How Skilled Nursing Facilities Can Prepare for — and Avoid — Medicare Audits Under PDPM

The Medicare reimbursement overhaul that’s coming in a few short months represents a major change in how skilled nursing facilities are paid for the care that they provide — as well as how officials monitor operators for potential fraud.

With the move to the Patient-Driven Payment Model (PDPM), SNFs will be paid based on the characteristics of the patients they serve, rather than on the amount of therapy minutes they provide. And with that shift away from the current Resource Utilization Group (RUG) system come several new potential audit triggers, according to Christina Bruenderman, director of denials and appeals at the therapy company TMC.

“We know that when PDPM’s implemented on October 1, the Medicare Part A audits will be changing,” Bruenderman said during a webinar held Wednesday. “This is expected, as many of the current Medicare Part A audits pertain to verifying RUG levels that are being billed.”


She outlined several key areas of SNF care and procedures that the Centers for Medicare & Medicaid Services (CMS) may scrutinize for audits under the new model — including coding, therapy services, and discharge patterns.

Documentation for coding and therapy

CMS will be monitoring changes in payment that occur from SNF coding, as opposed to actual changes in the case mix — which makes accurate coding imperative, Bruenderman said. The codes have to be well-supported by documentation, and SNFs could also face audits over ICD-10 codes, she noted; those diagnosis classifications, long the domain of hospitals, will take on increased importance with the new system.

“Documentation across the board for the codes used for anything that’s filled out on the [Minimum Data Set] is going to need to support what’s on the MDS, whether it be in therapy and/or nursing documentation,” she said.


Therapy is another area where audits are expected — specifically with regard to changes in the amount of therapy provided to SNF residents under PDPM, compared with the current RUG-IV system, Bruenderman said. CMS will be watching the amount of therapy provided very closely, and the agency has said that the volume should not change if therapy services provided based on patient need.

That said, therapy patterns likely will change somewhat under the new model, as Michelle Kastenholz, director of therapy reimbursement and consulting at the consulting firm Health Dimensions Group, noted earlier this year.

“We believe that it is unreasonable to expect no change under PDPM,” Kastenholz said back in April. “But a key takeaway is that all this evolution needs to be tied to clinically appropriate interventions and outcomes that come from all therapy treatment provided.”

If therapy does take a sudden nosedive on October 1, CMS is likely to take a wait-and-see approach to monitor the trend, Bruenderman said. If it continues, then providers could see audits for both RUG-IV and PDPM; a major drop in minutes could also lead the agency to look at the documentation.

That makes it essential for documentation to back up all the services provided at the facility level, Bruenderman said.

“This is going to be a really big one,” she said. “CMS has mentioned that the care is not expected to drastically change.”

CMS will also be closely observing compliance with a new 25% cap on group and concurrent therapy, and the agency has made it clear that individual therapy is the standard of care and primary mode, she noted. Officials will be watching for a warning message that noncompliant providers will receive on their validation reports; if the agency sees that warning pop up frequently, it could “trigger something” — which usually means audits, according to Bruenderman.

Specifically, the agency would look at patient functional outcomes and whether or they’ve improved, in conjunction with whether or not there’s been an increase in group therapy, she said.

“It is important to remember that the therapy provided should be tailored to fit each resident’s specific needs,” Bruenderman said on the webinar.

Don’t overuse

CMS will be keeping a particular eye on increases in several areas: the amount of mechanically altered diets, cognitive impairment as a payment classifier, and early discharges.

Under PDPM, the payment rates for certain conditions drops considerably at certain day thresholds; as a result, CMS will be monitoring early discharges to make sure they aren’t coinciding with those time periods. CMS will also be watching the use of interrupted stays, Bruenderman noted.

Mechanically altered diets, meanwhile, are a part of the speech therapy care provided in a SNF — which is an area of key opportunity under the new system.

Using mechanically altered diets can lead to an increase the daily rate in the speech and language pathology (SLP) case mix under PDPM, but if facilities record a large jump, it could signal to CMS that the dietary changes were motivated by financial gain rather than patient need, Bruenderman said.

As a result, SNFs need to make sure that the speech services are being provided for a swallowing deficit; they need to account for why a given patient has received orders for their specific diet, she explained. She also noted that SNFs must ensure that the mechanically altered diets are used for residents with a true swallowing deficit, as opposed to a lack of dentures or something similar.

In the SLP case mix, CMS will also be watching for an overuse of cognitive impairment as a payment classifier, she noted. This is another area that could boost the daily rate for the SLP case mix.

“If cognitive impairment is indicated on the MDS, but is not supported in the therapy or nursing documentation, a denial would occur,” she said. “So if a facility sees a large increase in the number of cognitive impairments that are being marked on the MDS, that will also increase audits.”

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