By Steve Gnatz, M.D.
Chief Medical Officer, Integrated Rehab Consultants

The new Patient Driven Payment System (PDPM) is scheduled to go into effect on October 1st, 2019. PDPM will affect the way skilled nursing facilities (SNFs) are paid under Medicare Part A for the services they provide to patients undergoing rehabilitation. PDPM will not affect the way physicians (including physiatrists) are reimbursed under Part B of Medicare. However, there are several ways that this new payment model may further demonstrate the value of physiatry in the SNF.

PDPM represents a shift away from SNFs being reimbursed based on the intensity of rehab therapies under the current Resource Utilization Group (RUGs) model to being reimbursed based on patient diagnoses and functional characteristics under PDPM.

PDPM can be seen as a move toward a prospective payment system (PPS) for SNFs. Inpatient rehabilitation facilities (IRFs) have been practicing under a PPS for many years. As mandated by the IMPACT Act of 2014,
it is anticipated that CMS will implement a unified post-acute rehabilitation payment system for all levels of rehabilitative care by 2023, if not sooner. Such a system will likely contain a “site neutral” PPS for post-acute rehabilitation whether the patient receives it in a SNF, an IRF, or a long-term acute care facility (LTAC).

Under PDPM, patients will be classified into one of ten clinical categories based on their primary ICD-10 diagnosis. Functional status at admission will determine case-mix index (CMI) group for PT and OT services. Nursing, speech therapy, and a new classification called Non-therapy Ancillaries (NTA) will be used to determine the CMI by diagnoses and certain specified comorbidities present on admission.

While under MDS RUG’s IV there were 66 payment categories based on patient characteristics, under PDPM there will be a whopping 28,800 possible.

Therefore, it will become significantly more important under PDPM for the SNF to capture and correctly assign ICD-10 codes to the patient. Physician documentation of diagnoses will provide ICD-10 codes that the facility can use for both primary diagnosis and co-morbidities.

Physiatrists will be able to significantly enhance the breadth and depth of ICD-10 coding that hospital discharge information and admitting primary doctors can provide. In many cases, the ICD-10 diagnosis codes added by physiatry will result in increased reimbursement when the patient falls into a higher reimbursement PDPM category.

Since there will no longer be any value to increasing the number of therapy minutes (in fact, increasing therapy minutes will drive up expense without any increase in revenue) it has been noted that functional rehabilitation outcomes might begin to slip under PDPM. SNFs will be challenged to deliver the same functional outcomes under PDPM as they have in the past. Value-based monitors such as percentage of patients discharged to home, functional status at discharge, and returns to acute care within a 30-day period after discharge will serve as rough measures of quality. Only time will tell if the incentive to provide less therapy minutes under PDPM will result in an erosion of quality outcomes – but you can be sure that CMS
will be monitoring this potential adverse effect of PDPM.

Since the RUG system (with its minute-counting approach to therapies) has been in place for 20 years. “We now have two generations of rehab therapists that have not needed and likely not developed the skill to evaluate the amount of therapy a resident really needs,” Mark McDavid, Seagrove Rehab Partners.

However, the physiatrist coordinating the SNF rehab team is fully trained to determine the optimal amount and combination of therapies needed to deliver the best rehabilitation outcome for the patient. The physiatrist can add significant value to the SNF by leveraging their experience to only use rehab therapies where they will be most likely to translate into better outcomes.

Lastly, physiatrists see patients in all levels of inpatient rehab care from the acute hospital to the IRF, the SNF, and LTAC. In some cases, physiatrists help coordinate rehab for patients in home care and outpatient settings as well. This breadth of rehab experience further positions the physiatrist to understand the issues and available resources that can be utilized for a successful outcome.

Under PDPM, physiatrists will become an even more important ally in assisting the facility to become positioned for success.