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Patient Driven Payment Model

What is PDPM?

PDPM is the new Medicare Reimbursement Model – Patient Driven Payment Model, replacing the current reimbursement model, RUGS IV.

When does the change happen?

October 1, 2019

What does that mean?

Under PDPM, Medicare providers will be reimbursed for the resources required to provide services for a patient’s condition and level of function. Medicare will no longer reimburse providers for the volume of services provided. Medicare will focus on quality vs. quantity and outcomes will become the priority of PDPM.

Why is Medicare changing the payment model?

  • Patient Care — To focus on the patient’s condition and resulting care needs rather than on the amount of care provided in order to determine Medicare payment.
  • Outcomes — To modernize Medicare through innovation in SNF, meaningful quality measure reporting.
  • Cost — Medicare has indicated PDPM reduces administrative costs and increases focus on resident care.

How will the PDPM model be implemented?

  • Clinically Relevant Factors — PDPM focuses on clinically relevant factors, rather than volume-based service for determining Medicare payment, by using ICD-10 diagnosis codes and other patient characteristics as the basis for patient classification.
  • Non-Therapy Ancillaries — PDPM includes a case mix group for Non-Therapy Ancillary Services (NTAs), which are items and services not related to the provision of therapy such as drugs and medical supplies, thereby more accurately addressing costs associated with medically complex patients.
  • SNF per diem payments — PDPM adjusts the SNF per diem payments over time to reflect varying costs throughout the stay.

What is the difference between RUGs and PDPM?

  • Under RUGS IV, Medicare providers were reimbursed based on the VOLUME of services delivered to residents. PDPM reimbursement focuses specific resident clinical characteristics and function, which enhances payment accuracy and strengthening incentives for appropriate care. It eliminates counting therapy minutes as primary reimbursement driver. CMS reports significant cost savings to providers by reducing administrative burden.
  • Current RUG-IV Model has two fundamental reimbursement components –
    • Therapy + Nursing + Non-Case-Mix Base Rate
  • PDPM has five case-mix components and one Non-Case Mix component to establish payment.
    • PT + OT + SLP + Nursing + NTA (Non-Therapy Ancillary) + Non-Case-Mix Base Rate

How do I prepare?

Paragon Rehabilitation is here to support you throughout this change. We are pleased to offer a complete PDPM analytics review based on your information. This overview is completely free of charge and requires no contractual commitment. Call now to schedule your review.

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