CMS says RIP RUG, PDPM for SNF ASAP

New Medicare Card and pen PDPM

What is PDPM?

Significant reimbursement changes loom on the horizon for skilled nursing facilities (SNF) as the Center for Medicare and Medicaid Services (CMS) plans to implement its new Patient Driven Payment Model (PDPM) as of October 1, 2019.

PDPM will replace the current Resource Utilization Groups Version IV (RUG-IV) model, under which reimbursement is based on the volume of therapy delivered to a patient while at an SNF. The goal is to create a simpler and fairer payment method that will focus on the individual patient’s needs rather than the amount of time spent in therapy.

Such policy changes are often fraught with unintended consequences despite the underlying good intentions. But when it comes to the bureaucratic nightmare of Medicare reimbursement, the road is mostly paved with paperwork and acronyms.

That being said, it’s worth exploring the pros and cons of PDPM as it relates to your SNF. First, let’s examine the up side. Keep your fingers crossed and your grain of salt handy.

Pros of PDPM

  1. PDPM will improve payment accuracy and appropriateness by focusing on the patient rather than the volume of services provided. By addressing each individual patient’s unique needs independently, PDPM increases payment accuracy and encourages a more patient-driven care model. To facilitate this, CMS will classify patients depending on their therapy needs and adjust SNF reimbursement based on that classification. The agency also plans to adjust per diem payments to address the varying costs throughout an SNF stay.
  1. PDPM will create a simplified payment model designed to be more holistic in patient assessment. It will capture more clinical complexity and greatly reduce the therapy focus by eliminating minute levels of categorization. It will also simplify the assessment process and schedule. This should significantly reduce the administrative burden on providers.
  1. PDPM will reportedly save providers $2 billion over the next decade while providing SNFs with the resources to treat medically complex patients.
  1. Because of the focus on patient needs, PDPM will improve SNF payments to currently underserved beneficiaries without increasing total Medicare payments.

Now this all sounds very promising; but let’s also examine the potential concerns with PDPM.

Cons of PDPM

  1. Transition confusion is a real possibility. All payers that currently use the RUG system have until September 30, 2020 to adjust their rate calculations accordingly. This puts even more pressure on the skilled nursing staff responsible for proper coding and billing. Minimum Data Set (MDS) coordinators and other staffers will need to work with multiple concurrent models, increasing the chances that mistakes will be made.
  1. Beware of CMS lowering reimbursement rates. Because PDPM was designed to be budget-neutral, any significant provider reimbursement gains are likely to draw attention from CMS. Bill Goulding, the national director of outcomes and reimbursement for Aegis Therapies, advises providers who see short-term financial gains under PDPM to stash that surplus away for a rainy day. CMS could move swiftly to adjust rates downward to ensure revenue neutrality.
  1. Moving money from the right pocket to the left pocket still leaves the right pocket with less. While SNFs will be able to offset the loss in therapy reimbursement with higher reimbursement for nursing care, contract therapy providers will see a reduction in revenue.
  1. Under PDPM, CMS has capped group and concurrent therapy at 25% of a resident’s overall care plan. While CMS won’t be immediately penalizing providers who go above the 25% threshold for individual residents, if a facility is listed as “non-compliant” this could result in future penalties.

Given the pros and cons swirling around PDPM, let’s look at three tactics you can employ to prepare your facility for these changes.

How to Prepare

  1.    Plan to augment revenue sources by identifying residents in your SNF who are not currently covered by Medicare Part A but would benefit from therapy services.
  1.    Plan to lower costs by enabling therapists to provide more treatments to more patients through the use of group and concurrent modes of treatment. But be careful to avoid mass changes to patient therapies that will raise red flags for CMS.
  1.    Improve patient outcomes by establishing data-driven protocols based on clinical evidence to suggest care plans that take into account reimbursement levels for each patient and the outcomes model that CMS has embedded into PDPM, using Section GG data.

The one constant in life is change. Nowhere is this more true than in healthcare and politics. With PDPM scheduled to arrive this fall, it’s best to get your SNF staff ready now.

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