Objects in Mirror May Be Closer than They Appear: Immediate Actions to Prepare for PDPM

Compassionate Care

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BKD’s trusted advisors have been talking to our clients about the Patient-Driven Payment Model (PDPM), and they have questions. Perhaps the hottest topic among skilled nursing facilities (SNF) is how to begin preparing for PDPM while retaining the revenues needed to care for their residents under the RUG-IV prospective payment system (PPS). Further, with quality reporting and value-based purchasing reimbursement effects to consider, the period from now until October 1, 2019, marks one of the toughest transition periods in the history of the Medicare program.

Under the RUG-IV payment system, revenue primarily is driven by minutes of physical, occupational and speech therapy rendered in excess of weekly minimum thresholds. Other significant rate components include levels of assistance required with certain late-loss activities of daily living and the presence of depression for certain categories. Of course, clinical needs drive rates as well, but most providers primarily use rehab services to drive payment.

Rehab in PDPM, purely from an accounting view, is an expense only—not a revenue driver. The real drivers of payment rates will be ICD-10 coding, clinical conditions, functional scores, swallowing disorders, mechanically altered diet, etc.

The change from RUG-IV to PDPM is significant. Our clients are concerned about making the necessary operational and clinical changes without giving up reimbursement under the current payment system. And we only have a little more than a year to implement those changes. As the old saying goes, “The way to eat an elephant is one bite at a time”—and that’s certainly the case here. Below are some elements of success under PDPM you should consider tackling now so when October 1, 2019, arrives, there’s not much elephant left to eat.

Sharpen Your ICD-10 Coding Skills

Possibly the most significant skills gap SNFs face in this transition is ICD-10 coding. Most ICD-10 codes map to a clinical category that affects the physical therapy/occupational therapy (PT/OT) component of the PDPM system payment—while some aren’t mapped at all. ICD-10 coding doesn’t drive payment rates under RUG-IV. As a result, many SNFs simply use the ICD-10 code provided by their rehab provider or obtained from the hospital upon admission. The ICD-10 codes used in the minimum data set (MDS), the electronic health record and the claims may not be consistent, and they may not accurately reflect why the patient is receiving skilled nursing services. Receiving training on ICD-10 coding for SNFs, including how it affects case-mix classifications under PDPM—and even practicing these newfound skills—is a crucial step for success under PDPM we can implement now with no effect on the RUG-IV payment rates.

Implement Programs to Better Capture Functional Scores

Like the ICD-10 codes, functional scores captured in MDS Section GG don’t affect payment rates under the RUG-IV system; however, under PDPM, function scores will have a significant effect. Unlike ADL scoring—in which a higher need for assistance drives a higher payment under RUG-IV—in PDPM a higher need for assistance (resulting in a lower functional score) is an indicator of a lower capacity for physical and occupational therapy. Lower capacity for rehabilitation services generally drives a lower case-mix index, but there’s also a reduction in case mix at the highest functional scores. The linkage between functional score and case mix isn’t clear without some familiarity, and developing that familiarity will take time.

Many providers still struggle with capturing ADL information, and we suspect those struggles will continue with capturing functional score information. Given there’s no negative effect on RUG-IV payments for capturing functional scores, we recommend starting the education, developing good processes, putting together interdisciplinary teams and getting in the habit of improving our capture of functional scores.

Have a Plan for Rehab Delivery

SNFs that achieve success under PDPM will change their delivery model for rehab. There’s a lot to consider, including the Centers for Medicare & Medicaid Services’ (CMS) conclusions on past medical necessity of high-intensity rehab, services and incentives in rehab provider contracts, use of group and concurrent therapy and use of restorative nursing to supplement traditional rehab.

If your facility decides to integrate restorative nursing more aggressively into your care model, you’ll probably want to start establishing or building up the program now, including training and deploying restorative aides. Doing so not only prepares a SNF for PDPM but also may positively affect Medicare payments as well as Medicaid payments in case-mix states. 

Remember, though, if patients qualify for skilled care based on the need for rehab services five days a week, restorative nursing doesn’t constitute rehab services. Patients will still need rehab delivered by a qualified therapist at least five days each week. With this in mind, many providers don’t identify qualifiers for skilled services other than this one, so it’s prudent to brush up and train on nonrehab qualifiers. The message CMS sends with PDPM is pretty clear—in the future they expect a stronger clinical focus.

Final Notes

As management consultant Peter Drucker claims, “Culture eats strategy for breakfast.” PDPM will require a culture change, and getting started now—one challenge at a time—will help make the transition more comfortable for your staff. In addition to the steps above, prescribing best practices in ICD-10 coding, functional assessments and restorative nursing can solidify good habits now, without negatively affecting payments under RUG-IV. PDPM is larger in the mirror than it appears—and smart providers will start preparing now.

For more information or assistance with PDPM preparation, contact Chris or your trusted BKD advisor.


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