Below is an examination of a series of facts and problems unique to the skilled nursing sector when it comes to ranking quality of care among a mixture of providers lumped into one catch-all category: Skilled Nursing Facilities. The opinions below are those of Marc Zimmet, CEO of Zimmet Healthcare Services Group. 

1.      The Facts First

“Skilled Nursing Facility” is a federal certification held by nearly 15,000 providers. It authorizes reimbursement under the Medicare Part A post-acute benefit. “Nursing Facility” (NF) is the state-level designation that allows billing for long-term care Medicaid.

Beginning in the 1980s, NFs sought SNF certification en masse to fill the emerging sub-acute niche; DRGs had given hospitals a strong incentive to discharge patients “quicker and sicker.” NFs could not bill for that level of care, and Medicaid did not cover it.

New buildings were designed, many NFs met the standard easily, and hospitals created “step-down” units designated as SNFs so they could collect the full DRG and keep revenue flowing by moving the patient down the hall. The SNF count eventually exceeded 16,000 before roughly 10 percent exited or closed as reimbursement and care patterns shifted.

2.      The Problem Arises When . . .

Hospitals vary widely. CMS recognizes nearly 20 discrete hospital types with distinct rules and reimbursement (IPPS, children’s hospitals, psychiatric hospitals, specialty hospitals, and so on). By contrast, there is only one SNF.

The provider class is far too broad and remains a structural flaw in the program’s design. A 40-bed rural facility, a 12-bed “Transitional Care Unit” tucked into an IPPS hospital, and a 400-bed complex with ventilators and onsite dialysis are regulatory triplets to CMS. A state may treat them differently, but Medicare does not. They are paid without distinction, subject to the same reporting rules, and would have been swept indiscriminately into the attempted minimum-staffing mandate. A SNF is a SNF to the federal government, yet there is no coherent “national SNF industry” in practice.

SNF data reporting and enforcement are equally inconsistent. Providers submit information to distinct state and federal repositories in dissimilar formats, at various times, using poorly calibrated measures. SNF cost reporting accuracy began to atrophy when it no longer impacted provider-specific reimbursement; differences in state regulations and local market dynamics further distort what we think we know about providers, yet like clockwork, CMS releases aggregated data for every facility that appears standardized but is effectively non-comparable. 

Not to be outdone, private accounting firms issue cost report compendium and media outlets such as Newsweek and U.S. News & World Report, and the inscrutably academic yet reality-challenged Medicare Payment Advisory Commission act as if SNFs are like standardized fast-food franchises and wonder why the fries taste different at each outpost.

3.      What the ‘Best of’ Ranking-Pulp Fiction Gets Wrong

Everything has its place; those cost report compendiums, “best SNF” stories, and MedPAC’s SNF meeting transcripts should be placed in the trash – they are damaging to the entire SNF provider class. Everything we think we know about SNF data is wrong. That must change, or payment and policy will never align. 

Consider the recent “Best of” lists praised by industry trades. No one seemed to question why certain provider profiles were so overrepresented. CCRCs, with their small bed complements and upfront payments, operate under different rules of engagement, many are shuttering their SNF units, and few are accessible to long-term care Medicaid residents.

Many on these lists don’t accept Medicaid at all – go figure. Others report high direct care hours that are not evenly distributed across the facility. Several SNFs with state-certified ventilator units were lauded for their robust staffing – outside those units, staffing is as likely to fall below average as above. 

Here’s the reality, staffing may be a driver of quality, but Medicare is the unequivocal driver of staffing.

The writers must have missed SNFonomics 101.

Bottom line: Numbers are not data. Context matters. SNFonomics dictates that a SNF can only perform as well as its market allows. If you’re in an area with low Medicare utilization, you won’t find many “best of” facilities nearby.