Specialties, Complex Patients Get Boost Under New CMS Payment Model

Skilled nursing facilities that can serve more medically complex patients will be rewarded under the Centers for Medicare & Medicaid Services’ (CMS) proposed Patient-Driven Payment Model (PDPM), according to a new white paper from Integra Realty Resources’ health care and senior housing practice.

The proposed model, announced late in April, draws from a previously proposed model, the Resident Classification System, Version I (RCS-I), in focusing on value instead of volume and primarily on the needs of residents rather than the services they receive, the white paper said.

“Although much of the talk in the industry has focused on the revenue side, there seems to be much to gain on the expense side by focusing on appropriate therapy services,” the white paper said.


If finalized, PDPM will take effect Oct. 1, 2019. CMS is accepting public comments on the Federal Register until June 26.

Slimming down RCS-1

The biggest change from RCS-1 to PDPM is simplification of the former, Brad Schopp, managing director of Integra’s health care and senior housing practice, told Skilled Nursing News.


The classifications in PDPM are streamlined, especially in contrast to RCS-1, Schopp said. PDPM determines which of 10 categories a resident belongs in, from which administrators can zero in on five case-mix adjusted components: physical therapy (PT), occupational therapy (OT), speech-language pathology (SLP), non-therapy ancillary (NTA) and nursing.

“Compared to the current 66 RUG-IV categories, this new process will represent more accuracy in patient assessment,” the white paper argued. “Second, CMS estimates this process will create reduction in paperwork and administration, which is estimated at a savings of approximately $2 billion over 10 years.”

PDPM also focuses particularly on reducing the average length of stay (ALOS), with proposed payment reductions of 2% for the PT and OT components every week after the first 20 days of a resident’s stay.

“The people who have already been trying to lower length of stay, who have been focused on readmissions, obviously they’re going to be in a better position, and they’re obviously going to be winners,” Schopp said.

Changes in incentives

With a new reward system under PDPM, facilities will seek out clinically complex patients, who will become more profitable, the white paper argued.

“I do think the medically complex residents will have better options in the future, because [the facilities] are getting reimbursed higher, and it’ll make [those patients] more desirable,” Schopp told SNN.

Other winners include those who have been through bundled payments and selected as preferred providers, he added. Speciality buildings will be rewarded, and nonprofits and older buildings, which have not notably catered to the demand for high-paying therapy residents, will also benefit because of the focus on more medically complex patients, according to the white paper.

Rehabilitation companies, traditional rehab centers and facilities without advanced capabilities, on the other hand, aren’t in the most ideal position. In particular, operators that haven’t focused on value and are running their nursing home as they’ve run it for decades will have problems, Schopp said.

“Some of these older operators that are not really well-versed in this stuff might run into trouble,” he said. “And that might create some buying opportunities for the people that are ahead.”

Written by Maggie Flynn

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