Effective Oct. 1, 2019, the Centers for Medicare and Medicaid Services Prospective Payment System will replace the current Resource Utilization Group, Version IV with a new Patient Driven Payment Model case mix classification system for skilled nursing facility patients who are under a Medicare Part A stay. Previously, patients were classified into RUG-IV payment groups based on the volume of therapy services received. The new PDPM classifies patients into case mix groups based on specific clinical characteristics. The PDPM is part of CMS’ overall strategy to align long-term care with value-based payments.
Payment will be based on a combination of six components. Five of the components are case mix adjusted and cover utilization of SNF resources based on patient characteristics within physical therapy, occupational therapy, speech language pathology, nursing and non-therapy ancillary services. A sixth component is not case-mix adjusted and covers utilization of SNF resources that do not vary by patient.
To ensure that individual therapy continues to be the primary standard of care under the PDPM, no more than 25% of therapy services to a patient can be delivered in concurrent and/or group therapy, combined. The previous RUG-IV limited group therapy services to 25%, with no limit on concurrent therapy.
Overall, CMS anticipates the PDPM to be budget neutral with total reimbursements for SNF patients remaining roughly the same, but with the allocation between therapy services and other services likely to change. SNFs with a greater mix of medically complex patients are expected to receive higher payments under the PDPM compared with the previous RUG-IV. Medically complex patients often are too frail to tolerate and benefit from the highest levels of therapy utilization. Under the previous RUG-IV, SNFs received lower payments based on lower therapy levels for those medically complex patients, despite having to provide additional patient care services such as dementia management, which was not covered. As a result, SNFs with medically complex patients may benefit more financially under the new PDPM than under the previous RUG-IV as reimbursements become more aligned with patient clinical characteristics. However, SNFs who previously delivered unnecessary amounts of therapy to patients in order to maximize reimbursements likely would not experience an overall benefit under the new PDPM.
Under PDPM, there will be three SNF PPS assessments: 5-Day Assessment (required), Interim Payment Assessment (optional) and PPS Discharge Assessment (required). The Interim Payment Assessment is needed if the patient undergoes a clinical change requiring a new PPS assessment.
Although SNFs were part of the transition to ICD-10 in 2015, they had not been relying on the codes as part of the Minimum Data Set for patient assessments under RUG-IV. Now that the clinical components will be used as a basis for payment under the PDPM, SNFs are implementing additional training around the patient evaluation and documentation process across nurses, therapists and social workers, which may also lead to improved care plans that help reduce hospital readmission rates.
Effective Jan. 1, 2020, CMS will also implement the Patient Driven Grouping Model for home health services. Similar to the PDPM, the PDGM is intended to remove incentives to overprovide therapy services and rely more heavily on patient clinical characteristics to align payments more closely with patients’ needs.
In July 2019, CMS released its projection that aggregate payments to SNFs will increase by $851 million, or 2.4%, in fiscal year 2020 compared with the prior year. CMS also projected that payments to home health agencies will increase by $250 million, or 1.3%, in fiscal year 2020 compared with the prior year.
Healthcare staffing firm executives are cautiously watching to see whether the PDPM and PDGM results in lower utilization of therapy services and lower demand for temporary therapy staffing in SNFs and home health agencies. Additionally, if therapists were to leave the SNF and home health settings due to lower utilization and seek employment in other clinical settings, overall demand for temporary therapy staffing could also decline across all settings.
“Although CMS is predicting budget neutrality in regard to SNF reimbursement once PDPM is fully implemented, after years of SNF operators fine tuning operations to maximize therapy hours and reimbursement, there will likely be a need for additional therapists, particularly occupational and speech therapists, but potentially for fewer hours per day per facility based on the new formula,” said Dr. Josh Luke, founder of the National Readmission Prevention Collaborative. “With daily therapy minutes no longer being the primary benchmark to maximize reimbursement, the healthcare industry will be watching to see how therapy staffing can be most efficiently managed under PDPM.”
Luke will be featured as “The Future of Healthcare” keynote speaker at SIA’s 2019 Healthcare Staffing Summit, which is being held Nov. 6 to Nov. 8 in Las Vegas, Nevada.
