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A New Way to Pay Skilled-Nursing Facilities

TARGETING OVERUSE OF THERAPY SERVICES, A PROPOSED NEW RULE AIMS TO ALIGN INCENTIVES WITH CARE NEEDS.

By Sarah Couture, Kaitlin Lavin

June 26, 2018

The Centers for Medicare and Medicaid Services (CMS) has been working to overhaul the skilled nursing facility (SNF) prospective payment system (PPS) because the agency has identified trends for overutilization of therapy services. Last year, CMS issued an Advance Notice of Proposed Rulemaking introducing the Resident Classification System (RCS-I).[i] After considering comments from stakeholders, CMS released the Proposed Rule for the Patient-Driven Payment Model (PDPM) this summer.

THE PROSPECTIVE PAYMENT SYSTEM AND RESIDENT CLASSIFICATION SYSTEM

The Balanced Budget Act of 1997 (BBA) created the PPS for SNFs, which pays a predetermined amount based on the classification of services and patient types. The predetermined rates incorporate a provider’s “case-mix,” a classification which accounts for relative resource utilization, and patient types.

The current payment methodology requires SNFs to place each resident in Resource Utilization Group (RUG) categories for a nursing case-mix component, based on various resident characteristics, and a therapy case-mix component, based on the intensity of therapy services provided. The higher-paying therapy component creates an incentive for SNFs to provide more therapy services than necessary. The Office of Inspector General (OIG), Medicare Payment Advisory Commission (MedPAC), and the American Health Care Association (AHCA) have been urging CMS for years to change the payment model from one based on the level of services SNFs provide to one based on individual patient characteristics and needs.[ii] CMS finally proposed a new payment model that includes components based almost exclusively on resident characteristics.

Under the current PPS, there are 2 case-mix components — nursing and therapy — and most providers only use the higher-paying therapy component for the purposes of payment. CMS proposed the RSC-I payment model last year, which was based on 5 case components including physical therapy/occupational therapy, speech-language pathology, nursing, non-therapy ancillaries, and non-case mix.[iii] The PDPM includes the same case-mix components but CMS has separated physical and occupational therapy into two separate components to assuage fears about inappropriate substitution across disciplines and to encourage providers to provide services based on clinical need.[iv] CMS also reduced the number of payment groups by about 80% to reduce administrative burdens.[v] Similar to the RSC-I, the PDPM will require SNFs to evaluate patients for case-mix components based on functional scores, primary reasons for a resident’s stay, and other resident characteristics. In addition to modifying case-mix components, the PDPM purposes to prevent overutilization of therapy services by limiting group and concurrent therapy to 25% of each discipline and front-loading payments because therapy costs decrease over the duration of a resident’s SNF stay.[vi]

RESPONSES TO COMMENTS IN THE PROPOSED RULE

Although MedPAC expressed disappointment that CMS delayed implementing a new payment methodology to prevent overutilization,[vii] many other commenters indicated that there were significant problems with the RCS-I.[viii] The PDPM remedies some of the concerns regarding the RCS-I. For example, many commenters complained that the RCS-I remains too static and did not give providers the ability to change a resident’s case-mix group over the duration of the resident’s stay.[ix] CMS has considered replacing multiple SNF assessments with a 5-day assessment to identify more stable resident characteristics (e.g., diagnosis) and using that assessment for the duration of a resident’s stay.[x] CMS would still require providers to perform a discharge status assessment and allow for providers to reclassify residents using a “Significant Change in Status” assessment in cases that meet the criteria for a significant change, as defined by the RAI Manual.[xi] The PDPM would also require providers to reclassify residents using a new assessment called the Interim Payment Assessment (IPA) for substantial changes in a resident’s clinical condition, which would include the 5-day SNF PPS MDS Item Set.[xii] CMS proposed the IPA to allow providers to reclassify residents for payment purposes but continue the resident’s same per diem adjustment schedule. The agency believes that the IPA would help balance the need to ensure accurate payment and monitor for changes in a resident’s condition with the importance of streamlining an assessment approach under the PDPM.[xiii]

Many providers and other stakeholders complained that RSC-I would create an incentive for providers to provide inadequate therapy services for medically complex patients.[xvi] The RSC-I did not account for the ability to record the amount of therapy provided to residents. CMS plans to ensure residents receive appropriate amounts of therapy under the PDPM by tracking therapy utilization via therapy collection items on discharge assessments. However, those who submitted comments for the PDPM have suggested that tracking therapy utilization will be an insufficient means to ensure SNFs meet the needs of medically complex patients.[xviii]

Commenters also described the RSC-I as static, since CMS would freeze payment policy in the past by relying on and making assumptions based on data from the 90s.[xvii] CMS remains somewhat limited by the BBA, which directs CMS to develop base rates hinged on cost reports from 1995 and adjust for inflation. Many stakeholders have suggested that CMS should — and has enough authority to — add provisions for modernization and updates based on SNF provider data because there have been significant changes in clinical practice, patient population, and providers behaviors in response to more value-based payment models. The Proposed Rule for the PDPM does not indicate any plans for CMS to collect data from more recent years, but CMS will be adding a market based increase of 2.4%, or $850 million for 2019, pursuant to the BBA.[xviii]

Additionally, the PDPM remedies many stakeholders’ concerns that the RCS-I model was not well aligned with the IMPACT Act and other major laws. In response, CMS proposed that the PDPM incorporate patient assessment information for the function score from Section GG, rather than Section G. This will create a necessary link between PDPM requirements and other quality initiatives, which have been collecting data since October of 2016 as part of the IMPACT Act.[xix]

However, CMS has not resolved the AHCA’s concerns that there would not be enough time to adjust to the new software and coding requirements. Currently, SNFs do not generally employ coders or heavily practice ICD-10 diagnosis coding.[xx] But the PDPM will require providers to list an ICD-10 “primary diagnosis” on the MDS that will be used in classifying residents based on some of the case-mix components.[xxi] According to the AHCA, the quality of coding and classification of diagnoses can be uneven or questionable.[xxii] Normally, SNFs do not diagnose patients but instead rely upon treating physicians, hospitals, and self- or family-reported medical history for information regarding diagnoses and diagnosis coding. This MDS requirement could create new costs for SNFs because they may need to repurpose staff or provide more training to MDS coordinators, therapists, and billers. SNFs will likely need to hire additional staff with health care coding expertise and certification.

The AHCA indicated that this change could lead to improper billing practices and overpayments because SNFs currently lack the expertise and resources.[xxiii] Further, trying to report the “primary diagnosis” may be confusing for staff because SNF residents often have comorbidities and a resident’s primary diagnosis may represent the reason a resident needs nursing services but not reflect the reason a resident needs therapy. AHCA comments emphasized the importance of CMS guidance for SNFs to help providers transition from using diagnosis in care planning to using a payment system, in which diagnosis is also the basis for payment.[xxiv] However, CMS stated in the Proposed Rule that, “because the MDS is used as a basis for payment, as well as a clinical assessment, we have provided extensive training on proper coding and the time frames for MDS completion in our Resident Assessment Instrument (RAI).”[xxv] CMS has mapped ICD-10 codes to primary reasons for SNF stay versus admission, but it is not clear that CMS will be providing any additional guidance to help SNFs during the transition.

WHAT CAN SNFS DO TO PREPARE?

SNF compliance programs can begin providing staff training and education about the importance of documentation of assessments and support for reasonable and necessary SNF services. It also might be time to consider hiring additional staff with ICD-10 coding expertise. Providers can also let CMS know about any additional concerns. CMS is accepting comments until June 26th.


i “Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities for FY 2018, SNF Value-Based Purchasing Program, SNF Quality Reporting Program, Survey Team Composition, and Proposal to Correct the Performance Period for the NHSN HCP Influenza Vaccination Immunization Reporting Measure in the ESRD QIP for PT 2020.” Federal Register, Centers for Medicare & Medicaid Services, 4 May 2017, s3.amazonaws.com/public-inspection.fed- eralregister.gov/2017-08519.pdf?utm_campaign=pi%20subscription%20mailing%20list&utm_source=federalregister.gov&utm_medium=email.
ii “The Medicare Payment System for Skilled Nursing Facilities Needs to Be Reevaluated.” , oig.hhs. gov/oei/reports/oei-02-13-00610.pdf.
iii “Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities for FY 2018, SNF Value-Based Purchasing Program, SNF Quality Reporting Program, Survey Team Composition, and Proposal to Correct the Performance Period for the NHSN HCP Influenza Vaccination Immunization Reporting Measure in the ESRD QIP for PT 2020.” Federal Register, Centers for Medicare & Medicaid Services, 4 May 2017, s3.amazonaws.com/ public-inspection.federalregister.gov/2017-08519.pdf?utm_campaign=pi%20subscription%20 mailing%20list&utm_source=federalregister.gov&utm_medium=email.
iv “Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities (SNF) Proposed Rule for FY 2019, SNF Value-Based Purchasing Program, and SNF Quality Reporting Program.” Federal Register, Centers for Medicare & Medicaid Services, 8 May 2018,www.federalregister.gov/documents/2018/05/08/2018-09015/medicare-program-pro- spective-payment-system-and-consolidated-billing-for-skilled-nursing-facilities.
v Id.
vi Id.
vii MedPAC. “Re: File Code CMS-1686-ANPRM.” Received by Seema Verma, Regulations.gov, 21 June 2017, www.regulations.gov/document?D=CMS-2017-0061-0107.
viii Center for Medicare Advocacy. “Re: CMS-1686-ANPRM. Advance Notice of Proposed Rulemak- ing with Comment. Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities; Revisions to Case-Mix Methodology, 82 Fed. Reg. 20980 (May 4, 2017).” Received by Seema Verma, 9 Aug. 2017.; Aegis Therapies. “Re: CMS-1686-ANPRM; Medicare Program: Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities: Revisions to Case-Mix Methodology.” Received by Seema Verma, 25 Aug. 2017.
ix American Health Care Association. “Re: AHCA Response to Advanced Notice of Proposed Rulemaking, Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities: Revisions to Case-Mix Methodology. Federal Register, Vol. 82, No. 85, May 4, 2017. CMS-1686-ANPRM.” Received by Seema Verma, 25 Aug. 2017.
x “Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities (SNF) Proposed Rule for FY 2019, SNF Value-Based Purchasing Program, and SNF Quality Reporting Program.” Federal Register, Centers for Medicare & Medicaid Services, 8 May 2018, www.federalregister.gov/documents/2018/05/08/2018-09015/medicare-program-pro- spective-payment-system-and-consolidated-billing-for-skilled-nursing-facilities.
xi Id.
xii Id.
xiii Id.
xiv American Health Care Association. “Re: AHCA Response to Advanced Notice of Proposed Rulemaking, Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities: Revisions to Case-Mix Methodology. Federal Register, Vol. 82, No. 85, May 4, 2017. CMS-1686-ANPRM.” Received by Seema Verma, 25 Aug. 2017.
xv “Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities (SNF) Proposed Rule for FY 2019, SNF Value-Based Purchasing Program, and SNF Quality Reporting Program.” Federal Register, Centers for Medicare & Medicaid Services, 8 May 2018, www.federalregister.gov/documents/2018/05/08/2018-09015/medicare-program-pro- spective-payment-system-and-consolidated-billing-for-skilled-nursing-facilities.
xvi American Health Care Association. “Re: AHCA Response to Proposed Rule, Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities FY 2019, SNF Value-Based Purchasing Program, SNF Quality Reporting Program, and SNF Payment Models Research; Proposed Rule. Federal Register, Vol. 83.” Received by Seema Verma, 24 May 2018.
xvii American Health Care Association. “Re: AHCA Response to Advanced Notice of Proposed Rulemaking, Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities: Revisions to Case-Mix Methodology. Federal Register, Vol. 82, No. 85, May 4, 2017. CMS-1686-ANPRM.” Received by Seema Verma, 25 Aug. 2017.
xviii “Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities (SNF) Proposed Rule for FY 2019, SNF Value-Based Purchasing Program, and SNF Quality Reporting Program.” Federal Register, Centers for Medicare & Medicaid Services, 8 May 2018, www.federalregister.gov/documents/2018/05/08/2018-09015/medicare-program-pro- spective-payment-system-and-consolidated-billing-for-skilled-nursing-facilities.
xix Id.
xx American Health Care Association. “Re: AHCA Response to Proposed Rule, Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities FY 2019, SNF Value-Based Purchasing Program, SNF Quality Reporting Program, and SNF Payment Models Research; Proposed Rule. Federal Register, Vol. 83.” Received by Seema Verma, 24 May 2018.
xxi “Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities (SNF) Proposed Rule for FY 2019, SNF Value-Based Purchasing Program, and SNF Quality Reporting Program.” Federal Register, Centers for Medicare & Medicaid Services, 8 May 2018, www.federalregister.gov/documents/2018/05/08/2018-09015/medicare-program-prospective-payment-system-and-consolidated-billing-for-skilled-nursing-facilities.
xxii American Health Care Association. “Re: AHCA Response to Proposed Rule, Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities FY 2019, SNF Value-Based Purchasing Program, SNF Quality Reporting Program, and SNF Payment Models Research; Proposed Rule. Federal Register, Vol. 83.” Received by Seema Verma, 24 May 2018.
xxiii “Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities (SNF) Proposed Rule for FY 2019, SNF Value-Based Purchasing Program, and SNF Quality Reporting Program.” Federal Register, Centers for Medicare & Medicaid Services, 8 May 2018, www.federalregister.gov/documents/2018/05/08/2018-09015/medicare-program-prospective-payment-system-and-consolidated-billing-for-skilled-nursing-facilities.
xxiiv American Health Care Association. “Re: AHCA Response to Proposed Rule, Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities FY 2019, SNF Value-Based Purchasing Program, SNF Quality Reporting Program, and SNF Payment Models
Research; Proposed Rule. Federal Register, Vol. 83.” Received by Seema Verma, 24 May 2018.
xxv “Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities for FY 2018, SNF Value-Based Purchasing Program, SNF Quality Reporting Program, Survey Team Composition, and Proposal to Correct the Performance Period for the NHSN HCP Influenza Vaccination Immunization Reporting Measure in the ESRD QIP for PT 2020.” Federal Register, Centers for Medicare & Medicaid Services, 4 May 2017, s3.amazonaws.com/ public-inspection.federalregister.gov/2017-08519.pdf?utm_campaign=pi%20subscription%20
mailing%20list&utm_source=federalregister.gov&utm_medium=email.
xxvi “Therapyresearch.” CMS.gov Centers for Medicare & Medicaid Services, 27 Apr. 2018,
www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.