Senior Living Health Care Connection: PDPM payment methodology, part 4

Summary and next steps

Jun 04, 2019
Audit Care facilities

The following is the fourth and final article on the new patient-driven payment model (PDPM) methodology for skilled nursing facilities (SNF). This article provides a summary of the five case mix components of the PDPM, including physical therapy (PT), occupational therapy (OT), speech language pathology (SLP), nursing, and nontherapy ancillary (NTA).

PT, OT and SLP

The primary drivers for these three components are ICD-10 codes for the primary diagnoses which include any surgical procedures done at the hospital setting. The other primary driver for PT and OT is the function score found in section GG of the minimum data set (MDS). The PT and OT case mix calculations have a variable per diem (VPD) adjustment factor.

  • PT: Clinical category + functional score using 10 section GG items
  • OT: Clinical category + functional score using 10 section GG items
  • PT and OT components have a VPD decrease in payment of 2% every seven days after day 20
  • SLP: Presence of acute neurologic clinical condition, certain SLP related comorbidities and presence of cognitive impairment, use of a mechanically altered diet, or presence of a swallowing disorder


The nursing component is based on the 25 resource utilization group (RUG IV) items.

  • Case mix for the nursing component is calculated using nursing RUG categories and the nursing function score found in section GG
  • Possible 25 RUG-IV categories + functional score using seven section GG items
  • This component does not have a VPD adjustment


NTA includes the comorbidity scores and certain “extensive services.”

  • This component uses a combination of MDS items and ICD-10 codes reported in item 18000 on the MDS
  • Comorbidities are grouped into point tiers with higher costs awarded more points
  • Comorbidities include HIV/AIDS and are reported on the claim for an 18% adjustment increase
  • There are six case mix groups with six different case mix indexes
  • NTA component has a VPD
    • Days 1–3 adjustment factor of 3.00
    • Days 4–100 adjustment factor of 1.00

Summary points

Required assessments under PDPM:

  • The only required assessments under PDPM that would produce a health insurance prospective payment system (HIPPS) code would be the five-day prospective payment system (PPS) assessment, which follows the same schedule as under the current SNF PPS.
  • There is an option for an interim payment assessment (IPA), which may be completed at any point during a PPS stay.

Interrupted stay policy:

  • After discharge, a patient returning to the same SNF within three consecutive days is considered a continuation of stay:
    • No new assessment and VPD not adjusted
  • After discharge, if a patient returns to the same SNF after the three-day window or is admitted to a different SNF:
    • New five-day assessment and VPD starts from day one

Transition plan:

  • To receive a PDPM HIPPS code that can be used for billing beginning Oct. 1, 2019, all providers will be required to complete an IPA with an assessment reference date (ARD) no later than Oct. 7, 2019, for all SNF Part A patients. Oct. 1, 2019, will be considered day one of the VPD schedule under PDPM, even if the patient began a stay prior to Oct. 1, 2019.
  • RUG-IV ends Sept. 30, 2019.
  • PDPM starts Oct. 1, 2019.

Steps to prepare for PDPM

1. If not already created, name a PDPM transition team

a.  Team members should include: administrator, director of nursing     (DON), MDS supervisor, accounting manager, therapy manager

2. Assess vendor readiness, including electronic medical record software,         therapy providers

3. Initiate hospital meetings to discuss information requirements for MDS such     as surgical codes

4.  Plan training sessions

a.     Nursing staff

  1. PDPM basic training
  2. ICD-10 diagnosis coding
  3. Documentation requirements to support ICD-10 coding and MDS support
  4. Depression interview
  5. Cognition interview – engage SLP staff for support
  6.  Neurological conditions – engage SLP staff for support
  7.  Swallowing difficulties – engage SLP staff for support
  8.  Assess status of restorative programs

b.     MDS staff

  1. PDPM basic training
  2. Review resident assessment instrument (RAI) manual changes
  3. ICD-10 diagnosis coding
  4. Section GG readiness
  5. Assessment requirements

c.     Therapy staff

  1. Documentation supporting therapy intensity and duration
  2. Documentation supporting need for group or one-on-one therapy
  3. Indication of interdisciplinary team involvement

d.     Determine which calculator to use for previewing PDPM rates using current MDS

  1. Include the VPD adjustments
  2. Include geographic location
  3. Process sample MDS and determine reimbursement losses and gains

Contact Joan McCarthy at for more information.

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