To Get Ahead of PDPM Audits, Skilled Nursing Facilities Target Top Areas of Payment Focus

When the overhaul of Medicare Part A reimbursement for nursing homes took effect in October 2019, predictions of audits and the potential for drastic changes came close on its heels.

After all, the Patient-Driven Payment Model (PDPM) was meant to be revenue-neutral, meaning that the Centers for Medicare & Medicaid Services (CMS) would not spend more money under the new system than under the Resource Utilization Group-Version 4 (RUG-IV) system that was replaced in 2019.

In the early months of PDPM, the new system appeared to be anything but neutral, to the point of it causing concern about adjustments from CMS by March 2020.


That was in the early days of March 2020, however. The COVID-19 pandemic would strike the U.S. in force just a few days later, turning the world in general — and the SNF world in particular — upside-down. CMS ended up making only minor adjustments to PDPM in the change from fiscal 2020 to fiscal 2021, and operators praised the new system as one that “arrived just in time” to help them survive the immediate crisis of operations.

But as SNFs start to emerge from the immediate crisis of COVID-19 as an existential threat, they should expect scrutiny from CMS to begin again.

“When we talk about PDPM and compliance, particularly from a compliance perspective, this is probably going to be the most unique rollout of a new payments system that we’ll ever see,” Michael Sciacca, partner and chief operating officer at the Morganville, N.J.-based reimbursement consulting firm Zimmet Healthcare Services Group and chief strategy officer at CORE Analytics, said in an informal PDPM compliance session on Wednesday.


The compliance session was hosted by CORE Analytics — which offers market analytics and PDPM data solutions for skilled nursing providers — as an overview of a new tool designed to help SNFs develop and implement a PDPM compliance strategy.

CMS has largely been quiet with regard to additional documentation requests (ADRs) and denials surrounding PDPM over the course of 2020, but that seems likely to change over the course of the new year. The CORE webinar examined some of the ways SNFs could target their strategies, with a tool called the SALT report (statistical analysis of likely targets) designed as a complement to CMS’ electronic report of provider-specific Medicare data statistics for discharges/services vulnerable to improper payments, known as PEPPER.

Under PDPM, there are five categories for which providers receive reimbursement: physical therapy, occupational therapy, speech-language pathology, non-therapy ancillary (NTA), and nursing. And some of the areas providers capture within those categories could be the target of audits by the government.

Documentation will be critical to surviving those audits, particularly since a high rate of capturing conditions in the potential target areas does not mean the billing was improper, Vincent Fedele, chief operating officer at CORE noted on the webinar.

An example of possible target areas are the non-orthopedic surgery and acute neurologic subcomponent of the PT/OT categories, or the special care high subcomponent of the nursing category. The goal of the SALT tool is to assess how facilities compare to the national capture rate of these target areas, and using an algorithm to calculate where they stand in terms of compliance risk.

If SNFs see themselves as outliers in the tool for any of the target areas — in a percentile above the 80th one or in a percentile below the 20th — that would be a place for them to target in compliance auditing initiatives, Fedele said in the webinar.

Another example is the PT/OT component, where the critical part is the primary diagnosis code, according to Sciacca. In this case, there’s a key distinction between “good documentation to support why a diagnosis is the primary reason for skilled care, versus why they were in the hospital,” he said.

The documentation needed includes clear indications from the interdisciplinary team and the physicians about why the beneficiary is entitled to a stay covered by Medicare, what the patient is being “skilled for,” and what the treatment interventions are directed to, Sciacca said. This means documentation from the physician, from the team, and consistency between the nursing and therapy teams.

Another area for attention is the speech component, especially if SNFs are capturing the acute neurologic primary diagnosis code, impaired cognition, and speech-related comorbidities. A high capture rate in this area could be a function of the population in the given SNF, but it could also be a function of the diagnosis code section, and the way SNFs conduct the Minimum Data Set (MDS) Brief Interview for Mental Status (BIMS) assessment for the cognitive impairment component, Sciacca noted.

“You’d want to safeguard that you have clear policies and procedures on how you collect the BIMS interviews, and who you’re doing the interviews on and when you switch to a staff assessment,” he said. “You would be concerned when you have a high percentage of impaired cognition capture, when you’re doing the staff assessment, as opposed to the resident interview piece. That would be one of the areas that you would look at.”

All of these are examples of areas where SNFs can target their compliance efforts, but Fedele emphasized in a follow-up e-mail with Skilled Nursing News that because there has been no real auditing from CMS third-party contractors as yet, “this is new territory for all.”

That means that for SNFs, the idea is for them to get a sense of where their issues may lie, and to plan their documentation strategies accordingly.

“What we’d like to highlight today is where the biggest liabilities may fall, and then safeguarding those liabilities with internal structure that ensures those drivers are accurately supported with documentation,” Sciacca said. “I think that this year will be an awakening of nursing home reforms from both the care perspective and infection control, to really some review of the payment system.”

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