Nursing Home Residents and Therapy Under The New Medicare Payment System

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The Centers for Medicare & Medicaid Services (CMS) implemented a new Medicare Part A reimbursement system for skilled nursing facilities (SNFs), called Patient-Driven Payment Model (PDPM), on October 1, 2019.[1] Therapists immediately began reporting that nursing homes and therapy companies were laying them off and demanding that they change their therapy practices, shifting residents from individual therapy to group and concurrent therapy.[2]  Medicare beneficiaries and their advocates need to oppose cutbacks in therapy that deprive them of necessary services. Medicare eligibility and coverage rules for beneficiaries have not changed. Eligibility for Part A coverage in a SNF requires needing and receiving daily skilled care – either skilled nursing services seven days a week or skilled therapy services five days a week.[3] Residents who need therapy and who have therapy services included in their care plans continue to be entitled to receive the medically necessary therapy that is ordered. Medicare continues to cover therapy for improvement and maintenance[4] goals alike.

How the New Payment System Works

Payments for most residents under the most recent system, Resource Utilization Groups (RUGs), were based on the number of minutes of therapy that a resident received.  The more minutes of therapy, the higher the reimbursement rate. CMS, the HHS Office of Inspector General, and the Medicare Payment Advisory Commission (MedPAC) believed that RUGs encouraged overutilization (or at least overbilling) of therapy.[5]

The new reimbursement system explicitly changed the financial incentives. CMS’s own analysis of the impact of the new system, included in the final rules for PDPM that CMS published in 2018, indicated that payments would be higher for residents who did not receive any therapy in the SNF and lower for residents who received all three types of therapy, physical, occupational, and speech therapy.[6]

Under RUGs, 99% of residents received individual therapy.[7] Nevertheless and while recognizing that individual therapy is the preferred method of providing therapy to residents,[8] CMS allows up to 25% of therapy services to be provided in group or concurrent settings under PDPM.[9] In final rules published in 2019, CMS expanded the permissible number of residents in group therapy to six.[10]

What CMS Says about Therapy in the New Payment System

CMS is fully aware that allowing more group and concurrent therapy under PDPM changes the financial incentives for SNFs: “We appreciate the commenters’ concern that the proposed change in the definition of group therapy may give providers an incentive to place the maximum number of patients in a group for financial reasons.”[11]

However, in Frequently Asked Questions, CMS confirms the continuing availability of therapy services under PDPM: “PDPM does not change the care needs of SNF patients, which should be the primary driver of care decisions, including the type, duration, and intensity of skilled therapies, made on behalf of SNF patients.”[12]

The preamble to the 2019 rule also includes several observations that may be useful to residents who are facing changes in their therapy services and to their advocates.

First, CMS confirms that financial considerations should not override clinical judgment, writing in 2019:

As we have stated previously, therapists treating SNF patients should use their own clinical judgment to determine the appropriate frequency, duration, and modality of therapy services and the size of a therapy group based on the individual needs of each patient.  Financial motives should not override the clinical judgment of a therapist or therapy assistant or pressure a therapist or therapy assistant to provide less than appropriate therapy, including putting patients in large groups that are not clinically appropriate for those patients.[13]

Second, CMS announces its “plan to implement a robust monitoring program to assess compliance with the 25 percent cap [on group and concurrent therapy].” Although the 2018 rules had indicated that facilities exceeding the cap would receive only “a non-fatal warning edit,” a “reminder” that it is out of compliance[14] – that is, no consequence for exceeding the cap – the 2019 rule says, “based on our findings [from the robust monitoring program], we may propose taking additional action in future rulemaking.”[15]

What Can Residents and Their Advocates Do?

Residents and their advocates can insist that residents receive the therapy services that are included in their comprehensive person-centered care plans.[16] Residents and their representatives are included in care-planning.[17]

If a facility suggests that group or concurrent therapy is appropriate, residents and their advocates can point to preamble language identifying individual therapy as the primary mode of therapy residents should receive and the need for the therapist to document the appropriateness of non-individual therapy:

[W]hile group therapy can play an important role in SNF patient care, group therapy is not appropriate for either all patients or for all conditions, and is primarily effective as a supplement to individual therapy, which we maintain should be considered the primary therapy mode and standard of care in therapy services provided to SNF residents.  Additionally, we stated that we continue to maintain that when group therapy is used in a SNF, therapists must document its use in order to demonstrate why it is the most appropriate mode of therapy for the patient who is receiving it…because group therapy is not appropriate for either all patients or all conditions, and in order to verify that group therapy is medically necessary and appropriate to the needs of each beneficiary, SNFs should include in the patient’s plan of care an explicit justification for the use of group rather than individual or concurrent therapy. This description should include, but need not be limited to, the specific benefits to that particular patient of including the documented type and amount of group therapy; that is, how the prescribed type and amount of group therapy will meet the patient’s needs and assist the patient in reaching the documented goals. [bold font supplied][18]

On a policy level, advocates need to assure that CMS fulfills its pledge to engage in robust monitoring of facilities’ use of group and concurrent therapy. Early reports of cutbacks in therapists’ hours make monitoring essential.

Residents and their advocates can work with their therapists and professional therapy associations. The national therapy associations – the American Physical Therapy Association (APTA), the American Occupational Therapy Association, and the American Speech-Language-Hearing Association – are closely monitoring implementation of PDPM and, already, jointly providing CMS with stories of therapists’ layoffs and other policy issues related to implementation. A clear one-page statement by APTA confirms that PDPM does not change patient needs or criteria for skilled therapy coverage in SNFs.[19]

October 10, 2019 – T. Edelman


[1] 83 Fed. Reg. 39162, 39183-39265 (Aug. 8, 2018).  See Center for Medicare Advocacy, “Final Rules for New Medicare Reimbursement System for Skilled Nursing Facilities: Goodbye Therapy” (CMA Alert, Aug. 23, 2018).
[2] See;  Danielle Brown, ‘Therapist advocates sharing layoff concerns with CMS,” McKnight’s Long-Term Care News (Oct. 3, 2019), Alex Kacik, “Therapists look to CMS for aid as SNFs restructure,” Modern Healthcare (not sure of the date; it says Oct. 4 now but I’m quite certain it came out earlier, maybe Oct. 1), Alex Kacik, “Therapists look to CMS for aid as SNFs restructure,” Modern Healthcare.
[3] 42 U.S.C. §1395f(a)(2)(B).
[4] See
[5] 83 Fed. Reg. 39162, 39184-39185 (Aug. 8, 2018).
[6] 83 Fed. Reg. 39162, 39257-39259 (Table 37).
[7] 83 Fed. Reg. 39162, 39238.
[8] 83 Fed. Reg. 39162, 39238.
[9] 83 Fed. Reg. 39162, 39237-39243.
[10] 84 Fed. Reg. 38728, 38745-38746 (Aug. 7, 2019).
[11] 84 Fed. Reg. 38728, 38748.
[12] CMS, Patient-Driven Payment Model, Frequently Asked Questions, Question 12.1 (Aug. 27, 2019), (click on Frequently Asked Questions).
[13] 84 Fed. Reg. 2728, 38748.
[14] 83 Fed. Reg. 39162, 39239 (Aug. 8, 2018).
[15] 84 Fed. Reg. 28728, 38748.
[16] 42 C.F.R. §483.21(b).
[17] 42 C.F.R. §483.21(b)(ii)(E).
[18] 84 Fed. Reg. 38728, 38746.

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