Uncertainty Surrounds New ‘Arbitrary’ Skilled Nursing Payment Rules

Early reactions to the finalized skilled nursing payment rules from the Centers for Medicare & Medicaid Services (CMS) are in, with one leading provider group issuing a stark warning about the days ahead.

“While the skilled nursing profession welcomes a new payment model, we are concerned with the language in this rule about the Patient-Driven Payment Model (PDPM),” American Health Care Association president Mark Parkinson said in a statement released early Wednesday morning. “The tone of the rule itself and many of the specific comments related to therapy and the new payment model are cause for concern.”

In particular, Parkinson pointed to an “arbitrary” 25% cap on concurrent and group therapy included in the new set of rules from CMS, which are slated to take effect October 1, 2019. These non-individual therapy services had been floated as a way for providers to adapt to the changes; for instance, Genesis Healthcare (NYSE: GEN) CEO George Hager said in May that group and concurrent therapy models were “significantly undervalued” under the current reimbursement model.


But Parkinson framed the group-therapy cap as an unnecessary intrusion by the government into individual care plans.

“In addition, rather than focusing on outcomes associated with therapy delivery as we requested, this rule micromanages patient care and therapy minutes at a time when providers are already overburdened by unnecessary regulation. … Decisions about how much therapy is provided should not be made from a government office,” Parkinson said. “Clinicians and patients should make those decisions together.”

Katie Smith Sloan, president and CEO of LeadingAge — a group that represents non-profit long-term care providers — was more measured in her comments on the final rule.


“We are supportive of a payment system that accurately reimburses for the needs of residents,” Sloan said. “CMS clarified some areas of concern in the final rule, but many questions remain about the implementation and impact of this new model. We look forward to working with CMS to ensure a smooth and successful transition to the PDPM payment system.”

New landscape ahead

The final rule, first introduced as a proposal in April and formally issued on Wednesday, represents a shift in incentives for skilled nursing providers: Whereas the current Resource Utilization Group, Version IV (RUG-IV) bases reimbursements on the volume of therapy hours provided, the new PDPM will instead link Medicare funding to the complexity of care provided.

Michael Sciacca, chief operating officer of consulting firm Zimmet Healthcare Services Group and a former physical therapist, said providers could start seeing significant updates to the ways therapy vendors charge for their services and provide treatment.

“I won’t be surprised if we see very different approaches to this with respect to volume of therapy minutes,” Sciacca told SNN. “Undoubtedly, we will see a spike in the use of these alternate modes of treatment, but we will also likely see expansion of restorative and activity-driven interventions, which provide the unskilled component of rehabilitative treatments.”

This change in philosophy for therapy reimbursement has been described as a “game-changer” in the skilled nursing industry, ushering in a new era in which the winners are the providers that can demonstrate their value to referral partners and private Medicare Advantage plans.

Clay Richards, CEO of post-acute care management company and bundled-payments convener naviHealth, echoed these sentiments Wednesday.

“How do you work with providers to produce consistent, quality outcomes?” Richards said, calling clinical complexity the “anchor” under the new system. “And for providers I would be asking: How can I get paid for doing that? How can I differentiate myself in the market based on my quality outcomes?”

The therapy shake-up came at the same time that CMS promised $820 million in additional Medicare funding for SNFs, which Parkinson classified as “essential for struggling providers as they prepare for the health care needs of an aging population.”

But he ended his commentary by classifying CMS’s process in proposing and implementing the rule as something of a bait and switch.

“We have been encouraged by our collaboration with CMS in recent months to create smart regulations that truly aim to improve care,” Parkinson said. “This final rule and the tone of the language within it seem to indicate a different direction. AHCA hopes to collaborate with CMS on the new payment model to make the transition as smooth as possible.”

Written by Alex Spanko

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