Pending Part B Changes Could Have Major Impact on Nursing Home Finances, Therapy Staffing

Early returns for the new Medicare Part A reimbursement system for nursing home operators appear positive, but some industry advocates warn that more Part B pain could be coming over the next few years, both for therapists and skilled nursing providers.

And although the exploding senior population represents heavy demand for therapy services, some leaders fear an impending lack of supply — brought on by a new round of therapy cuts — will leave a large portion of this growing population without access.

The Patient-Driven Payment Model (PDPM) prompted some operators to reduce their therapy headcounts in the wake of the October 1 shift, but more cuts could take aim at therapy services for Part B patients, who make up about 70% of all nursing home residents


In addition to an 8% proposed cut in physical therapy rates in the final Physician Fee Schedule (PFS), slated for 2021, a 15% cut for physical therapy assistants (PTAs) and occupational therapy assistants (OTAs) in 2022 could be a hard pill to swallow — especially for nursing homes still struggling with PDPM challenges, such as new coding burdens and shifts to group and concurrent therapy.

Coupled with the extra administrative burden of added billing modifiers every time an assistant works alone, multiple voices argued to SNN that therapy staff can’t take another hit — or add more work to their already heavy plate.

“Here comes another cut, and one would suspect that you may have the same consequences. It’s PDPM…then it’s the 8% cuts, then it’s the 15% cuts when you have a PTA or an OTA, and it’s sort of the culmination of these different events that’s almost draconian on the therapist,” Dan Hirschfeld, CEO of Chronic Care Management, Inc. (CCMI), a software and consulting company, said. …”In light of all the other cuts that are going on, how much can the industry and these professionals handle?”


The additional cuts are slated for 2022 for PTAs and OTAs, who will be paid out at 85% of the fee-schedule amount when they assist a patient “in whole or in part” without working in coordination with a physical therapist (PT) or occupational therapist (OT) — and when the assistant provides more than 10% of part of all of the service, a CMS spokesperson confirmed in an e-mail.

More reimbursement losses will hurt the economic health of the sector, Hirschfeld argued.

“These cuts are so clearly going to impact the financials of nursing homes because obviously, when they treat a Medicare Part B patient, there’s going to be less reimbursement,” he said, pointing to already-tight margins for both Medicare and Medicaid services — including persistent losses on Medicaid residents in many parts of the country.

Congress passed the therapy assistant reductions into law as part of the Bipartisan Budget Act of 2018, Kara Gainer, director of regulatory affairs at the American Physical Therapy Association, told SNN in an e-mail.

The initial impact of this law began January 1 of this year, when a new rule requiring the use of coding modifiers whenever a PTA or OTA performs services without a PT or OT took effect. That added administrative conundrum may slow down billing and reimbursements — and could negatively impact the quality of clinical care.

“When you have to start applying the modifier to the claim, we’re realizing how complex the 10% standard really is,” Gainer said.

Providers do not bill for services performed for less than eight minutes, known as the eight-minute rule for Medicare. To demonstrate the complicated process of applying the impending 10% standard to this rule, Gainer offered an example.

Under the eight-minute rule, if a therapist provides 25 minutes of a single service and the assistant provides an additional seven minutes of the same service, for a total of 32 minutes, two units are billed, Gainer explained in an e-mail. But under the new policy, because the assistant furnished seven minutes — which is more than 10% of one unit, defined in a 15-minute increment — one unit would get cut and one unit would not, beginning in 2022. Under the eight-minute rule, billing for two units requires furnishing between 23 through 37 minutes.

“Thus the question becomes, ‘Okay, you didn’t need the assistant to deliver that seven minutes in order to bill two units.’ So moving forward — will this policy negatively impact patient care?” Gainer posed.

Medicare B patients affected by these cuts may be particularly vulnerable, and count on ancillary services such as rehab therapy and doctor visits, while Medicaid covers their longer nursing home stay.

Many of these residents have finished their 100 days of post-acute coverage under Part A, but are still not able to live independently — and could represent a considerable fall risk, according to National Association for the Support of Long-Term Care (NASL) executive vice president Cynthia Morton.

“This therapy, which the doctor prescribes, keeps them from being a fall risk or further strengthens their ability to speak before they go home, or [helps] strengthen their bed mobility so they don’t fall out of a bed,” Morton said.

CMS is de-emphasizing rehab therapy under PDPM, she said, explaining that although the new PDPM reimbursement model is better overall by incentivizing good care, reducing therapy hours with a heavy hand is an incorrect interpretation of the rule.

In Morton’s view, that’s not the answer, because CMS will be looking very closely at nursing home quality measures and the functional abilities of their residents, she warned.

In order to prepare for more cuts, nursing facilities — either through their rehab therapy partners or in-house therapy divisions — “need to take a hard look through these modifiers and where they’re utilizing assistants, and make sure they want to continue it that way,” she said, suggesting that bringing about changes will be a challenge since they have so many other tasks to handle.

One consultant in the sector believes that the PTA and OTA cuts may not necessarily negatively affect all nursing homes, and suggested that multiple factors will be at play in order to analyze the impact of the 2022 cuts.

A facility’s geographic location, the gap between therapist and assistant salaries, and overall profit per visit can also affect a facility’s bottom line, Rick Gawenda, president of Gawenda Seminars & Consulting, a Detroit-area national consulting company for outpatient, physical, occupational, and speech therapy services, said.

“Even though they’re [a PTA or OTA] being paid 15% less, might the profit per visit still be greater if done by an assistant versus a therapist? Or it could be less? It just depends on how much they’re paying in terms of salary, hourly wages, benefits, and things like that,” Gawenda said.

The hardest-hit facilities will most likely be those that have a higher ratio of assistants to therapists, he said. Additionally, if there’s a larger gap in expenses between a therapist and an assistant, “it won’t hurt as much.”

For context, Gawenda noted that physician assistants and nurse practitioners are paid 85% of what a doctor is paid.

“People should not be surprised that this actually is going to happen in 2022. I was surprised that it took Congress this long to kind of figure it out and [do] the same thing to PTAs and OTAs,” Gawenda said.

Although industry experts note that the cuts are here to stay unless Congress takes action, some are calling for a fight against the cuts — preferably sooner than later.

If they wait until this time next year, then they’re victims,” Hirschfeld said. “So they need to step forward and say they want to have the opportunity to have people reconsider the 8%. They need to be proactive; they need to do it now, and not wait until after it’s happened. That’s what I saw with PDPM: people waiting until after it happened, then complained. And I’m sorry; that’s just too late.”

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