The new Medicare payment model for nursing homes took effect this week with a bang, as therapists across the nation criticized a wave of staffing reductions in the immediate wake of the October 1 start date.
Several companies implemented workforce cuts as the federal government shifted to the Patient-Driven Payment Model (PDPM), which moves incentives away from the sheer volume of therapy and toward accurately capturing residents’ individual needs.
Publicly traded skilled nursing giant Genesis HealthCare (NYSE: GEN), for instance, cut about 5% of its overall rehabilitation staff, laying off 585 employees across its national footprint. Signature HealthCARE, meanwhile, negotiated a pay cut with its therapy staff in an attempt to save jobs and prevent changes to resident care, according to a spokesperson.
But those changes also belie another side of PDPM: Individual therapists and rehab teams have greater leeway to customize care for residents, without the pressure to meet certain minute-based thresholds.
“PDPM reinforces the importance of therapists using their clinical judgment when developing a patient-centered plan of care,” Guy Cowart, president of Consonus Healthcare’s rehab division, told SNN.
The Milwaukie, Ore.-based Consonus, a subsidiary of post-acute and senior living provider Marquis Companies, cut about 10% of its jobs in response to the PDPM shift — with 25% of those affected in California due to a high concentration of contract labor in that market, Cowart said.
Cowart described a “thoughtful, intentional process” of PDPM planning, adding that the company was transparent about its plans with employees during the lead-up to the October 1 implementation date.
Under the old Resource Utilization Group (RUG)-based reimbursement system, there was a direct correlation between therapy minutes and Medicare payments, with widespread acknowledgement of pressure to place residents in the highest-paying “ultra-high” group. The Wall Street Journal, for instance, in 2015 determined that the proportion of ultra-high therapy billing rose from 7% of days in 2002 to 54% in 2013, and the Department of Justice reaped hundreds of millions in settlement dollars from providers accused of billing the government for unnecessary therapy services.
The Centers for Medicare & Medicaid Services (CMS) thus positioned PDPM as a way to potentially stem fraud and better align payments with resident care, an aim that many voices in the health care space support.
“I think it’s refreshing that we’re going to get back to that model of saying: Let’s base this on what the patient needs, not whether they fit into this category or that category in terms of how many minutes of therapy,” Steve Gnatz, chief medical officer at Integrated Rehab Consultants, told SNN.
Cowart also noted the potential for naturally lower therapy minutes in the absence of the RUG system, saying that the reductions in therapy staff go beyond a simple a push to group and concurrent therapy — a modality that many providers have positioned as a way to reduce expenses amid lower top-line Medicare revenues.
“Obviously, the ability to use group and concurrent is one reason for the reduction, but we also believe minutes will drop organically due to not having to make up minutes to reach a certain RUG level,” Cowart said.
In Gnatz’s view, the shift to PDPM will force skilled nursing facilities to realize that therapy isn’t their sole reason for being. As a physician leading a team of specialists that work with SNFs’ therapy teams, Gnatz said he would often encounter facilities where an obsession with minutes trumped the question of what patients really needed.
“You literally had a generation of therapists that didn’t know what the right amount of therapy was,” he said. “For 20 years, the therapists were trying to maximize minutes, and nobody was thinking about the patient in this whole scenario.”
For Consonus, the PDPM shift will include an ongoing assessment of the exact quantities of therapy that each resident needs.
“With therapists driving the appropriate amount of minutes for each patient, we look forward to gaining an even better understanding to the amount of treatment required to deliver exceptional outcomes,” Cowart said.
In addition, not all providers will necessarily opt for workforce reductions.
“We have no plans to decrease the staffing levels of our therapists that support our current model, and we could see an increased need for speech therapy as we move forward with PDPM,” Wesley Rogers, president of Golden LivingCenters — Indiana, said in a statement provided to SNN.
The 23-facility chain worked with Aegis Therapies, its third-party therapy provider, to develop person-centered care plans in the lead-up to PDPM; Aegis, meanwhile, cut per-diem labor and anticipates reductions in contract-labor therapists, CEO Martha Schram told SNN earlier this week.
“Golden LivingCenters — Indiana sees growth opportunities for group and concurrent therapy,” Rogers said. “We think PDPM presents an opportunity to complement individual therapy needs for physical therapy, occupational therapy, and speech therapy.”
No matter the strategy, the eventual resident outcomes will serve as the final arbiter of PDPM prep success, according to American Health Care Association president and CEO Mark Parkinson.
For years, Parkinson told SNN in a statement, both operators and the federal government faced criticism for the focus on therapy minutes baked into the old system.
“PDPM encourages long-term care providers to develop an approach that incorporates nursing, rehabilitation therapy, and more to ensure the best care possible for each and every resident. This will mean changes in care,” Parkinson said. “The most important measure of the success of PDPM should be resident health outcomes and the quality measures that CMS reports.”
Gnatz agreed, emphasizing that while he supports PDPM’s move away from minutes in theory, the actual effects on residents remain to be seen.
“The thing that we’ll have to see is whether outcomes suffer,” Gnatz said. “If we start to see that, I might be singing a different tune next year.”
LeadingAge, a trade group that represents non-profit senior housing and care providers, preached patience in its response to the therapy issue.
“We’re monitoring PDPM’s impact on our members. Any change of this magnitude will have both expected and unexpected effects,” a spokesperson told SNN. “However, we’re on Day 2.”
Maggie Flynn contributed reporting to this story.