Aegis CEO Schram: Therapy Still Has Value Under PDPM, But Providers Must Be ‘On the Hook’ for Outcomes

With therapy minutes no longer driving reimbursement under the new Medicare reimbursement system taking effect on October 1, the relationship between skilled nursing facilities and rehabilitation companies is undergoing a significant metamorphosis.

But the change runs deeper than the shift in revenue streams. The new system will drive new models of care and move. interactions that ideally will improve patient care and experience, Martha Schram, president and CEO of Aegis Therapies, told Skilled Nursing News on the newest episode of “Rethink: The Future of Skilled Nursing.”

The Frisco, Texas-based Aegis provides contract therapy services in about 550 skilled nursing and senior living facilities, and Schram is a firm believer in the value of therapy and its ability to impact the bottom line — even when the minutes don’t drive reimbursement.


But the way therapists work, the services that they offer, and the contracts governing their presence in SNFs will all have to be reassessed in light of the movement toward value-based payments and a system driven by outcomes. In her podcast appearance, Schram explained how third-party rehab has evolved in SNFs over the years, and discussed why she’s optimistic about what lies ahead for the collaborations between rehab and SNF providers under the Patient-Driven Payment Model.

For the full interview, head over to Apple Podcasts, Google Play, or Soundcloud — and if you like what you hear, catch up on our previous “Rethink” episodes with Sabra CEO Rick Matros, Anne Tumlinson Innovations CEO Anne Tumlinson, Genesis HealthCare CEO George Hager. And be sure to keep an eye out for the next installments over the coming weeks.

Here are some highlights from the conversation with Schram, condensed and edited for clarity.


On the value rehab still provides under PDPM

“There’s a lot of discussion around ‘Is therapy a cost center or a revenue center?’ Well, people don’t probably have that same conversation around nursing, right? And generating revenue — I think it depends on how you really want to define that, and my definition [is]: Generating revenue is the degree to which a facility is a magnet for referrals, for any number of reasons.

But one of the reasons can be their specialty rehab — or within rehab, some special programing, or just the skills and the structure of rehab can be a magnet for referrals. That certainly generates revenue, if it’s filling your beds incrementally. And then there’s a lot of other details around PDPM where the expertise of the rehab team is absolutely — and this gets back into the whole coding discussion — going to impact whether the reimbursement is X or Y. So I’m hearing that kind of conversation a little less.

When I think about the evolution of third-party rehab, and kind of put that into the context of this cost-revenue discussion, I do think there’s an absolute imperative in every facility — whether you’re in-house or third-party — to accept and execute on the challenge to deliver more efficient care. We are either all part of the problem with the Triple Aim or part of the solution. And I think this new environment is an extraordinary opportunity for rehab to be a bigger part of the Triple Aim solution: better quality, better person experience, lower cost.”

But rehab providers have to make changes in tracking outcomes

“Therapy, the delivery of therapy is not enough … that kind of generality is not going to be sufficient in the future. And the conversation, and it’s going to be potentially a little different depending on which SNF provider you’re talking to, but be very clear about: What are the expectations of contributions by the rehab professionals, and then what’s the expected outcome?

If a particular program is going to be put into place and the expected outcome is a positive influence on the quality measures, then contactually, I think third-party rehab providers are going to have be on the hook for those outcomes. They need to be well-defined, they need to be in agreement on how they will be measured, how often — all those things. It’s going to be much more granular in terms of: What does a quality outcome look like?”

And there will be ripple effects from PDPM

“PDPM is right now a [Medicare] Part A beneficiary model, right? But it is absolutely going to influence managed care. It is absolutely going to influence, ultimately, Medicaid, and … the number of Medicare beneficiaries who are participating in managed Medicare is doing nothing but growing.

So as far as that relates to what third-party rehab providers need to be thinking about, it’s: What is the value in those circumstances? Is everything in place as it should be to identify, in a timely way, and address the functional needs of Medicaid beneficiaries, as an example, or managed Medicare? Is the data and are the outcomes associated with those patients — from a rehab perspective — put together in a way that can be easily, concisely, and effectively communicated with the provider to that managed Medicare payer to garner perhaps a larger share of that managed Medicare payer’s participants?

So there’s much that can be done to partner more effectively.”

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