Coding Errors, Missed Payments, and CMS Red Flags: Navigating the Next Phase of PDPM

Data from the first quarter of the new Medicare payment model has been generally positive for skilled nursing operators, but it’s important for players in the space to realize that we’re still in the early innings of a change that could take years to sort out fully.

Despite the news of per-day payment bumps under the Patient-Driven Payment Model (PDPM), providers can’t declare victory in the face of the obstacles that lie ahead — which range from persistent missed payment opportunities to the looming threat of corrective action from the Centers for Medicare & Medicaid Services (CMS) if the reimbursement gains rise too high for officials’ liking.

As the CEO of the Carmel, Ind.-based JMD Healthcare Solutions, John Delossantos has had a front-row seat to the changes sweeping the industry, and he joined SNN’s “Rethink” podcast to identify some of the biggest early PDPM successes and surprises.


Currently serving about 15 skilled nursing facilities, JMD is eyeing growth through PDPM consulting and training, with a particular focus on bridging the gaps between the nursing and therapy teams. That collaboration will be key to success under PDPM, Delossantos argues.

To hear Delossantos’s full “Rethink” appearance, download the episode on SoundCloud, Apple Podcasts, or Google Play. And if you like what you hear, be sure to subscribe on the podcast service of your choice so you never miss one of our two free episodes each month.

Are you seeing the same positive early PDPM returns, with general gains in reimbursements, as other sources have reported?

They are a little higher, and that’s been commonly known. I think one of the reasons that is the result is because of the increased focus on the MDS [Minimum Data Set]. I think when Medicare put out their crosswalk, and they were converting what RUGs were and what the MDS would be, the more attention every one of these pieces are getting has made them a little more accurate maybe than they were in the past.


But I think that’s going to level out. What people have to remember is that this is still a type of prospective payment. So if you capture all these conditions or components, there’s also a whole other piece — you have to make sure all these things are followed up on. And that’s what people are starting to get a little more worried about.

Now it’s like: “Oh, well, we captured all these great scores; we’re getting these great payments. But what happens when this gets looked at? Are all these things completely justified in what we’re doing?” And that’s where we come in handy, because we kind of level these two things out.

We have seen some coding errors, just because of how people were thrown right into that — especially some of the therapy departments were thrown into a system of coding, and now we’re finally starting to see a few of the errors that are popping up.

What are some of the more common coding errors? Are you seeing missed opportunities for reimbursement, or inappropriate codes entered when they shouldn’t?

The most common things we’re seeing for missed opportunities would be more on the ICD-10 coding.

Some of the non-therapy ancillary services are being missed. Some of the comorbidities are being missed. They’re feeling good about finding that one diagnosis that fits in that one category, and then they move on right away. There are certain major group categories that actually, based upon other parts of the MDS, can actually have a different payment — and some of those things get looked over a little bit faster.

ICD-10 coding can be pretty tricky. And some of the biggest things we’re seeing that there’s going to be an issue in the future is — believe it or not — Section GG still not being coded. I’m a therapist myself, so I don’t blame therapy because there’s a translation issue here with some of the wording, and how the functional levels are worded. I think there’s some confusion with the therapy teams about what is what as far as therapy documentation goes and MDS documentation goes.

There is definitely a disconnect on some of the levels of function, causing both inflated payment and the lower payment. As you know, each one can be a different piece of that. So that’s where we’re seeing the most errors right now: Section GG and the translation issue.

We’ve definitely heard about Section GG being a potential issue, but the ICD-10 piece is news to me, at least — we heard a lot in the lead-up about how it was important but not vital. I wasn’t expecting to hear you say that it’s a problem.

It definitely is. I’m not saying you need to hire a coder. I don’t know if it’s at that level, but you definitely have to have someone who has the ability to use a coding book.

Make sure they get to those seven characters if required, because like I said, after the major category, a few of the minor changes in other sections, with some diagnoses that they didn’t code, could have effectively made that payment a little better. When we’re saying “effectively,” we’re talking about, you know, $20 to $30 a day, but over the course of a year, if it affects 20 patients, 20, 30 bucks a day — that’s a significant difference at the end of that year.

It doesn’t seem like a lot. But especially in this landscape, with all the threats to Medicaid, every dollar does count on the Medicare side.

Right. You’re talking about a building that may carry 15 to 20 [Medicare A residents], and, you know, with the average length of stay being around that 17-, 18-day range, and this is every day — yeah, it adds up.

Trust me, they would love to have that extra revenue. They deserve it; they should get everything they deserve. And that’s what has been our model the whole time: We’re not trying to do anything here to get you more payment. We’re trying to get you what you deserve. These are the rules, and there are a lot of them and it’s new. And having this therapy mind and the MDS mind together is really pulling up some good opportunities for some facilities.

When do you think we’ll start to see adjustments from CMS? Are there any particular areas that you think will be potential red flags once they start to dive into the data?

I still want to remind everybody that even though therapy minutes don’t directly generate the RUG anymore, and they got that monkey off their back, they still represent half of the components for payment. So therapy is still a big thing they’re going to be looking at, and they have been mentioning this the whole time: “We’re watching the minutes. Don’t go way over, don’t go way under; we want you to be around the same.”

I think the biggest liability that’s going to lay out there is when you capture all these great component scores for therapy, and then they go back and they start digging through documentation. Maybe some of these goals, or some of these areas weren’t even addressed by goal by your therapy team. We’ve seen this before; we’ve seen certain components being scored a certain way that affects reimbursement, and I go to the eval, and there’s not even a goal that an OT or PT are even working on.

What that’s going to come down to, I think, for Medicare — it’s going to be really easy for them to review this and say, “Huh, look at this. We got all this payment for these areas that don’t even really seem to be addressed on your end. We’re going to take that back now.”

What’s your defense? At least in the previous way, under RUGs, you had a fighting chance because it was the minutes you delivered, and you got to try to justify why those minutes were important. But if you didn’t address a component that was paid to you, I don’t know how you defend that — you really can’t, and it’s going to be a lot easier for them as far as not even having an appeal process for some of these issues that come up.

It’s going be really easy for them to recoup some of those payments that they’ve been paying out that seem really nice now, but they’re going to see as being overinflated.

What can operators do now? If they’re looking at their first two or three months of data, and maybe they’re seeing some gaps in the documentation, is there anything that they can do to potentially head off those problems from CMS?

I believe it starts with how a lot of the improvement starts in our industry: getting good-quality audits that come with resolutions to the issues that they’re seeing. One of those will be making sure that your therapy services that are being delivered are in alignment with your payment components — and what you receive for those components.

MDS and therapy, you know, sometimes they live in separate worlds. They might be doing their eval and doing a great job in therapy, and then also the MDS coordinator is doing a great job in coding, but do they ever come together and make sure what this eval is reflecting? Is it the same patient that your MDS reflects? Because it needs to be, because the MDS is going to be the tool that they’re going to be reviewing and assuming is the patient — and if it doesn’t match the picture that therapy painted of them on their eval and their treatment, there’s going to be a disconnect there.

I can tell you, they’re not going to want to pay for those things. They had this thought out before they did this. If they can make sure that their payment component, and those issues that they identify on them — even with the levels of function — is being addressed properly in their therapy departments, it’d be a really, really, really good start.

Also, proper training for the therapy departments to make sure that they really do know how to code this — or have someone else do it, because it needs to be accurate, and that’s gonna be a key.

I know the training part sounds obvious, but I have heard anecdotally about how some individual buildings may not have fully prepped therapists for the change.

I agree. One of the reasons is — well, first of all, it’s a nursing assessment, and I understand that. But if you’re going to have a department assist with it, they’ve got to know what they’re doing, especially with the interviews. Now, people look at these questions, and they seem simple in nature — like, “Well, these are very simple questions, you know, and how can you really screw that up?” Well, if they were that simple, the RAI manual wouldn’t be 1,300 pages long. It’s very thought out on how these are supposed to be administered and how they are to be scored.

There’s some scoring tricks that people don’t know. Like, if someone’s ever scored as a 2% assist, they must be dependent on the MDS. And then yet, I’ve caught people doing this constantly ever since it started, in therapy departments — no one even knew that. It wasn’t explained well enough to them. And if it was, it was too quick — it was like a webinar, and it was 20 minutes, and they went through it, and maybe it’s in there. And they can justify that, and that’s great.

But it doesn’t mean much if your therapy team doesn’t remember what they got trained. I mean, you’ve really got to follow through and make sure they got it and they got it correct.

Before we started recording, you had mentioned that there were some things that you didn’t expect from PDPM. I want to focus a little more on that — what are some outcomes or that you’re hearing that maybe weren’t a key area of your focus when you were preparing for PDPM?

One of my biggest surprises was the reaction of some of the therapy companies — in the massive loss of staffing hours before they even got a chance to get in there and really see how it was going to work at the facility level. I was surprised that there was so much reduction, and an increased focus on staffing and departments being even more efficient, because of the added pieces that were going to come in there under their department with the MDS.

I thought that was a little strange, I thought that was a little bit more reactive than what I was anticipating.

I’m also a little bit surprised about what we just talked about — the lack of being prepared. I mean, how long have we been talking about this? A long time. So to not have your therapy departments completely prepared to do some of these MDS [tasks] and some of these coding [tasks] — and it’s not just therapy. I shouldn’t be picking on therapy.

There were some facilities that I’ve talked to, even after October, where they were just looking into making sure — okay, well, now which ones of these are responsible for reimbursement now? Some people were not completely prepared for this. Being such a huge change that it was, I thought there’d be a little bit more readiness for it.

I was also really surprised at the speed at which the layoffs happened — during the first week of October, my inbox was filling with stories from therapists who’d been laid off. I thought it would at least take a few months, if not a few quarters, before we’d see real shifts.

Yeah, I agree — and especially since, like we just discussed at the beginning of this, some of these payments have gone up. As you know, most of the contract therapy companies, they take percentages of the revenue — as they should. It’s a partnership, and I understand that. But you’re right; I’m surprised they didn’t wait a little longer to see what the outcome was going to be before they started to make readjustments like they have. The therapists obviously had a poor view of that.

Patients and family members, they hear all this stuff about our industry too, and to give a reputation of “cuts come before anything else” — I don’t know. I just want to make sure that our patients and our clients didn’t get a bad impression of that either, because that was a surprise. I didn’t see that one coming, at least to that level.

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