Patient-Driven Payment Model Finalized in 2019 SNF Final Rule

  • Navigating health reform
  • 8/16/2018
SNF A Guide to Regulation and Legislation Volume Thirteen

Though there were no big surprises, CMS’ final rule resolves several important issues for skilled nursing facilities.

On July 31, 2018, the Centers for Medicare and Medicaid Services (CMS) released the fiscal year (FY) 2019 final Skilled Nursing Facility (SNF) rule. The following includes a high level overview of key provisions in the final rule (CMS-1696-F).

Use CLA’s 2019 SNF Medicare RUG-IV PPS Rate Calculator to see your facility’s payment rates.

CMS indicates the final FY 2019 SNF prospective payment system (PPS) rule increases payments rates to SNFs in the aggregate by $820 million. Payment rates will also be impacted by facility specific outcomes from the Quality Reporting Program (QRP) and the Value Based Purchasing (VBP) Program.

Market basket update

CMS finalized a 2.4 percent update for SNFs as required by The Bipartisan Budget Act of 2018.

Patient-Driven Payment Model

In a 2017 Advanced Notice of Proposed Rulemaking, CMS proposed the creation of a new Resident Classification System-1 (RCS-1) model. The RCS-1 model was never implemented, but CMS used it, and industry comments and concerns, as the general basis upon which it built its newly-named classification system, the Patient-Driven Payment Model (PDPM).

The PDPM is a case-mix classification that derives payment classifications almost exclusively from verifiable resident characteristics, not volumes of services. The new system will adjust five different case-mix components for the varied needs and characteristics of a resident’s care, and then combine these with the non-case-mix component to form the full SNF PPS per diem rate for that resident. This new model begins on October 1, 2019.

Federal base payment rate adjustments

Under the PDPM model, CMS makes several changes to the four components that go into the federal base payment per diem rate:

  • Nursing case-mix component ― Broken into two parts: nursing and non-therapy ancillary (NTA) components.
  • Therapy case-mix rate component ― Broken into three components: physical therapy (PT), occupational therapy (OT), and speech-language pathology (SLP).
  • Therapy non-case-mix component ― Component would be eliminated, and those dollars would be redistributed among the therapy components.
  • Non-case-mix component ― Maintained in its current form.

PT and OT case-mix groups

In contrast to the Resource Utilization Group (RUG) IV system that determines therapy payments based only on the amount of therapy provided, these groups classify residents based on the two resident characteristics shown to be most predictive of PT and OT utilization: clinical category and function score. Under the finalized PDPM, all residents are classified into only one of 16 PT and OT case-mix groups for each of the two components. The PT and OT components will be variable rates and reduced by 2 percent every seven days after the first 20 days of the SNF stay.

SLP case-mix groups

Similar to its approach with PT and OT, CMS identified a set of categories of predictors relevant in predicting relative differences in SLP costs. These include:

  • Clinical reasons for the SNF stay
  • Presence of a swallowing disorder or mechanically-altered diet
  • The presence of an SLP related comorbidity or cognitive impairment

CMS classifies all residents into one of only 12 SLP case-mix groups under the finalized PDPM.

Nursing component

CMS will utilize the existing RUG-IV methodology for classifying residents into non-rehabilitation RUGs. In doing so, CMS indicates its desire is to develop a nursing classification that helps ensure nursing payment reflects expected nursing utilization, rather than therapy utilization. Despite using RUG-IV methodology to guide resident classification, CMS finalized several modifications in order for it to conform to the PDPM.

Non-therapy ancillary

The existing RUG-IV methodology does not adequately account for the high utilization of non-therapy ancillary (NTA) services. The NTA component is based on the presence of comorbidities and extensive services received. All residents are now classified into one of six NTA case-mix groups, and payment for NTA services are broken out from nursing services as currently is done under RUG-IV. The NTA component is also a variable rate and is reduced over the length of stay.

Overall payment

The PDPM classifies each resident into five components (PT, OT, SLP, NTA, and nursing) and provide a single payment based on the sum of these individual classifications. The payment for each component is calculated by multiplying the case mix index (CMI) for the resident’s group first by the component federal base payment rate, then by the specific day in the variable per diem adjustment schedule. These payments are then added to the non-case-mix component payment rate to create a resident’s total SNF PPS per diem rate under the PDPM.

Changes to SNF PPS resident assessments

Under current regulations, SNFs are required to conduct resident assessments on or around days 5, 14, 30, 60, and 90 of a Part A SNF stay. The PDPM rule reduces this to two assessments. Effective October 1, 2019, CMS will use the five-day assessment to classify a resident under the SNF PDPM for the entirety of the stay Part A stay. CMS goes on to state that Medicare beneficiaries’ clinical needs can change. To address this, CMS will make Interim Payment Assessments (IPA) optional for facilities to conduct if two criteria are met.

  1. There is a change in the resident classification in at least one of the first tier classification criteria for any components under the PDPM, such that a resident would be classified into a classification group for that component that differs from the five-day scheduled PPS assessment, and results in a change in payment (either in one component or in overall payment);
  2. The change(s) are such that the resident would not be expected to return to the original clinical status within a 14-day period.

CMS is asking for further input related to the IPA.

CMS will continue to require SNFs to complete the PPS discharge assessment for each Part A SNF resident at the time of Part A or facility discharge.

Added therapy collection items in SNF PPS discharge

With the reductions in resident assessments, CMS is concerned about reductions in necessary therapy services. To prevent this, CMS has included various PT, OT, or SLP items that are to be reported in order to track therapy services and ensure appropriate services are provided under the new PDPM system. Further, CMS indicates that no more than 25 percent of an individual’s therapy time should be spent in group or concurrent therapy, meaning at least 75 percent of time should be individual therapy. CMS believes individual therapy is the most person-centered care, and it does not want to incentivize SNFs under the new PDPM model to move towards providing higher levels of group or concurrent therapy than is warranted. A non-fatal warning edit will trigger should a SNF use too much group or concurrent therapy time.

SNF PPS swing bed assessment

Beginning October 1, 2019, hospitals without critical access hospital (CAH) designation that use swing beds would need to report several new MDS items (K0100, I4300, O0100D2) on their Swing Bed PPS Assessment.

SNF Quality Reporting Program

CMS made no measure changes to the SNF QRP for the coming year.

The final rule did expand the provider notification methods to include: QIES ASAP system, USPS snail mail, and email from the Medicare Administrative Contractor (MAC). In addition, the final rule increases the number of years of data used to calculate the Medicare spending per beneficiary and discharge to the community measures for purposes of public display from one to two years, starting as early as CY 2019.

SNF Valued-Based Purchasing Program

In prior rulemaking, CMS included the performance and baseline years. Now, for FY 2021, FY 2019 (October 1, 2018, through September 30, 2019,) will serve as the performance period for the SNF VBP program year. FY 2017 (October 1, 2016, through September 30, 2017,) will serve as the baseline period for the FY 2021 SNF VBP program year.

Going forward, CMS wants to provide stability for SNFs in the VBP Program and indicated that beginning with the FY 2022 program year and for subsequent program years it will:

  • Adopt a performance period that is the one-year period following the performance period for the previous program year.
  • Adopt a baseline period that is the one-year period following the baseline period for the previous year.

SNFs without sufficient baseline data for the year (fewer than 25 eligible stays) will only be scored on their achievement in that year and should follow the low-volume approach to performance scoring, as laid out by CMS.

Experience the CLA Promise