"Rates” v. “Ratings”

The Cognitive Dissonance of PDPM

PDPM was intended to shift reimbursement from therapy volume to nursing services. Long overdue in principle, the problem is CMS had little data to quantify the actual intensity of non-therapy conditions SNFs were treating.

The term “case-mix creep” has entered the lexicon in the pejorative sense; it suggests SNFs are providing services under PDPM to simply to capture newly available reimbursement. ZHSG’s 1,000+ annual audits tell a very different story: SNF residents are far sicker now than at any time in our history – meaning the “care” has been there; but the RUG-IV therapy distortion provided no incentive for providers to call hospitals or invest resources into technology and documentation to compliantly “capture” services that were not “reimbursement-sensitive” and never audited.

PDPM changed that dynamic. Long-provided but undocumented services are now being captured – reimbursement is increasing, quality scores skewed, and nurse staff ratios diluted. Meanwhile, ACOs and BPCI Conveners are taking notice. Per Diem Medicare rates, the “third rail” of episodic cost (after re-hospitalization rates and average length of stay), are diverging – often not because of patient acuity, but by assessment management strategies.

SNFs are now faced with a form of utilization cognitive dissonance – optimize their PDPM rates or risk their position with payers and health systems aggressively seeking value. The early returns clearly show providers favor the immediate gratification of “rates” over “ratings.” Will there be consequences?

This session will distill the first four months of PDPM billing data into Component parts that are driving rate variation, while the AHCA CEO shares the Association’s concerns over this divergence in individual rates and aggregate provider payments – and more importantly what CMS may do to correct the imbalance.