March 16, 2021

Rebalancing PDPM

By Maureen McCarthy, CEO and President, Celtic Consulting

Rebalancing PDPM Healthcare

Between the inception of the Patient Driven Payment Model (PDPM) payment system and a global pandemic, providers have weathered a “perfect storm” of changes that resulted in a major adjustment in the expected PDPM data.

Occupancy Impact

Many providers closed their doors to new admissions, particularly at the beginning of the pandemic when little was known about the disease, including how it spreads and how to manage it. Also, providers needed to make additional modifications for isolating patients with symptoms or who had been out in the community. This was further complicated by virus-related hospital-phobia among many people in the community. Infection control surveys with areas of noncompliance may result in a ban on admissions.

Clinical Category Assignment

The PDPM clinical categories are also being impacted by the pandemic. COVID-19 diagnosis codes map to Medical Management, which is the lowest reimbursed category for PT/OT component. So where a resident may have qualified for a higher reimbursed case mix index, the diagnosis of a COVID-19 positive resident would be reported as primary.

Isolation Impact

The significant increase in case-mix assignment for the nursing component and non-therapy ancillary is also skewed. The significant use of isolation during the pandemic increased the nursing scores in the extensive services category, with a case-mix weight of 2.93. Generally, facilities capture 0.5-1% of days in this category. The increase in case-mix will overstate not only the market average but also increases the facility revenue. Providers should be aware that budgeting at this level would not be sustainable outside of a pandemic.

Normalizing PDPM

CMS has delayed many changes as a result of the pandemic and what a normal PDPM distribution should look like will likely be delayed as well. Also, early in the pandemic, some Medicare Advantage plans notified providers that COVID-19 was not a covered diagnosis leaving those providers to manage the exorbitant costs for this highly skilled condition on their adding insult to injury.

The time providers would have spent mastering the new payment system, was spent saving the lives of our elderly population. Rebalancing what is considered normal may take some time since we only have one-quarter of PDPM under our belts during the initial transition. Now that vaccines are being provided and the number of new cases reduces, the provider community and the world can begin to determine what the new normal will be moving forward.