Understanding the Patient-Driven Payment Model (PDPM)

What is PDPM? Patient-Driven Payment Model

The Patient-Driven Payment Model (PDPM) is the proposed new Medicare payment rule for skilled nursing facilities. It is intended to replace the current RUG-IV system with a completely new way of calculating reimbursement. Under PDPM, therapy minutes are removed as the basis for payment in favor of resident classifications and anticipated resource needs during the course of a patient’s stay. PDPM assigns every resident a case-mix classification that drives the daily reimbursement rate for that individual.

How will PDPM affect my therapy business?

We expect PDPM to impact your therapy business in three significant ways:

Managing Care – Unlike RUG-IV, which incentivizes ultra-high volumes of therapy to capture the maximize payment, PDPM will require you to carefully manage how you deliver services in order to provide just the right level of care for each resident. SNFs who over-deliver therapy won’t get paid for services provided beyond the reimbursement level for each resident classification. But under-delivering therapy will lead to poor patient outcomes and potential Medicare audits and take-backs.

Staffing – With a reduction in total therapy minutes provided, you can anticipate less demand for therapists in the SNF setting. This should help ease some of the burden associated with recruiting qualified staff, making it easier for you to find and retain the best therapy resources.

Financial – PDPM is designed to be budget neutral. Within SNFs, this is expected to be true. With some therapy dollars reallocated to nursing, SNFs will be able to offset the loss in therapy reimbursement with higher reimbursement for the nursing care that’s already being provided. From a revenue perspective, contract therapy providers will see a reduction in revenues. However, because of the provisions that have been made under PDPM, it’s very possible to achieve neutral to positive profit margins, while increasing patient outcomes.

What do I need to do to prepare?

With a proposed October 2019 implementation date, it’s important to start laying the groundwork now for the changes. We’ve identified four keys to success under PDPM:

1. One is to lower costs – You’ll need to enable each therapist to provide more treatment to more patients through the use of group and concurrent modes of treatment.

2. The second is to improve patient outcomes – This can be achieved by establishing data-driven protocols based on the clinical evidence to suggest a care plan that takes into account the reimbursement level for each patient and the outcomes model that CMS has embedded into PDPM with Section GG data.

3. The third is to augment revenue sources – Start by identifying the residents in your SNF who are not currently covered by Medicare Part A but would benefit from therapy services.

4. Finally, optimize the reimbursement that you’re due – This means ensuring that your patients are being classified correctly and that your SNF and, by extension your therapy provider, are reimbursed appropriately for each resident that you see.

EMR software with advanced business intelligence (BI) and data analysis tools can help you predict your future needs and manage costs under PDPM, as well as provide customizable treatment protocols that will allow you to deliver the appropriate level of care for each unique resident. Ask your EMR vendor what capabilities they will have to support your transition.