PDPM Parity Adjustment in the SNF FY 2022 Proposed Rule

CMS has made it clear in the SNF FY 2022 Proposed Rule, view full report, that PDPM was not budget neutral as originally anticipated, meaning that the new payment model would not result in an increase or decrease in SNF spending. With the recent data showing a 5% unintended increase in Medicare reimbursement for SNFs in FY 2020, CMS now states that a recalibration of the parity adjustment is needed to meet the initial goal of achieving budget neutrality.

When considering the increase, CMS does acknowledge the potential impact of the PHE for COVID-19 and the waivers have had on SNF reimbursement.  They are seeking comments from stakeholders regarding the impact of COVID-19 on distribution of patient case-mix and overall utilization. There were some initial findings that were concerning regarding the potential impact of the PHE for COVID-19 on SNF utilization in FY 2020 which included the following:

  1. Only 9.8% of SNF stays included a COVID-19 ICD-10 code (primary or secondary).
  2. 6 % of SNF stays utilized section 1812(f) waiver (DR code on the claim, majority were the prior hospitalization waiver).
  3. 87% of SNF beneficiaries had a qualifying hospital stay compared to 98% in previous years.
  4. Compared Actual CMI (FY 2020) to Actual Adjusted CMI ( FY 2020 without DR or COVID diagnosis) and found only .05 difference in average CMI, estimated $3.66 per day difference using the unadjusted, FY2020,
    Federal Rate Per Diem-Urban.

Source: https://public-inspection.federalregister.gov/2021-07556.pdf

While the data shows some impact to SNF operations, utilization, and average CMI, the overall impact of the PHE for COVID-19 was not enough to justify the significant impact to Medicare Reimbursement. Important questions to consider moving forward:

  1. Does this data show the actual prevalence and impact of COVID-19 and/or are their issues with coding and waiver utilization?
  2. Why was there a decline in NTAs with COVID-19 diagnosis (primary or secondary) and/or DR codes while Nursing CMIs increased? Are we capturing all of the NTAs?
  3. With the clarification comments from CMS regarding 3-day hospital stay waiver and that it applies to all SNF-level beneficiaries regardless of the direct relationship to COVID-19, why are only a small percentage of SNFs utilizing this benefit?
  4. How can SNF providers justify the impact of COVID-19 on reimbursement to CMS? Are there any opportunities for improvement?
  5. What processes have SNF providers implemented to identify opportunities with COVID-19 billing, waiver documentation, and coding?

If your facility is having questions regarding waiver utilization and/or coding opportunities/ guidelines with COVID-19, our team of dedicated experts are available to answer any questions that you may have.