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The DOs and DON’Ts when signing a PDPM Pricing Amendment

DO

  • Options – PDPM is not “one size fits all”, ask for 2 to 3 pricing options from your therapy provider so you can choose the one that you think is best for your facility.

  • Simplicity – You should be able to clearly understand what it is you are paying.

  • Flexibility – Many therapy providers have extensive knowledge of PDPM, no therapy provider has ever implemented PDPM. We have modeled and “hypothesized” what it would look like. Your contract should have an option to review PDPM pricing in 3 to 6 months. This is the only way both the SNF and the therapy provider can ensure their contract is working for both parties.

  • MPPR – Make sure your Medicare Part B services contract has this acronym. IF it does not, there is a strong possibility you are paying more for this service than you are getting reimbursed.

DON’T

  • A Contract Extension! – Many Therapy Providers are taking this opportunity to slip in a “non-cancellable” 12-month or 24-month contract extension into this PDPM Payment Amendment. So if you current provider is not as good at PDPM as you had hoped, you are stuck with them for a year or more?! They now get to practice PDPM for a year or two at your expense…… That makes NO SENSE for the SNF, but does make a lot of sense for the Therapy Company that is not confident in their PDPM ability and/or knowledge).

DO NOT DO IT! Just say “No” 

How does case-mix drive staffing ratings?

Changes in patient acuity change the case-mix or “expected” hours used to determine staffing stars. That’s not news for anyone who reads this blog. The problem is the relationship is difficult to tease out. This is because CMS does not publish the exact criteria they use to select assessments that are included in calculating acuity and don’t give us any documentation showing the ones they used.

This leads to questions like “If my case-mix increased by X, how much pressure would that put on my staffing rating?” This is a common question for anyone who is considering implementing a program to improve documentation. ADL coding is a classic example of this. Improved ADL documentation nearly always increases case-mix, which increases the number of hours required to maintain or improve staffing ratings. (For the record, never let anything get in the way of improving your documentation. Better, more complete documentation should always be the goal, regardless of star ratings or quality metrics.)

Let’s see if we can create a surrogate measure.

Estimating Overall Case-Mix Hours

For this analysis we combined the detailed Medicaid assessment data from the state of North Carolina with the latest data extract from Nursing Home Compare. Once those were linked up we just use a simple linear regression analysis like so:

What that chart is telling you is that there appears to be a relationship Medicaid case-mix index and overall nursing case-mix (or required hours). This makes intuitive sense because at least some of the Medicaid assessments are used to calculate case-mix hours. (Or even all, who really knows?)

Specifically, we are explaining slightly less than 60% of the variation in the data using just Medicaid case-mix. This isn’t too bad if you consider in North Carolina we use a “point in time date”, often called a “picture date” in other states. CMS uses a much more complex criteria to select assessments to include.

The slope of our regression line is 1.307. This means that for every 1 point change in Medicaid case-mix, the overall nursing hours expected by CMS for staffing ratings increases by 1.3 hours per patient per day. If you happen to be close to the lower cut-point for staffing ratings and your acuity increases, you could drop a star. (As luck would have it, we have a great tool for checking how close you are to the next staffing cut point. Check out Staffing Navigator™. It’s free!)

How do I use this?

Using this estimate, we can figure out the break even point between case-mix “slope” and hourly nursing pay. Bear with me a moment:

First we can use the CMI “slope” to estimate the change in Medicaid pay like this: (I am using North Carolina data as well as the 34 grouper for this experiment. I am ignoring changes in Medicare Part A.)

Here is the equation to calculate daily change in revenue for Medicaid for a given change in case-mix:

CodeCogsEqn (7).gif

Here’s the equation for the change in nursing expense for a given change in case-mix index using our slope from the regression analysis:

CodeCogsEqn (8).gif

To find the break-even point we just set those two equations equal and solve. We end up with this beauty. Fee free to admire it’s elegant simplicity. I’ll wait. (This will set the mood as you take it in.)

CodeCogsEqn (9).gif

So if you believe your case-mix “slope” is $77 per point, divide that by 1.307 and you get $58.91. That means that as long as your fully loaded expense to hire and pay nursing staff (ALL nursing staff) is less than $58.91 per hour per nurse/assistant, an increase in case-mix index will cover the cost of increased nursing hours. (This is an oversimplification since nursing hours can’t typically be adjusted in fine increments, very large facilities excepted.)

If the average fully loaded pay of all nursing staff in your facility is greater than $58.91 per hour, you have my sympathy but with all due respect, check your math. Additionally, $77 is probably low. The take-away: Increased acuity (either real or due to improved documentation) may indeed increase the need for nursing staff to maintain a star rating, but increased pay from Medicaid should always cover it.

The sub-take-away: Always be closing improving documentation!

P.S. You can get an exact number for slope by examining your reimbursement report. It may be as high as 100. If you aren’t comfortable with that, let me know. I will help you.

Want to talk? Let’s.

Staffing Navigator™ - A Case Study

In today’s posting I am going to explain how to use Staffing Navigator™ to diagnose and troubleshoot a staffing issue that is causing problems in a 5 Star Rating. This post will also explain staffing cut points which can be confusing.

If you haven’t already, download Staffing Navigator™. It’s free in the app stores.

Hypothetical Problem Statement

Let’s say we work with a facility that bounces between 4 and 5 stars on Nursing Home Compare. It’s become a problem for one reason: This is a facility that markets itself on being 5 stars. They can’t have the rating occasionally slipping to 4 stars.

This is what most of us would consider to be a nice problem to have but it’s still a problem to solve. Let’s use Staffing Navigator™ to troubleshoot.

First, we select the facility from the list and check out the current situation. Right away we can see a few things:

Figure 1

Figure 1

  • The survey is quite good at 4 stars. Getting that survey to 5 stars would be one way to solve the problem.

  • Neither Quality nor Staffing are high enough to get an extra star, but staffing might be close. We’ll need to investigate further.

  • This building has average size and acuity, so changing the staffing rating should be reasonable to do. (I’m basing this on the SEI. See the app for details.)

(If you aren’t familiar with the rules, touch the word “Staffing” for documentation that includes the rules and a handy table showing how RN and overall ratings translate into staffing stars.)

For the sake of our example, let’s say the facility recently had a survey that is going to be with us for a while. So while improving the survey rating is the most important thing to do, it isn’t the most expedient.

Figure 2

Figure 2

Next, scroll down to the Adjusted Hours section. I find this part of the app is the most confusing for people so let’s spend a little time here.

The hours you report on your PBJ are not used directly to determine your staffing ratings. The hours are first adjusted based on the acuity of your residents and the national average number of nursing hours. After those adjustments are made, then the cut points are applied and you see a rating. That’s why your adjusted hours don’t match reported hours. Adjusted hours, not reported hours, drive ratings.

Second, we need to understand CPP. CPP is telling us our position between the cut points. If CPP is 99%, that means you are right on the cusp of the next higher staffing rating. Likewise, a CPP of 1% means you are on the edge of moving down a rating. A CPP means of 50% you are exactly between cut points.

This is important because even when your PBJ doesn’t change at all, the number or residents in your building and their acuity does. Remember we use adjusted hours not reported hours. If your CPP is either very low or very high you will find staffing ratings bouncing around from quarter to quarter.

Figure 3

Figure 3

Let’s take a look at our adjusted hours again. I’ve highlighted the RN CPP of 92.0%. This means we are very close to the next higher rating for RNs.

If we take a look at the star rating table, we can see that we’re currently at an RN staffing rating of 2. Given our CPP of 92%, we would occasionally expect to drift into an RN rating of 3, which would give us 4 overall staffing stars and trigger an additional overall star. (Again, see the rules below the table in Figure 4 in the app.) We’ve identified a possible cause of the problem.

Figure 4

Figure 4

Now that we understand what’s happening, we can start to make some recommendations. The first thing we want to do is select an RN target rating of 3. After we do that, we check the results.

Figure 5

Figure 5

You can see in figure 5 that the optimizer is trying to reduce LPN hours to get to the least expensive way to get an RN rating of 3 and a total rating of 5. Since we’re just trying to work on RN hours, this isn’t really what we want. We want the optimizer to leave the LPNs and CNAs alone and let us focus on the RNs.

To do this, touch the “Minimum Hours” button at the bottom of the app and then touch the “Use Current” button and then touch “Back to Detail”. This tells the optimizer “Don’t make any changes unless I change a target.”

Back at the detail, we can see that’s exactly what’s happened. (See Figure 6.) The optimizer is telling us we need to add 10% of a full time RN to all shifts to get to 3 RN stars. But we aren’t quite done.

Figure 6

Figure 6

Looking at the adjusted hours, notice that the CPP is 0.0%. If we’re trying to protect against fluctuations in acuity and caseload, this isn’t going to help. We need to push away from the cut points.

Figure 7

Figure 7

Fortunately, this is easy to do. We need to tell the optimizer we want more margin. Touch the “Minimum Hours” button and check the “CPP Target”. It’s set to 0% which means the optimizer will stop exactly when it hits the cut point. This isn’t what we want. In this case we want plenty of margin so we’ll choose 50%. That would place us exactly between the cut points.

Figure 8

Figure 8

Notice in Figure 8 that we now have an optimized CPP of 49.8%. That’s plenty of margin. (Also notice that the CPP target of 50% caused the overall hours to be increased as well. If we want 50% margin for RN, it doesn’t make sense to keep the CPP for total nursing hours at 7.6% so both are increased.)

Figure 9

Figure 9

Here are the final optimized hours. (Figure 9) We now safely have a 3 RN rating and a 5 total rating which gives us 4 staffing stars. (Is this the cheapest way to get a 4 star staffing rating? Let’s call that homework. Staffing Navigator™ can easily do that too.)

Figure 10

Figure 10

If you’d like additional help with Staffing Navigator™, or quality measures, or rehab obviously, then contact us!

Introducing: Staffing Navigator™!

Today we’re introducing a new software tool: Staffing Navigator™! This tool is intended to help operators understand how acuity, number of residents, nursing rates and mix (RN, LPN and CNA) work together to determine your staffing stars. Additionally you can use Staffing Navigator™ to:

  • Determine the ideal mix of RN, LPN and CNA to achieve any star level

  • See how close you currently are to the next highest (and lowest) star

  • Understand how the acuity and caseload of ANY facility compares to any other

  • See how many additional (or fewer) nursing hours it would take to hit any staffing level

  • Run complex nursing staffing scenarios

  • See acuity, number of residents and staffing levels for any facility in the US!

In the remainder of this posting I am going to explain in detail how to use this tool. But before I do that, let me just say: This is an advanced tool intended for users who understand staffing planning, star ratings, hourly and fully loaded nursing rates. It is a tool we use to help people understand what it would take to improve star ratings. You may need additional training to effectively use this tool. (Let me know if you’d like to do some private training using this new tool.)

If you’re still interested, great! Let’s get started. First things first, download Staffing Navigator™ from your app store. (Yes, it is free!, Spread the word!) Click one of the links to the right to install it.

Get it on Google Play

A tour of Staffing Navigator™

Key.png

Now that you’ve installed and before I explain how to use it, let’s take a tour of the interface.

Once you have selected a facility, you will see the screen to the right. Note the letters by each section.

Current Ratings (A Left)

The current ratings are taken directly from the Nursing Home Compare website. This information is for reference and does not change as you work on different scenarios.

SEI (A Right)

SEI is a metric developed by Broad River Rehab. It tells you how difficult it will be for this facility to change star ratings compared to all other facilities in the country. An SEI of 50.0 would mean that half the SNFs in the country are more costly to change staffing star ratings and half are less.

SEI takes into account both acuity and number of patients. The higher either of these, the more expensive it will be to increase your staffing star rating. You can touch the box for more information on SEI.

Targets (B)

We’ll cover the targets much more in depth later. For now, just understand that when you first select a facility, these will both be set to you current staffing ratings. Note that the small star(s) under the dropdowns tell you what your staffing star rating would be if your staffing ratings matched the dropdowns.

Labor Hours (C)

The labor hours section shows you the current actual labor hours per patient per day for the three nurse types. The next two columns show you the optimized hours and the difference between optimized and current hours. (Much more on optimization later.) The last column shows you the increase or decrease in staff to get to the optimized level of staffing.

Labor Expense (D)

Labor Expense (highlighted) shows your current labor expense based on actual hours reported and the rates you have configured. (More on rates later.) Like the labor hours section, this area shows you the difference between your actual hours and optimized hours.

Adjusted Hours (E)

The adjusted hours (not highlighted) show you current and optimized adjusted hours as well as how close you are to the cut points. If CPP equals 50%, that means you are exactly centered between the cut points for the current staffing level. Likewise, if CPP is 99%, you are very close to the next star rating.

Minimum Hours & Rates (F)

These will both make more sense to discuss as we talk about optimization, but the navigation buttons are at the bottom of the screen. For now we’ll just say that you can configure rates and minimum hours to do many different types of analysis.

Let’s move on to actually using Staffing Navigator™!

 

How to use Staffing Navigator™

Okay, let’s get to some usage examples. Select a facility on your app and follow along. I would only caution you that selecting a one-star overall facility can be misleading: if the survey score is one then the overall is going to be one regardless of other factors. Likewise, facilities with an RN rating of one can be confusing as well. Make sure you have a good understanding of the star rating rules before you study edge cases.

Initial.PNG

I’m using this facility for my example. It’s got 2 overall stars with a two rating across the board for staffing. The SEI is 89.7 which means this building has high acuity, a relatively high number of residents and it’s going to be expensive to increase the star rating.

Initial1.PNG

Scrolling down, we can see the optimizer is suggesting changes to all three nursing types. Although we haven’t changed the RN and overall staffing targets, the hours can are still optimized for the current star rating, based on the minimum nursing hours and the rates, both of which can be configured to your needs.

The rates are straightforward and easy to understand. By default the rates are set to national average rates from the Bureau of Labor Statistics. More on these later.

The minimum nursing hours are a little more complicated. CMS publishes something called case-mix hours which are essentially the hours CMS expects to see given the reported acuity of the residents in the building. (These used to be called expected hours but have recently been changed to case-mix hours.)

By default, Staffing Navigator™ uses these case-mix hours as the minimum hours for each nursing type. You can see in my example facility both RN and CNA hours are less then than the case-mix hours so both were increased. LPN hours are higher than case-mix targets so LPN hours have been reduced. (I’m oversimplifying here. There are actually a few more things going on, but you get the idea.)

You can easily change the minimum hours to the actual hours, which will cause the optimization not to reduce any hours. Use this if you don’t want to reduce hours or staffing. Just keep in mind that you aren’t really optimizing at that point, but the tool will do whatever you ask. This technique is useful if you want to simply reach the next star level and you aren’t as concerned about the cost.

You can also reduce the minimum hours to zero, but beware: star ratings favor RNs, and CNA rates are typically lower than LPNs. If you set the minimums to zero you will not get any LPN hours. This isn’t a bug, it’s just the natural outcome of star rating rules and the economics of nursing.

Initial3.PNG

Based on this optimization, you could save $329.94 per day while maintaining a two star rating.

Back to the rates: the default rates are national averages and are not fully loaded. I highly recommend you update these rates for your market and use fully loaded rates if you plan on using the labor expenses for more than just differential comparison.

Below that, you can see that initially the RN hours were 5.6% away from the lower cut point for 2 stars. A small upward change in overall acuity or an increase in residents will cause RN hours to fall below that cut point and result in an RN staffing rating of one which would drop this facility to one staffing star. This is a serious concern.

After optimization, you can see we have much greater room for fluctuations in acuity and occupancy. You will find this isn’t always the case when doing optimizations however, as we’ll see next.

Simulating an Increase in Staffing Star Rating

So for my example facility you can see we have two overall stars. For a lot of markets, having less than 3 overall stars will have a negative effect on Part A admissions so getting one extra overall star could be very important. We can get a bonus star by getting our staffing stars up to four and we want to know how much that would cost. This would help answer the question: “Should we focus on increasing staffing or improving quality measures?” (Note that for this building, an additional quality star would result in a bonus star as well.)

targetChart.PNG

Our first hint should be the SEI of 89.7. That tells us right away that this is going to be expensive. The next thing to consider is what actions do we want to take. If you touch the blue circle or the section title “Adjusted Hours” you’ll see the cut point table. I’ve highlighted both where we are currently as well as three potential place we could go to get 4 staffing stars.

All we have to do now is change the dropdowns and compare the results. This type of analysis is called differential analysis: we don’t care about the exact dollar amounts, just which on is lowest. If we decide we’re actually going through with this, we would need fully loaded rates and we’d want to check facility acuity and caseload over time to see if this data accurately represents normal running conditions or is this quarter an outlier. In other words, this tool is pointing you in a direction only. Due diligence is important.

Scenario RN Total Change in Expense
1 ★★★ ★★★★★ $2,362.05
2 ★★★★ ★★★ $1,330.37
3 ★★★★★ ★★ $2,729.77
Optmized4Star.PNG

You can see that scenario 2 is the least expensive. Let’s take a closer look at the results.

We chose an RN rating of 4 and an overall rating of 3. You can see the optimized staffing changes to the right. We’d need to hire about 60% of a full time CNA for all shifts and a challenging 2.4 full time RNs for every shift. (You don’t need to spread those RN hours over all shifts, you just need the hours at some point during the day.)

You can see the optimization reduced the LPN headcount by nearly 1.5, which offsets the cost somewhat.

Speaking of cost, this is by no means inexpensive. Using national average rates, (again, not fully loaded) we’re looking at an increase of $485K annually.

Remember that SEI of 89.7?

Lastly, look at the adjusted hours. Notice that the optimizer hit the nursing target with minimal expense, which means you are very close to the lower cut point. If you were planning to implement this change, be aware that these are the minimum required hours to get the star rating. There is no margin for error built in.

Other Analysis

With a little practice and thought, there are hundreds of different scenarios you can do with this tool. You can also request private training sessions or custom analysis of your facilities.

CMS has updated the PDPM website… Again!

As we in the SNF world eagerly anticipate the 5-Star and the SNF FY 2020 proposed rule this month, the revised RAI Manual in May and the SNF FY 2020 Final Rule in July, on April 4th, CMS updated the PDPM Website… again! Things are really moving at a breakneck pace. You may feel   like it is a challenge to keep up. You are not alone. It’s time to pull out your running shoes and stretch your thinking muscles because the pace is not going to get any slower moving toward October.

As for the PDPM website revisions let’s take a breather and have a closer look. The following are the documents have been revised to reflect clarifications that CMS has made with regard to the new payment system; PDPM FAQ, PDPM Patient Classification Walk Through, PDPM Grouper Logic, PDPM ICD-10-CM Mappings. Here is a summery of the revisions that have been made. The full documents can be found at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/PDPM.html

PDPM ICD-10 Mapping – CMS has done us all a favor here. First, they have combined all of the mapping tools into one Excel workbook. Now we can just access that one tool to do all of our PDPM ICD-10 map searches. Next, they have updated the code sets in response to suggestions industry experts have made since the first edition of these tools. In the Clinical Categories by Dx. tab, ICD 10 codes have now been mapped appropriately.

For example, in the prior versions, there was an incomplete list of dx and some dx that should have mapped to possible surgical procedures did not. For example, dx code S72001D Fracture of unspecified part of neck of right femur, subsequent encounter, maps to a default category of Non-Surgical Orthopedic/ Musculoskeletal and May be Eligible for One of the Two Orthopedic Surgery Categories. This was not the case in prior versions of the mapping tool. There are multiple similar revisions that have been made.

The SLP comorbidity map now contains 102 diagnoses. The prior version only contained 70. Multiple diagnoses have been added to Apraxia, Dysphagia and speech and language deficits categories, further enhancing the variety of diagnoses that classify under these categories. The NTA comorbidity diagnosis map continues to have 1535 diagnoses available to map to the 27 NTA comorbidity categories that use MDS item I8000.

PDPM Patient Classification Walkthrough – This document has had only a minor revision. In the prior versions of this document, the source for the NTA comorbidity, Inflammatory Bowel Disease, was noted to be I8000. However, this was a typo and has been corrected to be I1300.

PDPM FAQ – This document has had several clarifications. CMS has also been very helpful in delineating these clarifications in red so they could be easily spotted. Here is a list of the FAQ’s that have been revised;

1.8 – The term primary diagnosis has been changed to Principle diagnosis as it related to the primary reason the resident is being treated in the SNF. CMS continues to indicate that MDS item I0020B and the UB-04 should match.

5.4 – The question as to whether a HIPPS code can be generated if the BIMS has not been completed has been resolved with this clarification, “If neither the BIMS nor the staff assessment is completed, then the patient will not be classified under PDPM and a PDPM HIPPS code will not be produced for this assessment.” In other words, when the BIMS was not completed because the resident had an unexpected discharge, the staff assessment may be completed. This clarification, however, does not apply to situations in which the BIMS could have been completed but was not. The current rules in the RAI manual page C-2 etc. will still apply.

11.5 – CMS has clarified how the items in J2100 – J5000 will be used for payment under PDPM. They indicate, “These items will be used, along with the patient’s primary diagnosis coded in item I0020B, to classify patients into a PDPM clinical category, which is then used as part of the PT, OT, and SLP case-mix classification groups for PDPM.”

12.10 – CMS continues to reiterate the fact that under PDPM, while there is no requirement that a certain amount of therapy days and minutes are required for a rehab payment category to be generated, it is important to remember that a daily skilled service will still be required. To that point they have added a reference to Chapter 8 of the Medicare Benefit Policy Manual, specifically section 30.6. where daily skilled services are defined.

12.12 – In this FASQ entry, CMS has clarified that, under PDPM, there is no change in the way a therapy student’s time can be captured. In this update they have added a reference to a section in the RAI Manual entitled “Modes of Therapy” which may be found in Chapter 3, Section O.

13.4 – Here CMS has made a substantive clarification as to how therapy data should be captured in section O of the discharge assessment when there have been one or more interrupted stays. To clarify this CMS indicates, “SNFs should report the therapies furnished since the beginning of the Part A stay, including all parts of an interrupted stay, in section O of the MDS for each discharge assessment.” The previous FAQ indicated that only therapies that occurred since the readmission would be included.

14.10 – This FAQ has been completely rewritten. The question is, “How long will the OSA be in place?” To which CMS has responded, “There is currently no definitive timeline for retiring the OSA. Once states are able to collect the data necessary to consider a transition to PDPM, CMS will evaluate the continued need for the OSA, in consultation with the states.” This is good news for states who require RUG III or RUG IV HIPPS data for Medicate rate calculations.

14.13 – As CMS winds down the RUG system calculations in light of PDPM, as in 14.10, CMS here reiterates that after the implementation of the PDPM, states that will need to continue to generate RUG scores on more frequently than the 5-day PPS, OBRA Comprehensive and quarterly types of assessments, will need to use the OSA to do so. CMS added the clarification that, “Beginning October 1, 2020, states must use the OSA as the basis for calculating RUG-III and RUG-IV HIPPS codes.”

PDPM Grouper Logic – While CMS did not provide a document that indicates what has been revised with  regard to the grouper logic, it is safe to say they have updated it with regard to the changes and clarification noted above, in particular, the multiple revisions made to the ICD-10 mapping.

CMS has updated their PDPM educational materials at least 3 times and we can expect more. As we look for the documents that will come our way in the coming months, it will be imperative that providers stay up to date on all of the changes and revisions that CMS provides.

At Broad River Rehab, we are up to date. Our PDPM Navigator® has already been updated to reflect the most recent ICD-10 mapping revisions. We provide state of the art tools and education to all our clients to help them stay current with the shifting LTC reimbursement landscape. We would love to talk with you about how Broad River Rehab can be your knowledgeable and compassionate rehab partner as you prepare for PDPM.

Give us a call at (800) 596-7234, we’d love to chat. Do you have a tough PDPM or other reimbursement question? Ask an expert!