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Solving the IPA Mystery Can Help NACs Show Their Worth

The nurse assessment coordinator (NAC) is still commonly stereotyped as a paper pusher or desk nurse in some sectors of long-term care, but the Patient-Driven Payment Model (PDPM) in the Skilled Nursing Facility Prospective Payment System (SNF PPS) offers NACs the chance to become Medicare Part A payment specialists who can make a strong impact on their facility’s reimbursement using tools like the Interim Payment Assessment (IPA), says Carol Maher, RN-BC, RAC-MTA, RAC-MT, RAC-CTA, RAC-CT, CPC, director of education for Hansen, Hunter & Co. PC in Vancouver, WA.

“PDPM was implemented in October 2019 just months before the start of the COVID-19 pandemic. NACs haven’t had much time to learn the nooks and crannies of this very complex payment system because they’ve been so focused on resident care,” points out Maher. “When my team does audits, we often find tens of thousands of dollars in missed reimbursements. While there are several reasons for that, including the need to understand how ICD-10-CM coding impacts PDPM classification, the IPA also plays a central role.”

From the first quarter of 2020 to the first quarter of 2021, IPAs accounted for only 3.52 percent of all PPS assessments, according to data provided by Broad River Rehab in Asheville, NC. “So, the IPA is the biggest opportunity available to improve facility payments to ensure that they are equal to the services being provided,” says Maher. “However, it remains a mystery to many NACs, as well as the rest of the interdisciplinary team.”

Maher will help NACs unlock the IPA mystery during the session “To IPA or Not? A Very Important Question” at Connected | Together, the April 12 – 14 AAPACN 2022 Conference in Las Vegas, NV. To develop IPA expertise, NACs must understand several factors. These include the following:

Mystery 1: PDPM’s basic structure

“The switch from the RUG-IV case-mix model to PDPM was such a good change because SNFs now receive payment that is designed to be very specific to the care that they provide,” says Maher. “PDPM pays for one non-case-mix component and five case-mix components for each resident: physical therapy (PT), occupational therapy (OT), speech-language pathology (SLP), nursing, and non-therapy ancillary (NTA) services. So, there are six payment components in PDPM, five of which are adjusted for that specific resident’s characteristics. That’s very different from RUG-IV, which just paid for the therapy component in most cases.”

Having five case-mix-adjusted payment components makes PDPM payment more accurate than RUG-IV, but it also makes it more complicated, says Maher. “PDPM has many possible payment combinations. While the non-case-mix component doesn’t change and pays the same for every Part A resident, the five case-mix components could be very different from each other. Officials with the Centers for Medicare & Medicaid Services (CMS) previously estimated that there are 1,900 different potential payment outcomes for any particular resident.”

In other words, PDPM’s complexity is a double-edged sword, explains Maher. “Even though the PDPM provides more accurate payment, NACs often can feel in the dark about payment specifics. It is hard for NACs to know what they are getting paid for any particular resident so that they can decide if an IPA would bring better payment.”

Mystery 2: HIPPS codes

“IPAs remain uncommon because (1) NACs don’t know what payment a Part A resident is currently generating and whether it is a high or low payment, and/or (2) they don’t know what would pay better,” says Maher. “Understanding both of these issues hinges on being able to interpret a PDPM HIPPS (Health Insurance Prospective Payment System) code, the five-character Part A payment code generated in MDS item Z0100A and validated on the MDS 3.0 Nursing Home Final Validation Report.”

The following chart explains the basics:

Breaking Down the HIPPS Code in PDPM  

A HIPPS code is an alphanumeric, five-position billing code that is calculated from assessment data and that contains four letters and one number:  
– Character # 1 = PT and OT component rate. There are 16 PDPM groups “A” thru “P.”
– Character # 2 = SLP component rate. There are 12 PDPM groups “A” thru “L.”
– Character # 3 = Nursing component rate. There are 25 PDPM groups “A” thru “Y.”
– Character # 4 = NTA component rate. There are six PDPM groups “A” thru “F.”
– Character # 5 = Assessment type indicator. This doesn’t impact the rates selected:
5-day assessment = “1”
IPA = “0”  

Sources: Chapter 6, “SNF Inpatient Part A Billing and SNF Consolidated Billing,” of the Medicare Claims Processing Manual and Section Z in Chapter 3 of the Long-Term Care Facility Resident Assessment Instrument 3.0 User’s Manual.

The HIPPS code can be difficult to understand because of PDPM’s complexity, says Maher. “With those 1,900 possible payment outcomes, there’s a lot of confusion. It’s very easy not to know the answer to questions like ‘What does HBOC1 mean?’ because each letter is short-hand for a specific case mix-group for that particular payment component, and the result is that NACs often don’t follow through on IPAs. So, my conference session will include a focus on how to understand what the HIPPS codes actually mean.”

Note: Chapter 6 of the RAI User’s Manual (pages 6-4 – 6-8) includes four tables that walk through what each letter in the HIPPS code means. Using the HBOC1 example, these tables indicate the following wealth of information:

  • The H stands for the PT/OT case-mix group TH, which indicates the Other Orthopedic clinical category with a section GG (Functional Abilities and Goals) function score of 24.
  • The B stands for the SLP case-mix group SB, which indicates that there is no presence of an acute neurologic condition, SLP-related comorbidity, or cognitive impairment, but there is either a mechanically altered diet or a swallowing disorder.
  • The O stands for the nursing case-mix group CA2, which indicates a Clinically Complex nursing category with depression indicated, no restorative nursing services, and a section GG function score of 15 – 16.
  • The C stands for the NTA case-mix group NC, which indicates an NTA score of 6 – 8.

Mystery 3: Facility-specific payments for each HIPPS code

Every year in the SNF PPS final rule, CMS publishes tables with the national urban and rural payment rates for each case-mix group in all five case-mix-adjusted payment components. For example, the national urban NTA payment rate for the NC case-mix group for FY 2022 is $152.02, while the rural rate is $145.23, according to the FY 2022 SNF PPS final rule.

“However, that’s not actually what facilities are paid,” points out Maher. “The actual dollar amounts of the payment rates vary depending on the county where the SNF is located to account for geographic variations in wages. So, it’s important to obtain wage index-adjusted payment rates from the facility’s business office or the Medicare administrative contractor (MAC), and I encourage NACs to bring those rates to the conference session to see the real-world payment impacts.”

Using the example of King County, WA (i.e., Seattle), Maher offers the following general insights about the rates for each payment component:

  • PT: “The difference between the highest and the lowest payment in the PT component is $58.68 in King County,” says Maher. “There is room to do an IPA that could increase the payment, but to move from the lowest to the highest case-mix group would be unusual, and the gain is less than $59 even then.”
  • OT: “Slightly worse, the difference between the highest and lowest payment for OT in King County is only $39.01,” says Maher.
  • SLP: “The difference between the highest and the lowest payment here is $92.06 in King County,” says Maher. “There is a bigger opportunity to increase payment in the SLP component than in PT or in OT, so now NACs should begin to consider. ‘Where should my focus be?’”
  • Nursing: “The huge opportunity to improve payment in the nursing component with an IPA is something that few NACs really understand,” says Maher. “The difference between the highest payment and the lowest payment in King County is $414.07.”
  • NTA: “The difference in King County from the highest payment to the lowest payment is $231.54—not as high as nursing but still offering some good opportunities for an IPA,” says Maher.

“In some areas of the country, such as San Francisco or Los Angeles, the high vs. low payment difference within these payment components is even more dramatic,” says Maher. “But regardless of the specific dollar amounts, you will see these same basic proportions no matter what county you are located in.”

Therefore, NACs can use those payment differences to understand where to invest more time in considering an IPA, suggests Maher. “NACs should focus on where they can achieve the highest payment because that is what the IPA is built for—to increase the payment when the facility is providing increased services. So, there’s a pretty clear case for assessing the need for IPAs in the nursing and NTA components when they could increase payment by up to $414 (nursing) or $231 (NTA) for a Seattle-area SNF.”

Maher offers this example: A Part A resident comes in for rehabilitation therapy services related to a hip fracture, which results in a high PT/OT case-mix group driving payment on the 5-day MDS. Otherwise, the resident is relatively healthy and only qualifies for a Clinically Complex or even a Reduced Physical Function nursing category. On day 9 of the resident’s stay, they develop COVID-19. This resident is put in strict isolation, and they need oxygen, IV fluids, and other services.

“The interdisciplinary team now is doing much more for that resident than taking care of the hip fracture,” points out Maher. “There is extra nursing time to monitor and care for the resident, personal protective equipment (PPE) for both the nursing staff and the therapists, and the additional services, such as the isolation. Doing an IPA for this resident will most likely generate another $300 – $400 a day in the nursing component—plus a potential increase in the NTA component—to pay for all of that.”

While COVID-19 offers a dramatic example of the potential benefits of an IPA, much smaller changes often can increase payment too, adds Maher. “For example, if a Part A resident is started on IV fluids for dehydration, that could come with a significant payment increase of up to several hundred dollars in the nursing component.”

Mystery 4: The nursing and NTA components

It’s hard to have a firm grasp of IPAs without understanding how case-mix classification works in the nursing component, says Maher. “The nursing component under PDPM is the same as the nursing component in RUG-IV. However, NACs were not focused on the nursing component in RUG-IV because the therapy RUGs usually provided the payment.”

NACs who understand what resident characteristics and services go into each nursing category (Extensive Services, Special Care High, Special Care Low, Clinically Complex, Behavioral Symptoms and Cognitive Performance, and Reduced Physical Function) can more quickly use the HIPPS codes to determine whether an IPA may be warranted, says Maher.

“If the nursing component of the current HIPPS code is a T, U, V, X, or Y, then nursing payment is on the bottom end of the range and could increase substantially using an IPA to capture additional services, but if it is an A, B, C, or D, then the nursing payment is already on the higher end,” she explains. “NACs need to know what qualifies a resident for Extensive Service and Special Care High, for example, to be able to make that judgment call about an IPA.”

Similarly, NACs must understand what impacts payment in the NTA component, adds Maher. “For example, ICD-10 coding is often a struggle in nursing homes, but NACs have to learn what ICD-10 codes affect payment here.”

Pulling it all together

The upcoming AAPACN conference session will help NACs solve each of these mysteries so that they can understand what the current payment is for each resident, what resident characteristics and services go into the most critical payment components, and how to calculate the potential financial benefit of an IPA, says Maher. “The goal is for NACs to know what to watch for—and be ready to educate the rest of the interdisciplinary team on what to watch for. In everything from Medicare meetings to record reviews, NACs and the team should know: What will alert us that an IPA would improve payment? And they need to know how to monitor for IPAs as well, so I will be sharing some tools to make that process as efficient and effective as possible.”

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