An In-Depth Analysis of the Final Rule

The Centers for Medicare & Medicaid Services (CMS) released the fiscal year (FY) 2020 update of the Skilled Nursing Facility (SNF) Prospective Payment System (PPS) on July 31, 2019. CMS reconfirms the October 1, 2019, implementation date of the new reimbursement methodology—the Patient-Driven Payment Model (PDPM), which will replace the Resource Utilization Group IV (RUG-IV) payment system for Medicare Part A Fee-for-Service SNF stays.

As defined in the final rule, the new payment system identifies the base rates and case mix adjustment weights for each PDPM component for the coming year. Under the methodology, the resident-specific daily rate reflects the sum of five case-mix-adjusted components and a non-case-mix amount, all adjusted to result in the same overall spending as would have occurred under RUG-IV. This reflects CMS’ intent to maintain budget neutrality in the transition from the RUGs-IV to PDPM. To achieve neutrality, the unadjusted PDPM case mix indices (CMI) were multiplied by a factor of 1.46 so that total estimated payments under PDPM would conform to total actual payments under RUG-IV. 

Market Basket
The final rule includes a net market basket increase of 2.4 percent (a decrease from the 2.5 percent included in the proposed rule), which is estimated by CMS to increase Medicare payments nationwide by approximately $851 million in FY 2020. This estimated increase is attributable to a 2.8 percent market basket increase factor with a 0.4 percentage point reduction for the multifactor productivity adjustment. While projecting revenue under the new methodology may be more difficult than in previous years, it’s likely to be advantageous to facilities serving residents with higher clinical needs, while potentially reducing revenue for facilities where the majority of residents fall into “ultra-high” therapy categories.

Group Therapy
In the final rule, CMS has adopted the proposal to redefine and expand the definition of group therapy from four patients to “two to six patients at the same time, who are performing the same or similar activities” (when provided by a qualified rehabilitation therapist or therapy assistant). As PDPM implementation takes place, CMS asserts that aligning the group therapy definition will serve to improve the agency’s consistency in payment policies across post-acute care settings. It’s important to note, however, that in the full text of the rule, CMS indicates that while group therapy can play an important role in SNF patient care, group therapy isn’t appropriate for either all patients or all conditions, and is primarily effective as a supplement to individual therapy. The agency maintains individual therapy should be considered the primary therapy mode and standard of care in therapy services provided to SNF residents. CMS further confirms that when group therapy is the selected method of treatment, the patient’s plan of care should include an explicit justification for the use of group therapy over individual or concurrent therapy. Documentation should include the benefits of group therapy to the patient, and how the prescribed type and amount of group therapy will meet the patient’s needs and assist the patient in meeting the documented goals. 

CMS also finalized the limit on concurrent and group therapy furnished to a patient. Specifically, for each discipline, no more than 25 percent of the therapy services furnished to a patient in a covered Medicare Part A stay may be in a group or concurrent setting. CMS believes the combined 25 percent cap on group and concurrent therapy will prevent overutilization of group therapy services. 

There’s a presumption by CMS that with the implementation of PDPM there will be a reduction in therapy and an increase in the use of group therapy. CMS plans to monitor closely changes in the provision of therapy, and may consider additional policy development in the future to address adverse trends.  

PDPM Implementation 
CMS finalized the revisions to the assessment schedule to clarify that the deadline for completing the initial Medicare assessment is set to no later than the eighth day of post-hospital SNF care. To address clinical changes throughout a SNF stay, the Interim Payment Assessment (IPA) remains an option. The IPA is not strictly limited to payment alone, but rather highlights the SNF’s responsibility to continually monitor the clinical status of each patient and use the IPA to capture a change in status. In addition, CMS acknowledged the intent to use a sub-regulatory process for updating ICD-10 mappings. This update would include nonsubstantive changes to the ICD-10 codes included in the code mapping and lists under the PDPM to be posted on the PDPM website. CMS believes this process will ensure providers have the most up-to-date information in a timely and useful format.  

SNF Value-Based Purchasing (VBP) Program & SNF Quality Reporting Program (QRP) Measures
The final rule reflects a number of policy changes that continue to move forward CMS’ stated commitment to focusing Medicare payments from volume to value, with the continued implementation of the SNF VBP and SNF QRP, with the additional objective of improving program interoperability, operational quality and safety. The SNF VBP Program provided incentive payments to SNFs based on their quality measure performance in October 2018. The program currently scores SNFs on an “all-cause” measure of hospital readmissions, and in the future will transition to a measure of “potentially preventable” hospital readmissions. As required by statute, the program reduces SNFs’ Medicare payments by 2 percent, then redistributes approximately 60 percent of those funds as incentive payments. 

Changes to the SNF QRP include its applicability to freestanding SNFs, any SNFs affiliated with acute care facilities and all non-critical access hospital (CAH) swing-bed rural hospitals. Under the SNF QRP, facilities that fail to submit required quality data to CMS will be subject to a 2 percent reduction to the applicable fiscal year’s annual market basket percentage update. In addition, as part of its stated commitment to improve the relationship and efficiency between health information and ongoing efforts to increase quality and safety in SNF operations, CMS is adopting two new quality measures to determine whether certain health information is provided by the SNF at the time of transfer or discharge. The two measures are: 1) Transfer of Health Information to the Provider Post-Acute-Care Measure (calculated as the proportion of resident stays with a discharge assessment indicating that a current reconciled medication list was provided to the subsequent provider at the time of discharge; and 2) Transfer of Health Information to the Patient Post-Acute-Care Measure (to be based on the proportion of resident stays with a discharge assessment indicating that a current reconciled medication list was provided to the resident, family or caregiver at the time of discharge).

CMS also is updating the specifications for the Discharge to Community Post-Acute-Care SNF QRP measure to exclude baseline nursing home residents (with baseline residents defined as SNF residents who had a long term NF stay in the 180 days preceding their hospitalization and SNF stay, with no intervening community discharge between the NF stay and hospitalization).

Reach out to your BKD trusted advisor or complete the Contact Us form below if you have questions.

Thumbnail

How can we help you?