The Protecting Access to Medicare Act of 2014 directs the Secretary to specify a skilled nursing facility all-cause all-condition hospital readmission measure (or any successor) by Oct. 1, 2015.

As per customary routine, the details are sketchy and nobody knows how the program will actually materialize.  The American Health Care Association (AHCA) offers the following insights into key elements of the legislation:

A long phase-in

• There is no financial ramification to anyone until fiscal year 2019. (October 1, 2018-September 30, 2017)
• For the first two years, CMS will be selecting a risk-adjusted hospital readmission measurement.

• Starting in FY 2017 (October 1, 2016), CMS will provide private information to you on how you are performing on that measurement.
• Starting in FY 2018 (October 1, 2017), that information will go public on Medicare’s Nursing Home Compare website, and data from FY 2018 will determine how you rank, relative to the other 15,000 nursing centers.

The financial impact doesn’t hit until 2019

• That year rates are cut 2%, but at least half of that figure (50% to 70% of the cut) goes into an incentive pool that CMS will distribute back to you based on your performance on the hospital readmission measure.
• The money is not withheld. Instead, you will receive a notice at the start of the year that tells you your rate for the entire year based on the prior year’s performance.

• So, the worst case scenario is that you would get 98% of your otherwise applicable rates.
• The best case is that you would get more than 100%, but it will depend on how the Secretary creates the system.

The Secretary of HHS will determine the amount that goes toward the incentive pool

• Secretary will develop the incentive pool (50-70% of the cut)including how funds will be distributed.
• The Secretary could decide that every facility receives something, or could take the extreme position that poor facilities get none of the pool.

It will be possible for members to avoid any penalty and will likely be possible for some members to achieve a greater payment rate

• The rate will depend on the Secretary-designed incentive pool.
• CBO scored this policy as saving the government $2 billion over the next 10 years.
• The savings comes from the fact that at least 30% of the 2% withheld is not in the incentive pool.
• CBO believes this will result in reduced hospitalizations, and therefore, less Medicare spending in hospitals.

One thing is for certain, the issue of hospital readmissions is not going away anytime soon.