As PDPM Looms, Providers Must Balance Desire to Boost Payments with Audit Dangers

Under the Patient-Driven Payment Model (PDPM), reimbursement for Medicare Part A patients in skilled nursing facilities will be driven by patient condition, rather than by therapy minutes provided to that patient.

It’s a change that the industry has hailed as an opportunity to receive financial credit for the care that they’re already providing, but they have to make sure that they’re taking credit in the right ways — with the required documentation crucial to avoiding headaches from the Centers for Medicare & Medicaid Services (CMS).

“All the information committed to CMS has to be accurate,” Nicole Cameron, a senior consultant at the accounting and advisory firm Blue & Co., said on a webinar co-hosted with Skilled Nursing News last last month. “We don’t know what this is going to look like in the future, but they are saying that inaccuracies in the data reported, or a failure to document the basis for such data, will necessitate the same type of administrative actions as occur today.”


Those include recovery audit contractor (RAC) audits, audits by the Department of Health and Human Services (HHS) Office of Inspector General (OIG), and others, all of which SNFs know well. Providers should expect some version of those processes, particularly for the beginning of PDPM, Cameron added.

Operators must be aware of the potential for audits and new forms of scrutiny on documentation, experts have told SNN.

“I do expect we will have audits as an industry with greater focus now on the nursing documentation, versus the therapy documentation that has been the focus in the past,” Denise Gadomski, partner at the consulting firm Plante Moran, said last month.


In the Blue & Co. webinar, Cameron also stressed the need to capture information appropriately. For example, SNFs should not be trying to maximize case mix index by using the coding equivalent of steroids when selecting the patient’s primary diagnosis code — which refers to the condition that prompted the patient’s transfer to a SNF and the primary motivation behind the patient’s care.

While a SNF patient could have multiple relevant conditions, it isn’t appropriate for providers to report all of them with an eye on the maximum reimbursement, Cameron said.

That said, SNFs do need to make sure that they are documenting the care that they actually provide to patients, since missing common conditions could result in hundreds of dollars in lost reimbursement over a 20-day stay, as Blue & Co. senior manager Nancy Hublar emphasized with multiple examples. These ranged from depression scores not meeting the threshold for reimbursement to Section K of the MDS going unchecked for the presence of swallowing disorders.

“You don’t want to be giving care and not getting paid for it. That is my main point,” she said on the webinar.

To that end, Cameron emphasized the importance of making sure that every “T” is crossed and every “I” dotted when it comes to documenting and capturing the patient conditions. When staff records a patient’s primary diagnosis, there are specific documentation mandates that have to be met, she said on the webinar. Only physician-documented diagnoses can be used, though information from a nurse practitioner, physician assistant, or clinical nurse specialist might be acceptable if a specific state’s licensure requirements permit it.

The acceptable medical record sources could include the patient’s most recent history and physical, transfer documentations, discharge summaries, progress notes, or other provider documentation as available, Cameron said.

Documentation from a physician will also be crucial for making sure that a SNF gets reimbursed for certain high-paying conditions under PDPM, Hublar noted. Under the Non-Therapy Ancillary (NTA) component, a patient who is morbidly obese, with a diabetes diagnosis and intravenous medication, should provide a facility with key points for reimbursement.

But if the physician fails to document morbid obesity or diabetes, that could result in a significant loss for the SNF, particularly since the reimbursement for NTA is three times higher over the first three days, Hublar explained.

SNFs are also at risk for inadvertently putting themselves into lower reimbursement categories if they aren’t careful about the Section GG scores for their patients, she noted. But even in the Nursing category, where certain score thresholds can set a SNF back hundreds in reimbursement, accuracy trumps everything else — because the consequences for artificially pumping up a score could be severe.

“If you have a a function score of 15 to 16, they’ll throw you down to clinically complex. That will result in about a $40 per loss,” Hublar said. “On a 20-day stay, that will be an $800 loss. So that function score, 15, 16 — if it’s accurate, that’s what you want to put down. But you want to make sure that your accuracy is that. And you don’t want to hit that threshold, unless that’s exactly what it is.”

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