What You Need to Know
Medicare payment system is in the midst of a paradigm shift—away from the fee-for-service payment structure, in which providers are rewarded solely by the volume of services provided, and toward a structure that holds providers accountable for patient outcomes and costs. This move to value-based care is intended to advance the goals of health care's "triple aim"—improving the patient experience of care (including quality and satisfaction), bettering the health of populations, and reducing the per-capita cost of health care.
As part of this effort, CMS has finalized significant changes that will affect the home health and skilled nursing facility payment systems—beginning in FY 2020 for SNFs and CY 2020 for home health agencies. These payment systems align payment with patient characteristics and patient needs, and eliminate the connection between therapy utilization and reimbursement. CMS finalized the Skilled Nursing Facility Patient-Driven Payment Model (PDPM) and Home Health Patient-Driven Groupings Model (PDGM) in 2018.
SNF Patient-Driven Payment Model
On August 8, 2018, CMS published its final 2019 prospective payment system (PPS) for skilled nursing facilities (SNFs), which outlines the agency's plans to replace the existing SNF case-mix methodology, known as Resource Utilization Groups Version IV (RUG-IV), with the PDPM. CMS believes the new model will save money and improve care by reducing administrative burden and tying payment to patient conditions rather than services provided.
Under the PDPM, payments will be based on a resident's classification among 5 components—physical therapy, occupational therapy, speech-language pathology, nursing, and non-therapy ancillary (NTA) services, a category mostly related to drugs and medical supplies. PDPM classifies residents into a separate group for each of the case-mix adjusted components, which each have their own associated case-mix indexes. Additionally, PDPM applies variable per diem payment adjustments to three components, PT, OT, and NTA, to account for changes in resource use over a stay. The adjusted PT, OT, and NTA per diem rates are then added together with the unadjusted SLP and nursing component rates and the non-case-mix component, as is done under RUG-IV, to determine the full per diem rate for a given resident.
Home Health Patient-Driven Groupings Model
On October 31, 2018, CMS released its final PPS rule for HHAs, which outlines the agency's plans to replace the existing HHA case-mix methodology with the. CMS believes the model will save money and improve care by reducing administrative burden and tying payment to patient conditions rather than services provided.
Under the PDGM, there will be greater reliance on patient characteristics and other information to better align payments with patients’ needs. As mandated by the Bipartisan Budget Act of 2018, the unit of payment will switch from 60-day episodes of care to 30-day periods and remove therapy visit thresholds as a determinant of payment. The PDGM will base case-mix adjustment solely on patient characteristics—including timing of episode, admission source, principal diagnosis, functional impairment level, and comorbidities—to place patients into clinically meaningful payment categories.
Demonstrating Your Value
CMS's goal is to improve payment accuracy for patients in HHAs and SNFs. In the new payment systems, the connection between therapy utilization and payment is eliminated. With the therapy utilization no longer being connected to payment, it is imperative that you are able to understand and demonstrate the value your services bring to your facility or agency—and, of course, to your patients.
To demonstrate the value of your services to the health care system and determine how your individual and group performance may affect payment within these new payment models, you need to know your outcome and cost data at the facility or agency levels.
For guidance on acquiring this data and working with your agency or facility administrators, please visit the APTA Quality webpage.