The adoption of PDPM had significant implications for the therapy contracts (physical, occupational, and speech language pathology) that Skilled Nursing Facilities (SNFs) enter into with third-party therapy contractors to provide therapy services to their residents. With the financial pressures SNFs are now facing, it is important that SNFs make fiscally responsible decisions.

Here are “The Top 5 SNF Therapy Service Models under PDPM”

#5. Contract Therapy (per minute) model- Under this model SNFs would pay contractors based only on the amount of therapy minutes provided to patients. This has been used under both the RUGs and PDPM payment systems. A per minute approach places the bulk of the financial risk associated with such contracts on the providers.  This approach generates huge monthly invoices with little to no therapy department oversight. And the therapy company is guaranteed profits while the SNF is only guaranteed a massive bill. We advise against this model unless constant and strict monitoring is done of the contract therapy company operations.

#4. Contract Therapy (per diem) model- The next alternate approach SNFs could adopt in their therapy contracts compensates their therapy contractors per day that patients receive skilled services at the SNF.  While this would be a better approach than a per minute approach, it still would not completely track with how SNF payments are calculated under the PDPM.  With PDPM, the per diem approach would cause SNFs to potentially lose money the longer the patient receives therapy at the SNF.  In addition, unlike RUGs, PDPM does not generate payment levels based on therapy minutes delivered.  Therefore, the PDPM payment level may not coordinate with the level of minutes therapy delivers, This gives the therapy company a huge advantage for increased profitably and clear financial incentive for systematic reduction of treatment minutes to Medicare A patients and an increase of Medicare B billing to push their profits higher than ever. If locked in a per diem contract, we advise to renegotiate pricing since this model no longer fits the current PPS payment system.

#3. Contract Therapy (CMG percentage) model- The third and most recent approach that SNFs turn to with therapy contracts uses percentage payments of PDPM therapy components.  This would start to balance the risk between the SNF and the therapy contractor and ensure that the compensation model mirrors how SNFs are paid under PDPM.  However, without quality measures, this approach has been misleading and unfortunately abused by contract therapy companies.  Because a therapy contractor would receive the same fixed percentage regardless of the quality of the services provided, there would be no incentive for the contractor to provide the best possible services. This could lead to contractors providing both inadequate therapy services and treatment minutes to the patients at the SNF.  With less rehab staff recruiting needs or minute / assessment management needed (and since most contract therapy companies ignore MDS accuracy and quality measure scoring) contract therapy services are losing significant value in the skilled nursing setting.

#2. Bring back the “In-House” model- Lets be clear, contract therapy has been very valuable in the SNF industry for the last 20 years. And it has relieved facilities from the burden of hiring therapists, ensuring they were qualified, keeping them up to date on regulation changes and properly compensating them to maintain a positive therapy margin.  And all these risk factors still exist under PDPM. So providers must decide if the cost and liability is worth continuing to cover these burdens.  And I can say; in some cases “yes” but in many “no”…..not anymore. But only if providers are willing to take the responsibly to confront and overcome these burdens.  This is easier said than done in almost all cases.  We have seen in-house therapy programs completely out of sync with regulations, education and caseload management.  Some facilities have rehab departments with only a 30-40% average productivity level.  Oversight and accountability are the keys to maintaining a clinically driven efficient rehab department. If you do not have a “superstar” corporate therapy leader (preferably one with regional contract therapy experience) we do not even suggest trying this.

#1. . The Therapy Management Model- Since the implementation of PDPM, this newer model does give providers the most return on their investment.  But comes with the commitment of providers to bring the therapy staff back “in-house” and hiring them directly.  Then allowing the therapy management company to oversee them, which actually most facility administration and therapists are more than happy with.  It allows the providers to pay only for the oversight and management of the rehab department, but no “mark-up” on the staff themselves.  This also lowers the risk of overtreatment to Medicare Part B patients since there is no incentive for increased profitability with any certain payers. The therapy management service is said to be “the best of both worlds” in regards to the current rehab model choices.  Most management services offer recruiting, education, caseload development monitoring, efficiency tracking and appeals management.  Some even offer onboarding, specialized software, PDPM coding assistance and quality measure monitoring.  All things most contract therapy companies have put in great effort trying to avoid. Although still an additional cost to the facility, usually this costs only a fraction of contract therapy. All while still eliminating those “burdens’ discussed with traditional in-house programs.  There are some concerns with joint venture agreements and non-compete clauses that need to be handled on the provider side, but the returns from this level of service is usually more than enough incentive to make the move.

Looking for a new and better option to contract therapy?  Click here to find one!

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JMD Healthcare Solutions LLC is a skilled nursing facility management service.  The purpose of this email is to provide educational discussions of the skilled nursing facility industry and promote the value of our services. This is advertising material.

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JMD Healthcare Solutions LLC
275 Medical Drive #875
Carmel, IN  46033
Phone: 1-801-PDPM-PRO

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