Each Medicare Advantage Plan Can Treat PDPM Differently — and SNFs’ Mileage Will Vary

Skilled nursing providers looking for a simple answer to how managed care plans will react to the new Medicare payment model will likely have to face an inconvenient truth: It’s complicated.

Private Medicare Advantage insurers didn’t have to follow the old Resource Utilization Group (RUG) model when deciding how to reimburse for skilled nursing services, and they don’t have to abide by the new Patient-Driven Payment Model (PDPM), either. Some will and some won’t, and it’s up to each operator to seek and receive firm answers from their managed-care partners.

“Bottom line: MA plans can do whatever they want,” Marc Zimmet, president of Zimmet Healthcare Services Group, told SNN.


In his experience so far, the proactive plans — ones that have directly reached out to their skilled nursing partners about the change — are the insurers switching to a new, non-RUG system, whether it’s based on levels of care, a percentage of the PDPM rate, or a flat blended rate. But many plans still hadn’t offered hints as to their intentions as of last week, Zimmet said, prompting him to recommend that clients “play defensively” by continuing to maintain RUG-based schedules for their managed care patients until receiving formal word.

Anne Tumlinson, CEO of consulting firm Anne Tumlinson Innovations, said many managed care plans simply aren’t ready to make the jump into PDPM, and will likely continue to play by whatever pre-October 1 rules they observed until their leaders sort out a post-PDPM strategy.

“Eventually, some of them may migrate and if they do, the precise methodology will likely vary by payer,” Tumlinson said.


HIPPS hope

Public-private Medicare Advantage plans have gobbled up an increasing share of the Medicare marketplace, with the Centers for Medicare & Medicaid Services (CMS) projecting penetration of around 40% of all eligible beneficiaries in the coming 2020 plan year. At the same time, CMS also announced the rollout of 600 more plan options for seniors nationwide next year, with an average boost of six additional choices per market.

From the consumer perspective, Medicare Advantage offers concrete benefits — such as expanded coverage of prescription drugs and specialty services — that have driven adoption rates among seniors. But for post-acute providers such as skilled nursing facilities, the model has multiple drawbacks, from lower per-day reimbursement rates to a pressure to shorten lengths of stay and send residents to the lower-cost home setting more quickly.

Those differences extend into PDPM, causing confusion on the ground as operators attempt to adapt to the new Medicare system without running into managed care reimbursement problems. For Jeannie McCabe, vice president of quality and analytics at the Florida-based Catholic Health Services, uncertainty arose around the use of HIPPS codes on the bills that the provider submits to its managed care partners.

Starting in 2014, CMS began requiring the codes, based on the RUG system, on all managed care invoices — and during that transition period, Catholic Health Services received some rejections for bills that didn’t include that information.

But there was little clarity on how managed care plans intended to handle the RUG-to-PDPM switch, and last week, Catholic Health Services made the executive decision to switch to a PDPM-based coding strategy for its managed care bills, while still recording the RUG-based codes to ensure full compliance.

Fortunately for Catholic Health Services — and the skilled nursing industry at large — CMS released updated guidance at the end of last week, indicating that both SNFs and their managed care partners could use either a RUG- or PDPM-based code moving forward.

“In order to allow providers and Medicare Advantage Organizations (MAOs) maximum flexibility in the submission of HIPPS codes on encounter data, CMS will accept the existing HIPPS codes as well as the new HIPPS codes,” Jennifer Shapiro, acting director of CMS’s Medicare Plan Payment Group, wrote in a memo dated September 26.

Patterns emerge

Guidance Care HMO spent the lead-up to PDPM calling Medicare Advantage plans in their clients’ marketplaces in search of firm answers — and discovered some patterns in the process.

“All of the major ones, the ones that run on a national level, are doing the same thing across the board,” Shimy Steinberg, chief marketing officer at the Lakewood, N.J.-based managed care consulting firm, told SNN.

That same thing is adopting PDPM, and those major players include heavyweights such as UnitedHealthcare, Aetna, Humana, Blue Cross Blue Shield, and Anthem. Some insurers — primarily Humana Military, which administers the Tricare East plan for veterans — have confirmed that they will not be following PDPM, and their reimbursement methods will continue to follow the RUG system, according to GCHMO’s research.

Still others, such as Cigna Healthspring, had not provided firm guidance as of last week.

But even with a mountain of research, making a blanket statement can be difficult: Blue Cross Blue Shield of Illinois and Blue Cross Blue Shield of Tennessee, for instance, confirmed plans to adopt PDPM, while Blue Cross Blue Shield of Texas remained undecided.

So until the dust settles on PDPM and managed care, it’s likely wise for skilled nursing operators to take a proactive approach in determining each of their managed care partners’ intentions, and not make any assumptions that could result in missed payments.

“This is very much a payer-by-payer thing — nothing uniform about it,” Tumlinson said.

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