Are You Ready For PDPM? Answering Your Burning Questions

If you work in a skilled nursing facility, you’re very familiar with the Resource Utilization Group (RUG-IV) system, which bases your Medicare reimbursements primarily on therapy minutes. Over the years, however, the inefficiencies of RUG-IV have received pushback within the industry, and the call for a new system was heard.

By now, you should know about the new Patient-Driven Payment Model (PDPM) that the Centers for Medicare and Medicaid Services announced back in July of 2018, that will take effect on October 1, 2019. But do you still need more information about how this change will affect you? And are you ready for the change? Today, we’re answering some of the top questions about PDPM to help you understand what to expect and how to adapt.

Diagnostic Testing

The Patient-Driven Payment Model will completely replace RUG-IV, changing the way Medicare Part A reimbursements are calculated for skilled nursing facilities. With this new model, gone are the days of therapy minutes influencing payment. According to Skilled Nursing News, "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." 1

This means that more services will be considered in order to create a more accurate and appropriate patient treatment, like physical therapy, occupational therapy, speech language pathology, nursing and non-therapy ancillary. Each patient will be assigned a clinical category based on their primary diagnosis, then a functional score for each component. Based on the combination of these elements, a unique case-mix reimbursement rate is assigned.

What Does This Mean for Skilled Nursing Facilities?

Without therapy hours driving reimbursement, PDPM will drive attention back to the individual needs of each patient instead of simply trying to meet quantity benchmarks. However, this switch leaves a few questions to be answered about how this new model will change the clinical dynamic within skilled nursing facilities. Here’s the answer to three:

1. How will Level of Care be Dictated?

The Old Way: RUG-IV incentivized higher volumes of therapy services to maximize the payment outcomes, no matter if the services were warranted or in the patient’s best interest.
The PDPM Way: With PDPM, you’ll need to be more cognizant about how you deliver services to ensure you’re providing the perfect level of care. Skilled nursing facilities who over-deliver therapy won’t get paid for services provided beyond the reimbursement level for each resident classification.

2. Who Will Have Control Over Patient Care Plans?

The Old Way: Under RUG-IV, therapists often controlled the resident’s care plan, with nursing staff following their lead.
The PDPM Way: This model flips the current standard, allowing nurses to dictate patient care planning. “In addition, the base nursing reimbursement rate — along with non-therapy ancillaries, or NTAs — will also provide consistent funding sources for providers. That doesn’t mean that therapists will take a back seat... the challenge moving forward is ensuring that all employees in a nursing home work together to focus on patient needs and outcomes.”1 From a financial perspective, it’s true that therapy will now produce less revenue. However, those lost therapy dollars will be reallocated to nursing; this means that skilled nursing facilities should be able to maintain or even increase profit margins with the higher nursing care reimbursements for the nursing care that’s already being provided. 2

3. What are the New Changes in Staffing Needs?

The Old Way: With the excessive amount of therapy minutes provided under RUG-IV, there’s a constant need to be recruiting and retaining therapy staff.
The PDPM Way: Once therapy time is condensed under PDPM, skilled nursing facility settings can expect a decrease in demand for therapy staff. “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.”

What Should I Do To Prepare Between Now and October?

With the switch almost a month away, it’s time to start restructuring your facility to accommodate this new model. Optima Healthcare Solutions recently published an article about PDPM that lists four major changes you need to make to be successful - and we suggest you follow their lead!

1. Lower costs to empower your therapists to administer more treatment to more patients through the use of group and concurrent modes of treatment. 3
2. Improve patient outcomes by utilizing data-driven protocols and clinical evidence to suggest care that takes into account the reimbursement level for each patient. 2
3. Augment revenue sources by identifying residents who are not currently covered by Medicare Part A but would benefit from therapy services. 2
4. Optimize the reimbursement that you’re due by making sure that your patients are being classified correctly so your facility and providers can be reimbursed appropriately. 2

For more information on the Patient-Driven Payment Model, visit the Centers for Medicare & Medicaid Services website to download fact sheets, frequently asked questions, training presentations and other resources.

Resources

1. https://skillednursingnews.com/2019/03/pdpm-101-what-skilled-nursing-providers-need-to-know-now/

2. https://www.optimahcs.com/resources/understanding-patient-driven-payment-model-pdpm/