November 28, 2018 | Net Health

3 Minute Read

PDPM: 10 Questions About Managing Care, Pricing and Data Analytics

With PDPM less than a year away, therapy providers and SNF operators are now knee-deep in the planning stages. In our recent Getting Ready for PDPM Success webinar, industry expert Michael Katri, one of Optima’s founders and senior product strategist, provided insight into key issues therapy providers will need to consider around pricing, data and care management as they develop strategies for success.

The following includes an overview of what Michael discussed and 10 of the most frequently asked questions, along with our answers.


New ways of determining the right amount of therapy and modes of treatment for each resident will be needed to succeed under PDPM. Michael discussed specific SNF therapy metrics for consideration, which led to the following questions:

1 – How do you believe that facilities will be measuring productivity for therapists under PDPM? Will it remain the same as it currently is?

 The current productivity standard of “treatment time” and “paid time” continues to provide value by identifying how effective therapists and individual programs are at implementing group and concurrent therapy into their thinking. However, it shouldn’t be the primary metric. We believe that three new SNF metrics will be needed to deliver successful therapy programs under PDPM:

  • Efficiency of Functional Improvement (EFI) – This metric looks at how much it costs from a labor perspective to gain functional improvements across your patient population or subsets of patients. The higher the EFI score, the more efficient your therapists and therapy programs are at delivering on better outcomes at lower costs.
  • Cost of Incremental Functional Improvement (CIFI) – This metric looks at how much it costs to improve outcomes for a patient by a single point on the PDPM functional scale. It can be calculated for an entire patient population or sliced by “like patients” to better predict the cost of improvement for patients with specific characteristics.
  • Days Per Incremental Functional Improvement (DIFI) – This metric shows how many days on average it takes to achieve one point of PDPM functional improvement. Through analysis of this data, you can gain insight into the length of stay unique patients are likely to need in order to obtain a desired outcome.

2 – Can you rank the top four tasks that therapy providers need to implement to be successful (i.e., lowering cost per minute, implementing clinical pathways, managing individual vs. group/concurrent treatment modes, improving outcomes)?

 A unified approach is necessary to be successful. Doing any one of these without the other will be extremely difficult because they are interrelated. While it is going to be critical to focus on lowering costs and improving outcomes, we see including group and concurrent as a critical factor in being successful at doing so.

3 – Will the group/therapist ratio remain the same under PDPM?

The current regulations from CMS dictate that a group cannot include more than four patients in a SNF setting. However, the penalty that is currently incurred when less than four patients are in a group under the RUG system is being eliminated since minutes are no longer the factor in driving reimbursement. More clarity around the group requirements, including possible changes to the cap on the number of patients in a group, could come in the proposed and final rules for FY-2020, which will be the final authority on PDPM.

 Ultimately, patients put together in a group should all be working on the same functional areas and be ready at the same time. There are a number of factors that come into play to  make a group successful, and it can’t be “we don’t have enough therapists today.” These groups have to be planned, and benefits have to be well documented. Otherwise, you’ll find yourself in a place of not being able to defend the decisions you’ve made in the months and years ahead.


Michael dug into the pricing models that providers are currently considering, as well as shifts that need to occur in how they do business in the PDPM world. This raised questions, including:

4 – Can you comment on your impression of the pros/cons of in-house vs. contract therapy?

Optima’s view is that PDPM introduces much more complexity to the delivery of therapy than has existed under the RUG system. While we believe in-house programs already functioning well will also be able to have good results under PDPM, we discourage SNFs that are currently outsourcing therapy to consider making a move to in-house at this time.  The risks of such a move are significant from a legal and financial perspective.

5 – How about a pricing model based on improved function or LOS?

We recommend some mechanism in the billing method to reward the therapy company when better outcomes are achieved at a lower cost. We anticipate there will be many derivatives to the basic models discussed in our webinar. As an example, there could be a percentage bonus payment when a LOS-to-Quality-of-Outcome ratio is met over a period of time. On the flip side, there could be a clause included for a discount if the ratio falls below a specified threshold.

For more information, read Evaluating PDPM Pricing Models to learn about PDPM therapy pricing models currently under consideration, and use the pricing worksheet to evaluate the best strategy for your business.

6 – How will other payer sources affect the different payment models outlined in the webinar?

There is no required change for any of the other payer sources, but it’s certainly possible they will adapt to PDPM. There may be some contracts where the therapy company agrees to provide services for a SNF’s entire patient population, regardless of payer, for a per diem fee or other model that would be appropriate for population management.

7 – Do you have information on how the billing is supposed to work (PDPM vs. RUG)?

Optima hosted a webinar titled “Goodbye RCS-1, Hello PDPM” that spent more time contrasting PDPM vs. RUGs. To watch that webinar, click here.


In addition to the three SNF therapy metrics discussed in the webinar (EFI, CIFI, DIFI), Optima’s Business Intelligence tool provides advanced BI and data analysis to support decision making. Michael showcased some of the insights provided by Optima’s BI tool during the webinar, which raised the following questions:

8 – How does Optima’s RUG to PDPM analysis tool handle I8000A coding? Are “optimized” codes picked or does the methodology rely on taking the exact I8000A code listed on the sample set?

Optima’s analysis tool identifies all diagnoses on the MDS, including all of I8000, checkbox items in section I and others. After filtering out diagnoses that are on a blacklist for use in I8000A (e.g., codes that would be “return to provider”), the code that yields the highest combined PDPM reimbursement for the SNF is used for the calculations. All factors that influence reimbursement are considered, not just the primary diagnosis. In some instances, the best diagnosis code could yield lower reimbursement for some components (PT and OT) but higher reimbursement for others (nursing and SLP). The code that yields the highest combined reimbursement is what is used for the calculations by Optima.

9 – Does Optima’s BI model assume maximized diagnosis for the case-mix groups (from the other MDS data)?

The PDPM analysis in Optima’s BI tool considers all diagnoses on the MDS in I8000, as well as checkbox diagnoses throughout the MDS, including much of Section I. The diagnosis used for calculations is the one that yields the highest combined reimbursement for each patient, after excluding any diagnoses on a blacklist as inappropriate for I8000A use under PDPM.

10 – Is the BI dashboard highlighted in the webinar available for customers?

Yes, Optima’s BI tool is currently available for Optima’s customers. We’re continuing to build on its capabilities and will release important new PDPM-analysis tools in in the coming months.

To learn more, request a demo of Optima’s BI tool, and visit our PDPM Resource Center to stay up to date on the latest information and insights.

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