It’s been an open secret that the federal government has, for years, wanted to change long-term care’s payment system from one rewarding volume of services to one that pays for quality outcomes instead.

The new Patient-Driven Payment Model (PDPM) may be just the ticket to reaching the goal. Providers and various analysts have been like a wriggling octopus, wrapping multiple arms around the Centers for Medicare & Medicaid Services’ creation, latching onto whatever concepts they can.

Released under the SNF-PPS Proposed Rule for fiscal year 2019 in April, PDPM replaces the Resource Utilization Group-IV system with a new entity aimed at improving payment accuracy and incentives. In addition, treating the “whole” patient should mean less paperwork — due to less tracking for a lower volume of services — CMS claims.

Of course, it also could reduce the fraud the government says stems from upcoding RUGs.

Timelines, ICD-10 concerns

There are definite pluses and minuses to the new proposed model.

The drawbacks range from implementation timeline concerns to significant staffing changes and training burdens. Implementing a paradigm shift in payment within 12 months is troubling, especially given that ICD-10 codes must be used in the Minimum Data Set, says Mark McDavid, OTR, RAC-CT, CEO of Seagrove Rehab Partners.

“Most MDS coordinators are not certified coders, and SNFs do not generally employ coders,” he notes. “Therefore, using ICD-10 may not be the most efficient way to implement the new model.”

Although perhaps less of a burden and more of an opportunity, SNFs will need to take some time to figure out how they will reconfigure and renegotiate therapy provider contracts.

“Whether you have an in-house or contracted therapy provider, you should talk to them about the new model,” says Josh Pickus, CEO of Optima Healthcare Solutions. “I’m impressed with the way [therapy providers] have been thinking about it and their perspective on the new model. Some innovative providers are saying this to SNFs: ‘Pay us a flat rate, hold us accountable for outcomes and let us manage it per SNF resident, per day and let’s negotiate what outcomes need to be delivered.’ Whatever the case, you need to have that conversation with therapy providers.”

Mike Capstick, EVP of Select Rehabilitation, also points to the need for contract renegotiations.

“Since therapy payments will no longer be based on the number of minutes provided, SNF operators likely will have to consider a contract renegotiation with the facility’s contract therapy provider,” he notes.

Start training now

Capstick also explains that SNFs will need to get staff up to speed on education and skills.

“Operators will need to train the clinical team on the regulatory and MDS updates and figure out how to consistently obtain hospital diagnosis related groups, or DRGs, in a timely manner,” he says, adding that facilities will need to learn how to quickly identify and code clinical attributes of the patient to ensure proper PDPM categorization.

Operators need to start planning now, asserts Cynthia Morton, senior vice president of the National Association for the Support of Long Term Care.

“PDPM will require the facility to rethink its workflow processes because the patient will need to be assessed much more accurately,” she advises. “Once a patient is assessed at the beginning of the stay, it sets the payment in motion and it will be difficult to change the payment category, even if the patient has a change in condition.”

Morton believes that although CMS is saying that fewer assessments is good, and that it reduces provider burden, it also could mean that facilities will have to change personnel to change workflow in order to meet the requirements of the new model: “And that would cost more money, which won’t end up being a savings for the provider.”

Staving off additional costs means the facility will have to get it right at the beginning, Morton warns.

“If they get it wrong, payment could be too low and the SNF will not get its costs covered,” she adds. “Perhaps this means that the interdisciplinary team should be strengthened, since they may have to redesign their processes to ensure they have the right people to reflect the new requirements.”

Providers must be sure to employ evidence-based practice, when available, to help avoid overutilization or underutilization, says Centrex Rehab’s Matthew Mesibov.

“Over-utilization will not match the reimbursement level of the PDPM case-mix classification while the under-delivery will likely result in poor patient outcomes and potential reimbursement related penalties,” he says.

Similar to Pickus’ observation, Mesibov believes that from an overall PDPM reimbursement standpoint, SNFs will become more likely to seek out more complex patients, “as those are the higher categorized and are more likely to be higher reimbursed.”

“What’s more, utilization of Non Therapy Ancillaries (NTAs) will be better recognized under PDPM. The hope, according to CMS, is that the NTA component more accurately accounts for drugs, lab services, respiratory therapy and medical supplies.”

Fresh strategies

The new categorizations mean new ways of thinking about the needs of the patient, according to Josh Fitzgerald, vice president, non-acute sales at Provista.

“Since the proposed PDPM breaks therapy out into three types for the purposes of setting payment rates —  ­physical therapy, occupational therapy and speech-language pathology — SNFs will need to match therapies to each patient based on their individual rehabilitation needs,” he says. “As a result, the mix of those services may be different from what they are now.”

Like Capstick, Fitzgerald also foresees a big impact on documentation and staff training and education.

“As with any new payment system, SNFs will need to learn the reimbursement rules to decide what they need to document to determine their payment rate for each individual patient,” he says.

MDS is critical

Operators must prepare by looking at specific areas in the MDS, according to HealthPRO Heritage’s Kristy Yoskey, MOT, OTR/L, specifically functional status in Section GG. 

Administrators must understand how patient information is captured and coded, and to keep stressing the need for correct documentation, she advises.

“Overall reimbursement will indeed be impacted by whether SNFs are able to best capture the most accurate clinical picture via the processes put in place to gather MDS and coding specifics,” Yoskey says.

Looking longer term at the impact of PDPM, Pickus gives credit to Sabra Health Care REIT CEO Rick Matros. Sabra’s leader has said “the era of standardized custodial care is threatened and that it’s shifting into specialization,” Pickus says. He agrees.

“SNF operators should be thinking about their patient mix, what they want it to be and what they are really good at. Since PDPM is designed to pay you more for more medically complex patients and pay you less for custodial type patients, operators need to ask themselves this: ‘What do I want my patient mix to be and where can I really excel?’ I believe the answer is not in everything — it’s in specialization — such as COPD, CHF, or knee replacements, for example.”

In the long term, Provista’s Fitzgerald believes that the real impact of the new model is about payment accuracy.
“The current system isn’t refined enough to reimburse SNFs based on their individual performance,” he says. “The proposed PDPM would change that by implementing a more granular payment formula, and SNFs that truly do a better job of caring for their patients — and are adept at documenting their care — would be rewarded. SNFs that don’t perform as well, or who fail at adequately documenting the good care they provide, would not.”

Since minutes will no longer drive reimbursement, some rehab providers and clients may focus on optimizing the net margin associated with providing therapy, Yoskey says.

“While many providers may be inclined to decrease costs associated with rehab services, more forward-thinking SNFs will consider therapy an integral part of their care delivery system,” she says. “As such, savvy rehab providers should focus on driving evidence-based clinical programs that produce high performance/functional outcomes and effectively prepare patients for a safe transition to their next level of care.”