The Centers for Medicare & Medicaid Services (CMS) has finalized its annual update to Medicare skilled nursing facility (SNF) PPS rates and policies for fiscal year (FY) 2019, without significant changes to the rule as proposed.  Most notably, CMS adopted the Patient-Driven Payment Model (PDPM) case mix classification system.  The PDPM, which will replace the existing Resource Utilization Groups, Version IV (RUG–IV) model beginning in FY 2020 (effective October 1, 2019), focuses on a resident’s clinical condition and care needs, rather than the volume of care provided.  CMS characterizes PDPM as a value-based, unified post-acute care payment system that prioritizes the unique care needs of patients and reduces the administrative burden associated with the system.

With regard to the annual payment update, CMS (as proposed) increased rates by 2.4%, as mandated by the Bipartisan Budget Act of 2018; the annual market basket percentage is reduced by 2 percentage points for SNFs that fail to submit required quality data to CMS under the SNF Quality Reporting Program (QRP).  Based on this update, CMS estimates an increase of $820 million in Medicare payments to SNFs in FY 2019.  CMS also finalized various updates to the SNF Value-Based Purchasing Program (VBP), which adjusts a SNF’s payments up or down based on its performance on a 30-day hospital readmissions measure.

As we noted in our post on the proposed rule, CMS expressed concerns that its proposed change in how therapy services would be used to classify residents under the PDPM could incentivize the use of group and concurrent therapy rather than individual therapy. CMS finalized its proposal to establish a combined 25% limit on concurrent therapy and group therapy for each discipline of therapy provided.  CMS reiterated its position that individual therapy permits the greatest degree of interaction between the resident and therapist, and should therefore represent, at a minimum, the majority of therapy provided to an SNF resident.  While CMS finalized the proposed cap, it left room for future changes and stated that it will monitor whether group and concurrent therapy are being over- or underutilized and will consider revising the policy and undertaking enforcement efforts as necessary.

While CMS finalized its proposal to revise the current SNF PPS assessment schedule to require only two scheduled assessments (instead of the current five) for each SNF stay effective October 1, 2019, the proposed “Interim Payment Assessment” (IPA) is optional for providers. Thus, the 5-day SNF PPS scheduled assessment will be the only PPS assessment required to classify a resident under the PDPM for payment purposes, while the IPA may also be completed.

PDPM will identify and adjust the following five case-mix components to characterize a resident’s care:  Physical Therapy (PT), Occupational Therapy (OT), Speech-Language Pathology, Non-Therapy Ancillary (NTA), and Nursing.  Within these components, the patient is assigned to one of 10 clinical categories based on their primary diagnosis (determined by ICD-10 codes recorded in MDS item I8000).  CMS will apply variable per diem payment adjustments to account for changes in resource use over the course of a stay for the PT, OT, and NTA components.  The sum of each of five components would be combined with the non-case-mix component to determine the full SNF PPS per diem rate for that resident.