Will Medicare’s New Patient-Driven Postacute Care Payment System Be a Step Forward?

Abstract

Skilled nursing facility (SNF) and home health agency (HHA) use and spending vary substantially across the US. However, higher spending on rehabilitation and nursing following a hospitalization has not necessarily led to better patient outcomes. 1 In 2017, approximately 1.6 million patients receiving Medicare fee-for-service benefits were admitted to a SNF, with an estimated annual cost of $28.4 billion, and 3.4 million patients received HHA services at a cost of $17.7 billion. 2 Consequently, SNFs and HHAs have become a major target of policy reform by Medicare.Historically, SNFs and HHAs have been paid largely based on the amount of therapy provided, rather than the level of illness or special care needs of patients. These payments were constant across the entire duration of SNF or HHA care as long as the amount of therapy provided was the same, regardless of whether a patient's functional status or other needs changed.The historical system created strong incentives to maximize the number of SNF days or HHA episodes and also provide additional therapy to qualify for a higher payment. Recognizing this, the US Centers for Medicare & Medicaid Services recently implemented the Patient Driven Payment Model for SNFs and the Patient-Driven Groupings Model for HHAs.

Association Between the Patient Driven Payment Model and Therapy Utilization and Patient Outcomes in US Skilled Nursing Facilities

“…Instead, they are determined by patients' clinical and functional characteristics at the time of their SNF admission. 6 Previous research has demonstrated that these altered incentives resulted in modest cuts in therapy staffing levels by SNFs during the first quarter of program implementation. 7 However, the association between the PDPM and the amount and type of therapy delivered to Medicare SNF patients is unknown.…”

Home health utilization association with discharge to community for people with dementia

“…6 PDGM also shortens the payment period from 60 days to 30 days and the expected number of therapy visits is no longer considered in the payment calculation. 6 Additionally, the payment rate is reduced after the first 30-day period. 6 These features of the PDGM have potentially important implications for medically complex patients who may require longer home health stays or a greater number of home health visits before being discharged to the community.…”

“…The PDGM was designed to place greater emphasis on a patient's clinical, health, and functional characteristics when determining the payment rate 6 . PDGM also shortens the payment period from 60 days to 30 days and the expected number of therapy visits is no longer considered in the payment calculation 6 . Additionally, the payment rate is reduced after the first 30‐day period 6 .…”

“…In January 2020, the Centers for Medicare and Medicaid Services implemented the Patient‐Driven Groupings Model (PDGM) 5 . The PDGM was designed to place greater emphasis on a patient's clinical, health, and functional characteristics when determining the payment rate 6 . PDGM also shortens the payment period from 60 days to 30 days and the expected number of therapy visits is no longer considered in the payment calculation 6 .…”

“…6 Additionally, the payment rate is reduced after the first 30-day period. 6 These features of the PDGM have potentially important implications for medically complex patients who may require longer home health stays or a greater number of home health visits before being discharged to the community.…”