PDPM Regulations during COVID-19

The COVID-19 pandemic has affected the long-term care industry is unprecedented ways. The federal government has rolled out several programs to help nursing homes during these difficult times. The new Medicare payments system that was implemented a few months before the pandemic for nursing homes has been left untouched since October 2019. However, operators and investors should expect this to change. Provider behavior is still being collected and analyzed under the Patient-Driven Payment Model (PDPM) by the Centers for Medicare & Medicaid Services (CMS). The goal of PDPM was to eliminate incentives from the old Resource Utilization Group (RUG) model. These incentives rewarded operators who provided the highest number of therapy services. This resulted in multimillion-dollar settlements due to claims of patients being given unnecessary treatments for the purpose of receiving reimbursements. In the new system, Medicare funds were given only to residents who needed the treatment. Therefore, the more sick a patient was, the more money a facility was able to receive.

COVID-19 brought on public health emergency that is still ongoing one year later. Due to increased healthcare demands and limited health care providers able to review new proposals, CMS has decided to limit annual rulemaking to essential policies to include Medicare payments to SNF. Isolations in private rooms has been a key strategy for long-term facilities for COVID-19 prevention and treatment. This is the highest payment category PPDM that takes priority over other services. Rates have been distorted this year due to demands like these. In the past year isolation rates have been around 17% compared to 1% in a non-pandemic world.

This has severely skewed the rates. Another change from this year that may go away post-pandemic involves Medicare eligibility waivers that allow residents to extend their stay in skilled nursing facilities by 100 days without the requirement of a three-day stay rule before hospitalization.In a post-pandemic world, it is difficult to know how CMS will analyze areas of the PDPM system that have been altered during the pandemic. Audits will be conducted, however data points are expected to be skewed.

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