This October, the Patient-Driven Payment Model (PDPM) will supplant the Resource Utilization Groups (RUGs) as the paradigm by which a nursing center’s Medicare Part A per diem payment for post-acute (skilled) residents will be calculated.
This will significantly de-emphasize the impact of therapy minutes, which has been the primary driver of payment for decades and will bring medical complexity to the forefront in determining reimbursement.

While there is understandable fear and consternation around learning a new system, and concerns that there may be negative financial consequences for some nursing centers, the Centers for Medicare & Medicaid Services (CMS) feels that PDPM represents a move toward value-based care.

CMS wants to recognize that some patients are sicker than others and acknowledge the increased complexity by compensating centers for providing care and rehabilitation to the more ill, complex population. Whereas 80 percent of the calculus of the RUG rate was determined by therapy minutes, a majority of the rates under PDPM will hinge on medical diagnoses and comorbidities, as determined by ICD-10 codes.

Changing Rates

Additionally, cognitive and functional impairment will be taken into account, and PDPM rates for the rehab component will decrease over time—albeit only modestly by 2 percent per week after the first 20 days. It’s probably a safe bet, especially considering congressional budgetary concerns, that for a majority of post-acute residents, the reimbursement under PDPM will be lower than it would have been under the RUGs, at least for ultra-high rehab recipients (who constituted 50 percent or more of the total post-acute population in many facilities).

However, there will be some very medically complex residents whose PDPM per diem rates will be higher than ultra-high RUGs.

More Data points

For those who thought the RUGs crosswalk was complicated enough, bad news. Whereas only 20 Minimum Data Set (MDS) items were used to calculate the RUGs, it will require inputting more than 150 MDS data points to determine the PDPM rates. There are six “buckets” that will add up to constitute the overall per diem rate, and the most important of them is called Non-Therapy Ancillary (NTA).

Much more information is available through the American Health Care Association and other resources on PDPM, but the importance of correct, comprehensive medical diagnoses to capture all of each resident’s medical problems cannot be overstated.

Another PDPM category or “bucket” relates specifically to speech and language pathology (SLP). Neurological conditions, cognitive deficits, and dysphagia (plus, specifically, mechanically altered diets) factor into the level of reimbursement calculated from this discipline.

Nursing, physical, and occupational therapy also have “buckets,” and the resident’s functional status based on Section GG of the MDS is taken into account. Ultimately, residents are assigned to a Case Mix Group based on these categories to yield a numerical Case Mix Index.

Scouring for Diagnoses

Some organizations and nursing centers have already started ramping up for PDPM by examining their current processes for documenting diagnoses when residents are admitted from the acute care setting. 
Suffice it to say that commonly used, rehab-based diagnoses from the RUGs era (for example, “difficulty walking” and “muscle weakness”) will not be helpful—particularly as primary admission diagnoses—in the PDPM world.

This is why it is so important for nursing centers to ensure that their receiving clinicians, including physicians, nurse practitioners, and physician assistants, truly scour the records from the sending institution and—when possible—from community physicians, to identify and document all active and relevant diagnoses and past history.

High-Impact Diagnoses

In the NTA category, points are given for conditions that impact medical complexity or the intensity of required services. Among the few dozen diagnoses, a few with the highest impact are worth mentioning specifically, although they are not common in most nursing centers: human immunodeficiency virus/acquired immunodeficiency syndrome (HIV/AIDS), parenteral feeding, ventilator dependence, and transplant status.

More common conditions include intravenous medications (5 points), wound infections (2 points), and “active” diabetes (2 points). Numerous other more common conditions count for one point, and these points add up: wounds, morbid obesity, multi-drug-resistant organisms, isolation status, feeding tube status, need for suctioning, heart failure, chronic obstructive pulmonary disease (COPD), and many more.

Without a careful examination of the records and a thorough history and physical (H&P) examination before the first MDS is recorded, nursing centers may easily miss out on significant reimbursement for these post-acute residents. It is recommended that centers’ medical directors and all attending practitioners who document diagnoses in residents’ charts familiarize themselves with the NTA codes, so they will not be missed. 

Finding the Pearls

Formal education of medical staff in addition to in-services for nursing staff can help remind all involved in a resident’s evaluation and treatment to document diagnoses accurately and completely. Many diagnoses remain “buried” in the hospital records and may not show up either in the hospital H&P or even the discharge summary.

For example, the person may have been treated for shock (1 point) but it is not explicitly stated. A patient may have known diabetic retinopathy (1 point), but if this condition was not identified or treated during the hospitalization, it can be missed.

If the admitting doctor does not take the time to look for (and document) these hidden “pearls,” the facility will get short-changed. These points add up to real dollars, especially over the course of skilled admissions that can last weeks or even months.

Some experts, including leaders of AMDA—The Society for Post-Acute and Long-Term Care Medicine, fear that residents may experience unintended harmful consequences from PDPM. There may be a push for nursing centers to request orders for altered diets, including thickened liquids (the evidence for which is very marginal to begin with), in residents with mild dysphagia. Intravenous therapies may be instituted in cases where oral therapy probably would suffice. Suction, another intervention that can do more harm than good, may be ordered in residents for whom it is not clearly indicated.

Staying Objective

Because of the system of additive points directly impacting reimbursement, it is important for all involved to maintain objectivity and the best interest of residents when considering whether such interventions are appropriate to order. To do this, administration, nursing, and medical staff must be aligned in their goals. Nursing centers also need to ensure that there is no skimping on therapy—and CMS will be watching to see if the therapy minutes decline significantly after PDPM goes live.

Whether or not some interventions are necessary may not always be black-and-white, and an individualized, person-centered approach is critical. As skilled nursing enters the brave new world of PDPM, it would do well to keep this as its overarching aspiration. An engaged medical director, working closely with other attending physicians and practitioners, administration, nursing, and the entire interdisciplinary team, will help promote a safe and successful transition from RUGs to PDPM.
Karl Steinberg, MD, CMD, HMDC, is a long term care geriatrician in Oceanside, Calif. He is chief medical officer for Mariner Health Central and medical director of Life Care Center of Vista and Carlsbad by the Sea Care Center. He is vice president of AMDA—The Society for Post-Acute and Long-Term Care Medicine and editor-in-chief of its monthly periodical, Caring for the Ages.