Aug 1, 2018

New CMS payment system for skilled nursing facilities reimburses providers for care not volume

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CMS new Patient-Driven Payment Model (PDPM) will be implemented on Oct. 1, 2019. CMS finalized the Patient-Driven Payment Model for skilled nursing facilities (SNF), which will link Medicare payments to value and care, rather than volume/ fee-for-service care. The rule according to news reports “would reduce documentation standards around patient assessments, saving facilities approximately $2 billion over 10 years,” and would “give a $975 million collective raise next year to post-acute care providers including skilled-nursing facilities, inpatient psychiatric facilities and inpatient rehab facilities.” According to the CMS fact sheet The final rule also modernizes Medicare through innovation in SNF, meaningful quality measure reporting, reduced paperwork, and reduced administrative costs.

How It Works – The PDPM model will use ICD-10 diagnosis codes, patient characteristics, and other clinically relevant factors to classify patients and patients can choose a skilled nursing facility with services tailored to their condition.

Excerpt from the CMS Fact sheet:

Promoting Patient Driven Value-based Care: The new model is designed to improve the incentives to treat the needs of the whole patient, instead of focusing on the volume of services the patient receives, which requires substantial paperwork to track over time. CMS also significantly reduced the overall complexity of the PDPM, as compared to RUG-IV or RCS-I, based on stakeholder feedback. The new case-mix classification system (the PDPM) will be effective October 1, 2019 to allow time for education and training of SNFs to prepare for this new model. The improved SNF PPS case-mix classification system moves Medicare towards a more value-based, unified post-acute care payment system that puts unique care needs of patients first while also significantly reducing administrative burden associated with the SNF PPS.

 Further, PDPM adjusts Medicare payments based on each aspect of a resident’s care, most notably for Non-Therapy Ancillaries (NTAs), which are items and services not related to the provision of therapy such as drugs and medical supplies, thereby more accurately addressing costs associated with medically complex patients.

Finally, PDPM adjusts the SNF per diem payments to reflect varying costs throughout the stay and incorporate safeguards against potential financial incentives to ensure that beneficiaries receive care consistent with their unique needs and goals. In addition to these finalized changes, we also finalized a combined limit on group and concurrent therapy of 25 percent, as we believe that this best ensures that SNF patients will continue to receive the highest caliber of therapy that is best attuned to their individual needs and goals. 



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