Are SNFs ready for PDPM?

Coding will drive the Medicare payment model replacing RUG-IV at skilled nursing facilities in FY2020

One of the most significant changes ahead for the nation’s skilled nursing facilities under a new Medicare payment model taking effect in FY2020 will be the importance of coding accuracy.

ICD-10 coding will drive the new Patient-Driven Payment Model (PDPM), determining case-mix groups and reimbursement amounts. Another important component under the new model will be the patient’s functional status, determined by the use of standardized post-acute care patient assessment data elements known as GG items on the Minimum Data Set (MDS) assessment instrument used by skilled nursing facilities.

But there is concern among leaders in the post-acute care field that skilled nursing facilities (SNFs) may not be ready for the coding challenges ahead when the new model becomes effective Oct. 1.

“The need for coding accuracy under PDPM is expected to be an eye-opener for long-term care facilities,” said J’non Griffin, owner and president of Home Health Solutions, a nationwide consulting and outsourcing firm which has served the home health and hospice industries since 2012. Her Alabama-based company has launched a new long-term care solutions division known as LTC Solutions in anticipation of a PDPM-inspired need among skilled nursing facilities for training, consulting and outsourcing.

“Although long-term facilities have been using ICD-10 coding to report diagnoses and assess the functional status of patients, they are not accustomed to the degree of accuracy which will be required by the new payment model,” J’non said.

“The coding is going to directly affect their reimbursement under PDPM,” she said.

A troublesome inaccuracy rate

Coding at many facilities is performed by staff members who lack coding certification and have received little or no ICD-10 training. Because reimbursement was not tied to coding accuracy under the existing payment model, facilities had little incentive to invest in ICD-10 training to make certain coders understood and correctly followed coding guidelines and conventions.

Recent audits of long-term care facilities by LTC Solutions identified numerous coding errors, J’non said.

“The primary diagnosis was placed in the wrong category 98 percent of the time at the facilities we audited,” she said. “PDPM will be a primary diagnosis-driven model, and these types of errors will result in the loss of thousands of dollars in potential reimbursement.”

A look at the changes

Under the current RUG-IV payment model, residents are placed in a Resource Utilization Group (RUG) based on therapy and nursing needs. Therapy volume largely determines reimbursement.

Under PDPM, five case-mix components (physical therapy, occupational therapy, speech-language pathology, nursing and non-therapy ancillary services) will be used to determine payment. Those five components will be further divided into resident classifications to make up a case-mix index and determine the per diem rate.

Coding will play a significant role in determining the resident classifications that make up the case mix, J’non said. Diagnosis codes must be mapped into the correct clinical categories, and co-morbidities must be identified as well.

“Resident classifications are determined by coding the co-morbidities that will further classify the resident in the speech-language pathology, nursing and non-therapy ancillary case-mix index,” J’non said.

“There must be a clear understanding of ICD-10 coding guidelines and conventions and how to map these codes into the correct clinical category for reimbursement.”

Functional status

Other important changes are ahead for facilities in how the resident’s functional score is determined.

Under the current RUG-IV model, Activities of Daily Living (ADLs) from Section G of the Minimal Data Set (MDS) determine a functional score. The more assistance a resident needs, the higher the Section G score.

PDPM will reverse that, awarding a higher score for residents who are more independent.

(See our previous blog post on other ways functional status scoring will change under PDPM here.)

Length of stay

Length of stay will also be important to reimbursement under PDPM.

Therapy per-diem rates will fluctuate under the new model, decreasing over the length of the patient’s stay. Beginning on Day 21, per diem rates for physical therapy and occupational therapy will decrease by 2 percent every seven days until Day 100 of the patient’s stay. The per diem rate for non-therapy ancillary services will also fluctuate, tripling for Days 1-3 of the patient’s stay and returning to the base rate after Day 3. Nursing and speech-language pathology rates will not fluctuate, however, remaining the same throughout the patient’s stay.

“There are many changes ahead for facilities under this new payment model, and we are expecting a huge learning curve ahead,” J’non said.

We can help

Need help preparing for PDPM? Would you like to discuss how using coding and review services from HHS can improve your facility’s bottom line? Contact us today!