Patient-Driven Payment Model (PDPM) – 6 Keys You Need to Know

By Melissa Keiter, RN, RAC-CT, DNS-CT, DON
and Melissa Sabo, OTR/L, CDP, CSRS

On April 27, 2018, CMS released an alternative proposed rule for the Prospective Payment System (PPS), called the Patient-Driven Payment Model (PDPM), which would replace the existing RUGs-IV PPS classification system. In CMS’s proposed rule, PDPM is defined as promoting the utilization of “resident characteristics and care needs, while reducing systematic and administrative complexity.” PDPM also removes service-based metrics utilized in the current RUG-IV SNF PPS and derives payment from supportable resident characteristics. If the proposal is finalized, the proposed PDPM could replace the current SNF PPS classification system on October 1, 2019.

Here are 6 key points you need to know about PDPM:

1.PDPM has 5 Payment Groups:
a. Physical Therapy (PT) Component Per Diem Rate
b. Occupational Therapy (OT) Component Per Diem Rate
c. Speech Pathology (SLP) Component Per Diem Rate
d. Non-Therapy Ancillary (NTA) Component Per Diem Rate
e. Nursing Component Per Diem Rate

This means that every resident falls into a group within each of the five case-mix components of PT, OT, speech, non-therapy ancillary and nursing. Each separate case-mix component has its own case-mix adjusted indexes and corresponding per diem rates. Every rate is determined independently of the other category rates. The final aggregate per diem rate is obtained by adding up the individual per diem rates.

2. PDPM Utilizes only 3 MDS Assessments:
a. 5-Day MDS Assessment
b. Interim Payment Assessment (Mandatory Assessment to change payment only when a first tier classification changes)
c. Discharge MDS Assessment

This is a win in many ways for MDS Coordinators as the number of assessments will decrease and this will result in an overall reduction of the administrative burden. The 14-day, 30-day, 60-day, 90-day, COT, EOT, EOT-R and SOT assessments will all be removed. While the amount of paperwork and MDS assessments under PDPM will be lessened, the assessment performance will require more expertise, accuracy and clinical judgment. Necessary services not provided during the 5-day assessment or resident characteristics not captured on the 5-day assessment will now impact reimbursement for the entire stay!

3. Group & Concurrent Therapy Allowed for a Total of 25%
Under RSC-1, it was proposed that 25% group therapy and 25% concurrent therapy would be allowed per discipline. However, with PDPM, there is a 25% combined group and concurrent therapy allotment per discipline. Some providers and advocates are asking that this be re-categorized into “individual and non-individual” categories to reduce the provider burden on the administration and oversight of these categories and percentages.

4. The minutes will ONLY be recorded on the Discharge MDS Assessment
CMS added therapy items to the PPS Discharge Assessment under PDPM. This will include the total days, total number of minutes for each discipline and the start and stop dates of therapy. This will reveal information on two key items: therapy utilization and the appropriateness of therapy days and minutes provided.

5. PDPM reimburses less per day after day 20 for therapy and more for days 1, 2 and 3 for NTA.
For PT and OT, days 1-20 would be reimbursed at the full rate. On day 21, a decreasing adjustment factor of 2% is applied every 7 days throughout the remainder of the stay. The lowest rate is 76% on days 98-100.
In reference to NTA, under RUGS IV, NTA costs are incorporated into the nursing component. However, in the proposed PDPM model, the NTA category is separated out and receives an adjusted per diem payment. NTA on days 1-3 are reimbursed at an adjustment factor of 3 (i.e. 3 times the amount per day for NTA reimbursement on Days 1, 2 and 3). For the remainder of the stay, the per diem payment will return to a baseline rate of 1. These adjustments are based on Medicare’s research that indicated PT, OT, and NTA costs decrease with longer resident stays.

6. PDPM will replace Section G with Section GG.
Replacing section G with GG for the functional component is required for PT & OT payment classifications, as well as nursing case-mix classification. Six areas are scored and totaled for the functional measure: eating, oral hygiene, toileting, sit-to-lying, lying-to-sitting on bed, sit-to-stand, chair/bed-to-chair, toilet transfer, walk 50 feet with 2 turns, and walk 150 feet.

For SNFs, the takeaways are evident. Documenting and capturing clinical complexity will be the provider’s focus in an effort to see increased accuracy of payments. Therapy reimbursement structure will shift dramatically. However, CMS has made it clear that they do not expect provider behaviors to adjust or change, especially for therapy provision of services. It will be imperative for MDS coordinators to be exceptional clinicians who can educate the interdisciplinary team in clinical areas of importance and drive the team’s efforts to provide and document appropriate services for each resident. RUGs-IV categorization will no longer be the driving force, so providers will need to switch gears to being efficient in documentation, proactive in planning, and delivering an even higher quality of care to promote outcomes instead of volume.

Centers for Medicare and Medicaid Services. Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities (SNF) Proposed Rule for CY 2019, SNF Value-Based Purchasing Program, SNF Quality Reporting Program. Available April 27, 2018, at

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