On July 30, 2019, the Centers for Medicare and Medicaid Services (CMS) released the FY 2020 final rule for SNF PPS, which contains several important messages for skilled nursing facilities (SNFs) regarding the Patient-Driven Payment Model (PDPM). We are now two short months away from implementation of this major change in payment policy.

Downward Rate Changes

In the proposed FY 2020 rule, the standard rates were projected to increase by 3.1 percent. Because of some revisions and a calculation error regarding the wage index, the rates are now projected to increase by 2.4 percent. This change should be factored into budgets along with any changes to the wage indices as well as the facility’s FY 2020 SNF Value-Based Purchasing Adjustment (typically released in August).

Budgeting under PDPM can be a challenge for a variety of reasons (e.g., some MDS items not yet operationalized), so providers need to pay careful attention to all the moving parts. Health Dimensions Group (HDG) has developed a claims-based model of payment changes under PDPM that projects payments by clinical categories and demonstrates opportunities for changes in costs and clinical service line development.

Group Therapy Definition Revised as Expected

CMS adopted the proposed change of group therapy from “exactly four” patients to the more flexible standard of “from 2 to 6 patients.” In so doing, CMS reiterated that clinicians should have the flexibility to make judgments about what is best for the patient, specifically citing the potentially positive psycho-social aspects of group therapy and the alignment of SNF therapy policy with that of inpatient rehabilitation facilities (IRFs). Medicare is also making it clear that clinicians need to document the necessity and appropriateness of group therapy.

Of particular note was CMS’ response to a commenter that pointed out that CMS is changing the policy regarding group therapy at the same time that it is fundamentally changing therapy incentives under PDPM, making it hard to evaluate the effect of PDPM on therapy. CMS stated it expects that there will be behavioral changes under PDPM, reiterated that therapy should be provided in accordance with clinical judgment, and confirmed that it will have a robust monitoring framework to assess the impact of the 25 percent limits on group/concurrent therapy.

Many SNFs are still in the early stages of what will likely be a fundamental re-examination of the provision of therapy under PDPM. HDG has been assisting providers in this process through the use of evidence-based benchmarks derived from a group of high-quality providers and adjusted for differences in clinical profiles of patients. Our data shows that significant changes in therapy are possible in situations where providers substantially exceed benchmarks. Providers need to be careful about signing therapy contracts which directly or indirectly lock in providers to current practice patterns and which do not have adequate safeguards for quality outcomes and evidenced-based care pathways.

Initial Medicare Assessment Name Change and IPA Policy

In the FY 2020 proposed rule, CMS sought to rename the 5-day assessment the “Initial Payment Assessment” in order to clarify that SNFs actually have until day 8 to set the Assessment Reference Date (and 14 days later to actually complete it). Some commenters felt that this term might be confused with Interim Payment Assessment (both having the same acronym—IPA). CMS agreed and changed the regulatory text to call it the “Initial Medicare Assessment.” It will be interesting to see if this term catches on in the marketplace, or whether the initial assessment will continue to be referred to as the 5-day assessment. Old habits die hard.

Of note, CMS did not agree with a commenter’s suggestion to clarify that the Interim Payment Assessment (IPA) would only be completed for payment purposes. CMS reiterated that the IPA is optional, but left open the possibility that providers could complete it for other reasons, stating:

“Finally, regarding the request for clarification about the optional nature of the IPA, we note that while an SNF’s decision to complete the IPA itself is indeed optional, the SNF’s underlying responsibility to remain fully aware of (and respond appropriately to) any changes in its resident’s condition is in no way discretionary. Moreover, the discussion of the IPA in the FY 2019 SNF PPS final rule (83 FR 39233) clearly envisions a role for this assessment that is not strictly limited to payment alone: “We continue to believe that it is necessary for SNFs to continually monitor the clinical status of each and every patient in the facility regularly regardless of payment or assessment requirements and we believe that there should be a mechanism in place that would allow facilities to do this” (emphasis added). At the same time, in making the IPA optional, we recognized “. . . that providers may be best situated, as in the case of the Significant Change in Status Assessment, to determine when a change has occurred that should be reported through the IPA.” (84 FR 39233)

So while CMS has reiterated that an IPA is optional and that continual monitoring of a patient’s condition is required, it did not elaborate on scenarios wherein an IPA would be completed for anything other than payment purposes. Hopefully, the FAQs will be updated in this regard. In any case, it will be critical that SNFs have clear policies about when formal assessments are to be completed versus continual monitoring, and that those policies are in sync with RAI Manual guidance and high-quality clinical care. HDG will continue to address this issue in our webinars and consulting services.

Consolidated Billing Policies Unchanged

Although CMS received comments suggesting the exclusion of certain items and services from consolidated billing under PPS, it did not accept any suggested changes and left current policy in place, citing statutory limitations in some cases. Excluding high-cost services from consolidated billing will continue to be an issue as more medically complex patients are admitted to SNFs under PDPM and costly pharmaceutical and medical technologies evolve. Our analysis shows that rates will indeed increase for medically complex patients, but will not cover scenarios such as when chemotherapy drugs are $500 per day all by themselves. Providers need to keep an eye on costly Non-Therapy Ancillaries, and there may eventually need to be a rewrite of consolidated billing statute to keep up with medical innovation.

ICD-10 Subregulatory Process Adopted

CMS will update PDPM payment mapping tools and groupers for non-substantive ICD-10 changes through a non-rulemaking process as proposed. CMS committed to making the changes clear on their website. HDG will continue to keep you informed on this.   

Quality Review Program (QRP) Changes

This final rule updates requirements for the SNF Quality Review Program (QRP), including the adoption of two Transfer of Health Information quality measures and standardized patient assessment data elements. SNFs would be required to begin reporting this information with respect to admissions and discharges that occur on or after October 1, 2020.

CMS is also finalizing the proposal to exclude baseline nursing home residents from the Discharge to Community Measure and to publicly display the quality measure titled Drug Regimen Review Conducted With Follow-Up for Identified Issues-Post Acute Care (PAC) Skilled Nursing Facility (SNF) QRP.

CMS did not finalize the proposal to expand data collection for SNF QRP quality measures to all SNF residents, regardless of their payer.

Preparing for Successful PDPM Implementation

Health Dimensions Group offers comprehensive PDPM consulting solutions to assist you in preparing for this significant payment change, including on-site education and live and recorded webinars. For more information, visit our website or contact us at 763.537.5700 or info@hdgi1.com.

Authored by: Brian Ellsworth, MA,
Vice President, Public Policy and Payment Transformation