SNF PDPM Fraud and Abuse Risk Update: What Providers Need to Know
The Patient-Driven Payment Model (PDPM) significantly changed skilled nursing facility (SNF) reimbursement under Medicare by shifting reimbursement from therapy service volume to residents’ clinical characteristics, While CMS achieved the goal of reducing incentives tied to therapy minutes, this payment model introduced new compliance, fraud, and abuse risks centered on coding accuracy, documentation integrity and clinical classification that draw scrutiny from regulators, auditors, and enforcement agencies. Recent OIG guidance emphasizes the need for SNFs to strengthen compliance programs, auditing practices, and documentation processes.
PDPM Risks
Under PDPM, reimbursement is driven by clinical conditions and diagnoses, functional assessments, nursing needs, and Non-Therapy Ancillary (NTA) conditions. As a result, auditors and investigators have shifted their focus from therapy delivery to whether the documentation supports coding decisions impacting reimbursement. The OIG has highlighted concerns related to documentation accuracy, reporting reliability, and quality oversight within nursing facilities. Federal regulators continue to monitor whether facilities are improperly maximizing reimbursement through unsupported coding practices or inaccurate resident assessments.
Key compliance issues under PDPM include:
- Unsupported or Upcoded Diagnoses.: One of the most significant PDPM risk involves assigning diagnosis codes or conditions that are not supported by the medical record. Because certain diagnoses can increase reimbursement, auditors’ expectation is that facilities maintain comprehensive physician documentation, clinical assessments and supporting medical record documentation for all coded conditions.
Examples include:
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- Incorrect primary diagnosis selection
- Inaccurate reporting of acute neurological conditions
- Coding unsupported comorbidities
- Coding diagnoses that do not accurately reflect the resident’s current condition, and
- Assigning diagnoses based solely on reimbursement impact.
If a diagnosis impacts reimbursement under PDPM, auditors expect to find consistent support throughout the medical record. A lack of supporting documentation could result in overpayment findings and recoupments.
MDS Accuracy and Assessment Integrity: The MDS is the foundation of PDPM reimbursement. Errors in MDS completion can result in overpayment, underpayment, and potential false claims exposure.
Focus areas under review include:
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- Timely MDS completion and submission
- Section GG Functional Assessment coding and supportive documentation
- Cognitive Assessment (BIMS interview)
- Depression Indicators
- Criteria to support the nursing classification.
The OIG guidance emphasizes the need for strong assessment processes, staff training, and monitoring of coding accuracy.
- Medical Necessity and Supportive Documentation: In addition to reviewing the accuracy of the PDPM HIPPS billed, medical review entities continue to focus on whether the services billed are medically necessary and supported by the medical record documentation.
Documentation should be sufficient to support:
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- Skilled services ordered by the physician
- Timely and complete Physician certification/recertification for skilled care
- Daily Skilled nursing and/or therapy services provided.
- Duration of care is reasonable and medically appropriate based on the patient’s clinical needs.
- Care plan interventions and outcomes.
Key PDPM Compliance Audit Red Flags to monitor for include:
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- Higher-paying nursing classifications, including Extensive Services, when applicable.
- High Non-Therapy Ancillary (NTA) component (i.e., NA or NB)
- SLP component Qualifiers (cognitive impairment, comorbidities, swallowing disorders, and mechanically altered diet)
- Significant increase in PDPM reimbursement levels
- ICD-10 diagnosis coding accuracy
- Depression qualifiers
Best Practices to Reduce Fraud and Abuse Risk Under PDPM
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- Conduct PDPM coding audits and focused training related to the findings.
- Validate supporting documentation for all high reimbursement diagnoses.
- Monitor reimbursement trends for outlier patterns.
- Utilize data to identify any coding concerns.
SNFs that implement strong interdisciplinary review processes, perform regular MDS coding and billing audits, and maintain strong documentation integrity practices are best positioned to mitigate fraud and abuse risks while maintaining regulatory compliance.
Next Steps:
- Contact Proactive to discuss a partnership for compliance and reimbursement accuracy audit services and supportive documentation training.
- Register new staff members with little to no experience in assigning ICD.10 codes for Proactive’s virtual 10-CM for Beginners Workshop coming up August 12-14.
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