Signature’s PDPM Playbook: Data, Specialization, and 600 More Nurses

Therapy has taken center stage in the run-up to the new Medicare payment model for skilled nursing facilities, but a growing chorus has begun to frame the change as a return to the primacy of nurses in nursing homes — with a leading provider planning on adding 600 of them to meet the new priorities and expected demand.

As Signature HealthCARE’s senior vice president of data informatics and management information systems, Vinnie Barry and his team have taken the lead on preparing the provider for the Patient-Driven Payment Model (PDPM), set to take effect October 1. And as the Louisville, Ky.-based provider has crunched the numbers, a few clear trends have emerged: Moving forward, Signature plans to focus on honing its clinical capabilities and changing the way it markets its services to hospital partners in key regions.

While Barry expects Signature to see overall reimbursement gains as a result of the new incentives, he emphasized that the company is willing and ready to take a short-term earnings hit in order to properly staff up its facilities to eventually capture that new revenue.

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Skilled Nursing News sat down with Barry at Signature’s headquarters in Louisville to talk about PDPM, data, and his vision for the future of skilled nursing care.

I’ll start by asking about your role at Signature and how it plays into the company’s PDPM prep.

We’ve implemented MatrixCare to help us navigate PDPM. CMS has taken the next step in patient-driven care, and so instead of the old RUGs system being heavily dependent on therapy utilizations, PDPM’s going to be a lot more on the nursing side, so incentivizing therapy use is going to be fading away. The patient characteristics will be a lot more prevalent with the components under PDPM, so Signature thinks it’s a huge advantage. It really brings nursing care back into the nursing home. There will always be short-term rehab patients, but what CMS wants to do is get the chronic illnesses, chronic diseases, co-morbidities. [There will be] a lot more admission flow, patient intake under that model — which gives us a chance to be nurses again and practice medicine again. That’s why we think there’s a lot of upside.

Where does a company like Signature, with more than 18,000 employees and locations across the Midwest and Southeast, even start when tackling a major reimbursement change?

We have a phenomenal group with our therapy department, our clinical reimbursement teams, who came together and read the rule and basically figured out what the long-term objective was. Looking at patient inflow and referrals, and what patients are denied versus admitted — traditionally, you’re looking for short-term, hips and knees, the short-term rehab, and now it’s going to be chronic illnesses.

We studied the denial database for us, and really it picked apart. The new payment structure, the new reimbursement structure, there’s advantages for capturing those clinical diagnoses, the co-morbidities. We will get reimbursed at a level that will provide a higher nursing capability, so our PPD will go up, our expected star ratios will go up — which CMS is pushing on the star levels. Again, it helps enable lower ratios, nurses to patients, but with the right reimbursements. Therapy will always be there — the patients will get the care they need under therapy — but it just won’t drive the reimbursements as the nursing components will.

We’ve looked at informatics [right] when it started, just simulating the current MDS’s [Minimum Data Sets] that we do, the processes, and what is it paid under RUGs vs. PDPM. And we’re at an 8% advantage right now … We simulated what that bridge would look like, so we keep looking at the patient characteristics and then talking to the clinical team: “Hey, we have to get excellent at COPD, CHF, bariatric, cognitive diseases, behavioral.”

We just constantly are studying what the patient characteristics are, matching our clinical capabilities to that, so that we can say: Now, the volume of new revenue, new patient inflow over the next five years, is a huge upside.

How do you change the mindset with your referral partners — how do you get hospitals to look at SNFs as not just a place for hips and knees, but for real medical care?

It’s a true transition. We’ve looked at our major markets, like Louisville where we have a critical mass … so we can show the hospitals that we have greater outcomes in certain areas. We’re doing central-intake admission flow now, so we can move patients to the best options.

It’s rebranding ourselves clinically, [while] still showing that we have in-house rehab. So where a lot of providers have external rehab companies — if they’re stuck in a five-year contract, I don’t know what they’re going to do over those next few years. Internally, we’re modifying the pathways for each of those characteristics that rehab would need. It’s modeling. It’s never-ending. With the number of payment categories … it’s completely changing the game, and we kind of think of it as: We’re digging into the details, with all the data we can. We’re really making sure that we are ready for October 1.

What’s the plan for the transition period? It’s pretty much a hard stop.

There’s going to be a dovetail into it. You don’t just wake up October 1, and then you can do this many group therapies or concurrent therapies or whatever. You’re not going to have a whole hallway of behavioral. It’s going to be looking at the MDS’s up to that point, to really see how they fit in and where it levels out. It’s the new revenues that we’re looking at, that we can go say to Baptist, or Norton — local hospitals here, or in Atlanta, or Miami, or Memphis — … and say hey, we can help you here, because we’re going to be up to speed and practicing that type of medicine. We’re modeling each individual home to the market.

What’s the future of therapy under PDPM? How is it going to change?

They are going to do what’s right for the patient. That’s first and foremost. There will be pathways of care that will be suggested — that option with that family, to say, you may need two hours of therapy a day or not, and really working with that individual to make sure they get the right level of therapy to gain their independence or functional improvement. We have an internal therapy department organization — they run their own models, care pathways, versus the nursing side.

I don’t know if it’s going to be a drop. I think they will start to look at similar capabilities where they can do group therapy or concurrent therapy; there’s upside there. But we don’t see that as a major shift. To have four alike patients doing similar therapies — if you have a lot of volume, there’s a lot of Medicare admissions, then there’s a higher chance — but we don’t think it’s going to be that major. 

If I’m a nursing home operator, what are the key data points I should be looking at as I prepare for PDPM?

Cognitive levels will be big. The non-therapy ancillaries. The major co-morbidities — bariatric to speech deficiencies. It’s tough, just because there’s such a wide selection do to. All we can do is say: If we’re converting one out of three referrals today, we know the referrals are going to grow, and we’ll look at the ones that we’ve denied or we have not admitted, that didn’t choose us, or one thing or the other. If it’s a clinical weakness, or a clinical advantage, then we look at those denials and say: There could be a 50% increase in admissions, but we’ve got to be able to do this.

We can’t sell ourselves short. We can’t tell the hospital we can do something and fall short, or return them back. Value-based purchasing is going to hit both sides. We’re just taking the right steps to make sure that we have the appropriate staffing from the nursing side, which is a huge challenge. You see it every day about the nursing shortages. We put wage investments in, benefit investments in, to prepare — because our math, we need 600 more nurses October 1 under PDPM. There’s such a major shift in the ratios that that’s what we feel we need to take that new revenue on. But you can’t have 1:20, 1:15 ratios — it’s going to be 1:10, with six or seven from the CNA side.

So we’re really making sure we’re in the right wage scales by market, [that] we have the right benefits that give that flexibility and accessibility to our company. But you just have to model it out. The population’s growing, and getting older, so bed-fill will happen. It’s just a matter of having the right staff to care for them, and we’ve had to limit admissions because of the staffing, and that’s part of our principles — to have the right acuity-based staffing. So the case-mix scores under PDPM will dovetail the new expected stars and the right staffing that we’ve modeled out. It’s pretty crystal clear to us on what that staffing need is going to be in the future.

600 is a lot of nurses to hire.

It’s major. And they’re not letting them out of school any faster or any easier, so it’s a challenge.

How do you tackle a challenge like that?

There’ll be more closures for long-term care. We feel we have an organizational design that’s going to be better than some providers … If you have two or three homes, it’s going to be very challenging to maneuver that.

We’re saying: Look, we’re going to take a hit to earnings, because wages are rising, which is great. To see $15-an-hour CNAs, it’s going to be here. It’s on its way. We’re already in markets that we’ve had to do that. But that’s fine. With this new revenue, this new census, it’ll pay for it. You’ve got to put the money in today — unfortunately, you may be cannibalizing other providers, or other homes, or competing with the hospital. But in our eyes, you have no choice. You need that level of care to have the intake.

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