Preparing for the Patient-Driven Payment Model

In November, CliftonLarsonAllen LLP (CLA) held a webinar to provide guidance to U.S health care providers on the changes surrounding the Patient-Driven Payment Model (PDPM). CLA is a professional service firm that provides wealth advisory, outsourcing, and audit, tax, and consulting. They have more than 5,400 employees with offices across the country. CLA serves more than 8,300 health care organizations.

The webinar’s two speakers brought their considerable experience to the call. Deb Freeland is a Principal in CLA’s health care practice and specializes in reimbursement services for senior living facilities and hospitals. She was joined by Jillian Martin, a senior consultant in long-term health care who specializes in operational assessments, reimbursement best practices, and education for individual and multi-site organizations, just to name a few.

The webinar provided detailed information around PDPM including a detailed breakdown of the calculation. CLA also identified potential operational changes that may be necessary to sustain your organization during the transition to PDPM. In addition to providing some background, this article primarily will focus on those recommendations.

PDPM – What is it?

Consistent with the IMPACT Act, CMS has created a payment model that focuses on quality and outcomes. Reimbursement will be reflective of the outcomes achieved rather than the services provided. PDPM:

• Removes therapy minutes to assess reimbursement level. Reimbursement rates are instead primarily based on clinical and diagnosis info rather than the amount of service needed.
• Includes a separate payment component for Non-Therapy Ancillary (NTA) services, using resident characteristics to predict utilization
• Has five case-mix components: PT, OT, SLP, Nursing, NTA
• Establishes a base rate for each of these components

PDPM – Motivating Factors

Primarily based on therapy minutes, the existing RUG payment model does not fully consider the wide range of clinical characteristics that influence the relative resources used in a Skilled Nursing Facility. In moving to PDPM, the goal is to reduce overtreatment and focus instead on the characteristics and condition of the resident. In doing this, there is increased reimbursement accuracy for therapy, nursing, and non-therapy ancillary services.

Leading Practices

CLA reviewed four recommended practices for skilled nursing facilities to achieve success:

1. Understanding Financial Impacts

• Use your current data to assess the financial implications under PDPM
• Characteristics of populations will determine overall profitability under this model
  • Clinically complex residents and residents with comorbidities tend to be more profitable while high rehab residents tend to be them

2. Recognizing the financial drivers

• Exploration of top five RUG levels
  • Assess, for your facility, what are your top 5 rug scores and what do they translate into (approximately) under PDPM, factoring in length of stay?
  • Using the RUG scores of RUB, RUA, RUC, RVB, and RVC, CLA demonstrated that while the PDPM rate for days 1 through 3 is significantly higher than the RUG rate for each of those scores, the PDPM rate drops below the RUG rate for all but one of those RUG scores (RVB) on day 4.
• Using national averages, CLA presented a predictive sensitivity analysis to demonstrate how the following factors will impact revenue under PDPM
  • PDPM Therapy CMI à Higher CMI = High Revenue
  • PDPM Comorbidity à Higher CMI = Higher Revenue
  • Length of Stay (LOS) à Shorter stays = Higher revenue
    • This analysis assumes occupancy rates also stay the same which may be a challenge to facilities

3. Training and Coordination

• Changes and implications of PDPM must be understood across all levels of your organization
• CMS offers a PDPM Calculation Worksheet and additional tools to walk users through determining the scores for each case-mix component
• Accurate MDS and ICD-10 coding will become even more critical
  • Who completes Section GG today?
  • Do the individuals completing Section GG know all the coding guidelines?
  • ICD-10 coding can “make or break” the resident’s primary clinical category and comorbidity score, which would significantly impact several of the case-mix components
    • Timely and accurate hospital discharge information is critical
      • Discharge diagnoses
      • Prior surgery information

4. Therapy contracts

• Start thinking and having conversations about them now, do not put changes into place until PDPM goes into effect
• Consider, how will delivery of therapy change with the ability to utilize group/concurrent therapy?
• Focus now on how therapy practices may be modified with a focus on obtaining functional outcomes
  • Current contracts may be based on minutes or portion of RUG score
  • Contracts also may be based on resident achievements

Find more information and updates as they become available here.

Want to learn more? Let’s connect!

[i] https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/MDS_Manual_Ch_6_PDPM_508.pdf