A new case-mix classification system to reward value, not volume.

The research community has been calling on CMS to modernize the payment model under the skilled nursing facilities prospective payment system (SNF PPS) for years; citing that the current system encourages providers to prescribe clinically-unnecessary services for financial gain.


MedPAC Report Pushes CMS to Take Action

A report to Congress, submitted by MedPAC in 2015, ignited action by CMS when it concluded, “A revised payment system would improve the accuracy of payments to skilled nursing facilities, make providers more neutral to the types of patients they admit, and dampen the incentive to furnish therapy services unrelated to patients’ care needs.”

Since 2017, CMS has been working with stakeholders through an Advanced Notice of Proposed Rulemaking (ANPRM) to modernize the existing SNF PPS case-mix classification system called the Resource Utilization Group, Version IV (RUG-IV).


A New Patient-Driven Payment Model

CMS has received a significant amount of questions and concerns from commenters throughout this engagement, and after careful review and consideration, CMS is recommending the existing RUG-IV system be replaced with a new case-mix system called the SNF Patient-Driven Payment Model (PDPM). The new model incorporates several recommendations from MedPAC that will help mitigate excessive therapy utilization and improve the allocation of resources to more complex cases.

In an announcement released on Friday, April 27th, CMS’ Administrator, Seema Verma, stated, “We envision all elements of CMS’ healthcare delivery system working to reward value over volume… For skilled nursing facilities, we are taking important steps through proposed payment improvements that will reduce administrative burden, and foster innovation to improve care and quality for patients.”

This new Patient Driven Payment Model (PDPM) is yet another step towards value-based care, and ensuring providers are treating the patient’s care needs as opposed to focusing on the volume of services performed.

If the proposed rule is authorized, it would go into effect October 1, 2019. Comments on the proposed rule will be accepted through June 26, 2018.  To support commenters in evaluating the proposed PDPM, CMS has released a technical report on the development of the PDPM, along with other materials to support commenters in their responses.

This report and other materials can be found at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/therapyresearch.html