New Skilled Nursing Payment Model Raises Medicare Advantage Questions

Providers that have learned to navigate the Medicare Advantage ecosystem will likely have a leg up when approaching the new payment model for skilled nursing facilities, but many questions still remain about how managed care plans will adapt under the coming system.

The Patient-Driven Payment Model (PDPM) reflects an ongoing push toward rewarding therapy providers that take on higher-acuity residents while moving toward linking reimbursements with outcomes — something that the public-private Medicare Advantage plans have been doing for years now.

“The PDPM situation that’s coming about is all about the management of the patient,” Susie Mix, CEO of managed care consulting firm Mix Solutions, told Skilled Nursing News. “We definitely do that with our Medicare Advantage clients now.”


The rise of managed care has dominated the outlook for the skilled nursing industry in recent months: Though penetration currently only sits at around 33%, leaders have postulated that number will grow at a faster rate than currently predicted by the Congressional Budget Office, and operators will be forced to adapt to the changes.

Part of this sea change includes a greater reliance on data to prove each individual SNF’s worth to the managed Medicare plans, which hold increasing sway in terms of referral streams in an era already defined by narrowing networks.

“The top five nursing homes are getting more and more patients, and the others are getting fewer and fewer,” Jill Krueger, president and CEO of pharmacy and rehab company Symbria, said at an industry conference back in April.


PDPM, with its incentives for therapy providers to take on medically complex residents, could potentially accelerate this trend once it takes effect.

“I think that’s the way the industry’s been moving in general, but I do think that it’s going to help the skilled nursing facilities just get even more acclimated to managed care,” Mix said. “Now all of their payers are managed. In one way, shape, or form, they’re going to get more savvy with the managed care piece of things because of this new system coming into play.”

But major questions still remain about how Medicare Advantage providers will react to the changes. Many of the contracts that dictate reimbursements under managed care plans are based on the soon-to-be-replaced Resource Utilization Group (RUG) system — which, in Mix’s experience, generated rates that most skilled nursing facilities found sufficient.

“We’ve enjoyed having the RUG rate be the reimbursement for us,” she said. “It matches what we currently do. It’s profitable for the most part, but now we’re changing into a whole new system that we’re not sure of.”

Of course, the PDPM — just like the RCS-I proposal that it replaced — still remains in the design stages, with a comment period scheduled to close June 26 and a current roll-out date of October 1, 2019. In the meantime, it’s up to providers to begin reaching out managed care partners to begin negotiating the transition.

“Historically, the providers … want to get paid proportionate to the services that they’ve been offered. They’ve been happy with the RUG rate they’ve been getting, so [they’re looking for] anything close to what they’ve been getting,” Mix said.

Written by Alex Spanko

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