PDPM Creates New Litigation Risk for Skilled Nursing, Rehab Providers

After years of facing governmental and legal scrutiny over providing too many rehabilitation hours, both skilled nursing and therapy providers will soon find themselves with the completely opposite risk.

As the Patient-Driven Payment Model (PDPM) shifts incentives away from the volume of therapy hours, providers could find themselves accused of not providing enough rehabilitation time for residents, leaders at both operators and law firms have told Skilled Nursing News.

“With the change to PDPM, most third-party providers of rehabilitation services will look to change the contract. As a result, many patients may see a reduction in the total therapy hours provided, as the emphasis for reimbursement moves away from the total minutes for rehabilitation services provided,” Timothy Ford, a partner at the firm Einhorn Harris, told SNN. “Diligent plaintiffs’ attorneys will try to use any reduction in the number of hours of therapy as evidence of neglect and malpractice.”


Too much to too little

In rolling out the proposal for PDPM last year, the Centers for Medicare & Medicaid Services (CMS) explicitly pointed to fraud reduction as a key selling point, referring to “evidence of therapy being furnished to SNF patients on the basis of financial consideration rather than patient need” in its final rule on the payment system.

Providers accused of artificially inflating therapy hours have faced steep fines under the False Claims Act, with Signature HealthCARE shelling out $30 million to settle such allegations last June and Southern SNF Management seeing a $10 million fine the following month.

PDPM will largely eliminate that problem by linking therapy reimbursements to resident needs and not hours, with generally more Medicare dollars going to higher-acuity patients with greater health needs. But that system also means that therapy, whether provided in-house or through a third-party partner, shifts from a pure reimbursement vehicle to something more of a cost that must be managed. This hypothetically opens the door for unscrupulous providers to potentially skimp on hours in order to reduce expenses — or for attorneys to start looking for ways to accuse providers of neglect whether it meets the definition or not.


“The ideal plaintiffs’ case would be a situation where you’ve got nursing homes providing really big levels of RUG-level therapy, as a lot of them are. And then all of a sudden, October 1, the average number of minutes per patient just falls precipitously,” Glenn Hendrix, a partner in the Atlanta office of law firm Arnall Golden Gregory, told SNN.

And while providers have only until October 1 to adapt their care models to the new payment system, Hendrix noted that regulators and lawyers probably won’t begin to start knocking on facilities’ doors immediately — giving them a little more time to ensure full compliance.

“It’s not going to happen October 1. It’s going to take some time,” Hendrix said. “I would say if you’re really a good plaintiffs’ lawyer, you’d wait a year to see how the data play out.”

Avoiding the fall-off

For both therapy providers and nursing home operators, developing a clear care plan from the beginning — and providing detailed justifications for each therapy intervention — will likely be essential to avoiding any legal or regulatory problems.

“For 20 years, somebody’s been telling them how many minutes to get with a patient,” Lisa Chambers, chief quality and operations officer at Blue Sky Therapy, said. “And now it’s really not minute-driven anymore, but you have to make sure that your plan of care is appropriate.”

Blue Sky and other therapy providers have extolled the virtues of creating dedicated care pathways, or blueprints for treating specific conditions that also allow for flexibility at the individual therapist and patient level. But before the nursing home and the therapy provider start to work on those pathways, both parties need to have a frank discussion about who’s responsible if things go wrong.

Under existing contracts, liability isn’t usually a consideration for the therapy provider, as they’ve never faced lawsuits and government scrutiny for providing too few hours. Still, skilled nursing providers could find themselves on the hook for mistakes committed by their therapy partners — and vice versa — making the new contract negotiations even more important on both sides.

For instance, a rehab provider might insist on having its skilled nursing partners take full responsibility for staffing-level decisions, Hendrix said. On the other side of the coin, nursing home providers should pay attention when therapy providers start to insist on those stipulations during contract negotiations, and perhaps respond with minimum staffing requirements of their own. Additionally, SNF chains could also require their therapy providers to meet certain quality benchmarks, such as hospital readmission rates and functional independence measurements (FIM) scores, to ensure that both sides’ incentives remain focused on resident outcomes.

“The optics are important, because you don’t want to look like, from a plaintiff’s perspective or a defense perspective, that it’s all about dollars and staffing people like widgets,” Hendrix said.

Care plan primacy

In addition to a clearly written contract where both sides know their potential for risk and rewards, the development of a solid care plan will serve to protect all parties from potential problems.

Billie Nutter, president of post-acute electronic medical records (EMR) provider Casamba, joined other voices in the industry by emphasizing that PDPM hasn’t changed some of the basic guiding principles in nursing homes and therapy: Residents of skilled nursing facilities should need that high level of rehab, with the therapy plan designed to improve their condition so they can move on to the next site of care.

“Regardless of payer source or the payment methodology that’s in play, that really doesn’t change,” Nutter said. “The need for skilled care, and the criteria for skilled care, doesn’t change. And the therapist’s plan of care, which identifies the deficits and the needs for intervention, still needs to be the driver for the care that’s delivered.”

The major difference between RUGs and PDPM, then, is a lack of prescribed volume for certain services — meaning providers will have to create solid, medically sound plans that demonstrate clear needs when determining the types and quantities of services they will offer to each resident.

“I think that that plan of care, when well-written, will absolutely dictate the amount of care that needs to be provided,” Nutter said.

Companies featured in this article:

, , ,