Specialized Skilled Nursing Operators to Benefit from New CMS Payment Model

The new Patient-Driven Payment Model (PDPM) for skilled nursing facilities will require a strategic shift away from the volume of services provided to a focus on patient needs, and a new analysis from Avalere Health says providers should start breaking down their patient data now in order to adapt.

Some providers could see Medicare reimbursements decrease by roughly 40% under the proposed rule changes, while others could achieve gains of 70%, according to a comparison by the Centers for Medicare & Medicaid Services (CMS).

While the new payment model, which is scheduled to take effect on October 1, 2019, removes the focus on therapy volume, it presents an opportunity for skilled nursing providers to become a setting for medically complex nursing care.


“SNFs must have the expertise and skill sets to provide these highly specialized services and accurately document patient characteristics and the care they have delivered,” Fred Bentley, vice president, and Erica Breese, director, said in their article for the Washington, D.C.-based consulting firm.

In short, PDPM will place a greater emphasis on the complexity of the care that skilled nursing facilities can provide, while simultaneously de-emphasizing volume – thus forcing companies that have built their business models on offering the most therapy hours possible to seriously reconsider their operations.

During an interview with Skilled Nursing News, Breese said providers need to analyze current patient populations to get a better idea on the impact.


“Any nursing home could do well under this system,” Breese said. “Facilities that have doubled down on therapy the last few years will have a bigger challenge to shift their operations to the new system.”

For the most part, providers see the changes as an improvement, and CMS estimates it will save providers $2 billion over the next decade; according to a June analysis from Integra Realty Resources, publicly traded companies with skilled nursing holdings saw a 14.8% boost in stock prices in the wake of the PDPM announcement, far outpacing the market at large.

When all the variables shake out, PDPM brings the focus for skilled nursing providers back to medical care.

“SNFs that are very specialized have more opportunity under this program,” Breese said.

Written by John Yedinak

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