Tips for Early PDPM Success: Demand More Data from Hospitals, Market Higher-Acuity Services

The early returns for the new Medicare nursing home payment model have been positive, but providers aren’t seeing gains by sitting back and watching the changes.

Several key strategies for success have emerged in the Patient-Driven Payment Model’s first four months, with a particular focus on data — as well as clearly communicating the availability of higher-acuity services to the referral partners who matter most.

“As an industry, I think we’re asking for more,” Nick Hicks, vice president of operations at Trinity Rehabilitation Services, told SNN. “I think we’re asking for more information via portals, or via e-mails, or Slack from the acute provider. That’s allowed us to capture some of these co-morbidities, conditions, diagnoses, that before we just didn’t — because we never really needed to, per se.”


The concept of “reimbursement sensitivity” — the sudden payment relevance of services that SNFs had provided for years without any direct effect on reimbursements — was a prime area of focus in the 18-month lead up to PDPM’s implementation last fall.

From speech therapy to depression treatment to non-therapy ancillaries (NTAs) such as IVs, consultants and operational leaders identified areas where providers could boost their reimbursements without substantially changing their operations. The only difference, at least in theory, is the accurate recording and coding of these services to ensure that the facility receives the proper payment under PDPM.

But the right coding and paperwork won’t mean much without clear communication between acute and post-acute providers, according to Hicks. In his view, the industry already improved by leaps and bounds between October and December, realizing the importance of capturing a clear picture of each resident’s needs — particularly in the NTA domain — before he or she even enters a SNF’s doors.


“I think it’s been a collaborative effort — the post-acute providers really engaging some of the acute providers on what’s really needed,” Hicks said.

Writing on his company’s blog, Language Fundamentals vice president of business development Matthew McGarvey echoed those sentiments in a roundup of early PDPM success stories.

“It’s all about the team. High-performing facilities appear to have one thing in common: great team communication,” he wrote. “Doing a great job on Section GG, capturing co-morbidities and an efficient Medicare huddle all have one thing in common: teamwork.”

That need for communication doesn’t just stop at identifying resident status. More than ever, according to Hicks, skilled nursing operators need to let area hospitals know that their services extend beyond the traditional hip-and-knee replacements of the past. Though the move toward acuity has been a consistent theme in the skilled nursing world over the last decade, PDPM has created an environment where SNFs need to think of themselves as closer to long-term acute care hospitals (LTACs), he noted.

Hicks gave the example of two residents: one recovering from an elective hip replacement, and another who had suffered a neurological stroke. The old Medicare payment model would have compensated both residents’ ultra-high therapy at the same rate, Hicks noted — while PDPM brings higher reimbursements for the latter patient’s acute neurological needs.

And with joint replacement patients increasingly sent home with shorter lengths of SNF stay — or potentially no SNF stay at all — operators need to communicate that difference to their referral partners.

“Being able to train your staff, make sure your facility assessment and marketing is geared toward those higher-acuity patients, really had an impact — end of November, December — in capturing what ultimately led to [better] operations, and getting paid for the resources going in,” Hicks said.

PDPM has been met with near-unanimous acclaim from skilled nursing operators, with preliminary analyses showing widespread reimbursement boosts. Some of those initial gains have to do with a quirk of the transition process that saw an artificial, one-time boost in payments for residents who were already in skilled nursing facilities when the system took effect on October.

In addition, multiple voices have warned that reimbursement clawbacks, or downward go-forward adjustments, could be coming if the federal government decides that operators are seeing too much of a Medicare payment increase. But until the Centers for Medicare & Medicaid Services (CMS) weighs in, the story so far has been one of cautious optimism in a space that has long struggled with narrow overall margins.

“Keep in mind that this new reimbursement system was intended to be budget-neutral while just shifting the focus from where we’ve been focused — on the therapy volume — to the patient’s condition,” Camille Lockhart, partner at consulting firm BKD, said last week. “However, we are seeing in this first quarter that generally everyone that we’ve looked at has an overall increase on their average reimbursement, based on their respective billing.”

Trinity, for its part, recently released a comprehensive breakdown of the expected distribution of case mix groups (CMGs) under PDPM, based on 2017 data from the old model, as a way for providers to see where they currently measure up.

In the meantime, individual operators can focus on the stated goals of PDPM — improving outcomes while receiving proper credit for performing higher-level services — while waiting to see exactly when and how hard the CMS hammer will fall.

“My view is that if the increase that we see is just a few percent above budget-neutral, I don’t think that CMS will react in a 2021 payment rule, which will be proposed around May 1 of this year,” American Health Care Association president and CEO Mark Parkinson told SNN in an interview earlier this month. “I think that they would view that as possibly statistical noise, and more time would need to pass before there would be significant adjustments.”

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