More Winners Than CMS Expects Could Emerge Under PDPM

The government has predicted a mix of winners and losers under the new Medicare payment model taking effect later this year. But due to the impact of payment changes on provider behavior — both past and future — there could end up being more winners under the new system than regulators expect.

Specifically, under the Patient-Driven Payment Model (PDPM), the clinical condition of a patient — rather than the number of therapy minutes that patient receives — will drive Medicare reimbursement. Most of that clinical information is captured on the Minimum Data Set (MDS), part of the federally mandated process for assessing residents in nursing facilities.

Under the current Resource Utilization Group (RUG) system, however, operators may not be recording all of the necessary MDS data that will soon be vital to reimbursements, according to Sherri Robbins, managing consultant at accounting and advisory firm BKD.


“I’ve been in skilled nursing for 30-plus years and used to do MDS assessments when they were actually paper forms,” Robbins said on a recent webinar hosted by Skilled Nursing News. “I’ve spent the last several years here at BKD doing consulting. And it is common practice … when you have somebody who’s going to calculate into a rehab RUG group, the majority of the other areas on the MDS assessment don’t get a lot of attention.”

That gulf between MDS reality and theory may lead to a substantially different outcome than the Centers for Medicare & Medicaid Services (CMS) has projected for the PDPM landscape.

“A lot of the projections that CMS put out when they were first talking about the PDPM, and they were showing some facilities as winners and some facilities as losers — I’m really skeptical about that information,” she said. “Simply because I think there were so many inaccurate MDS assessments out there that just focused mainly on the therapy-type services, and didn’t really take into consideration a lot of the clinical things that could have gone onto the MDS. So I think we’re going to have a lot more winners.”


But in order to come out on the winning side, SNFs have to make sure they’re capturing all the patient characteristics appropriately on the MDS – a task that could be more difficult if they aren’t already in the habit of correctly recording all the information.

“It’s really going to be imperative under PDPM that the whole entire MDS is correct, because therapy days and minutes aren’t going to drive the payment,” Robbins emphasized. “Individual items that we are talking about … are going to drive the payment, and if they are not on the MDS, they aren’t going to drive your payment.”

CMS has touted PDPM as a budget-neutral program, meaning that the agency will not be increasing or decreasing the amount it spends on skilled nursing care due to the change. As a result, it’s quite likely that officials will be looking to cut reimbursements if there’s a major increase. That said, if providers work to truly understand the program, Robbins said on the webinar, “we’re going to have a lot of winners.”

This change is a revolution, not an evolution.

To truly understand the program, SNFs will have to make sure they have a handle on how the changes in payment will affect them. This is no small task, given the magnitude of the switch.

“This change is a revolution, not an evolution,” John Harned, director at BKD, said on the webinar.

For SNFs to prepare, he recommended establishing a dedicated team with specific, focused roles for individuals — with ICD-10 coding as the first area of priority.

“That’s what’s going to place the patient in one of those 10 clinical categories, which starts the process of determining their overall reimbursement,” Harned said.

The very next priority should be the MDS, because while ICD-10 coding will drive the primary diagnosis and thus the first grouping under PDPM, the MDS then starts to determine the case mix adjustments for the various components of nursing, physical therapy, occupational therapy, speech therapy, and non-therapy ancillaries (NTAs).

“Start coding as if your reimbursement depended on it,” Harned said on the webinar. “The key here will be assessing your processes for getting this information to the MDS coordinator and their backup, from the source of origin. Most of this information is going to come from nursing and therapy team, some electronically, some manually. Whatever systems are in place now may need to be supplemented to make sure this information makes it to that critical five-day MDS timely and accurately.”

“So what type of patients are you treating today? And what type of patients are the trainwrecks of the hospitals upstream, [where] you can identify a clinical pathway and actually help them?”

The next area of care that will need focus is therapy, with a particular eye toward developing clinical pathways. So much falls under this category that a SNF should consider appointing multiple people as so-called “champions,” Harned said. A SNF has to identify the five primary diagnoses it is currently treating and focus on the communication between nursing, therapy and the physicians or nurse practitioners.

The therapy champion or champions will also have to look at determining the proper schedules for group and concurrent therapy, and possibly the contract for therapy services — though the latter might be less of an immediate focus.

Therapy is another area where CMS’s case study for budget neutrality could be flawed, Harned added.

“Our patient populations have changed dramatically in the past 18 months,” he noted. “So what type of patients are you treating today? And what type of patients are the trainwrecks of the hospitals upstream, [where] you can identify a clinical pathway and actually help them?”

Solving problems for the hospitals could actually be a way for SNFs to create a margin, even if the patient population from the referrers doesn’t provide the highest reimbursement for PDPM, he noted later in the webinar.

SNFs also have to designate employees to overhaul in-house educational materials and technology systems, he added. But as they turn a new eye to almost every aspect of care, they need to remember that a core facet of the SNF business remains unchanged.

“Any type of therapy service is still going to be expected to be five times a week. Nursing services are expected to be daily,” Robbins said. “The actual qualifiers for skilled care haven’t changed.”

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