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New Patient Driven Payment Model from CMS―What to Expect and What to Do

Effective October 1, 2019, Skilled Nursing Facilities (SNF)s will be reimbursed under a new payment system.
The existing case mix classification group, Resource Utilization Group IV (RUG- IV) will be replaced with a new case mix model, the Patient Driven Payment Model (PDPM). CMS has indicated factors leading to the change in the payment system include over utilization of therapy and incentives for longer lengths of stay.

Background and overview

PDPM is one of the initiatives resulting from the Improving Medicare Post-Acute Care Transformation Act of 2014 (the IMPACT Act). The IMPACT Act requires standardized patient assessment data across post-acute care (PAC) settings to enable:

Comparisons of quality and information exchange across post-acute settings
Improvement of Medicare beneficiary outcomes through shared-decision making, care coordination, and enhanced discharge planning
Non-therapy ancillaries (NTA) payment is determined by a base rate and separate CMI. NTA is a variable payment, paid at 300% for the first three days, and then reduced to 100% after day four.
Payments based on patient characteristics

 

PDPM will be a significant shift in how SNFs are paid, and facilities need to start preparing for the change. PDPM:

Removes therapy minutes as a determinant of payment and creates a new model where payment is linked to differences in clinical characteristics
Creates a separate payment component for non-therapy ancillaries (NTA), using resident characteristics to predict utilization of these services
Focuses on clinically relevant factors and ICD-10 diagnosis codes to determine payment


Value Base Purchasing (VBP), SNF Quality Reporting Program and PDPM are all initiatives advancing the IMPACT act and moving payment from fee for service to value. SNFs have been reporting quality measures since May 2017, and are subject to a 2% (VBP) payment adjustment if they don’t submit the quality measures.

In October of 2018, SNFs began receiving a payment adjustment based on hospital readmissions under the SNF Quality Reporting Program. The implementation of PDPM will be one more step towards moving reimbursement for care from volume to value.

PDPM shifts payment to residents with complex clinical needs, and targets the resources towards beneficiaries with diverse care needs. Its goal is to aim care at the more medically complex patients. There are six components in the daily rate:

Physical therapy
Occupational therapy
Speech therapy
Nursing
Non-therapy ancillary services
Non-case mix


The components are all taken from the five-day minimum data set (MDS), and assigned a daily rate based on that components case mix index (CMI). Therapy is broken out into the three disciplines (physical, speech and occupational), with each having its own base rate and case mix index:

Therapy payment is a variable payment paid at 100% for the first 20 days, and then reduced by 2% every seven days. 
Nursing services payment is a base rate with a separate case mix, with no variable payment.
Non-therapy ancillaries (NTA) payment is determined by a base rate and separate CMI. NTA is a variable payment, paid at 300% for the first three days, and then reduced to 100% after day four.


Under PDPM, payment is based on each aspect of the resident’s care. Payment is still a per diem payment―however, it is adjusted to reflect varying costs throughout the resident’s stay.

The admissions process is going to be critical to ensure appropriate payment. Accurate coding of patient conditions must occur at the time of admission, and while the information coming from the hospital will be helpful, facilities cannot rely on hospital information when coding the MDS. Diagnosis and accurate coding are critical to assigning the appropriate case mix group to make certain there is adequate payment for the stay.

Patients over Paperwork

PDPM emphasizes patients over paperwork, as it eliminates the current (MDS) schedule. The new model only requires an assessment at five days and a final discharge assessment.

Facilities can perform an optional interim payment assessment within 14 days of a change in the resident’s characteristics. An interim payment assessment will not reset the NTA and therapy payments to day one. CMS is still working on guidance as to how you will need to report this.

If a patient leaves the facility and is away from the facility for less than three days, then the stay is considered the same admission. If the resident is away for more than three days, the admission is considered a new admission, and the NTAs and therapy payments are returned to day one payment.

The MDS has been an important tool in driving resident care over that last 30 years, and is relied upon for reimbursement and quality data. With the implementation of PDPM, the MDS will become even more important to reimbursement. As payment shifts from therapy focus to clinical characteristics focus, there will need to be more detailed documentation to support the medical condition. Under RUGs, there are approximately 20 items on the MDS which impact reimbursement―under PDPM, there will be approximately 160 items which impact reimbursement.

The implementation of PDPM will increase the importance of the role of the MDS coordinator. Facilities need to invest in a strong MDS coordinator to ensure appropriate assessment and documentation that support medical conditions―which drive payment.

While therapy minutes will no longer drive payment under PDPM, you still have to monitor them. Therapy will be reported on the final discharge MDS, separately by discipline. MDS will report therapy minutes by one-to-one sessions, concurrent, and group therapy. Total therapy delivered concurrently and/or in group sessions cannot be more than 25% of total therapy time.

Given the depth and breadth of the changes to the payment system, facilities need to begin preparing for the change now. What can you do in prepare for PDPM?

Educate yourself so you can plan for the transition to PDPM:

Know what is driving your current payments
Assess the skills of your staff and know your gaps
Attend education sessions


Strengthen your capabilities to prepare for the increased documentation:

Train or retrain MDS nurse and billers on ICD-10 and the MDS
If you don’t already have care teams, form care teams
Determine who with in the facility should be on care teams


Align resources to be sure you are ready to bill on October 1, 2019:

Determine your hiring and training needs
Look at therapy contracts, how do they align with new payment model
Talk to software vendors to be sure they will be ready for the new MDS and ICD-10


For more information or assistance on Patient Driven Payment model contact
Lisa Trundy-Whitten. Look for additional BerryDunn articles on the Patient Drive Payment Model releasing in the coming months

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