Skilled Nursing Providers See Opportunity in Group Therapy Despite Coming Cap

The new skilled nursing payment system set to take effect in October of next year includes a 25% cap on group and concurrent therapy services, a limit the Centers for Medicare & Medicaid Services (CMS) argued is needed to ensure patients receive the therapy best suited to their needs and goals.

That limit, enshrined in the new Patient-Driven Payment Model (PDPM), drew the ire of Mark Parkinson, president and CEO of the American Health Care Association (AHCA), who argued that CMS was essentially implying that the industry abused therapy by providing too much of it.

“They have created a system that is heavily focused on therapy, and then are complaining about the inevitable result it would create,” he told Skilled Nursing News at the time, additionally pointing out improved outcomes as a result of increased therapy hours.

But major skilled nursing players were more upbeat about their prospects under the group and concurrent therapy cap.

“I think operating margins are likely to improve just because of the ability to do 25% group and concurrent therapy,” Omega Healthcare Investors (NYSE: OHI) CEO Taylor Pickett said in response to analyst questions about PDPM’s impact on operating margins on the company’s second-quarter earnings call. “So we’ll see therapy costs drop and revenue remain relatively neutral. We think most people will benefit, ultimately.”

Limit ‘intellectually inconsistent’ with PDPM

That said, Josh Pickus, CEO of Optima Healthcare Solutions, thinks the 25% limit on group and concurrent therapy goes against the grain of the new payment model.

“I believe that the 25% limit is very intellectually inconsistent with the spirit of the whole PDPM regulatory scheme,” he told SNN. “The whole point of PDPM is [that] this is patient-driven, it’s not minutes-driven. And you would think if that’s the theory, that the providers would have the opportunity to determine where group or group and concurrent are going to be effective and where are they not.”

However, the fact that CMS is effectively removing some of its barriers to delivering group and concurrent therapy is a key reason that Aegis Therapies — which provides physical, occupational, and speech language therapy services to about 600 SNFs — is positive about the new model.

“Yes, 25% is a limitation, but if we’re at .24% as an industry today, there’s a lot of margin and a lot of opportunity before you even begin to approach 25%,” Aegis chief clinical officer Mark Besch told SNN.

That said, Aegis president and CEO Martha Schram would prefer to see CMS not regulating clinical judgments.

“We would be in the camp that in the ideal world, the clinical decisions would be left to the clinical professionals and practice,” she said. “But I would echo what Mark said with regard to our view on the final rule around this.”

Medical reasoning should be paramount

The Ensign Group (Nasdaq: ENSG) expressed similar optimism about the upside available under the cap in its second-quarter earnings call, pointing out the current low penetration of group and concurrent services.

“You have your real opportunities in therapy,” Ensign Services chief operating officer Barry Port said on the call. “For a Medicare patient population, we do less than 2% in group therapy. And we’re now able to go up to 25% in group therapy. That’s a tremendous opportunity for us financially, on a cost savings front to be able to do that at that level, even getting to 25%. Fifty percent would have been even greater, but 25% represents just a giant opportunity for more than offsetting, we think, what the potential revenue decline would be.”

But therapy providers can’t rush headlong into group and concurrent therapy just because it’s now easier to report and could help counteract the effects of overall lower therapy reimbursements. In fact, if providers move too quickly to boost their group and concurrent therapy, they could run the risk of getting into trouble with regulators, especially given how low the levels currently are, Pickus told SNN. In other words, providers can’t cite economic benefit over defensible patient care as a reason to boost group and concurrent therapy levels.

“It’s probably not realistic in the immediate term that providers are going to get to 25% or even close to it,” Pickus said. “And I think if they try to do it too fast, there’s a lot of regulatory risk.”

Aegis is in discussions with its SNF customers to understand how they’re processing the new model and what it means, but the needs of patients aren’t going to change overnight from September 30, 2019, to October 1, 2019, Schram noted.

“As with anything else, you have to select based on the evidence that aligns with whatever the patient’s profile is,” she told SNN. “Our clinical team is working on making sure all the clinicians understand the evidence so they’re choosing the right patients for inclusion.”

Changing provider behavior

Concurrent therapy, in which one patient begins as another finishes a session, is much easier to execute than group therapy, Pickus said. Providers will have to identify where — and with whom — groups can be effective.

Aegis expects scheduling will be different, and the company plans on making sure it sets patient expectations for group therapy upfront in the admission process, Besch told SNN. This might include, after determining the patient’s goals and needs, detailing group therapy — which might be called “classes” rather than “group therapy,” Besch noted — as a part of the care plan at the very beginning of talks with the patient.

Another important consideration will be ensuring that whatever activities are included in a 30-minute group session are meaningful and therapeutic in nature.

“There’s so many different options for group interactions, and when you see patients interact in a group, that’s what makes therapists want to do that, quite honestly,” he said. “The level of engagement and participation, maybe some friendly competition, those are all the social benefits of group interactions. It goes beyond just the very therapeutic benefits of receiving that additional time. I think that’s another opportunity, as it represents some additional therapy time that they might not be getting today.”

Written by Maggie Flynn