SNF Providers Are on a PDPM Learning Curve

It’s been less than two months since the new Patient Driven Payment Model (PDPM) was implemented across all SNFs participating in Medicare Part A, and while no one can make definitive conclusions on the results and success of the program yet, some consistent themes have already emerged according to Zimmet Healthcare’s PDPM Reimbursement Analysis for the month of October.

In the lead-up to October 1st, the consensus largely was that PDPM would be a windfall to some SNFs, particularly those caring for high-acuity, medically complex patients whose conditions, and the extra work that comes with them, would finally be recognized by CMS, and reimbursed. To them, the change was far better than the in-place Resource Utilization Group (RUG) system, which had more of an emphasis on therapy volume, rather than patient-specific care. In the long-term, PDPM should also benefit SNFs as they expect to take on higher acuity post-acute patients not only because of an aging population but also as those patients will likely shift from the higher-cost acute care hospitals, in-patient rehab hospitals and long-term acute care hospitals.

Firms like Zimmet Healthcare certainly did caution providers to be prepared for the change, with a heavy emphasis on staff training on everything from initial patient evaluations to accurate coding. But, Zimmet also acknowledged that PDPM would end up leading to more winners than losers, and would not be “budget-neutral” as CMS intended. Indeed, according to their October results, 91.5% of SNFs they surveyed saw an increase in their average per-patient day rates, compared with the RUG system.

The statistics sample 623 SNFS, split between 587 for-profits and 36 nonprofits, across 35 states clustered in the eastern United States, plus Washington, D.C. The average facility was 148 beds, with 16.7% of its census reimbursed by Medicare. And Zimmet used a simple average so that larger SNFs would not distort the results. Compared with the 2019 RUG rates that were updated by the 2.4% market basket increase effectuated this past October, there was an increase in per-patient day rate from $562.89 to $614.96, or a $52.07 increase. Because residents already staying at the SNF on October 1 were considered new admissions, the rates for October were artificially high, according to Zimmet, but even after adjusting for this to bring the average PDPM rate to $584 per day, it still results in a roughly $21 per day difference, which any SNF provider will tell you makes a serious impact on their bottom line.

Zimmet believes that as staff gets better at recognizing additional co-morbidities and coding them properly, the average per-day rate should only increase in the coming months. A side effect of that, and something that no one in this industry should be shocked by, is that CMS will likely readjust reimbursement down to keep to their “budget-neutral” goal, even if SNFs are properly coding and caring for their patients.

Diving deeper into the analysis, the Zimmet report found that the provider experience varied, but that were some inconsistencies with coding the four PDPM components, or “Composite:” Physical Therapy, Speech Language Pathology (SLP), Nursing Care and Non-Therapy Ancillary (NTA) care. One key example was that 25% of patients identified as having an acute neurological diagnosis, cognitive impairment and SLP-related comorbidity did not have either a medically altered diet or a swallowing disorder. Dieticians would find that proportion bogus, because the diagnoses usually go hand in hand.

Zimmet also found that patients with depression, which is now reimbursed with PDPM, were far more common in states and facilities that were previously treating and reimbursed for it. That means that providers and staff will likely improve at recognizing and coding depression properly going forward. The same goes for all of the other composite scores that make up PDPM. If that is the case, however, then we all better be prepared for a CMS correction soon. This is especially true for current buyers of SNFs trying to forecast their Medicare rates and cash flow.

 

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