Transition to Value-Based Payments Top Concern for Long-Term and Post-Acute Care

Posted on November 12, 2018 I Written By

Colin Hung is the co-founder of the #hcldr (healthcare leadership) tweetchat one of the most popular and active healthcare social media communities on Twitter. Colin speaks, tweets and blogs regularly about healthcare, technology, marketing and leadership. He is currently an independent marketing consultant working with leading healthIT companies. Colin is a member of #TheWalkingGallery. His Twitter handle is: @Colin_Hung.

On 1 October 2019, CMS will flip from a volume-based reimbursement model for Long-Term & Post-Acute Care Organizations (LTPAC) to a value-based one. This looming transformation was the top concern for most of the 2,000 attendees at PointClickCare’s annual user conference – #PCCSummit18.

PointClickCare makes a cloud-based EHR platform for LTPAC and HomeCare Organizations. According to the company, 60% of all Senior Living and Skilled Nursing Facilities (SNFs) in North America use their platform. Each year, PointClickCare hosts a user conference, called PCCSummit, where customers gather to get a preview of new features and to discuss the industry’s most pressing challenges.

Sweeping LTPAC changes by CMS

The top challenge on the minds of #PCCSummit18 attendees was, by far, the sweeping reimbursement changes being implemented by the Centers for Medicare & Medicaid Services (CMS) on 1 October 2019.  Referred to as the Patient Driven Payment Model (PDPM), it contains three significant changes for SNFs:

  1. A new value-based payment model
  2. Adopting ICD-10
  3. New reporting requirements

“The move to PDPM is going to be a challenge for everyone in the industry,” said Dave Wessinger, COO and Co-Founder of PointClickCare. “I think everyone will agree that moving from a volume-based reimbursement model to a value-based one is ultimately better for healthcare and for patients, but getting there is going to take some work. We are investing millions of dollars in product R&D, implementation resources and training to help make this transition as smooth as possible for our customers – who are all worried about PDPM.”

There were several sessions at #PCCSummit18 dedicated to PDPM. Each session was standing-room only.

A new value-based payment model

PDPM is the first step taken by CMS to shift LTPAC from a volume-based reimbursement model to one that is more value-based.

Currently, SNFs are reimbursed based on the minutes of therapy that patients/residents receive. The daily rate is determined by the type of therapy and SNFs are paid for as long as that therapy is administered. SNFs are required to conduct an assessment at pre-determined intervals to determine if further therapy is needed.

Under PDPM, CMS will base payments to SNFs on patient characteristics (diagnosis and comorbidities) rather than the type and duration of therapy being provided. According to CMS, there are several key advantages of this approach:

  • Removes therapy minutes as the basis for therapy payment (which may have encouraged some SNFs to provide unnecessary therapies to patients)
  • Enhances payment accuracy for nursing services by making nursing payment dependent on a wide range of clinical characteristics
  • Introduces payment adjustments that better reflect changes in resource use over a stay

Under PDPM, each patient/resident will be assigned a case-mix classification that drives the daily reimbursement rate for that individual. This classification is based on the diagnosis, acuity and characteristics of the patient/resident. Unlike the current payment model, the daily reimbursement rate is not uniform. It declines over time. This was done because evidence suggests that most therapies have diminishing returns the longer they are administered – unless the condition of the patient/resident changes.

The following slide illustrates the difference. It was presented by Genice Hornberger, RN, Senior Product Advisor at PointClickCare. The column on the left shows the uniform reimbursement for a 30-day SNF stay under the current RUG-IV payment model. The column in the middle shows what it the daily payments would be like under PDPM with accurate documentation.

Notice how the daily rate under PDPM starts off much higher at almost $915/day vs $631/day. This is in recognition of the work required of SNFs when new patients/residents are admitted.

The right-most column is very interesting. It shows the daily reimbursement rate for the case where patient documentation is inaccurate (ie: missing meds or missing patient conditions). This would result in $1,800 less under PDPM vs the current reimbursement model.

Adopting ICD-10

One of the goals CMS had for PDPM was to “promote consistency with other Medicare and post-acute payment settings by basing resident classification on objective clinical information while minimizing the role of service provision in determination of payment”.

To achieve this goal, CMS is mandating the adoption of ICD-10 standard in LTPAC. This will align long-term and post-acute care with their acute-care counterparts and make it easier for CMS to track Medicare patients moving between different parts of the healthcare system.

During the research and development stage of PDPM, found that almost half of SNF claims assigned generic ICD-9-CM codes as the principal diagnosis for residents in their care, which had limited usefulness in classifying residents. It also made it difficult for CMS to perform detailed analysis of LTPAC data.

Under PDPMD, ICD-10 codes will be used to map residents to the clinical categories that represent the primary reason for SNF care and are also sued for resident classification which determine the reimbursement rate.

New Reporting Requirements

Under the current reimbursement mechanism, SNFs are required to file patient/resident assessments with CMS 5 days, 14 days, 30 days, 60 days and 90 days into the stay. For longer stays, only quarterly assessments need to be filed.

Conducting, documenting and electronically transmitting these assessments requires a lot of time and effort by staff. In consultation with industry leaders, CMS is reducing the reporting requirements under PDPM.

Instead of regularly scheduled assessments, SNFs will now only be required to file a report when a patient/resident is admitted, discharged or has a change in condition. CMS expects to save itself $2B over the next 10 years from this reduction in paperwork and calculates SNFs will save on average, 183 hours per facility per year.

CMS tools to help transition

To help make the transition to PDPM, CMS has made several guides and online tools freely available to SNFs. One very useful tool is a customized analysis of each SNF’s current reimbursement vs future reimbursement under PDPM.

CMS used historic claims data from each SNF and corresponding acute-care data for patients transferred to SNFs (because only the hospital data had the requisite ICD-10 coding to determine the new patient/resident classification under PDPMD) to come up with an estimate of that SNF’s reimbursement under PDPM.

The analysis reveals that most SNFs would be at or above current reimbursement levels. A few therapy-heavy SNFs with non-complex patients will see lower reimbursements.

PointClickCare helping with PDPM transition

Given the importance of PDPM and the worries expressed by its customers, PointClickCare has created additional tools to help in the transition.

The team at PointClickCare smartly realized is the key to PDPM is having accurate documentation of each patient/resident. Any diagnosis, condition change or medication that is not documented will have a negative impact on reimbursements. Sandy Herbert, Senior Director of Product Management at PointClickCare explains:

“There is a hidden gap that could significantly impact reimbursements that we want to make our customers aware of. Through the CMS online tool, they can see an estimation of their reimbursement under PDPM, but baked into that estimation is an assumption of perfect documentation. Everything about the patient/resident needs to be captured and documented properly in the system – if anything is missed it means less money. However, with the change in classification method and the new reporting requirements, SNFs will have to be much more diligent in enforcing good documentation habits in order to maintain their level of reimbursement.”

At #PCCSummit18, the company unveiled an online PDPM assessment tool that calculates what a customer’s PDPM reimbursement would be based on the actual documentation in the system. In most cases, this amount is below the amount the CMS estimate.

In her presentation Hornberger showed an example of how significant this gap can be (see slide above). For a typical 30 day stay, PointClickCare found that certain aspects of the record were not coded properly which would result in a smaller claim being submitted to CMS. Their analysis showed that on average, a SNF would only receive $17,100 for that 30 day stay versus $18,900 under the current system and well below the $19,600 that would be possible under PDPM.

PointClickCare has made their assessment tool – PDPM Risk Assessment – freely available to its customers. Their team of consultants are also working with customers to address the gaps that are identified by the free assessment.

“PointClickCare has a history of working well with clients, especially when it comes to data,” said Timothy Carey, Director of Data and Performance Analytics at BaneCare. “Having the right data available to our leadership is critical. It’s what we need to help improve our processes and workflows. As far as I’m concerned, data from the PointClickCare system is like gold. It shows us where things are going wrong and where we can improve.”

Judging from the smiles on the faces of attendees who got a preview of their customized PDPM Risk Assessment at #PCCSummit18, the data is clearly reducing the anxiety around the transition.