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Starting October 1, 2019, the Patient-Driven Payment Model will take effect. Start implementation now to give your clinical and administrative staff time to prepare.

Navigating health reform

Skilled Nursing Facilities: It’s Time to Implement PDPM

  • Deb Emerson
  • 3/14/2019

In the FY19 SNF PPS Final Rule, the Centers for Medicare and Medicaid Services (CMS) finalized a new payment system for Skilled Nursing Facilities (SNFs) called the Patient-Driven Payment Model (PDPM). CMS will be transitioning from Resource Utilization Groups (RUGs) to PDPM on October 1, 2019. Under this new reimbursement system, CMS aims to:

  • More accurately compensate SNFs for the clinical care provided to residents
  • Reduce incentive for SNFs to deliver therapy based on financial considerations, rather than resident needs
  • Maintain simplicity, to the extent possible

PDPM is one of the biggest changes in the senior living industry within the past 20 years. From now until implementation, facilities should take the opportunity to understand what changes may be necessary to effectively adjust to the new payment model. Some of these changes may include updates to electronic health records (EHR) systems, additional training for Minimum Data Set (MDS) and coding staff, updates to therapy contracts, and developing an understanding of the financial implications of the change. Both administrative and clinical staff need to prepare for these changes.

Not sure where to start? Contact us.

How will PDPM calculate reimbursement?

Instead of using therapy minutes and days to determine reimbursement, the PDPM system bases payment on resident characteristics and resource utilization. Resident characteristics will be case-mix adjusted into five major cost categories, plus one non-case mix adjusted category. The five categories include:

  • Physical therapy (PT) services
  • Occupational therapy (OT) services
  • Speech-language pathology services
  • Nursing services
  • Non-therapy ancillary (NTA) services

The per diem payment under PDPM will be reduced for the PT and OT components by 2 percent every seven days after day 20, and the NTA component will be reduced by approximately 67 percent after day three. Data shows the usage of these services is greater at the beginning of the stay and is reduced over the entire length of stay, supporting a variable adjustment.

The PDPM system also reduces the number of MDS prospective payment system (PPS) assessments to a five-day assessment and discharge assessment. Therefore, it is important that the five-day assessment be accurately completed, as this will set the rate for the entire stay. As a result, facilities should be evaluating their MDS and coding functions to make sure they are optimizing the PDPM rates.

RUG factors PDPM factors
Therapy (number of minutes)

PT/OT: diagnosis, functional score (Section GG) and variable per diem adjustment (i.e., rate declines over time)

SLP: diagnosis, cognitive impairment, SLP-related comorbidities, presence of swelling disorder or mechanically altered diet
Nursing (extensive services, ADL score, medical conditions, behavioral systems, depression, restorative services, therapy minutes)

Nursing: extensive services, depression, restorative services, clinical information from SNF stay

Non-therapy ancillary: comorbidities, extensive services, variable per diem adjustment (i.e., rate declines over time)
Non-case-mix base rate Non-case-mix base rate

Prepare for PDPM with an on-site pre-assessment

Having a professional review your documentation prior to and during implementation can help you identify reimbursement opportunities. A pre-assessment allows professionals to take a hands-on approach to determine where your staff may be missing billing or coding opportunities. Because documentation of diagnosis and services provided have not had a critical impact on reimbursement rates up until this point, you may also consider providing training for your administrative and clinical staff to cover PDPM best practices.

Calculate your pre- and post-assessment rates

A key to successfully implementing PDPM is ensuring your staff’s documentation is adequately capturing the services provided under your facility’s care. CLA’s PDPM calculator can compare your pre-assessment rate to a resident’s post-assessment rate, allowing you to identify areas for improvement. Your facility can also use the calculator after the implementation date to estimate rates prior to accepting residents to help you make educated admission decisions.

How we can help

CLA’s senior living professionals have experience working directly with MDS assessments, ICD-10 coding, therapy, and overall PDPM coordination in SNFs. Instead of just providing you with data, our professionals can perform an on-site pre-assessment of you current documentation processes and identify areas for improvement. From there, we can help train your clinical staff to document the services your facility provides to its residents to help you achieve full reimbursement.

Get more resources for implementing PDPM.