LTC Market Update by Lou Ann Brubaker

By Lou Ann Brubaker, President – Brubaker Consulting. Original article posted October 2, 2017 at qs1.com.

One of the burning questions fueling healthcare provider discussions is: What’s going to happen to the Affordable Care Act? The first answer was provided on March 24, 2017, when House Republican leaders pulled the proposed American Health Care Act legislation from a vote. However, on May 4, 2017, the House passed the American Health Care Act.

Now, we wait…

For post-acute care (PAC) providers, the big question is: Regardless of any future legislative action, what should we do to be successful – given the pressures that won’t be going away?

How We Got Here

Before exploring where PAC might be going, it’s valuable to revisit how it got here in the first place. In the 1970s, nursing facilities provided custodial care – lengthy stays for individuals who had private funds to pay for care or who had few financial resources and qualified under Medicaid. Typically, admission drivers were chronic physical illnesses or declining cognitive abilities. Therapy services were also provided.

By the early 1980s, people were living longer, there were advancements in joint replacement surgery and the federal government provided generous reimbursement under Medicare Part A for post-surgical therapy services to help keep seniors independent. This created strong incentives for skilled nursing facilities (SNFs) to expand their rehabilitative services. More SNFs were built, and by the early 1990s, the total number of SNFs increased to an all-time high of 15,000.

Between 1980 and 1990, Medicare expenditures rose from $35M to $109M. Reimbursement was retrospective and cost-based; providers were only required to track their expenses in providing Medicare-covered services (everything from labor, food and supplies, to medications) and send the government the bill. As a result, the race was on to hire rehabilitation therapists, acquire or build additional SNFs, expand dedicated Medicare beds and optimize lengths of stay.1

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