The new Medicare reimbursement system for skilled nursing facilities (SNFs) – the Patient-Driven Payment Model (PDPM) – fundamentally changes the financial incentives for facilities. With PDPM, Medicare now pays lower rates for residents needing therapy and higher rates for residents needing complex nursing care. Responding to these financial incentives, SNFs laid off therapists across the country and some SNFs began actively recruiting and admitting people who use ventilators or need dialysis. The federal Requirements of Participation require facilities making changes to the types of residents they admit to update their Facility Assessment in order to assure that they have the staff and equipment that are needed to provide care for these new residents. Are SNFs doing these mandatory assessments? If not, what can advocates do?
In creating PDPM, the Centers for Medicare & Medicaid Services (CMS) intended to reverse the perceived overuse of therapy (and definite overbilling for therapy) under the prior reimbursement system, Resource Utilization Groups (RUG). Final PDPM rules expressly confirm that PDPM financially disfavors residents needing therapy and pays lower rates to facilities providing therapy.
SNFs’ Responses to PDPM
SNFs’ responses to the new financial incentives were swift. Reports in early October, days after PDPM’s October 1 effective date, indicated that thousands of therapists had lost their jobs or had their hours reduced. Less public attention was focused on SNFs’ changing admissions practices – the admissions of residents using ventilators or needing dialysis – but these changes were occurring as well.
Skilled Nursing News reported in July 2019 that respiratory therapy would provide a “massive skilled nursing opportunity under PDPM” for several reasons that it identified:
- Residents using ventilators would be assigned to the highest case mix group for the nursing component. (Note that this case mix component does not decline over the course of a resident’s stay under PDPM’s variable per day adjustment, while three other case mix categories– physical therapy, occupational therapy, and non-therapy ancillaries [chiefly drugs] – do).
- Residents using ventilators have a greater chance of using the maximum number of days of Medicare coverage in a benefit period (100 days).
- Residents using ventilators need just (at least) 15 minutes of time each day with a respiratory therapist or nurse.
- SNFs can make as much as $1200-$1800 extra reimbursement each week for each resident using a ventilator.
An industry analysis of the first six weeks of PDPM reported that SNFs have responded to the “massive” financial incentives presented by respiratory therapy. Zimmit Healthcare Services Group found “[a]nother surprise – we did not expect the Special Care High group to be so well represented on day 1. Respiratory Therapy generated well-deserved attention, with several high-profile service providers marketing RT’s potential Return on Investment.”
Another special service supporting high Medicare rates is dialysis services, which Skilled Nursing News also identified as “a major growth area” under PDPM, “both financially and clinically.”
The Center has two concerns about SNFs’ expansion of services to ventilators and dialysis. First, some poor quality facilities seem to be responding to PDPM’s financial incentives. Second, we question whether SNFs are fully assuring their actual capacity to provide the necessary complex nursing care.
The Center heard reports that some poorly performing nursing facilities, including a candidate for the Special Focus Facility program, began establishing new ventilator units and actively recruiting people who use ventilators. The interest of poor quality facilities in ventilator care is especially troubling in light of The New York Times’s report in September 2019 that drug-resistant infections are prevalent and deadly for residents using ventilators in nursing facilities because of facilities’ insufficient and inadequate staffing and poor infection control practices.
Skilled Nursing News’ article on dialysis highlighted two facilities that had planned to add dialysis services. One facility is a one star facility (CMS’s lowest category) and the other facility has a two-star rating in health inspections (below average), according to the federal website Nursing Home Compare. The interest of poorly performing SNFs in providing such complex care is troubling.
What Can Be Done? Facility Assessment
One response to SNFs’ expansion into ventilator and dialysis services and other complex services is to determine whether the facility has actually taken steps to ensure that it is fully prepared to meet these residents’ challenging needs. Has the facility performed the Facility Assessment?
The 2016 revisions to the federal standards of care that SNFs must meet in order to be eligible for Medicare reimbursement, the Requirements of Participation, include a new requirement for Facility Assessment. The Facility Assessment requires a facility “to determine what resources are necessary to care for its residents competently during both day-to-day operations and emergencies.” Assessments must address the “resident population” and “facility resources,” including equipment, services, and staff. SNFs must review and update their Assessments annually and “whenever there is, or the facility plans for, any change that would require a substantial modification to any part of this assessment.” CMS’s State Operations Manual gives examples of “modifications” requiring review and updating of the Assessment, such as the decision to begin admitting residents with ventilators or on dialysis who were not previously admitted.
The mandate on facilities is clear, but residents’ and advocates’ role may be limited. CMS says facilities are “strongly encouraged [but not required] to seek input from the resident/family council, residents, their representative(s), or families” about a facility assessment. Only surveyors’ access to Facility Assessments is unequivocal.
What Residents and Their Advocates Can Do
Resident and their advocates can ask for a copy of the SNF’s Facility Assessment, although SNFs may decline to give them a copy. If a SNF has newly added ventilator or dialysis coverage, advocates can ask the state survey agency to determine whether the facility has complied with the Facility Assessment requirement. Advocates can also join the Center for Medicare Advocacy in asking CMS to send a Survey & Certification Letter to state survey agency directors, reminding them of the Facility Assessment requirement and encouraging them determine whether SNFs assured their ability to take on new residents needing complex care.
January 30, 2020 – T. Edelman
 83 Fed. Reg. 21018, 21034-21036 (May 8, 2018) (proposed rules).
 83 Fed. Reg. 39162, 39183-39265 (Aug. 8, 2018). See especially Table 37, Impact Analysis Resident Level, at 39257-39259, and Table 38, Impact Analysis Facility Level, at 39160-39161.
 See Danielle Brown, ‘Therapist advocates sharing layoff concerns with CMS,” McKnight’s Long-Term Care News (Oct. 3, 2019), https://www.mcknights.com/news/therapist-advocates-sharing-layoff-concerns-with-cms/; Alex Kacik, “Therapists look to CMS for aid as SNFs restructure,” Modern Healthcare (Oct. 4, 2019), https://www.modernhealthcare.com/payment/therapists-decry-layoffs-amid-snf-reimbursement-overhaul. See CMA, “Nursing Home Residents and Therapy Under The New Medicare Payment System” (CMA Alert, Oct. 10, 2019), https://www.medicareadvocacy.org/nursing-home-residents-and-therapy-under-the-new-medicare-payment-system/.
 Alex Spanko, “Respiratory Therapy’s ‘Massive Skilled Nursing Opportunity Under PDPM,” Skilled Nursing News (Jul. 28, 2019), https://skillednursingnews.com/?s=Respiratory+Therapy%27s+Massive+Skilled+Nursing+Opportunity.
 Zimmet Healthcare Services Group, LLC, CORE Analytics, PDPM Reimbursement Analysis: October 2019 Medicare Claims; Financial Impact, Observations, Rate Measures & Comparative Integrity, page 9 (Nov. 18, 2019), https://www.zcoreanalytics.com/wp-content/uploads/2019/11/PDPM-Reimbursement-Analysis-2019.pdf.
 Linda Yamshon, “Nursing Home Dialysis Demand Drives Post-PDPM Push to Specialty Services,” Skilled Nursing News (Nov. 25, 2019), https://skillednursingnews.com/2019/11/nursing-home-dialysis-demand-drives-post-pdpm-push-to-specialty-services/.
 See CMA, “Medicare’s New Skilled Nursing Facility Payment System Alters Access to Care” (CMA Alert, Nov. 7, 2019), https://www.medicareadvocacy.org/medicares-new-skilled-nursing-facility-payment-system-alters-access-to-care/.
 Matt Richtel, Andrew Jacobs, “Nursing Homes Are a Breeding Ground for a Fatal Fungus,” (Sep. 11, 2019), https://www.nytimes.com/2019/09/11/health/nursing-homes-fungus.html?searchResultPosition=1.
 42 C.F.R. §483.70(e).
 42 C.F.R. §483.70(e).
 42 C.F.R. §483.70(e)(1).
 42 C.F.R. §483.70(e)(2).
 42 C.F.R. §483.70(e).
 State Operations Manual, CMS Pub. , Appendix PP, (unnumbered page) 619, https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/som107ap_pp_guidelines_ltcf.pdf.
 Id. 618.