28 Feb 2019

PDPM Prep: Laying the Foundation

Rod Baird


The Patient Driven Payment Model (PDPM) is on its way—with an October 1st, 2019 implementation date—and we’re here to help you sort through the issues and succeed in this new world. This is the first in a series of articles about PDPM. We’ll provide you everything from background, insights from the experts at CMS, how-to guides, and more.

PDPM Background

PDPM is a new, comprehensive reimbursement model for skilled nursing facilities (SNFs), replacing therapy minutes as the basis for payment with resident classifications and expected resource needs. PDPM consists of five case-mix-adjusted payment components:

  •  Utilization of physical therapy.
  •  Utilization of occupational therapy.
  •  Utilization of speech-language pathology services.
  •  Utilization of nursing and social services.
  •  Utilization of non-therapy ancillary services.

At the same time, PDPM would maintain the existing non-case-mix components to cover utilization of skilled nursing facility resources that do not vary according to resident characteristics. Specifically, these resources involve:

  •  Physical therapy payment.
  •  Nursing payment.
  •  Speech-language pathology payment.
  •  Non-therapy ancillary services payment.
  •  Occupational therapy payment.

Much like the current RUG-IV model, per-diem payment under PDPM will be determined by two primary factors: base rates that correspond to each component of payment and case mix indexes (CMIs) that correspond to each payment group. Each resident will be classified into a group for each of the five case-mix-adjusted components. The base rate for each component then is multiplied by the CMI corresponding to the assigned resident group.

When CMS introduced the concept of PDPM, the agency targeted fraud reduction as a selling point. In fact, the final rule pointed to “evidence of therapy being furnished to SNF patients on the basis of financial consideration rather than patient need.” For the most part, PDPM will eliminate fraud by linking therapy reimbursement to resident needs and not hours. As a result, more Medicare dollars are expected to go to higher-acuity patients with higher-level health needs.

How will these changes affect you?

  • Facilities will need to evaluate their current care processes and staff resources to determine what changes they will need to make. You should be prepared to help your team analyze data and other information to identify potential problems and fraud-risks, as well as opportunities for improvement.
  • Therapy will not be included in the new case mix calculations; instead the need for therapy is based on care requirements. Be prepared to determine how these requirements will be identified, managed, and tracked.
  • PDPM is designed to reduce administrative paperwork, so this could free up the interdisciplinary team for to focus on direct, person-centered care and face-to-face patient encounters.

It’s worth noting that PDPM requires 75% of all therapy to be individually provided; and concurrent and group therapies will be capped at 25% of the total minutes provided.

Preparing for volume-to value-based medicine

PDPM represents a further move away from volume- to value-based medicine; and it reinforces the need for “intelligent technology” as providers transition to true quality-driven care. In part, you are going to need:

  • Intelligent workflows. Better assessments lead to better documentation, which ultimately results in better clinical and financial outcomes. You need a system with intelligence built in, so the insights that staff and others need are available when and where they need them.
  • Standardization and a single integrated platform. You will want the largest network of SNF providers and technology partners possible in one single platform. Standardization will enable you to pull meaningful, evidence-based best practices for a variety of sources that drive better outcomes. It will allow your team to access information across settings in real-time.
  • Customization. Your EHR should enable you to create customizable treatment protocols to enable individualized care while following population- and/or organization-specific guidelines and requirements.

While PDPM represents a significant payment system change, the good news is that you don’t have to face this alone or start from scratch. Be on the lookout for more in this series, and let us know how we can help.