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The payment world could change dramatically for skilled nursing facilities (SNFs) as early as October of next year if the US Centers for Medicare and Medicaid Services (CMS) follows through on a proposed rule.

On April 27, CMS unveiled its proposed SNF rule for 2019, which includes plans to replace the existing SNF case-mix methodology, known as Resource Utilization Groups Version IV (RUG-IV) with an entirely new system dubbed the Patient-Driven Payment Model (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. The new system would go into effect on October 1, 2019.

Under the PDPM, payments would be based on a resident's classification among 5 components—physical therapy, occupational therapy, speech-language pathology, nursing, and "non-therapy ancillary services," a category mostly related to drugs and medical supplies. Payment would be calculated by multiplying the case-mix index for the resident's group with each component, first by a base payment rate and then by days of service received. The payment calculations for each component would then be added together to create a resident's total per diem rate.

The big picture: CMS believes the new system would shift payment away from the focus on volume-based services associated with RUG-IV and toward "incentives to treat the whole patient." That shift also would come with "significantly" reduced administrative burdens, according to a CMS fact sheet on the proposed rule.

The new model is itself an overhaul of sorts of a case-mix methodology system CMS floated last year. That model, known as the Resident Classification System (RCS-I), met with heavy criticism from a wide range of stakeholders, including APTA. The association argued that the plan was based on an inadequate set of patient characteristics and a poor understanding of the impact of comorbidities, and likely would reduce therapy for patients most in need. Initial analysis of the PDPM reveals that CMS may have listened to that criticism, creating a system that it says "puts the unique care needs of the patient first."

To ensure that SNFs are delivering the kind of care envisioned, CMS would add 2 new therapy reporting requirements to the discharge assessment—the first aimed at documenting therapy minutes and each therapy mode used, and a second focused on days for each discipline and mode of therapy. CMS hopes that monitoring both minutes and days will allow it to get a better handle on the daily intensity of services provided—something that's difficult to do under the current RUG system. In addition, the new system would limit concurrent and group therapy to 25% for each discipline.

Other elements of the proposed SNF rule:

  • Overall payments to SNFs would increase by 2.4%, or $850 million.
  • The reporting window for the public display of SNF outcome measures would be expanded from 1 to 2 years, a change that CMS believes will require more SNFs to participate and is in line with current requirements for inpatient rehab facilities and long-term care hospitals.
  • Beginning as early as 2020, CMS would begin publicly displaying data related to changes in self-care and mobility during SNF care and at discharge.
  • CMS would add a cost-benefit analysis as an additional factor when considering potential outcome measures to remove from its list of requirements.

And while no actual changes are being proposed, CMS is using the release of the proposed rule to remind SNFs that beginning in October 2018, SNFs could receive increased or reduced payments depending on their performance on the SNF value-based purchasing program's readmission measure. The measure, based on all-cause 30-day hospital readmissions, doesn't require SNFs to report additional information, since CMS will use existing claims information to make the assessment.

APTA regulatory affairs staff are reviewing the rule and will draft comments for submission before the deadline of June 26, 2018.

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