On Friday, April 19, 2019, the Centers for Medicare and Medicaid Services (CMS) issued the next installment in transforming Medicare Part A payment for skilled nursing facilities (SNFs). As expected, the proposed rule does not make wholesale changes to the Patient-Driven Payment Model (PDPM), but does contain some good news and important policy clarifications and adjustments. The bottom line is that PDPM is on track for October 1 implementation, and providers need to be ready to roll.

Market Basket Update and Base Rate Adjustments

The good news is that next year’s net market basket update is projected at 2.5 percent. This estimated increase reflects a 3.0 percent market basket increase less a 0.5 percentage point reduction due to the annual productivity adjustment required by statute.

CMS also adjusted the base rates to maintain budget neutrality by updating the data used for the PDPM rate calculations from 2017 to 2018. The effect of this change appears to be small, so it may be more important for its symbolic value than its actual effect in the near term. CMS is continuing to send a clear message that rates will be adjusted on an ongoing basis to preserve budget neutrality. As we move into PDPM implementation, cost and revenue patterns are likely to shift more significantly from one year to the next. How these types of technical rate adjustments play out is likely to become increasingly important.

Group Therapy Definition Proposed to Change to Allow Up to Six Patients

In the rulemaking last year, CMS indicated that it might revisit the definition of group therapy. CMS is now proposing to define group therapy in the SNF Part A setting as “a qualified rehabilitation therapist or therapy assistant treating two to six patients at the same time who are performing the same or similar activities.” CMS states that “this definition would offer therapists more clinical flexibility when determining the appropriate number for a group, without compromising the therapist’s ability to manage the group and the patient’s ability to interact effectively and benefit from group therapy.” It was also noted that this definition more closely aligns with how group therapy is permitted in inpatient rehabilitation facilities.

The proposed rule reiterates CMS’ belief that individual therapy is the preferred mode and “offers the most tailored service for patients.” CMS cited the 2012 proposed rule, noting that “while group therapy can play an important role in SNF patient care, group therapy is not appropriate for either all patients or for all conditions, and is primarily effective as a supplement to individual therapy, which we maintain should be considered the primary therapy mode and standard of care in therapy services provided to SNF residents.” CMS expects that the need and benefits of group therapy are clearly documented.

This proposed flexibility in providing group therapy is a welcome change from CMS as patients and SNFs will both benefit from having a variety of modes of therapy available to meet their needs.

Comments Invited on Consolidated Billing Exclusions

In this proposed rule, CMS has invited public comments on specific billing codes in any of four service categories (chemotherapy items, chemotherapy administration services, radioisotope services, and customized prosthetic devices) representing recent medical advances that might meet the criteria for exclusion from SNF consolidated billing (low volume/high cost).

Since PDPM is expected to increase the presence of medically complex patients in SNFs, this is a welcome request from CMS. In comments from providers last year, several high-cost cancer drugs were specifically identified as prime candidates for exclusion from consolidated billing, which will help promote access for otherwise difficult-to-place patients.

CMS Reiterates that Interim Payment Assessments (IPAs) Are Up to Provider

The proposed rule includes language codifying that providers have the discretion to make “such other interim payment assessments as the SNF determines are necessary to account for changes in patient care needs.” This proposed regulatory language change would enshrine the provider’s option to execute IPAs, which, according to the regulatory impact analysis, are only expected to occur in about 4 percent of Medicare Part A stays.

No further detailed guidance on criteria for IPAs was provided in the preamble to the proposed rule, except to refer back to last year’s final rule and to outline the expectation that SNFs: “provide excellent skilled nursing and rehabilitative care and continually monitor and document patient status” (83 FR 39233), and…that the SNF’s responsibility in this context would include recognizing those situations that warrant a decision to complete an IPA in order to account appropriately for a change in patient status.”

CMS also clarified that the actual deadline for completing the 5-day assessment is no later than the eighth day of post-hospital SNF care. In addition, CMS proposed to replace the phrase “the 5-day assessment” with “the initial patient assessment” in the applicable regulations.

Non-Substantive Changes to ICD-10 Codes Implemented Via Non-Regulatory Process

CMS proposes to update non-substantive changes (i.e., those simply made to conform to broader ICD-10 changes) through a sub-regulatory process. By contrast, changes to the assignment of a code to a comorbidity list or other changes that amount to changes in policy would be substantive changes and would go through normal rulemaking. This will help expedite the process of incorporating updated ICD-10 technical code changes into PDPM.

Quality Review Program and SNF Value-Based Purchasing

This proposed rule proposes to update requirements for the SNF Quality Review Program (QRP), including the proposal of two Transfer of Health Information quality measures, as well as standardized patient assessment data elements to begin collection on October 1, 2020.

CMS is also proposing to exclude baseline SNF residents from the Discharge to Community Measure. In addition, CMS is proposing to expand data collection for SNF QRP quality measures to all SNF residents, regardless of their payer, and to publicly display the Drug Regimen Review Conducted With Follow-Up for Identified Issues-Post Acute Care (PAC) quality measure. Some of these changes are potentially significant and are driven by the IMPACT Act of 2014. As providers pivot into PDPM, it will be important to keep an eye on their quality metrics.

Finally, in accordance with statute, this proposed rule would update the base and performance periods for the SNF Value-Based Purchasing (VBP) program.

More information about the proposed rule can be found in the CMS PDPM Fact Sheet as well as on HDG’s upcoming webinar, CMS Policy Update: Latest on PDPM and SNF Quality Review Program. This webinar will be held on Thursday, May 9, from noon to 1 p.m. CST and will provide an in-depth overview of all modifications to the PDPM proposed final rule. Registration information coming soon.

Please contact us if you are interested in preparing for this important change in payment. For more information, visit our website or contact us at 763.537.5700 or info@hdgi1.com.