first year of progress.

Read the blog post.

Written by Jason Oliva

Here’s a collection of news bites pertaining to the senior housing and long-term care industries, gathered from around the nation. Many of the articles are state-specific, but could eventually have national implications or influence senior care trends. Click the links to access the full article. 

Nursing Home News

From ElderLawAnswers.com—Court Upholds Ruling of Son’s Responsibility for Mom’s Nursing Home Bill

“In May 2012, a Pennsylvania appeals court found a son liable for his mother’s $93,000 nursing home bill under the state’s filial responsibility law. Health Care & Retirement Corporation of America v. Pittas (Pa. Super. Ct., No. 536 EDA 2011, May 7, 2012),” writes ElderLawAnswers. ”In March 2013 the state’s Supreme Court declined to hear the case, meaning that the ruling is final.” Read more…

From the judgment: “Though Appellant is correct that it was HCR’s burden to establish his ability to support his mother, we hold that HCR met its burden. As a result, Appellant’s first request for a new trial is without merit.” Read more…

From Kentucky.com—Bills Seeking Protection for Nursing Home Residents Fail to Pass

“House Bill 73, a bill that would continue a criminal background check program for nursing home employees, was passed by the House but was never heard by a Senate committee. If a similar bill isn’t passed in the 2014 session, the fingerprint background check program—currently paid for through a $3 million federal grant and an additional $1 million in state funds—will end after June 30, 2014,” reports Kentucky.com. “Bills that would create a registry of workers who have had substantiated cases of adult abuse or neglect also failed to pass for the fourth straight year. Gov. Steve Beshear had earmarked $1.2 million in the 2012-2014 budget for the creation of the adult abuse registry.” Read more…

From EnterpriseNews.com (Mass.)—New Law Provides Safeguards for CCRC Residents

“Governor Deval Patrick held a ceremonial bill signing Wednesday for legislation that will give residents of continuing care retirement communities additional consumer protections and housing rights,” reports EnterpriseNews.com. “The legislation will give residents of Continuing Care Retirement Communities the right to establish a resident’s association, receive a current copy of the facility disclosure statement and receive information on fees and construction. Providers must make reasonable efforts to explain the terms of disclosure statements, adjustments in monthly fees, information that may affect the health and welfare of residents and the future of the facility, including the ownership and providers’ financial health.” Read more…

From NewsOK.com—Nursing Home Camera Bill Advances in Okla. Legislature

“[On Tuesday,] a legislative committee unanimously passed a bill that would allow nursing home residents or their family members to put video recorders in their rooms,” reports NewsOK.com. “[The bill] also would prohibit a nursing home facility from refusing to admit a person who wants a recording camera in the room or remove a resident because a camera is in the room. Backers are confident Senate Bill 587 will get eventual approval of the full House. It was approved in the Senate 44-0.” Read more…

From NJ.com—Whistle-Blowing Verdict Against Nursing Home Gets Overturned

“A state appeals court has overturned a verdict against a Bridgewater nursing home accused of firing a nurse in retaliation for him reporting allegedly improper patient care to government agencies in January 2008,” reports NJ.com. “Jurors in March 2012 agreed with the claim made by James Hitesman that his termination from Bridgeway Senior Healthcare violated the Conscientious Employee Protection Act, or CEPA, which is designed to protect employees in whistle-blower cases. But the appellate judges found that since the code of ethics only applies to nurses, it cannot be cited as part of a CEPA claim against Bridgeway.” Read more…

From The News-Herald (Ohio)—Nursing Home to Close, Displacing Residents

“Broadfield Care Center at 7927 Middle Ridge Road sent a letter to its residents Thursday notifying them its skilled nursing facility will close in 90 days,” reports The News-Herald. “Provider Services, which bought Broadfield three years ago, issued a statement Friday. The statement didn’t provide a reason as to why the 81-bed facility is closing. No plans have been made on what will happen to the facility and its 80 skilled nurses.” Read more…

From the Harford Courant (Conn.)—Bill Prohibiting Violent Criminals to Live in Nursing Home Advances

A bill spawned by the controversial Rocky Hill nursing home proposal cleared one legislative committee and was forwarded to a second on Tuesday. In its current form, the bill would amend existing state law to prohibit people convicted of sexual assault, along with convicted murderers, from residential nursing home placement,” reports the Hartford Courant. “If it becomes law, and is not vetoed by Gov. Dannel P. Malloy, the bill would take effect at enactment.” Read more…

Senior Care & Long-Term Care News

From the News-Journal.com (Tex.)—Senate OKs Overhaul of Medicaid-Funded Long-Term Care

“The Texas Senate unanimously approved an overhaul of long-term and acute care Medicaid services on Monday in an effort to expand care to more disabled Texans while saving millions of state dollars. “We cannot continue to fund the same inefficient, unsustainable long-term care system and expect a different result,” said Sen. Jane Nelson, R-Flower Mound, the author of Senate Bill 7,” reports the News-Journal.com. “SB 7 is expected to save $8.5 million in Medicaid costs in the 2014-15 biennium by expanding managed care services, establishing pilot programs to try to provide services at capitated costs and implementing measures to ensure more efficient monitoring of services.” Read more…

From the Post-Tribune (Ind.)—Ralliers Call for More Senior Care Options

“Senior citizens and physically handicapped people gathered at the Statehouse on Wednesday to share the importance of home and community-based services that can help keep people in their own home, instead of having to move to a long-term care facility,” reports the Post-Tribune. “At the Rally for Independence, Indiana residents from all corners of the state gathered to show how a little funding to help those who would prefer to stay home on their own goes a long way.” Read more…

From the National Senior Citizens Law Center—Calif. Dual Eligibles Agreement with CMS

“[On March 28], California’s Department of Health Care Services (DHCS) and the federal Centers for Medicare and Medicaid Services (CMS) announced an agreement to redesign the way Medi-Cal and Medicare services are delivered to low-income older adults and people with disabilities in California,” says the National Senior Citizens Law Center. “Under the agreement, dual eligibles will be automatically enrolled into capitated managed care plans responsible for delivering all Medicare and Medi-Cal services in exchange for a single payment. The payment will be less than the two programs spend on the population today. Enrollment will begin this October. As many as 456,000 people will be impacted.” 

The Ensign Group, Inc. (Nasdaq:ENSG) announced Wednesday the acquisition of three skilled nursing facilities (SNF) in Texas. 

The facilities include San Marcos Rehabilitation and Healthcare Center, a 129-bed SNF in San Marcos; The Courtyard Rehabilitation and Healthcare Center, a 56-bed SNF in Victoria; and La Cila Rehabilitation and Healthcare Center, a 152-bed SNF also in Victoria. 

The acquisitions were effective April 1, 2013, according to Ensign. 

“These opportunistic acquisitions further solidify Ensign’s presence in the important Southeastern Texas area,” said Christopher Christensen, Ensign’s president and CEO, in a statement.

The acquisitions increased Ensign’s operational base in Texas to 27 skilled nursing facilities and assisted living communities, according to Christensen.

The acquired SNFs will each be operated by a subsidiary of Keystone Care, Inc., Ensign’s Texas-based portfolio subsidiary, said Barry Port, president of Skilled Nursing and Assisted Living Services at Ensign. 

The purchases wee made with cash and bring Ensign’s portfolio to 112 healthcare facilities, 90 of which are owned by Ensign. Additionally, the company adds to its seven hospice companies and nine home health businesses across 11 states. 

Ensign is actively seeking additional opportunities to acquire both well-performing and struggling skilled nursing, assisted living and other healthcare-related businesses across the U.S., according to Christensen. 

Written by Jason Oliva

Budget cuts impacting Medicare and Medicaid will leave Texas nursing home providers no choice but to scale back on staffing among other changes, the communities say.

Nursing homes in Texas say state and federal funding cuts to are presenting a “dangerous strain” on their ability to care for older, more medically complex patients.

In a survey of 100 nursing homes representing 10% of the state’s nursing home population, the Texas Health Care Association found more than 65% have made staff changes, more than 72% have reduced staff hours, wages and benefits, and 60% have canceled or postponed facility improvements already in response to Medicare and Medicaid cuts.

“The so-called ‘Medicaid expansion’ discussion in Austin is coming at the expense of a closer legislative look at how Texas nursing home patients are increasingly put at risk by the state’s own lack of Medicaid funding adequacy,” said Tim Graves, THCA president. “So far, the Texas Legislature has not come close to adequately addressing seniors’ state Medicaid funding requirements, and far more focus is warranted. Local seniors are at risk, and the Legislature needs to act.”

The cuts are putting increasing pressure on senior care within the state, the survey finds, with the majority of providers anticipating measures such as freezing wages, deferring facility improvements, and reducing staff benefits to accommodate the change.

More than 30% say they are considering staff layoffs in 2013.

Written by Elizabeth Ecker

A pilot program focusing on transitions between levels of care—including hospitals and skilled nursing facilities—has yielded hugely successful outcomes in reducing rehospitalizations, with the potential of spreading to more post-acute senior care settings. 

Healthcare reform initiatives have emphasized reducing preventable hospital readmissions, and in October, the Centers for Medicare & Medicaid Services (CMS) began implementing reimbursement cuts to hospitals with higher-than-expected readmission rates.

While preventing rehospitalizations might not prove to be an easy fix, a session during the Aging in America Conference in Chicago last week suggested that collaboration between various health providers can be one way to significantly reduce them. 

Through funding from both CMS and the Administration on Aging (AoA), the Aging & Independence Services (AIS) and Aging and Disability Resource Connection (ADRC) have been able to achieve significant reductions in hospital readmissions through the Care Transitions Intervention (CTI) Program.

“I truly believe that all communities that are a part of this program have the opportunity to learn from one another and make system-wide changes to reduce readmissions in this country,” said AIS Aging Program Administrator Brenda Schmitthenner in a conference session about the CTI program.

During a CTI pilot in 2009, a partnership between Sharp Memorial Hospital in San Diego and AIS/ADRC saw only seven readmissions from a total sample of 88 patients. 

Developed by Eric Coleman, MacArthur Fellow and Professor at the University of Colorado School of Medicine, the CTI model incorporates what are called the “Four Pillars” of criteria to ease a patient’s transition period from the hospital to a skilled nursing facility or the home.

These Four Pillars include the establishing and maintaining of patients’ personal health records, medication lists, specialist follow-ups and recognition of “Red Flags,” or symptoms of chronic illness.

Sharp Memorial Hospital ended up adopting the CTI Program following the success of the pilot, and now it has expanded to the University of California San Diego Medical Center and Scripps Mercy Hospital.

The CTI model even led to the birth of another initiative to reduce hospital readmissions called the San Diego Care Transitions Partnership (SDCTP) Design.

To design SDCTP, AIS collaborated with a variety of San Diego health care providers as well as the UCSD Health System with the central mission of improving quality of care for patients during transition periods, while also reducing readmissions for high-risk beneficiaries.

“SDCTP is committed to reducing readmissions by 20% in two years,” says Schmitthenner. “Failure is not an option.”

The program also looks to include what it calls “care enhancement,” which entails providing transportation, durable medical equipment not covered by Medicare, and homemaker assistance, including medication pickup and shopping errands.

Additionally, some key elements of care enhancement also include coordination with the patient’s care team, hospital visit-discharge assessment, and home visits 24-72 hours of discharge.

The SDCTP will serve approximately 21,000 fee-for-service Medicare patients with various interventions that include: using assessment tools to conduct risk screening, using a high-risk health care coach to coordinate care and handoff to other providers upon discharge, using a pharmacist for medication education, as well as transitioning patients into palliative care and hospice.

Currently, Schmitthenner says the SDCTP design team is customizing an IT solution for invoicing, data collection, monitoring and reporting to compile a database that shows what hospitals provided which types of interventions.

The transition between care settings can sometimes induce harmful side effects on a patient’s physical well-being, according to the American Medical Directors Association, making programs that focus on coordinated care during these transitional periods necessary to ensure patients leaving institutional settings remain healthy during the recovery process.

Written by Jason Oliva

Stock for healthcare real estate investment trust Aviv REIT (NYSE:AVIV) was up double digits as of noon Eastern on Thursday during its first day of trading on the New York Stock Exchange. 

Aviv announced on Wednesday the pricing of its initial public offering of 13.2 million shares of common stock at a public offering price of $20.00 per share. The shares began trading on March 21, and were up more than 14% to $22.95 as of 12 p.m. Eastern. 

Underwriters have been granted the option of purchasing up to an additional 1.98 million shares of common stock to cover over-allotments. 

The REIT, which focuses primarily on the ownership, acquisition, and development of skilled nursing facilities, plans to use the net proceeds from the IPO to repay certain indebtedness and use the remainder for general corporate purposes, including the potential acquisition of additional properties.

This is the third time Aviv REIT has attempted to go public. The offering could raise more than $300 million if all shares are bought.

The offering is expected to close on March 26.

Medicare margins in skilled nursing facilities are expected to range between 12% and 14% in 2013, according to the Medicare Payment Advisory Commission (MedPAC) in its  most recent report to Congress, indicating that the sector’s payment system needs to be restructured and rebased.

MedPAC recommended revising the skilled nursing facility Prospective Payment System (PPS) for 2014, which would result in an additional cut of at least 4% on top of the 2% cut in Medicare reimbursements healthcare providers must absorb due to sequestration.

In MedPAC’s March 2012 report to Congress, the commission recommended restructuring the skilled nursing payment system and then to rebase payments the following year, with no update to that year’s payment rate.

The commission based that recommendation off of several factors, it says, including “high and sustained” Medicare margins, widely varying costs unrelated to case mix and wages, cost growth “well above” the market basket, reflecting “little fiscal pressure from the Medicare program,” and the ability of many skilled nursing facilities to have consistently below-average costs while providing above-average care.

The industry has demonstrated a continued ability to maintain high margins despite changing policies, MedPAC said. The report also cites some Medicare Advantage payments to facilities that were “considerably lower” than Medicare’s fee-for-service (FFS) payments, which the commission believes indicates a willingness to accept rates much lower than FFS payments for beneficiaries.

“No policy changes have been made that would materially affect the trajectory of these findings going forward,” MedPAC writes of their previous recommendations in the 2013 report. “Therefore, the Commission maintains its position with respect to the SNF PPS and urges the Congress as soon as practicable to direct the Secretary to revise the PPS and begin a process of rebasing payments.”

Nursing home trade groups are opposed to MedPAC’s recommendations, citing already slim operating margins when considering enormous shortfalls from Medicaid underpayments.

“Considering the fact 40 states have cut or frozen state Medicaid SNF rates since 2009, today’s MedPAC recommendation, as it does annually, fails to properly evaluate overall Medicare-Medicaid operating margins—the lowest of any provider group,” said Alan Rosenbloom, President of the Alliance for Quality Nursing Home Care, in a statement.

The sector is currently facing $65.6 billion in “unsustainable” Medicare cuts over the next ten years, Rosenbloom said

Non-Medicare margins (Medicaid and private pay) in 2011 ranged from an estimated –1% to –3%, MedPAC found, while total margins ranged from 4-6% considering all payers and lines of business.

Increases in payments between 2010 and 2011 outpaced increases in providers’ costs, the commission found, reflected in the continued concentration of days in the highest payment case-mix groups.

Payments in 2011 were “unusually high” because of overpayments resulting from an adjustment made with the implementation of the new case-mix groups, said MedPAC, which were then followed by an average 11.1% reimbursement rate reduction effective Oct. 1, 2011.

Margins in the skilled nursing industry ranged between 22-24% in 2011, MedPAC estimated—the eleventh year in a row Medicare margins were above 10%. However, the commission noted those margins were estimated without Medicare cost reports, which hadn’t been available in time for the MedPAC report.

Medicare spending in skilled nursing facilities for 2011 was $31.3 billion and comprised about 6% of the program’s overall spending, estimates the Office of the Actuary.

View MedPAC’s March 2013 report.

Written by Alyssa Gerace

CapitalSource, a commercial lender to small and mid-sized businesses, has launched a new national financing program to help skilled nursing providers upgrade their physical plants and keep up with healthcare trends. 

The Healthcare Construction Finance program is designed to provide funding for the replacement or substantial renovation of skilled nursing facilities, which will allow the facilities to reposition themselves in local markets and be better equipped to deliver quality care.

Under the new program, CapitalSource will provide loans to skilled nursing owners and operators with market-based pricing depending on leverage and credit. The structure includes up to two years for the construction period with rollover to a four to five-year mini-permanent loan. The loan-to-cost will be up to 75%, and terms will include a 25-year amortization schedule on the principal balance after the construction phase has ended.

“There is high demand to upgrade or replace the current nursing home stock,” says Steve Gilleland, CapitalSource’s senior managing director of healthcare finance, as nursing homes are an average of 45 years old. 

What operators are looking to do with their facilities varies by location and proximity to referral sources, he says. In more rural areas, it’s more common for operators with a majority Medicaid census to want to upgrade their facility to differentiate from local competitors. In other markets, operators may want to focus on converting units to private rooms, or adding post-acute or sub-acute care units as they look to partner with Accountable Care Organizations. 

Sometimes this can be done through extensive renovations.   

“If an existing facility has good enough bones and can do enough to get the latest technology, and all the bells and whistles to help deliver care in the existing building, then that’s a less expensive option,” Gilleland says.

However, some things just can’t be retrofitted, he says, and at that point, if extensive renovations aren’t possible, a facility replacement can be the solution.

While the program has a national platform, for operators to qualify for loans, existing relationships and strong operational track records are a must.

“We’re only going to do business with people we know and [have good relationships with],” Gilleland says, “or for someone we haven’t done business with, but has a well-established track record.” 

The golden rule, he says, is this: “It’s not what we lend on, it’s who we lend to. We’re more concerned with who we’re lending to, rather than for what.” 

A possible benefit of the program includes the offer of fixed-rate financing, something a regional bank may not be able to provide on the construction side, according to Gilleland. Additionally, unlike some regional lenders, CapitalSource does not require cash accounts.

CapitalSource plans to lend in the ballpark of $70 million in 2013, says Gilleland. While the program is currently only for skilled nursing replacement or renovation lending, he adds, there are plans for rolling out a senior housing program as well, with an ultimate goal of also doing new construction lending. 

Written by Alyssa Gerace