PDPM Could Create Risk-Sharing Opportunities, Headaches for Skilled Nursing

Risk-sharing has loomed large in health care reform efforts over the last decade, and the new Medicare payment model for skilled nursing facilities could open up additional avenues for operators to take control — along with pointed questions from partners along the spectrum.

The Patient-Driven Payment Model (PDPM) marks a step toward a long-teased site-neutral payment system for post-acute care; a chance for SNF operators to build new risk-sharing structures with hospitals and home health agencies; and a potentially tempting excuse for referral partners to question their existing SNF relationships, experts said during a panel discussion at the Skilled Nursing News Summit last week in Chicago.

“One of the risks is not understanding the impact on the larger continuum, and really just focusing on ourselves and skilled nursing,” Erin Shvetzoff Hennessey, CEO of operator and advisory firm Health Dimensions Group, said. “Hospitals are really excited about PDPM, too, and I think there’s a risk in not going to your hospitals proactively.”


For example, a hospital could start to look at the residents on its medical-surgical floors, and see an opportunity to hand them off more quickly along the continuum as SNFs chase higher acuity residents. For that reason, Hennessey said, not approaching acute-care referrers about potential PDPM-driven partnerships represents a major missed opportunity.

“How do we position ourselves as a person at that table, directing the way that that person moves through the continuum — hopefully very quickly from the hospital, with a high clinical need, right into our skilled nursing facility where they’ll get great care? That’s the perfect world,” Hennessey said.

Aaron Tripp, vice president of reimbursement and financing policy for non-profit provider group LeadingAge, took things a step further, positioning PDPM as the first step toward the site-neutral reimbursement structure long advocated by groups such as the Medicare Payment Advisory Committee (MedPAC).


Tripp specifically pointed to the Patient-Driven Groupings Model (PDGM), the new Medicare payment model coming to the home health care industry. Like PDPM, PDGM will change the provision of therapy and place an increased incentive on nursing, which Tripp sees as another example of CMS blazing a trail toward patient-centered care — making a macro view critical to success under both new models.

“The thing that we should be focusing on is the people that we’re caring for — those folks and what they get, whether you’re in a skilled nursing facility, whether you’re in inpatient rehab, a long-term care hospital, home health,” Tripp said. “There’s a lot of similarities with those folks, and we need to be talking with each other as a continuum of care, not just our own four walls.”

To that end, Hennessey suggested that skilled nursing facilities take a page from their upstream counterparts. Risk-sharing partnerships, preferred provider networks, and other care-continuum efforts all generally share a common denominator: the desire for hospitals and payers to monitor and control the fate of their patients after discharge. And if PDPM represents another signpost in the care-continuum evolution, there’s no reason why SNFs shouldn’t want to maintain that kind of control for themselves.

“Skilled nursing should have a home health provider network, and as you move downstream, there should be control over who you’re handing these patients to,” she said.

But this push doesn’t come without risks. One of the immediate effects of PDPM will be wide swings in rates among various SNFs — even in a single marketplace, Vincent Fedele, director of analytics at consulting firm Zimmet Healthcare Services Group, said.

With incentives generally aligned toward therapy volume today, hospitals typically don’t see much difference in their downstream partners’ costs of care. But once PDPM takes effect and reimbursements align more closely with acuity — and providers’ ability to capture resident conditions — that picture could change quickly.

“For some people … it won’t matter at all. For others, it will be tremendously important to document and explain to your acute referral partners that are engaged in risk-sharing why your per diem rate jumped up $300 a day October 1,” Fedele said. “Right now, everybody’s rates are kind of the same, but in the PDPM world, there’s going to be a lot of variation between you and your next-door neighbor.”

Fedele also countered his fellow panelists’ calls for greater care collaboration, describing current CMS efforts to encourage risk-sharing as generally lackluster. For instance, under the SNF Value-Based Purchasing (VBP) program, operators automatically lose 2% of their Medicare reimbursements, which they can then earn back by lowering hospital readmissions, with the overall goal of decreasing the episodic cost of care.

But for many operators, that 2% cut isn’t enough of a stick to encourage real behavioral change, Fedele asserted; last fall, after the government revealed that 73% of providers incurred some type of loss in the first round of VBP results, Fedele urged the industry to look at the numbers in context.

“I think everyone can get behind that we need to reduce our hospital readmissions, and I think most of the providers are doing that,” Fedele told Skilled Nursing News at the time. “[But] if your penalty’s only going to be $25,000, how much are you going to invest in technology or additional staff in order to effectuate change under VBP?”

He echoed those sentiments again in Chicago last week.

“It’s a good sound bite to talk about the downstream and the collaboration between home health and SNFs, but I’d like to see more incentive placed by CMS on us,” Fedele said.

In response, Hennessey asserted that providers shouldn’t wait for CMS to make moves — and instead take matters into their own hands.

“It is a good sound bite, but I think that we have to do it ourselves,” she said. “If the programs aren’t there for us to do it from the government, I think skilled nursing should go to hospitals and payers, and make their own risk contracts.”

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