With greater scrutiny of case-mix growth and coding, nursing homes should be strengthening documentation. Operators should also prepare now for expanded MDS reporting requirements beginning in 2029, reimbursement experts said.
To be sure, the Centers for Medicare and Medicaid Services (CMS) is not implementing a case-mix adjustment in the FY 2027 final rule, but the rule’s language makes clear that the federal agency will be watchful of the so-called “case-mix creep,” a reference to increases in SNF case-mix that appear to result from changes in coding or documentation rather than residents becoming more clinically complex.
All this means more meticulous documentation and coding compliance if providers want to protect their modest reimbursement increase.
Currently, the MDS is already required for traditional Medicare Part A residents under PDPM and federal nursing-home regulatory and quality-reporting requirements, with assessments transmitted through iQIES. However, CMS will be requiring reporting by all payers past October 1, 2029, and seeking MDS data pertaining to residents under Medicare Advantage, Medicaid, private pay, or other managed-care payer arrangements.
Facilities should determine how many additional assessments they will need to complete, evaluate whether current staff can handle the volume, and consider how expanded requirements could affect processes such as triple-checks and other revenue-cycle activities, said Elizabeth McLaren of SVP of Revenue Cycle Reimbursement and HCBS at Covenant Living Communities and Services.
“One of the biggest shifts is going to be, ‘can you staff for that change and how different is it from your current practice?’” McLaren said.
The change will also increase the staffing workload and the scope of required CMS submission for SNF QRP purposes, experts told Skilled Nursing News.
“QRP becomes even more of a slippery slope,” Danielle Dang VP of Clinical Reimbursement at EF Senior Care said.
Dang and McLaren were featured speakers at last week’s SNN’s webinar focused nursing home payment.
The impact of the expanded MDS requirement will depend largely on a facility payer mix and current MDS staffing practices, but operators should begin preparing now for the increased MDS workload rather than waiting until 2029, Dang and McLaren advised.
Each facility should be assessing its current practice, payer mix and staffing needs, McLaren said.
Buildings with a high Medicaid or custodial population and less Medicare experience will face a greater staffing and operational impact, while Medicare-heavy facilities may see less change.
McLaren also advised increasing technology investment. Operators should select and implement systems early, she said, and train staff and ensure that technology can support accurate assessments, documentation, care planning and audit-ready records.
Case mix creep, diagnoses often flagged
CMS’s continued scrutiny of case-mix growth and potential upcoding means that operators need to pay extra attention to documenting services.
Covenant’s approach is to document what is clinically true, establish why it is true, and ensure that the entire care team is telling a consistent story, McLaren explained.
“[At Covenant], we’re never starting with the payment result. We’re always starting with the resident’s clinical condition. What are their care needs?” she said.
Sometimes operators struggle in maintaining consistency among all the care team members, she said, pointing out malnutrition and depression as two major areas needing alignment.
“With malnutrition, what is the diagnosis? Is it supported by the practitioners? Is it supported by the dietitian? Are we looking at weight and intake records, intervention? Are we monitoring for care plan alignment? So I think you look at all of those,” she said.
With depression, diagnosis and symptoms, facilities should monitor to see if there’s consistency between all the practitioners who are providing services to those residents.
Certain diagnoses are often flagged for case mix creep, Dang said.
The top areas include malnutrition and depression, and Dang cautioned that facilities should not simply rely on a dietitian’s malnutrition screening or assessment.
“One of the biggest areas that I find the clients make [mistakes] is simply taking that mini-nutrition malnutrition scale from the dietitian and [assume] they can run with it as is,” she said, explaining, “You really need your physician’s anchoring documentation in the lookback to support that, because we all know there’s no malnutrition risk …. It has to be documented.”
Other areas receiving scrutiny include pneumonia, sepsis, depression, swallowing disorders, and isolation, according to Dang. Historical diagnoses should not simply carry forward without current clinical support, she said.
“For isolation in particular, facilities should have a systematic and reproducible process demonstrating the clinical need, physician involvement, required orders, and evidence that appropriate services were actually delivered.”
Moreover, coding problems may not be identified immediately, and facilities can face consequences years after the original claim through CMS audits, probes, or payer reviews. Increasingly sophisticated electronic data systems also allow CMS and other payers to identify inconsistencies between physician documentation, MDS information, claims and other records.
As a result, documentation must be accurate, consistent, and capable of being reproduced during an audit, Dang said, cautioning that moving documentation from electronic systems to paper can make it more difficult to reconstruct the record and defend reimbursement during an audit, especially for depression screening and treatment.
“I see a lot of providers not having a responsible, systemic way of coding and documenting isolation, valid isolation needs – and that’s one of the highest areas of reimbursement that a building can get without having a vent program,” she said.
As nursing facilities enter flu season, Dand urges careful documentation that is reproducible.
“As we head into flu, pneumonia, COVID, RSV season, everybody needs to look at from an internal process and make sure they have a way to reproduce that documentation and prove it. You want to make sure you have your physician order, your physician documentation, all care and services brought to the room, and so on,” she said.
Wage index, inflationary pressures
Other noteworthy elements of the SNF rule include considerations to the wage index, with facilities in certain regions feeling a greater pinch on payment.
“The biggest winners are going to be those that have a positive wage index increase this coming fiscal year under Medicare, and those facilities will see the greatest gain,” Dang said.
Some areas had a slight reduction, with the overall figure being $204 million seen overall across the country, Dang noted.
Operators should not, of course, assume that a 2.4% increase in payments will translate into a comparable increase in margins.
Labor, employee benefits, pharmacy, therapy, ancillary services, and other operating costs may rise as much or more than the payment increase, McLaren said.
“It’s important to kind of recognize that 2.4% isn’t going to fall to the bottom line. It really is kind of that top line, and then you have to manage all of those expenses underneath,” she said.
Covenant looks at the payment picture facility by facility, McLaren said. Her organization pays attention to their financial position at the community level, considering wage index, case mix, quality performance and payer mix, including with Medicare Advantage, she said.
Companies featured in this article:
CMS, Covenant Living Communities and Services, EF Senior Care
