CMS Sends Message with Quick PDPM Approval: Change Is Coming Fast

By quickly finalizing the new payment system for skilled nursing facilities, the Centers for Medicare & Medicaid Services (CMS) sent a strong message that the model is final and that the industry will move forward with it.

That’s according to a webinar from Minneapolis-based consulting firm Health Dimensions Group (HDG), which last week gave an overview of the new Patient-Driven Payment Model for skilled nursing facilities. The rule was finalized late last month after an April introduction as a proposal, and generally shifts incentives away from the volume of therapy hours provided. Instead, under the new system, providers will increasingly see reimbursements linked to the complexity of residents’ health needs.

To get ready, SNFs must start preparing now — with understanding the financial impact as their very first step, HDG senior vice president of consulting services Darrin Hull said. They’ll also have to ensure that Minimum Data Set (MDS) coding is accurate and complete, and evaluate the provision of therapy, he added.


Other considerations include assessing and validating how markets will likely evolve in the wake of the new rule, and enhancing clinical capabilities, including considering making the shift to a more medically complex caseload.

Above all, SNFs have to understand what’s rewarded and penalized under PDPM.

“Clearly if you have longer utilization or a very high percentage of cases in ultra rehab, you are likely looking at a rate reduction,” Brian Ellsworth, vice president of public policy and payment transformation, said on the webinar. “And one of the interesting things that we’re also seeing from the impact tables is that hospital-based and swing-bed facilities are potentially looking at a significant increase under the system — again, primarily probably due to their shorter length of stay (LOS) and potential less focus on just therapy-oriented cases.”


Clinical considerations

Kathy Karr, manager of consulting services at HDG, stressed the importance of identifying the placements that pose challenges for referring hospitals as PDPM draws near. Major skilled nursing players have pointed to boosting clinical capabilities as a path forward amid general industry uncertainty, and under PDPM, SNFs will have extra incentives to do just that.

But they need to make sure they don’t bite off more than they can chew.

“Know what your clinical capabilities are to care for those patients that have the challenges,” Karr said. “[Know] what patients can you accept, and what patients you can’t accept and care for without returning to the hospitals. To enhance your relationship with the hospitals, you will need the hospital to have confidence in your clinical capabilities.”

SNFs will also have to know their competitors’ capabilities — in great detail — as well as how they stack up compared to their neighbors.

“Know niches of each of your competitors,” Karr explained. “What clinical complexity does each of your competitors specialize in? What are your clinical strengths? Can you do better at providing care than your competitors?”

Written by Maggie Flynn

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