‘CMS is Watching’: Changing Therapy Patterns Raise Concerns About Skilled Nursing Audits, Care Quality

The first week of the new Medicare payment model for nursing homes has brought stories of rapidly shifting therapy patterns among some providers, and voices from the consulting and advocacy worlds are warning that any sudden movements could cause adverse effects — both immediately and down the road.

The advent of the Patient-Driven Payment Model (PDPM) last Monday triggered layoffs and strategy changes at several major companies, as Skilled Nursing News reported last week. But while the staffing reductions garnered the most attention — both from industry-watchers and therapists struggling with sudden job losses — the changes have gone beyond layoffs, according to American Physical Therapy Association director of regulatory affairs Kara Gainer.

In addition to workforce reductions, Gainer said her organization’s members have reported significant conversions to PRN, or as-needed, status, as well as pressures from leadership to maximize the use of group and concurrent therapy services and boost individual productivity.


And while some shifts were to be expected after the advent of PDPM, Gainer warned that overcorrections could attract the attention of the Centers for Medicare & Medicaid Services (CMS), which has pledged to ensure that resident care and outcomes don’t suffer amid the changeover.

“I think it’s really short-sighted that these companies are doing this, because they know CMS is watching, and they know if they have a dip in outcomes or dip in utilization, CMS is probably going to audit them,” Gainer said.

PDPM, in the works for more than 18 months, marks a significant sea change in how skilled nursing facilities and their contract therapy providers offer their services. Where the old system directly linked payment levels with the amount of therapy provided, the new model seeks to connect reimbursements to individual resident needs, with greater funding for services associated with higher-acuity residents.


The model is also meant to be revenue-neutral, meaning the federal government will not be increasing its total amount of Medicare spending on nursing homes. As a result, many companies and analysts floated the idea of boosting group and concurrent therapy — which previously accounted for less than 1% of total services provided in the skilled nursing setting — to reduce expenses and help offset potential reductions in therapy revenue.

CMS has placed a 25% cap on group and concurrent therapy programs, down from an initially proposed limit of 50%, but that threshold still gives operators significant headroom to expand. Over the past week, Gainer said APTA has received reports from members about internal directives instituting mandatory group and concurrent therapy services — orders that go against PDPM’s intention to place care decisions at the discretion of clinicians, and not therapy-minute targets.

“These patient plans of care were developed before October 1. You were obviously delivering care based on that plan,” Gainer said. “October 1 comes, and what happens? Laying off therapists or cutting back minutes — patient plans of care didn’t change, so why is your behavior changing so drastically?”

Gainer emphasized that she’s received positive reports from therapists at skilled nursing providers that have taken PDPM’s patient-first message to heart, and many of the operators that have spoken to SNN since the change took place emphasized that they took pains to clearly communicate their staffing and strategy changes well before PDPM took effect.

“Really, it was CMS’s intent that this model would re-empower therapists to use their clinical judgment, because it was no longer based on minutes — it’s based on what the patient needs,” Gainer said.

Still, the preliminary news reports were enough for APTA and its fellow therapy advocacy organizations — the American Occupational Therapy Association and the American Speech-Language-Hearing Association — to issue a joint statement last week to announce that they had been sharing members’ stories about therapist layoffs to CMS officials.

“We voiced our concerns that, as a result of these changes, Medicare beneficiaries may be harmed if they do not have access to the medically necessary skilled therapy that they need,” the joint statement read.

The bumpy transition period reveals a difficult truth about any new payment model: Every change will have a cascading set of effects, with winners and losers emerging in both the immediate wake and the long term. The industry spent decades adapting to one system, with its own set of rules and incentives that disappeared overnight — and providers have spent the last year and a half trying to adapt to the new rulebook.

In fact, federal government concerns about the over-provision of therapy minutes was a major driver behind the rule change. As the American Health Care Association noted in its statement on post-PDPM therapy patterns, both providers and policymakers had faced criticism that the old model encouraged operators to provide high-intensity therapy services when they weren’t necessary — and accusations of profit-driven therapy decisions netted multi-million-dollar settlements for the Department of Justice under the False Claims Act.

For those reasons, a behavioral shift wasn’t necessarily a surprise: Back in April, a pair of reimbursement consultants from Health Dimensions Group acknowledged that the industry’s therapy strategies would naturally evolve, just as they had when CMS rolled out the now-defunct Resource Utilization Group (RUG) system.

“We believe that it is unreasonable to expect no change under PDPM,” Michelle Kastenholz, director of therapy reimbursement and consulting at Health Dimensions Group, said during a spring webinar. “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.”

Robert Lane, a director at consulting firm BKD, told SNN that some trimming of contract therapy and PRN conversions were to be expected, though he was surprised to see reports of layoffs so soon after PDPM’s formal implementation.

“I would have thought that most providers would at least pump the brakes for 90 days to kind of see where we’re at after that first quarter, couple of billing cycles,” Lane said. “This seems a little premature.”

That said, Lane the revenue neutrality of PDPM means that there should still be plenty of reimbursement money for appropriate therapy treatments moving forward, Lane said, though potentially not at the same levels of high-intensity therapy as under the previous system.

“Certainly, this is going to draw attention from CMS,” Lane said of the early changes to care patterns.

The question of whether any post-PDPM changes were driven by resident care or profit motivation is where providers could get into serious trouble, and where therapy advocates have focused their concerns.

CMS itself was blunt in warning providers about its monitoring plans as early as last year.

“We do plan on monitoring that and seeing how much of a change occurs, along with changes in the patient population,” a CMS spokesman said during a December presentation on the RUG-to-PDPM shift. “Because if we don’t observe changes in the patient population … that would suggest that payment incentives are continuing to have an impact on care decisions, as opposed to the needs of the patients. Then we’ll have to consider the scope of those levels, whether it’s at the facility level or the national level, and then consider what’s appropriate [to address that].”

But the exact form that CMS’s actions will take remains to be seen. The agency could potentially refer cases to the Department of Health and Human Services’ (HHS) Office of the Inspector General (OIG), its top fraud watchdog, according to Gainer.

Still, advocates have already expressed concerns that CMS’s promised enforcement could be overly toothless for their tastes. The Long-Term Care Community Coalition, a New York-based organization that works to improve conditions for residents of nursing homes and other institutional care settings, observed that violations of the 25% group and concurrent rule won’t immediately result in fines or other corrective actions.

“There will be no penalty for exceeding the 25% combined concurrent and group therapy limit,” a CMS fact sheet on group and concurrent therapy reads. “However, providers will receive a warning edit on their assessment validation report that will inform them that they have exceeded the 25% limit.”

That warning edit will note that “consistent violation of this limit” could result in additional medical review, according to the fact sheet.

“CMS will also monitor therapy provision under PDPM to identify facilities that exceed the limit, in order to determine if additional administrative or policy action would be necessary,” the agency noted.

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