Medicare Swing Beds and Strategic Considerations

By Baker Newman Noyes April 9, 2014

The term “swing bed” is used to describe the use of an inpatient hospital bed for either an acute or skilled level of care. It applies to rural hospitals with less than 100 beds and swing bed status must be granted by the Department of Health and Human Services. If the provider is a critical access hospital (CAH), swing beds are included as part of the 25 bed limit. There are many strategic considerations related to swing bed care.

For most CAHs, swing beds are a “critical” revenue stream and can improve both occupancy and productivity levels, in addition to increasing a facility’s revenue. The Federal Office of Rural Health Policy has estimated that increased reimbursement is as much as $3.2 million dollars with a mean range of approximately $394,000 annually.

As most CAHs know, cost reimbursement for swing beds is based on a carve out of an inpatient per diem for Medicare and is typically higher than SNF RUG rates under prospective payment. The OIG is currently reviewing this to determine if savings for the Medicare program can be achieved by more closely matching these two types of reimbursement. Should this ultimately occur and CMS changes its policy, it will be important to remember that the extent to which reduced swing bed reimbursement is related to fixed costs, any loss in reimbursement will be mitigated by a higher actual cost per day for the acute population of the facility.

There are many anecdotal reasons this author has heard as to reasons some CAHs do not use or only minimally use swing beds, including:

• Swing bed patients are sicker and require care not always available in a skilled nursing facility
• Concern about bed availability for acute patients
• Hospital nursing staff do not want to care for SNF level patients
• Swing beds are only used when a short stay is predicted
• The SNF affiliated with the organization will lose market share

Each of these is a valid concern, but with appropriate management and strategic consideration given to swing beds, optimal use specific to any given facility can be achieved, while mitigating the negative factors. For CAHs, the end will usually justify the means.

As a start, ensure the CAH has a designated care coordinator. Careful case management and coordination between the swing bed provider and the referring entity is key. With readmission penalties now in place, providers want to keep readmissions to a minimum and appropriate care in a swing bed can help ensure this. Second, think about the CAH’s tertiary care center. With an already established relationship, open communication and collaboration can assure a mutually beneficial outcome. In some instances, the CAH may find that the tertiary care facility will even discharge patients with specialized equipment that is necessary for care in order to continue that care in a more appropriate setting, e.g., equipment necessary for complex wound management. Since the two facilities already have an established relationship, this type of outcome should be readily achievable.

From an overall perspective, CAHs looking to expand their use of swing beds should pursue relationships with many different providers and agencies, including:

• The tertiary care facility already in their network
• Other acute care hospitals
• Physician specialty groups
• Local nursing homes and other post-acute facilities
• Area agencies on aging
• Other senior care facilities and agencies

Each of these can be considered a referral source, and with an appropriate strategy can help to increase swing bed use.

When considering the strategy to be used in marketing swing beds to these potential referral sources, there are several key points a CAH might use, including:

• The care is close to home, making it better for the patient and family.
• There can be an improved continuity of care, especially if the patient is being discharged from the CAH’s acute side.
• It is recovery in what is basically a hospital setting, often with the same caregivers who are already familiar with the patient and his/her medical care.
• There can be less disruption in the healing process, where the patient never leaves the bed he/she was in as an acute patient.
• There is focus on returning the patient to home.

In summary, swing beds are a valuable level of patient care for most CAHs and with a good strategy in place, they can enhance a CAH’s revenue stream.