Five Important Considerations for Successful Billing Under PDPM

Thoughtware Alert Published: Aug 16, 2019
Long-Term Care Professional Holding Patient's Hand

With the October 1 Patient-Driven Payment Model (PDPM) implementation date quickly approaching, it’s important to make sure your billing team has a clear understanding of the coming changes and how they will affect your overall reimbursement. Here are five important considerations related to PDPM billing:

1. Revised Assessment Schedule

PDPM will only require a single five-day admission assessment for billing purposes. Similar to the current requirements under Resource Utilization Groups version IV (RUG-IV) classifications, the assessment reference date (ARD) must occur during the first eight days of a beneficiary’s stay and is effective for billing/payment on day one. If the assessment is missed or completed outside the defined ARD window, the resulting billing implications could include provider liability or default. Specific rules are outlined in Section 6.8 of the Minimum Data Set (MDS) 3.0 Resident Assessment Instrument (RAI) manual.

However, unlike the current RUG-IV requirements, additional assessments will not be required under PDPM. Providers will have the option to complete an Interim Payment Assessment (IPA). The IPA can be completed at the provider’s discretion to capture changes in the resident’s condition, but this is not mandated for billing purposes. If an IPA is completed, it will be effective for billing/payment on the ARD date.

2. Interrupted Stay

Under PDPM, skilled nursing facility (SNF) stays will be subject to a three-day interrupted stay window. For example, when a resident in a Medicare Part A stay discharges and is readmitted to a Part A stay at the same facility before midnight of day three, the stay is considered a continuation rather than a new stay. A continuation is billed similarly to a leave of absence, noting occurrence span code 74 along with noncovered days and revenue on the claim. Claims for continued stays also should reflect the initial admission date and assessment, since a new assessment wouldn’t be required; however, an optional IPA can be completed if the provider chooses to capture a change in the resident’s condition.

It’s important to remember the variable payment schedule does not reset for a continued stay. For beneficiaries with readmissions outside the three-day window, a new claim and a new five-day assessment will be required. CMS outlines multiple scenarios regarding interrupted stays in the PDPM frequently asked questions.

3. HIPPS Coding

The Health Insurance Prospective Payment System (HIPPS) codes calculated in section Z of the MDS and billed on claim forms under revenue code 0022 will change under PDPM. The default HIPPS code will be ZZZZZ while all other HIPPS codes will consist of five characters representing the following:

  • Character 1 – physical therapy and occupational therapy (PT/OT) payment group
  • Character 2 – speech language pathology (SLP) payment group
  • Character 3 – nursing payment group
  • Character 4 – non-therapy ancillary (NTA) payment group
  • Character 5 – type of assessment

We have a helpful tool that outlines the HIPPS code conversion for each case mix group.

4. Payment Methodology

PDPM payment methodology will be more complex than RUG-IV. Your billing team should thoroughly understand correct payment calculations to accurately resolve potential variances that could easily arise. PDPM payments will be based on six groups—one non-case mix group (CMG) and five specific CMGs: PT, OT, SLP, NTA and nursing. The five CMGs then convert to a corresponding case mix index (CMI), which is a multiplier to the base rate for a particular CMG. Base rates are either rural or urban as determined by geographic location.

It’s important to note that three CMGs will result in varying reimbursement rates throughout a beneficiary’s stay. While rates for the NTA group will be tripled for the first three days of the stay, rates for the PT and OT groups decrease by 2 percent starting on day 21 of the stay and continue to decrease by an additional 2 percent every seven days thereafter. For example, rates for the PT and OT groups would decrease by 4 percent on day 28 and 6 percent on day 35. Keep in mind that these variable reimbursement rates will not reset when an IPA is completed or if a patient has an interrupted stay.

However, PDPM rates will still be adjusted for the wage index (based on the labor-weighted portion), sequestration, value-based purchasing and quality reporting program penalties. Our rate calculator tool can help you determine correct reimbursement amounts based on PDPM payment methodology.

5. Transition

Claims for all September dates of service and prior must be billed under current RUGs-IV classifications, and claims for all October dates of service and forward must be billed using PDPM methodology. There is no transitional period where both payment methodologies will be in effect simultaneously. For beneficiaries with a SNF stay overlapping from September into October, providers must complete a one-time IPA to calculate a PDPM HIPPS code with an ARD no later than October 7, 2019. In addition, providers will still need the correct RUGs-IV assessment to cover all payment dates in September. Due to changes in the default HIPPS code, no-pay claims through September 2019 will require the AAA00 code, while claims beginning on October 1 will require the ZZZZZ HIPPS code.

In addition to the five considerations above, we strongly recommend including your billing team in:

  • Conversations with billing software vendors regarding PDPM changes
  • Reviewing changes to current processes and forms with the interdisciplinary team, such as triple check, utilization review meetings, Medicare meetings, etc.
  • Reviewing managed care contracts for any changes resulting from converting to PDPM

For more information on how you can be ready for the October 1 PDPM implementation, complete the Contact Us form below or reach out to your BKD trusted advisor.

Related Thoughtware

Kate & Ben — How can we help you? Contact Us!

How can we help you?