Regulatory changes can spell massive headaches for any industry, and over the last year in the world of skilled nursing—that headache was spelled PDPM. In October of 2019, the Center for Medicare and Medicaid Services (CMS) officially implemented the Patient Driven Payment Model (PDPM).
The payment model aimed to curb inefficiencies, overcharging, and overall bloat within the industry. However, as with most major changes, the rollout was met with some criticism.
But skilled nursing facilities (SNFs) and contract therapy companies that accept the new landscape and employ some agility can excel because when you get under the hood of PDPM—it’s got some great opportunities and benefits that often get overlooked.
Growth Through Medically Complex Patients
PDPM shifts from a volume-based payment approach to a value-based model. In other words, a SNF’s reimbursement for care is no longer driven by the number of therapy minutes recorded but by the needs of the patient. Reimbursements are configured based on the complexity and clinical needs of the patient.
The result is a shift in where profitability is highest. Under the old Resource Utilization Groups (RUG-IV) system, less medically complex patients who needed high volumes of therapy were the most profitable. Under PDPM, though, medically-complex patients needing a lower volume of therapy are the profit drivers.
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SNFs looking to capitalize on this opportunity should assess their facility’s capabilities to handle more complex patients. If such capabilities are lacking, it may be time for an upgrade. Additionally, facilities may want to assess their patient mix and resource allocation moving forward. PDPM is supposed to be budget neutral, but macro trends need to be analyzed for micro effects.
Increased Reimbursements by Employing Data
Under PDPM, reimbursements are determined during the initial Minimum Data Set (MDS) assessment, as opposed to being reactionary to the volume of therapy and services administered. Because reimbursement is dictated by factors like comorbidities and the patient’s condition, it’s imperative that, during the initial assessment, as many contributing factors as possible are identified.
As the program is still in its infancy and moving along a steep learning curve, things will inevitably be missed. However, by keeping extensive records and analyzing data from past and current patients, trends can be identified. These trends and data sets can help shape the MDS process to lower the missed conditions and ensure maximum reimbursement. Additionally, treatment data and analytics can help shape better treatment plans with lower costs.
A Preserved Industry
When an industry undergoes a major change, it’s natural to worry about how the changes will affect you and then inadvertently overlook the benefits.
From 2002 to 2016, the percentage of days assigned to the ultra-high group for SNFs increased from 7% to 58%, even though, as the Office of the Inspector General said in 2015, “beneficiary characteristics—including age and reasons for and severity levels of the preceding hospital stay— remained unchanged.” PDPM changes seek to improve the quality and integrity of the industry as a whole. Left unchecked, the SNF industry could see more significant and more aggressive regulation rollouts that are devoid of benefit to providers. While parts of PDPM are not ideal, any improvements to the overall integrity and longevity of the industry should be viewed as a net positive for everyone.
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