Skilled Nursing Facilities Final Rule: Reimbursement Tied to Patient Service Needs

Skilled service must be is reasonable and medically necessary on a daily basis.

Years ago – when I was first entering healthcare and pilgrims were coming over on the Mayflower – the Centers for Medicare & Medicaid Services (CMS) initiated a sea change in the manner in which skilled nursing services were reimbursed.

This came on the heels of when the world of geriatric medical management was realizing that there were highly qualified therapists who worked in skilled nursing facilities (SNFs) who could assume the task of fulfilling rehabilitation needs for older adults. So the frequency of utilization of services in the SNF jumped very quickly, and CMS responded with a seismic adjustment to the payment model.

Enter the Prospective Payment System (PPS).

We were doomed. We knew it. Rehab in SNF was over. My organization—along with every other in the industry—laid off a third of our staff, because clearly, we couldn’t support them anymore.

It took about four months before we realized the enormity of our error. We tried desperately to get those therapists back, but we couldn’t – I guess they all opened bed and breakfasts or went into real estate. Those were two of the hardest, most desperate years of my professional career – trying to deliver quality rehabilitation when we’d gutted our own programs.

So when I hear the current discussion about the Patient-Driven Payment Model (PDPM), the new payment model that CMS just published for SNFs in its new final rule, I am overcome with déjà vu.

CMS has had this model on the table for the past year. The original proposal, called RCS-1, was much more complicated and had less flexibility. CMS took hundreds of provider comments into account in finalizing PDPM, but the current model operates on the same philosophy – that reimbursement will be tied to conditions and patient service needs, and will be heavily separated from utilization.

Other criteria that will affect a SNF’s overall reimbursement are length of stay, quality measure reporting, and re-hospitalization.

So this is a pretty significant change.

But here’s what hasn’t changed one iota: in order to be covered by Part A in a SNF, you must be receiving a skilled service that is reasonable and medically necessary on a daily basis.

Because reimbursement has been de-coupled from therapy intensity, I’ve heard and read a lot of discussion about how we won’t need all these therapists anymore. And my response to that is: are we talking about the same industry?

Skilled nursing services alone exists now – it has always existed. That is simply not the reason most patients come to a SNF after an acute event, however. And since there is nothing that’s going to change the clinical demographics of the patients themselves, there is no basis for assuming that under the new model, patients will somehow need radically less therapy than they currently do.

Patients need both skilled rehab and skilled nursing now, and that won’t change in a year. And unless you’re in agreement that SNFs cared only about how much therapy they could provide, rather than what their patients needed, the philosophical underpinning of rehabilitation in the new model is unchanged.

The new payment model is designed to capture outcomes – section GG on the Minimum Data Set (MDS) was specifically designed for this purpose, with the almost inevitable eventual inclusion of an outcome adjustment. There are already adjustments related to quality measure reporting.

Additionally, payment declines over time as the length of stay progresses – this incentivizes shorter stays. But to date, no one has been able to explain to me how you maintain good outcomes, decrease length of stay, and provide markedly less therapy. Our whole challenge with managed care payors is that this is what they’ve been asking for years, yet we still find ourselves constrained by the laws of biology when it comes to facilitating patient recovery.

An increasingly informed consumer also highlights the risk of responding to the new payment model with radical under-delivery. “How much therapy will my mom get?” is a standard question when a family is touring. While the proper answer has always been “the amount she clinically needs,” what they really want to know is how the patient’s time will be maximized for a speedy recovery. And as a rehabilitation director, the most common question I received about intensity was not “why are you giving so much,” but “what are they supposed to do all the hours they’re not in therapy?” Tipping that ratio away from meaningful therapy simply ensures that the provider down the street who did not use the new model as a rationale to pare down the rehab department gets the majority of the patients.

The new model encourages efficacy and efficiency – if a shorter stay is beneficial, how do we facilitate more expeditious recovery through interdisciplinary clinical processes? If payment is no longer linked to a specific amount of therapy, how can groups or concurrent sessions create more efficient delivery? If outcomes is going to be a performance standard, how can we make every minute of therapy have an impact?

And finally, from a long-range staffing standpoint, the ability to deliver with more efficiency has the potential to mitigate some of the concerns about the upcoming professional shortage, at least in a SNF environment – patients are entering the marketplace faster than practitioners, and more organizations struggle with therapist shortages than overages.

For years, therapy practitioners in SNFs have felt chained by the Resource Utilization Group (RUG) – fearing that 10 minutes of under-delivery could negate payment for a week’s worth of incredible therapy for a patient. It is no small relief to be free from that constraint.

But much like the days when PPS was launched, the inclination to panic, to overcorrect, to look short-term rather than long-range, is intense. The objective is remembering what won’t change while preparing for what will.

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