SAN DIEGO—The rollout of the government’s new Medicare payment system has been a “great success story” — and the ride might last longer than first expected, a panel of long-term care experts agreed Thursday.
Federal regulators likely will not have enough data on Patient Driven Payment Model results to issue any payment cutback proposals by April, which is when new pay rate recommendations are typically issued for the coming fiscal year. That was the consensus among panelists at the “PDPM: Five Months In” session at the 2020 NIC Spring Conference.
Therefore, reimbursements averaging more than 5% above what was forecast could be around a lot longer than Oct. 1, when the new fiscal year starts.
“I do believe there will be some correction,” said moderator Michael Torgan, chief operations officer for Bespoke Healthcare Management. Proposed payment guidelines come each spring, “but I don’t think they’ll make that April deadline with all the events that are occurring. So I think it will get pushed out until maybe sometime in 2021.”
Overall, that is good news for providers — at least in the short term. CORE Analytics recently found that 67% of providers had gained greater payments and about 33% had lower payments during the first two months of PDPM. That’s nearly exactly opposite of what the Centers for Medicare & Medicaid Services had predicted in its 2017 PDPM benchmark projections.
“The big surprise was how well we did,” said panelist Steven Littlehale, Zimmet Healthcare’s chief innovation officer, about early PDPM returns. “The huge effort by the industry really is a great success story.”
The panel’s optimism included seeing more interdisciplinary team involvement and greater roles for nurses and physician groups. But all of the presenters also were quick to caution against over exuberance.
“Ultimately, outcomes will be judge and jury, and guide CMS’s hand in what they should do,” LIttlehale said.
Cautious capital
The early positive results have put the lending community on alert, said panelist Luann Gutierrez, managing director at Greystone.
“We are remaining cautiously optimistic,” she explained. “The whole intent on this by CMS was to be budget neutral. Of the homes we have, about 110 or 120, we have yet to see any losers. [Pre-PDPM] we thought there would be some slight declines. One of the [biggest] disservices we could do would be over-leveraging properties right now.”
“I really think CMS is going to do something to level it out,” she added. “They’re going to reformulate … to do something to level this out because it’s just not sustainable with this many winners.”
“They [CMS officials] really need six months of data to look at,” noted panelist Ashley Dava, president and CEO of Covenant Care.
At least one panelist felt rate adjustments would be in providers’ future, while at least one felt any future funding “correction” would come through a decreased market basket update.
“Pretty much everything, with the exception of PT/OT, is increasing,” Littlehale said, reflecting on the CORE analysis. “The reimbursement rates and per diems, we’re looking at about an 11% increase over the RUG system overall.”
Even companies that were extremely therapy-aggressive have been reporting gains of 5% or 6%, Littlehale noted. This, despite forecasts that had them going into negative territory.
“I think when all is said and done, we’re going to see a much higher PDPM uptick than the the 5% or 6% we’re hearing about now. In our database [of Zimmet clients] alone, it’s about 5.6%,” he noted.
He added that one disturbing occurrence has been providers that have changed their therapy contracts to “basically mimic what RUGs were doing, and paying therapists for every minute … basically recreating the old world.”
“Perpetuating yesterday’s news is not the way to move forward,” he asserted.
He said he doesn’t believe therapy utilization rates have fallen drastically nationwide.
“We will see rates go down, but they were inflated before” under RUG-IV, he offered.
“I don’t believe we’re slashing and burning therapy, and no therapy company I’ve spoken with has said that their clients are,” he added. “I don’t think that will be a concern that CMS will have to respond to.”
That would be in stark contrast to how regulators responded with swift and severe takebacks after RUG-IV was put into place and providers exploited the system, as reimbursements unexpectedly grew more than 12%. That led to numerous claims of upcoding, legal challenges, and among other things, a lingering black eye for the industry.
Ultimately, the feds took back hundreds of millions of dollars in 2012 after the unexpected gains emerged.
“That was the revenge of CMS,” Littlehale said. “There were a lot of reasons why it happened that way and a lot of that … we in the industry … shame on us. It’s taken us a very long time to live beyond that. But we’re not seeing that kind of [egregious] behavior now.”
