Big Changes Coming Soon for Post-Acute Care
Apr 26th 2019

Big Changes Coming Soon for Post-Acute Care

On October 1, 2019, BIG changes will arrive! CMS will be dropping the current Resource Utilization Group (RUG) payment methodology and replacing it with the Patient-Driven Payment Model (PDPM). This new model will reimburse skilled nursing facility providers based on the clinical complexity of the patients they serve, rather than the volume of therapy they provide. Is your organization ready for this change and its potential impact on your business? eviCore is prepared to discuss how its Post-Acute Care solution is tailor-made for this change to the PDPM and how it can benefit your organization

To learn more about the Patient-Driven Payment Model, read the FAQ’s below.

What is the Resource Utilization Group, Version IV (RUG-IV or RUGs)?

The RUG system is the current classification system for SNF payments under Medicare FFS. Under RUG-IV, a resident’s classification into a single group determines the case-mix indexes and per diem rates for all case-mix adjusted components. Using RUGs, the amount reimbursed is based on the volume and type of therapy the patient receives.

What is the PDPM?

The Patient Driven Payment Model (PDPM) is a new case-mix classification system for sorting skilled nursing facilities (SNF) patients in a Medicare Part A covered stay into payment groups under the SNF Prospective Payment System. Effective October 1, 2019, the PDPM will replace the current case-mix classification system, the Resource Utilization Group, Version IV (RUG-IV or RUGs). Under the PDPM, payment classification will be based on patients’ clinical characteristics, rather than the amount of therapy provided, and PT and OT reimbursement will decrease as the patient length of stay (LOS) increases.

  • RUGs ‒ Provider reimbursements are based on the functional status of patients (which utilizes clinical subjective judgment) and therapy minutes.
  • PDPM ‒ Provider reimbursements are based on holistically assessing the patient using five separate clinical elements.

Why is CMS changing from RUG-IV to PDPM?

Under RUGs, most patients are classified into a therapy payment group, which uses the volume of therapy services provided to the patient as the primary basis for payment classification. This creates an incentive for SNF providers to furnish therapy to SNF patients regardless of the patient’s unique characteristics, goals, or needs. The PDPM removes 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 administrative burden on SNF providers.

Does PDPM apply to Medicare Advantage?

Although CMS does not dictate how Medicare Advantage plans pay their providers, any Medicare Advantage plans that are contracted on a percentage of CMS reimbursement will be required to pay their providers on the new PDPM.

How will the CMS-mandated PDPM rolling out in October of this year affect the PLAN?

The plan will have to change the payment model for its providers. The providers who are paid based on a RUG score will now need to be paid based on the PDPM score. The plan must be able to pay the provider adjusted rates throughout the patient’s stay in the facility, per the adjustment factor for both PT/OT and Non-Therapy Ancillary elements of the PDPM.  

How will the CMS-mandated PDPM rolling out in October of this year affect the PROVIDER?

The PDPM is a value-based and more holistic program for the SNF providers. The providers will need to be able to document a heightened level of nursing care/needs, as the PDPM is focused on the clinical complexities of the patient—as opposed to the RUG model which is therapy based. Under the PDPM, providers can use a multidisciplinary approach to determine the needs of the patient and ensure that the correct level of care is being utilized. That will allow the focus to remain on patient needs throughout the stay. Because providers will no longer be reimbursed directly for the volume of therapy they receive, we may see a shift in the types of patients SNFs care for, i.e., they will be incentivized to take on more medically complex patients who do not require high levels of therapy. 

Regarding the upcoming PDPM changes, how does eviCore’s PAC solution differentiate itself from those of other PAC-managed service providers in the market today?

We have traditionally differed from other managed service providers in that we have always used our patient-centric model, which focuses on the patient as a whole. We have always evaluated the patient’s clinical complexities as well as their therapy needs to determine the proper reimbursement. eviCore’s model requiring the initial assessment in the SNF within the first 3 days complies with the new rules of the PDPM, where the initial MDS assessment must be completed within the first 3 days of the patient’s stay. (Previously it was a 7-day lookback period under RUG scoring.) 

eviCore has always authorized using levels, so that the provider is paid at the level of care that is being provided to the member. The PDPM will adjust the rate of payment for the provider. The longer the patient stay in the facility, the lower the payment; this essentially posits that members do not need to remain in a facility for long periods of time.  

eviCore has been evaluating SNF performance and proactively communicating expected level of care for SNFs with a more holistic and patient-centric approach since the program’s inception. For this reason, our methodology is already more consistent with the goals of the PDPM. Thus we will be better able to manage the transition to PDPM at both the payer and provider levels, with an approach that will accommodate a wide range of market-, system-, and contract-specific scenarios. Our familiarity with the PDPM will enable us to better respond to the new administrative and provider-relations challenges that will likely arise in the application of the new model.

The countdown is on…are you ready for the CMS change? To learn more, join us to hear Ethan Brosowsky from the Advisory Board host a special webinar examining how this shift away from volume and to value—i.e., the CMS payment mandates for Skilled Nursing Facilities called PDPM, and the Home Health Agencies called PDGM—will impact the greater marketplace. Sign up here.