Under the new Medicare payment model taking effect next year, rehab minutes are out and clinical complexity is in, as is reliable data. This represents a sea change in how skilled nursing facilities are reimbursed.

A new landscape for payment

The new Patient-Driven Payment Model (PDPM) is just one component of the wide reforms rewriting the equation between volume and revenue across the health care continuum. With it, hospitals, insurance companies, ACOs, BPCI participants, and other “risk-based” stakeholders are seeking more sophisticated tools to measure value.

Fundamental, systemic change is challenging, and measuring performance against competitors can be even more difficult, says Marc Zimmet, CEO of the Zimmet Group and a managing director of Greystone. Many operators are collecting data, but creating benchmarks remains a challenge.

“Comparative SNF data options are limited, to say the least,” he says. “’Data dashboards can aggregate data, but they can’t really be used to compare specific performance across companies. There is simply too much local regulatory and market variability. And once you cross state lines with different Medicaid reporting incentives and requirements, all bets are really off.”

Assuming outcomes are comparable from one facility to another, Episodic SNF Cost can be used to benchmark performance, Zimmet says. The cost is calculated using an equation consisting primarily of three variables: re-hospitalization rate, length of stay, and average per-diem rate.

PDPM maintains the same equation, with one significant difference: SNFs in the same region often have similar RUG distributions. So while there may be few per-diem rate differences today, these same facilities may vary by hundreds of dollars per day under PDPM, and upstream partners will be seeking answers.

“Do you treat such a disproportionately acute population that your higher episodic spend actually supports your facility’s value proposition? Or is your team simply better at managing the four variable PDPM rate components to enhance the PDPM rate ‘Composite?’” Zimmet says.

To solve for this variable, providers and partners can lean on the UB-04, especially as the industry shifts from a therapy-centric environment to patient-specific conditions as qualifiers.

Hospitals upping their data sophistication

At Brooklyn, N.Y.-based Allure Group, leadership saw the challenges around being a specialized post-acute provider when it came to determining value. Allure, which has six nursing homes and about 1,500 beds, has always focused on particularly acute patients, such as those who need ventilation or cardiac services, Melissa Powell, chief operating officer at the Brooklyn, N.Y.-based Allure Group, says. The problem, she says, was determining the actual results for the nursing home group’s bottom line, especially since it meant higher staffing costs for registered nurses (RNs) and specialized therapists.

“What are the financial implications of that? I’m obviously spending more than most people do,” she said of the early days of this drive to take on patients with more comorbidities and specialized needs. “‘Am I making more money?’ Well, nobody knew … The hospitals were telling me that their gut feeling was that [we] were better, but there were no reports that actually showed it.”

Hospitals have stepped up their data capabilities, and are starting to understand the true cost-to-quality equation, says Steven Sax, director of clinical reimbursement and development for the Englewood Cliffs, N.J.-based CareRite Centers. They’re bringing that sophistication to bear as they look for post-acute partnerships.

“Whether it’s a nursing home or home care company, they are on the hook for those outcomes as well,” he says.

The Next Generation Accountable Care Organizations (ACOs) are also demanding more specificity as they face downside risk, with attention to detailed, quantifiable clinical justification for spending and analysis of current performance compared to other facilities.

PDPM changes data needs

“Regarding true comparative integrity, the Minimum Data Set (MDS) has its limitations; EMRs can provide many of the answers, but they also a require a uniform access point,” Zimmet says. “The UB-04 was overlooked as a data source for years. But because coding accuracy will improve under PDPM, we can finally produce accurate cost data, especially for ancillaries, by acuity, and can quantify a value metric that is fully comparable across providers – regardless of where they are located or the technology they use, especially given the premium the new model places on medically complex patients ”

“For the PDPM, you really need episodic, actionable intelligence, based on specific outcomes, by specific diagnosis levels, but not from patients discharged eight months ago,” Powell emphasizes.

Sax agrees, adding that PDPM changes data collection completely for SNFs. The reimbursement methodology is changing, and so are the incentives, he says. PDPM necessitates analyzing, understanding, and collecting “a tremendous amount of data,” as well as knowledge of what a facility is getting reimbursed for.

“To get ready for this reality, SNFs need to start preparing now. There are some specific places they can start,” Sax says.

“I think [SNFs] need to identify the way that they’re performing currently,” he explains. “Understand the different outcomes for the different cohorts of patients, based on the different diagnoses. If a patient is coming in short-term, how well is that SNF performing in terms of outcomes and the amount of time it takes them to rehabilitate that person and get them back to their previous level of function?”

Providers should also take advantage of the data dive to understand their weaknesses and the population that they’re caring for, he adds.

“I think we’re realizing today, more than ever, that data is the new currency in health care,” he says. “Having actionable, real-time data is empowering to an operator, and it lends a level of confidence to the hospital partners that we’re doing business with a progressive company that has its finger on the pulse of the patients we’re taking care of.”

This article is sponsored by CORE Analytics, a software provider with innovative solutions to the challenges of operating in the post-acute care industry.