Are You Prepared for PDPM on October 1st?

Are You Prepared for PDPM on October 1st?

The journey to PDPM (Patient-Driven Payment Model) presents many new changes for healthcare organizations in the skilled nursing world.

On October 1st, PDPM will bring about a paradigm shift from the current RUG-IV system for SNF patients covered in Part A stay. This blog will help your organization prepare for a smooth transition ahead.

How is PDPM divided?

PDPM consists of five case-mix adjusted components, and one fixed component. The five variable components are:
  1. Physical Therapy (PT)
  2. Occupation Therapy (OT)
  3. Speech-Language Pathology (SLP)
  4. Nursing
  5. Non-Therapy Ancillary (NTA)

There is also a sixth non-case mix base rate, which is (as the name suggests), a fixed rate for every patient. As discussed in our last blog, PDPM also includes a “variable per diem (VPD) adjustment” that adjusts the per diem rate over the course of the stay. Thereby, PDPM is assumed to decrease the total length of the stay for skilled nursing patients. Learn more in our CE course: Patient Driven Payment Model Overview (PDPM)

How do you derive a RUG under PDPM?

Under PDPM, each patient is classified into one of the five case-mix adjusted components: PT, OT, SLP, Nursing, and NTA. Each of these components has different criteria to classify a patient:
  • PT & OT: uses clinical category and functional score.
PDPM has a total of 10 clinical categories based on the patient’s primary diagnosis for the SNF stay. These 10 clinical categories are collapsed into four PT and OT clinical categories. The functional score for the PT and OT components is calculated as the sum of the scores on ten Section GG items of the MDS.
  • SLP: has a number of different patient characteristics, which are directly related to SLP costs.
  • Nursing: uses the same basic nursing classification structure as RUG-IV. PDPM is intended to reduce the number of nursing groups from RUG-IV. It also collapses many functional nursing groups.
  • NTA: PDPM accounts for the presence of certain co-morbidities or use of extensive service into payment.

The co-morbidities and extensive services for NTA classification are derived from a variety of MDS sources as well as ICD-10 CM codes. You can find more information on NTA classification at

When do the MDS assessments occur and when do you change the RUG?

PDPM only requires an admission assessment and a discharge assessment for the SNF stay. This means there is no longer need of the five different assessments under RUG:
  • 5-day
  • 14-day
  • 30-day
  • 60-day
  • 90-day

The admission assessment is a five-day scheduled PPS assessment which should be performed within day 1 to day 8 of the admission. This assessment covers all Part A days until the patient discharges. The only exception is if there is a necessity of an IPA assessment. Thus, this will reduce a significant burden from care providers for required scheduled and unscheduled assessments. However, this means that a patient’s admission RUGs remains the same for the payment until discharge from Part A. IPA assessment is only performed when there is a significant change in the patient’s condition.

What counts as a "significant change" for IPA?

IPA is an optional assessment that may be done by the provider to report a change in the patient’s status. It does not impact the variable per diem schedule but does impact the payment. The change in the payment takes effect beginning on the ARD and it continues until the end of Part A stay or until another IPA is completed. Medicare does not clarify as to what is considered a “significant change" in the patient’s status. Again, IPA is an optional assessment so it is solely on the provider’s discretion to determine whether an IPA is necessary. With all of the anticipated changes with PDPM, it is important to remember that the criteria for a patient to qualify for a SNF stay under Medicare Part A has not changed. The patient still requires a three-day qualifying hospital stay with the need for skilled therapy under physician guidance.

What are some additional PDPM policies?

Apart from the changes described above, PDPM has a few more policy changes in the following areas:
  • MDS changes: Includes assessments and new MDS items sets.
  • Concurrent and Group Therapy Limit: The combined limit of concurrent and group therapy should not exceed more than 25% of the therapy received by SNF patients, for each therapy discipline.
  • Interrupted Stay Policy: This allows providers to combine multiple SNF stays into a single stay where the patient's discharge and readmission occurs within a prescribed window. (The patient needs to discharged and readmitted.)
  • Administrative Presumption: Nursing groups, PT and OT rugs, SLP groups, and NTA components are designated under the presumption in PDPM.
  • Payment for Patient with AIDS: PDPM accounts for the increased cost of AIDS-related care accurately and appropriately.
  • Revised Health Insurance Prospective Payment System (HIPPS) Coding: The PDPM HIPPS algorithm is revised in five characters to accommodate the new payment groups. Those five characters are:
  1. Character 1: PT and OT Payment Group
  2. Character 2: SLP Payment Group
  3. Character 3: Nursing Payment group
  4. Character 4: NTA Payment Group
  5. Character 5: Assessment Indicator
Is there a RUG-IV to PDPM transition period? There will not be any transition period as PDPM begins October 1st, 2019 and RUG-IV billing ends September 30, 2019. All providers are required to complete an IPA with an ARD no later than October 7, 2019, for all SNF Part A patients in order to receive PDPM HIPPS code. References:
This article was written by Bijal Shah, Clinical Educator

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