Nearly a Year into PDPM, Therapy Rates Stable — But Some Operators Fail to Capture Payments

The new Medicare payment model for post-acute care providers has largely gotten lost in the more pressing concerns of COVID-19, but as operators continue to struggle with increased costs related to the pandemic, some are still making mistakes that could cause them to lose out on money they earned.

The differences between the top performers under the Patient-Driven Payment Model (PDPM) and the rest of the pack all come down to accurately capturing the services provided, a new analysis from Zimmet Healthcare Services Group and its data affiliate, CORE Analytics, has found.

The New Jersey-based consulting firm analyzed the top 10% of facilities by per-day Medicare reimbursement, and compared them against the average of all facilities in the country — excluding outliers such as rural providers, buildings with low patient volume, and facilities with a high percentage of ventilator days.

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That high-performing 10% recorded per-day fee-for-service Medicare payments of $643, a 7.9% improvement over the average figure of $596.

With PDPM, the Centers for Medicare & Medicaid Services (CMS) sought to remedy problems identified under the former Resource Utilization Group (RUG) model for nursing home Medicare payments, which incentivized operators to provide as many therapy minutes as possible to ensure the greatest reimbursements.

CMS now determines each facility’s Medicare rate with a formula that draws from five key care components: physical therapy, occupational therapy, speech-language pathology, non-therapy ancillary (NTA), and nursing. The goal, in CMS’s reasoning, is to more closely link reimbursement dollars to the actual services provided, in turn compensating SNFs for accurately meeting resident needs.

Prior to the implementation of PDPM last October 1, most industry observers agreed that therapy would swing rapidly from the primary payment driver to a cost center, with low variability in potential reimbursements under the new model.

Those predictions seemed to bear out in news of therapist layoffs throughout the industry in early October, as operators and third-party providers alike sought to counteract the shift by increasing the proportion of group and concurrent therapy services — seen as a key area of cost savings under the new model.

In the most recent CORE analysis, there was no significant difference between the physical and occupational therapy rates among the top 10% and the rest of the pack: The highest performers logged an average PT/OT payment of $175.75, compared to a national average of $175.56.

“The data shows that there’s almost no movement in that category,” Vincent Fedele, chief operating officer at CORE Analytics, told SNN.

Those numbers are in line with an earlier Zimmet Healthcare prediction about PDPM’s effects on therapy.

“Therapy should not be the driving force behind PDPM eligibility and reimbursement management!” firm president Marc Zimmet warned in a PDPM preview published in November 2018. “This power has been returned to nursing after a generation of perverse incentives endemic to a therapy-centric world.”

The true differences lay in the other categories, with the nursing category leading the way in dollar variance, according to CORE: The top 10% of operators had nursing rates that were 14% higher than baseline, or an extra $23.50 per day.

The biggest PDPM winners were twice as likely to capture services under the Special Care High domain of the nursing category, and 2.5 times as likely to record depression — a common diagnosis for elderly patients after a health scare, and one that operators can effectively treat with the additional funding.

“There are still elements of care-versus-capture discrepancies, and nursing is chief among them,” Fedele said.

That finding also tracks with a pre-PDPM analysis conducted by Zimmet chief innovation officer Steven Littlehale last summer.

“Depression is a linchpin to PDPM success,” Littlehale said at the time.

States that base Medicaid reimbursements on case mix generally saw better capture of depression, the analysis found, along with several other conditions.

“The states that were already used to it were able to get a head start on depression and some of the other capture issues that drove the rate,” Zimmet told SNN.

In the speech-language pathology category, the top performers saw the greatest improvement on a percentage basis over their middle-of-the-pack peers, with a 15% bump — $45.46 as compared to $39.35. The leading operators achieved that increase primarily by accurately recording two resident conditions, mechanically altered diet and swallowing disorders, for which operators should both provide adequate care and receive the associated reimbursements.

Finally, the non-therapy ancillary category saw a 14.4% gap between the top tier and the rest, driven by a greater proportion of residents classified with three to five and six or more NTA conditions; that category includes a variety of comorbidities from end-stage liver disease to morbid obesity to HIV/AIDS.

Of course, while capture issues have emerged in the first 11 or so months of PDPM, it’s important to emphasize that those diagnoses must exist, or else operators face audits and punishment from CMS.

“If you’re hearing: ‘Capture depression, you’re going to get reimbursed more’ — it is to pay for the care that will cost you more to deliver,” Littehale warned last August. “Make no mistake that this is a well-thought-out system.”

The CORE database serves a more up-to-date collection of Medicare claims data for nursing homes than official CMS reports, which are often months out of date at any given time; the company has positioned its product as a more reliable way to provide benchmarking data in a skilled nursing landscape with considerable regional variation in reimbursements, costs, and Medicare Advantage penetration, among other variables.

This most recent data builds on early analyses that showed more winners than losers under the new system, a cause for concern given CMS’s desire to make PDPM budget-neutral — that is, because the federal government will not increase the total amount of fee-for-service Medicare funding for nursing homes, each top PDPM performer must be offset by a facility with a corresponding drop in payments.

That said, prior to the start of the COVID-19 pandemic, American Health Care Association (AHCA) CEO Mark Parkinson predicted that the slow-moving reality of Washington would prevent any major shifts in CMS’s PDPM math.

“I don’t think that CMS has, or we have, enough information now to currently act,” Parkinson said in February.

Citing the ongoing demands of the COVID-19 pandemic, CMS indeed did not make any significant changes to the PDPM structure in finalizing its 2021 payment rule, which will bring an overall Medicare increase of $750 million to skilled nursing facilities when the new fiscal year begins October 1.

“In recognition of the significant impact of the COVID-19 public health emergency, and limited capacity of health care providers to review and provide comment on extensive proposals, CMS has limited annual SNF rulemaking required by statute to essential policies including Medicare payment to SNFs,” CMS noted.