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How PDPM affects your skilled nursing facility

Apr 08, 2019
By: Larry P. Lester

Is your skilled nursing facility (SNF) aware of this fiscal year’s Medicare changes?

The Centers for Medicare & Medicaid Services (CMS) issued a final rule that established it will begin using a new case mix model effective Oct.1, 2019. 

That case mix model is the patient-driven payment model (PDPM).

CMS’s goal with PDPM is to create a model that:

  • Compensates SNFs based on the complexity of care (a change from how therapy-driven it currently is)
  • Addresses the concern about current incentives for SNFs to deliver therapy services (and more therapy than might actually be needed)
  • Simplifies the process by limiting the number of assessments and number and type of elements used to determine case mix.

Old vs. new

Under the present system, patients are assigned to one of 66 RUG levels, and all three therapy groups — physical therapy (PT), occupational therapy (OT) and speech language pathology (SLP) — are added together to determine the case mix. It does not address the variation in nursing and non-therapy ancillary (NTA) services in the nursing component.

But under PDPM, the nursing and therapy case mixes are separated into five components: PT, OT, SLP, nursing and NTA. This is to reflect the varied needs and characteristics of resident care. Combining these five components with the non-case mix component forms the full PPS per diem rate. Rates are separated into urban and rural categories, as well as adjusted based on your labor market.

It’s important to note that, presently, providers who contract therapy services pay per-minute charges or a percentage of RUG charges. However, under PDPM, therapy minutes are not used to determine classification into a group, which means those providers will have to renegotiate contracts with therapy providers. If they don’t, they’ll be paying far too much money to therapy. Ultimately, the SNF has to monitor the therapy needs of residents to ensure that each resident gets what they actually need when it comes to therapy — no more and no less.

Diving further into the therapy components, while PT and OT are split under PDPM, the predictors of the use of PT and OT are the same: the clinical reason for the stay and the resident’s functional status. The predictors of SLP are different: the clinical reason for the stay, the presence of a swallowing disorder or mechanically altered diet or the presence of SLP-related comorbidities or cognitive impairment.

ICD-10 coding

We can’t stress enough how critical correct ICD-10 coding will be to PDPM success.

Currently payment isn’t driven by ICD-10 coding, so SNFs haven’t concentrated on it. However, you need to switch your focus to ICD-10 coding — understanding it, learning how to do it correctly, etc. — by October 1, 2019. It’s a learning curve because some SNFs have nonprofessionals doing ICD-10 coding, but it’s a real driver in each area of PDPM, so it’s critically important to do it right so you get the correct reimbursement.

Each category uses classifications by diagnosis. MDS Section I0020 is the primary reason for the resident’s stay, while MDS J2000 reports surgical procedures in the most recent hospital stay to support the primary reason. MDS still drives the payment, so as you move forward with PDPM implementation, it’s important that not only nursing administrators understand these changes but also the MDS nurses and staff who are doing the documentation, so that the MDS can be coded correctly.

For Section GG, facilities right now are having therapy complete this section, but this will need to change to a combination of therapy and nursing completing the section to ensure you are providing the appropriate level of care.

MDS and interrupted stays

The good news is that under PDPM there is a reduction in the number of MDSs. Most critically, there is a five-day assessment performed to classify a resident under PDPM for the payment of their entire stay unless an interim payment assessment (IPA) is performed.

There’s also a new interrupted-stay policy. Under the rule change, for residents who are readmitted in less than three days, it’s considered a continuation of the stay, so there’s no new five-day MDS or new therapy evaluations, and the variable adjustment continues. The variable per diem adjustment accounts for the length of the stay and is applied only to PT, OT and NTA. For PT and OT, it declines after day 20, while NTA is set a 3.00 for the first three days and 1.00 per day afterward. (It is 3.00 for the first three days because bringing in a high-cost resident is more expensive then, since you have to initially acquire things like a special bed or antibiotics.)

If the resident is readmitted after three or more days, it’s considered a new admission, and everything resets to day one. There is a new five-day MDS, the variable adjustment resets and new therapy evaluations are needed. If the resident is readmitted to a different SNF, everything always resets to day one. However, frequent readmissions will be scrutinized by CMS.

Also note that concurrent therapy and group therapy are limited under PDPM to 25% in total, and the tracking of minutes will start from admission and end at discharge. PDPM will use the total, unallocated number of therapy minutes, and if these are exceeded, will provide a nonfatal error on the validation report. CMS will be monitoring this, so excessive use of concurrent or group therapy could constitute a reason to deny SNF coverage.

How Wipfli can help

The most immediate strategy for SNFs to undertake is obtaining a comprehensive understanding of ICD-10 coding because it will be a key part of getting reimbursed. Also make sure Section I is coded accurately, since this is where the diagnoses that will be the driver of PDPM components go. Lastly, make sure the MDS is accurate and matches the services being provided.

At Wipfli, we have ICD-10 certified instructors on our staff, and our whole PDPM team has been working with SNFs on education and training, as well as providing baseline assessments, audits, therapy contracting, software selection and support, and impact analyses.

If you have questions about PDPM and its implementation at your SNF, contact Wipfli or learn more about our PDPM services on our web page.


Larry P. Lester
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