The IMPACT Act of 2014 is being likened to the Omnibus Budget Reconciliation Act of 1987 related to the impact (no pun intended) of this piece of legislation on post-acute care providers as it sets the stage for overhauling the Medicare payment methodology for these services.

This bill, which was passed by Congress on Sept.18, calls for 3 specific areas of new reporting:

  1. Standardized Assessment

This assessment tool is to be interoperable, to allow exchange of data among post-acute care providers and others and must include common standards and definitions. The expectation is that existing assessment instruments utilized by LTACs, IRFs, HHAs, and SNFs will be modified to include the required elements of this standardized assessment instrument.

The assessment instrument will include information regarding functional status, cognitive function, special services, treatments and interventions (such as dialysis, ventilator use, chemotherapy); medical conditions and impairments such as sensory loss, incontinence or inability to swallow.

No later than October 2018, “the secretary shall match claims data with assessment data pursuant to this section for purposes of assessing prior service use and concurrent service use, such as antecedent hospital or PAC provider use, and may use such matched data for such other uses as the secretary determines appropriate.”

  1. Quality Measures

In addition to the existing quality measures currently reported, the IMPACT Act calls for reporting of functional status, cognitive function and changes in function; skin integrity and changes in skin integrity; medication reconciliation; incidence of major falls; and the existence of and providing for the transfer of health information and care preferences.

While risk adjustment is mentioned in reference to quality measure reporting, it is to be done “as determined appropriate by the secretary.”

The first phase will include measure specifications such as numerator, denominator and other exclusions, data collection and data analysis. The second phase will involve feedback reports to PAC providers. And finally, the third phase will include public reporting.

This will occur not later than two years after the specified application date (Oct 1, 2018 for home health and SNFs), and will be incorporated into existing reporting programs.

Beginning October 1, 2018, failure to report the standardized patient assessment data or quality measures will result in a 2 % reduction in payment rates.

  1. Resource Use

This area is intended to capture the full cost of the post-acute care that will include total estimated Medicare spending per beneficiary (to be done at CMS through claims data); discharge to community; and measures to reflect all-condition risk-adjusted potentially avoidable hospital readmissions (however, it is worth noting that such risk adjusted measures have not been released for post-acute settings).

The secretary will apply geographic adjustments to resource use, as well as other risk adjustments, “as determined appropriate by the secretary.”

The date to begin the reporting of these three domains will be October 1, 2016 for home health and skilled nursing, October 1, 2018 for inpatient rehabilitation facilities, and January 1, 2019 for long-term care hospitals.

Alternative PAC Payment Models

Not later than June 30, 2016 the Medicare Payment Advisory Commission (MedPAC) shall submit to Congress a report that evaluates and recommends features of PAC payment systems; “to the extent feasible,” such report shall consider the impacts of moving from the current payment system “to new post-acute care payment systems under title XVIII of the Social Security Act”.

What Does This Mean For Skilled Nursing Facilities?

Clearly the requirements for reporting will mean new work for providers, and failure to do so will result in significant payment reductions (2%), but this is only part of the story.

Although not specifically called out by name, this legislation sets the stage for payment changes that will likely include some form of “site-neutral” payments that pay for services provided and not by setting, as well as new prospective-payment models — including expansion of bundling.

These changes will not only impact fee-for service beneficiaries, but will also translate to Medicare managed care and private insurance payers who typically follow Medicare standards for payment.

Now is the time to put into place strategies to capture your internal quality measures and integrate them into process improvement activities, focusing on areas such as hospital readmissions, functional changes, medication reconciliation and documenting patient preferences in care.


The positive side to all of this is that the industry has long pushed for payment methods that recognize complexity of care and are not merely driven by such services as rehab. Furthermore, this will provide meaningful and standardized information to drive improved care coordination and optimal use of post-acute services.