How are skilled nursing facilities transitioning to Patient-Driven Payment Model?

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Crystal Yednak Senior Manager, Health Research Institute, PwC US December 06, 2019

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Skilled nursing facilities and therapist organizations are keeping a close eye on the rollout of CMS’ new Patient-Driven Payment Model, which is shifting away from paying for physical, occupational and speech therapy based on minutes and toward payments based on diagnosis and other factors. CMS also said it is watching how its policy affects patients.

In the final rule, CMS indicated that the shift was necessary because previous payment rules under the skilled nursing facility prospective payment system rewarded organizations for volume of services. Noting that the move could prompt a change in how skilled nursing groups deliver care, CMS said that “close, real-time monitoring will be essential once [the model] is implemented” and that it would review data from patient assessments, claims, cost reports and quality measurement programs to identify trends.

The rule also expanded the definition of “group therapy” to allow therapists to treat two to six patients in a group session, instead of four. CMS permits up to 25 percent of patients’ therapy to occur in groups.

HRI impact analysis

Therapists told The New York Times they were concerned about the change, arguing that it was leading some skilled nursing facilities to reduce therapy for patients and treat more patients in groups. Therapist associations have said they feared skilled nursing facility companies would react swiftly to the rules and cut therapy staff.

“Significant changes in the amount of therapy provided to [skilled nursing facility] patients under [the payment model] could result in notifications to the Department of Health and Human Services Office of Inspector General for further investigation,” the American Occupational Therapy Association wrote after the rule took effect.

Officials with the American Physical Therapy Association issued a similar call saying that the rule does not reduce the importance of physical therapy for the Medicare beneficiaries receiving care in skilled nursing facilities. Some providers have responded by investing in training to improve their coding and processes to better prepare for the new reimbursement model, but it will continue to be a transition as CMS seeks to shift the incentives from volume to value as part of a broader pursuit to reduce spending across Medicare and Medicaid. 

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Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Ben Comer

Senior Manager, Health Research Institute, PwC US

Crystal Yednak

Senior Manager, Health Research Institute, PwC US

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