New SNF Value-Based Payment System Brings Big Changes

Starting Oct. 1 therapy payments to nursing facilities will shift to a value-based model, emphasizing patient needs over the amount of services provided. The Patient Driven Payment Model (PDPM), a more individualized approach, aims to reduce inflated billing by basing payments on patient’s medical characteristics.

The new approach rewards skilled nursing facilities (SNFs) for the effectiveness of their care and subsequent patient outcomes rather than the volume of care provided; the current case-mix model is not tailored to the individual’s needs or goals and often times billing can be exaggerated with excessive, unnecessary therapies.

According to Bloomberg Law reporting, it is a significant change for the industry. Mark Reagan, managing partner at San Francisco-based law firm Hooper, Lundy & Bookman PC, told Bloomberg, “It will be a challenge for everybody because the system is going to demand more precision in the way that patients are assessed and the way that claims are coded for reimbursement purposes.”

Reagan’s firm represents a number of nursing homes across the country.

A study launched by healthcare research firm Acumen identified residents who are dual-enrolled in Medicare and Medicaid, use intravenous medications, have end-stage renal disease, or a wound infection are more likely to yield higher payments under the new model. The study also estimates provider subsets such as non-profits, government-owned facilities, hospital-based facilities, swing bed providers, and small facilities will also reap higher reimbursements.

The study’s approximations however, contrast those of WellSky Chief Clinical Officer Tim Ashe, who told Bloomberg smaller nursing home operators are at risk for under the new payment model because they may not have the resources available to invest in technology and workflow solutions needed to improve billing the way larger operators can.

The PDPM has five case-mix adjusted components as opposed to the current model, which only has two (therapy and nursing), it consists of:

• Physical therapy
• Occupational therapy
• Speech Language Pathology
• Nursing
• Non-therapy ancillaries

To promote needs-based therapy as the standard, only 25% of therapy services to a patient can be concurrent.

The Centers for Medicare and Medicaid Services (CMS) expects the new system to be budget neutral with total reimbursements remaining the same, but allocation shifting between therapy and other services.

Read more about the PDPM’s implications at Bloomberg Law.

For the full study conducted by Acumen, click here.

Check out this CMS presentation for frequently asked questions on the new model.

Visit the CMS site for the agency’s fact sheet.