The Revenue Cycle for Skilled Nursing Facilities

Big ICD-10 changes coming soon to the SNF world.

In July 2018, the Centers for Medicare & Medicaid Services (CMS) finalized a new case-mix classification model, the Patient-Driven Payment Model (PDPM), which, effective beginning Oct. 1, 2019, will be used under the Skilled Nursing Facility (SNF) Prospective Payment System (PPS) for classifying SNF patients in a covered Part A stay. PDPM will replace the current case-mix classification system, the Resource Utilization Group, Version IV (RUG-IV).    

The introduction of the PDPM marks arguably the biggest reimbursement system change for SNFs in 20 years! ICD-10 coding should be of high priority for all right now, as we await the rollout of the PDPM. Diagnoses are driving reimbursement in the SNF market. PDPM is designed to address concerns that a payment system based on the volume of services provided creates inappropriate financial incentives. This revised payment methodology is driven by the patient’s clinical characteristics rather than the number of therapy minutes provided. Other significant elements of the PDPM include the use of the Minimum Data Set (MDS) to track the delivery of therapy services and a limitation on the use of group and concurrent therapy, combined at 25 percent of all therapy provided to the patient, per discipline.

Under RUG-IV, most patients are classified into a therapy payment group, which primarily uses the volume of therapy services provided to the patient as the basis for payment classification. This creates an incentive for SNF providers to furnish therapy to SNF patients regardless of each patient’s unique characteristics, goals, or needs. PDPM eliminates this incentive and improves the overall accuracy and appropriateness of SNF payments by classifying patients into payment groups based on specific, data-driven patient characteristics, while simultaneously reducing the administrative burden on SNF providers.  

ICD-10 is important in that it reports data about SNF residents, and that data is used for trending and to identify cost drivers. Diagnoses also are used in value-based purchasing and the quality reporting program to identify exclusions, risk adjusters, and planned readmissions.

There are two ways in which ICD-10 codes will be used under PDPM. First, providers will be required to report on the medical decision-making (MDS) regarding the patient’s primary diagnosis for each SNF stay. Each primary diagnosis will be mapped to one of 10 PDPM clinical categories, representing groups of similar diagnosis codes, which then will be used as part of the patient’s classification under the physical therapy (PT), occupational therapy (OT), and speech-language pathology (SLP) components.    

Second, ICD-10 codes are used to capture additional diagnoses and comorbidities the patient has, which can factor into the SLP comorbidities that are part of classifying patients under the SLP component and the non-therapy ancillary (NTA) comorbidity score that is used to classify patients under the NTA component. The ICD-10 clinical category mapping that will be used under PDPM is available online at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM.html.

In PDPM, each diagnosis maps to a clinical category, which assigns a case-mix group, which translates to a case-mix index, which translates to reimbursement – hence the need to create clinical documentation improvement (CDI) programs for the SNF industry.

Remember that there are five different components to reflect the individual needs or characteristics of resident care. Payment is based on the case-mix index for each component; the diagnosis affects the rate for each. Comorbidities also impact the non-therapy ancillary rate.  

Health information management (HIM) professionals advising SNFs should identify the most frequently used diagnoses at each facility and map them to the clinical categories. If they are not falling where you think they should, you need to identify why and review the codes for specificity. Coding guidelines dictate to code to the highest level of specificity. 

If an unspecified diagnosis is listed, the coder or CDI specialist needs to query the provider for clarification. Make sure that the correct seventh character is being used for injuries and poisonings, and to note when aftercare codes (Z codes) are used. All diagnoses that are coded must be supported by provider documentation. If there is a question, the provider must be queried.

This is a game-changer for SNFs, with a new focus on the importance of clinical documentation. So now you will see CDI emerging in the SNF market. There are always new and emerging opportunities for HIM, coding, and CDI professionals!

Comment on this article

Facebook
Twitter
LinkedIn

Bonnie S. Cassidy, MPA, RHIA, FAHIMA, FHIMSS

Bonnie Cassidy is the president of Cassidy & Associates LLC. She was the former president of AHIMA and received the 2015 Distinguished Member Award from the Georgia branch.

Related Stories

Leave a Reply

Please log in to your account to comment on this article.

Featured Webcasts

CDI Query Mastery: Best Practices for Denial Prevention and Revenue Integrity

Physician queries are essential for accurate documentation and claims data, but they are increasingly scrutinized by payors, leading to denials and revenue leakage. This webcast, led by industry expert Cheryl Ericson, RN, MS, CCDS, CDIP, provides actionable strategies to craft compliant queries, reduce denials, and enhance revenue integrity. Attendees will gain insights into clinical validation queries, how to avoid common pitfalls, and learn best practices to defend against query denials. Don’t miss this opportunity to refine your query process and protect your organization’s financial health.

March 27, 2025
Heart Failure Coding Essentials: Ensuring Compliance and Optimal Reimbursement

Heart Failure Coding Essentials: Ensuring Compliance and Optimal Reimbursement

Master the complexities of heart failure coding with this expert-led webcast by Emily Montemayor, CCS, CMBCS, COC, CPC, CPMA. Discover strategies to ensure compliance with ICD-10-CM guidelines, documentation integrity, and capture comorbidities like CKD and hypertension. Learn how to resolve coding challenges, improve documentation practices, and submit clean claims to minimize denials and safeguard your organization’s financial health. With practical insights and real-world examples, this session equips you to prevent revenue leakage, enhance compliance, and secure optimal reimbursement—all while supporting better patient outcomes.

February 26, 2025
Decoding 2025 OPPS Charge Capture and Coding Complexities: Strategies for Success

Decoding 2025 OPPS Charge Capture and Coding Complexities: Strategies for Success

Prepare your organization for the 2025 OPPS updates with expert insights from Tiffani Bouchard, CCS, CRCR, a Revenue Integrity Professional with over 30 years of experience. This webcast will address critical challenges in charge capture and coding, providing clarity on APC policies, C-APC packaging, exclusions, and payer-specific requirements. Attendees will learn actionable strategies to ensure compliance, optimize reimbursement, and mitigate risks of claim denials. Gain the knowledge needed to implement updates effectively, educate your team, and maintain seamless revenue cycle operations in the face of evolving OPPS complexities.

January 29, 2025

Trending News

Featured Webcasts

Utilization Review Essentials: What Every Professional Needs to Know About Medicare

Utilization Review Essentials: What Every Professional Needs to Know About Medicare

Dr. Ronald Hirsch dives into the basics of Medicare for clinicians to be successful as utilization review professionals. He’ll break down what Medicare does and doesn’t pay for, what services it provides and how hospitals get paid for providing those services – including both inpatient and outpatient. Learn how claims are prepared and how much patients must pay for their care. By attending our webcast, you will gain a new understanding of these issues and be better equipped to talk to patients, to their medical staff, and to their administrative team.

March 20, 2025

Rethinking Observation Metrics: Standardizing Data for Better Outcomes

Hospitals face growing challenges in measuring observation metrics due to inconsistencies in classification, payer policies, and benchmarking practices. Join Tiffany Ferguson, LMSW, CMAC, ACM, and Anuja Mohla, DO, FACP, MBA, ACPA-C, CHCQM-PHYADV as they provide critical insights into refining observation metrics. This webcast will address key issues affecting observation data integrity and offer strategies for improving consistency in reporting. You will learn how to define meaningful metrics, clarify commonly misinterpreted terms, and apply best practices for benchmarking, and gain actionable strategies to enhance observation data reliability, mitigate financial risk, and drive better decision-making.

February 25, 2025
Navigating the 2025 Medicare Physician Fee Schedule: Key Changes and Strategies for Success

Navigating the 2025 Medicare Physician Fee Schedule: Key Changes and Strategies for Success

The 2025 Medicare Physician Fee Schedule brings significant changes to payment rates, coverage, and coding for physician services, impacting practices nationwide. Join Stanley Nachimson, MS., as he provides a comprehensive guide to understanding these updates, offering actionable insights on new Medicare-covered services, revised coding rules, and payment policies effective January 1. Learn how to adapt your practices to maintain compliance, maximize reimbursement, and plan for revenue in 2025. Whether you’re a physician, coder, or financial staff member, this session equips you with the tools to navigate Medicare’s evolving requirements confidently and efficiently.

January 21, 2025
Patient Notifications and Rights: What You Need to Know

Patient Notifications and Rights: What You Need to Know

Dr. Ronald Hirsch provides critical details on the new Medicare Appeal Process for Status Changes for patients whose status changes during their hospital stay. He also delves into other scenarios of hospital patients receiving custodial care or medically unnecessary services where patient notifications may be needed along with the processes necessary to ensure compliance with state and federal guidance.

December 5, 2024

Trending News

Prepare for the 2025 CMS IPPS Final Rule with ICD10monitor’s IPPSPalooza! Click HERE to learn more

Get 15% OFF on all educational webcasts at ICD10monitor with code JULYFOURTH24 until July 4, 2024—start learning today!

CYBER WEEK IS HERE! Don’t miss your chance to get 20% off now until Dec. 2 with code CYBER24