CMS Adopts New SNF PPS Patient-Driven Payment Model (PDPM): Important Highlights From the SNF PPS 2019 Final Rule

Beginning October 1, 2019, a new case-mix model titled the Patient-Driven Payment Model (PDPM) is set to take effect and replace the existing case-mix classification methodology, the Resource Utilization Groups, Version IV (RUG-IV) model. PDPM focuses on clinically relevant factors rather than codes and other patient characteristics as the basis for patient classification. Under the existing RUG-IV model, residents are classified into rehabilitation groups, where payment is primarily determined based on the intensity of nursing and therapy services received by the resident and other aspects of the resident’s care and condition. However, only the higher paying of these groups is used for payment purposes. While the Centers for Medicare and Medicaid Services (CMS) believes that the PDPM represents an improvement over the RUG-IV model and the previously proposed RCS-I model because it would better account for resident characteristics and care needs while reducing both systemic and administrative complexity, AOTA does not feel this payment model will be enough to ensure appropriate patient access to skilled care.

AOTA continues to have concerns that the PDPM does not include enough safeguards to ensure that patients will receive the skilled, appropriate occupational therapy they need to achieve desired outcomes. While some areas remain a challenge, AOTA was successful in advocating for several key areas to protect patient access to occupational therapy services.

1. Separate Occupational Therapy Case-Mix Classification

AOTA had grave concerns that bundling OT and PT into one case-mix classification, as proposed in an Advanced Noticed of Proposed Rulemaking, could lead to unintended consequences. We were concerned that bundling the OT and PT classifications for payment purposes could lead to skimping on therapy or providing non-professional, inauthentic physical or occupational therapy, such as using rehabilitation or restorative aides to provide services in place of skilled service providers. Accordingly, we strongly supported a separate case-mix classification for OT and urged ongoing monitoring to ensure the provision of skilled occupational therapy. In this rule, CMS finalized separate case-mix adjusted OT and PT components. CMS agreed with Technical Expert Panel commenters that PT and OT have different aims and that there are clinically relevant differences between residents who could benefit from PT, residents who could benefit from OT, and residents who could benefit from both disciplines. AOTA believes the separation of OT and PT case-mix classifications is an important step toward ensuring patient access to skilled occupational therapy services. We are pleased CMS agreed with AOTA’s recommendation on this issue.

2. Combined 25% Limit for Group and Concurrent Therapy

CMS finalized its proposed combined 25% limit for group and concurrent therapy (per discipline). This means that at least 75% of therapy must be individual therapy. Total therapy minutes will be reported by discipline and mode on the PPS Discharge Assessment (see below). CMS believes 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. Providers will receive a non-fatal warning edit on the validation report upon submission when the amount of group and concurrent therapy exceeds 25% within a given therapy discipline.

AOTA advocated for and strongly supports the 25% limit on group and concurrent therapy as a reasonable percentage that is supported by previous policy, which may also protect against therapy practitioners being pressured to provide inappropriate group or concurrent therapy. Therapists must be allowed to use their clinical judgment to determine the mode and amount of therapy that an individual patient needs to reach their goals.

CMS indicated that they will monitor the mode of therapy provided, and they will determine whether group and concurrent therapy are being over or underutilized and then consider revising the policy and enforcement efforts as necessary. They reiterated several times that they believe that individual therapy should represent a majority of therapy provided in a SNF.

3. Tracking Utilization of Skilled Therapy 

AOTA is encouraged that CMS finalized a requirement that SNFs report total therapy minutes by mode (individual, group, and concurrent) and discipline in a modified MDS Section O discharge assessment. Last year’s proposed Resident Classification System, Version I (RCS-I) did not include any method of tracking minutes of therapy, as all assessments except admission and discharge were eliminated in the proposal. AOTA urged CMS to continue to track the utilization of therapy to monitor minutes of skilled therapy, protect against the use of non-skilled personnel to provide what should be skilled occupational therapy, and hopefully protect access to medically necessary therapy. We remain concerned that it is currently the only safeguard in the PDPM to help protect patient access to individual therapy services and ensure appropriate tracking of therapy resources identified in the underlying payment components.

CMS also said they will consider revising the definition of group therapy to align with other PAC settings in the future. AOTA advocated for a definition of 2–4 patients at a time doing the same or similar activities; others advocated for 2–6 patients (which is the current inpatient rehabilitation facility [IRF] definition).

4. Lack of Recognition of Cognition, Swallowing, and Comorbidities in OT Component

These areas remain a challenge, and occupational therapy practitioners must continue to highlight their role addressing cognition and swallowing with SNF patients. While CMS did not choose to include comorbidities for OT or PT payment at this time, they left open the possibility of adding them as care practices change if analyses show a strong impact on OT or PT utilization in the future. In regard to cognition, AOTA expressed great concern about the failure to include or even reference cognition in the occupational therapy payment component. We also alerted CMS that the PDPM may not promote fully capturing mild cognitive impairment, which affects performance of ADLs and IADLs.

In its SNF PDPM technical report (https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/PDPM_Technical_Report_508.pdf) CMS stated that they also believe attention should be paid to cognition as an area for potential future system refinements and they will consider these concerns as they continue to evaluate potential refinements to CMS assessment tools. AOTA is closely reviewing the CMS SNF PDPM technical report that CMS relied on to reject cognition as a predictive factor for the OT payment component. In regard to swallowing, AOTA advocated for occupational therapy practitioners to be appropriately recognized as providers of swallowing services under the PDPM, as these services are within the occupational therapy scope of practice and occupational therapy practitioners approach feeding and eating as meaningful occupations that are central to a client’s full participation and performance. CMS did not directly respond to this comment but instead indicated that swallowing disorders did not meet the necessary criteria to be included as a comorbidity for OT or PT classification.

AOTA will continue to advocate with CMS on these issues to ensure appropriate recognition of occupational therapy practitioners’ expertise and role.

5. Use of ICD-10 Codes to Determine Clinical Category for OT Classification

CMS adopted its proposal to categorize a patient into a PDPM clinical category for purposes of PT, OT, and SLP classification using the ICD-10-CM code in the first line of item I8000. CMS dismissed concerns that potential logistical issues may arise because SNFs do not receive clinical information on admitted patients from the prior inpatient stay in a timely manner. They stated that PDPM requires facilities to code the diagnosis that corresponds most closely to the primary reason for SNF care (the secondary condition that arose during the hospital stay) rather than the primary reason for the prior hospitalization. Further, rather than requiring the use of ICD-10-PCS codes (procedure codes), CMS is developing a new sub-item within J2000 to identify the relevant surgical procedure that occurred during the patient’s preceding hospital stay.

6. Use of Section GG Items to Determine Functional Score

CMS is moving forward with the use of Section GG items to determine functional score. AOTA supported the use of Section GG items to replace Section G to calculate the patient’s functional score; however, we urged caution in relying on items for payment purposes before the data is confirmed as valid and reliable, and we encouraged a delay in the use of Section GG in the PDPM. In this final rule, CMS rationalized that it conducted several investigations to validate the section GG data, including verifying that the relationship between section G responses and PT and OT utilization was very similar to the relationship between corresponding section GG responses and PT and OT utilization, thus determining that section GG items performed similarly to section G items in predicting PT and OT utilization. After comparing coding of section GG items during the first 6 months of FY 2017 to coding of these items during the second 6 months of FY 2017, CMS found only small changes in the frequency of responses. Based on the results of these checks, CMS rationalized that the FY 2017 section GG data are valid and reliable, and are therefore appropriate to use as a basis of resident classification and payment under PDPM. See AOTA resources for Section GG at https://www.aota.org/practice/practice-essentials/documentation/section-gg-medicare-selfcare-measures.

7. Opportunities for Students

AOTA and other commenters expressed concern that student supervision may be affected by the limit on group and concurrent therapy. AOTA urged CMS to review PDPM’s implications for the use of students and to monitor potential impacts on student placement in an effort to avoid a disincentive for SNFs to accept therapy students for fieldwork training, and to ensure a competent therapy workforce. CMS discussed the policy related to use of students in detail and indicated that the limit on group and concurrent therapy should not deter facilities from taking more therapy students. They said they agree that the therapy student internship is crucial to ensuring that students gain valuable SNF experience that would encourage quality therapist and assistant graduates to pursue employment at SNFs when they eventually graduate. CMS will consider monitoring student therapy minutes along with therapist/assistant minutes for future policy making.

8. Concern that PDPM Could Lead to Less Therapy in SNFs

Some commenters acknowledged that the fundamental design of PDPM (which will no longer tie payment to the amount of therapy a patient receives, as occurs under the current RUG-IV payment system) could cause some patients appropriately to receive less therapy. CMS responded:

We agree with commenters that it is possible that, in some cases, less therapy will be provided under PDPM than under RUG-IV and that this would be a positive development in those cases where therapy was provided regardless of patient need and simply because of higher payments for higher volumes of therapy. However, we continue to be concerned that under PDPM, providers may reduce the amount of therapy provided to SNF patients because of financial considerations. We agree with commenters that quality and outcomes measures (like those in the SNF Quality Reporting Program) would be a positive way to evaluate the efficacy of therapy provision, and we will take this into consideration for future policy development. However, we disagree that the collection of these items is not relevant to case-mix determination. While the days and minutes of therapy provided will not be a determining factor in the therapy case-mix classification under PDPM, the need to ensure beneficiary protection under this payment system is very relevant to the therapy case-mix classification, and the ability to collect this data will safeguard the integrity of the case-mix classification and help ensure that patients receive an appropriate amount of therapy services. Should we discover that the amount of therapy under PDPM is distinctly different from the amount of therapy under RUG-IV, we will evaluate the potential reasons for this change and consider potential actions, either at the provider or systemic level, to address these issues.

The PDPM will lead to a transformational change in SNF payment. Occupational therapy practitioners and all SNF stakeholders should not lose sight of all factors related to Medicare payment for SNF services. Quality measurement, value-based payment, and star ratings (including monitoring of staffing levels) are also important areas that will impact recognition of necessary services. Occupational therapy practitioners must use these opportunities to highlight the distinct value of occupational therapy and work at the top of their license in providing patient-centered care to achieve critical patient outcomes and help SNFs meet quality and other requirements.

AOTA and other stakeholders have requested that CMS convene a PDPM Stakeholder Work Group to collaborate and troubleshoot issues that arise during transition and implementation of PDPM. CMS did not commit to such a work group in the final rule, but we remain optimistic that CMS staff will be open to working with stakeholders to ensure as smooth a transition to PDPM as possible. AOTA will continue to advocate for the occupational therapy profession and push for appropriate patient access to medically necessary, skilled occupational therapy services in the SNF setting.

For more details and technical resources on PDPM, go to https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html.

For information on the proposed SNF PPS rule, go to https://www.aota.org/advocacy/advocacy-news/2018/ask-medicare-to-revise-proposed-snf-payment-model-template-letter