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The Patient-Driven Payment Model And Why It's Important

Polaris Group Profile
Polaris Group
July 7, 2021
March 14, 2023
Polaris Group Profile
Polaris Group
March 14, 2023

The Patient-Driven Payment Model(PDPM) and Why It's Important

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ICD-10Coding Under PDPM

The Patient-Driven Payment Model (PDPM), took effect on October 1, 2019 and represents a change for skilled nursing providers (SNFs)in that patient condition, rather than therapy minutes, will drive reimbursement.  

Previous RUG System

Previously therapy minutes were the primary driver under the PPS RUG reimbursement system.  There are 20 MDS item fields associated with assigning someone to a rehab RUG for payment. There are currently four components to each of the 66per diem rates, including:

·       Therapy

·       Therapy Non-Case Mix

·      Nursing

·      Non-Case Mix Component Overhead

Each has a dollar amount or CMI (Case Mix Index) attached to it.  Final dollars determine daily RUG rate billed. The system is index maximizing, requires multiple PPS MDS assessments, and the RUG rates are billed for days aligned with those PPS MDS Assessments.

Patient Driven Payment Model (PDPM)

Under the Patient-Driven Payment Model, ICD-10 codes now form the basis of payment; we are utilizing the primary patient diagnosis as the key determinant of payment making it crucial for SNFs to have accurate coding.  The level of detail and accuracy required forICD-10 coding under PDPM is new for SNFs.  Under PDPM, the MDS now has 161 items associated with assigning someone to one of the five service-related components: physical therapy (PT), occupational therapy (OT), speech-language pathology (SLP), non-therapy ancillary (NTA) and nursing.

The PDPM system is case-mix index combining which means it combines dollar amounts for each component per day.  One MDS is required for entire stay until Discharge MDS with one exception - the Interim Payment Assessment (IPA).  Rate per day will change due to variable/tapering rates for PT, OT, and Non-Therapy Ancillary (NTA).  Every resident is assigned a Case Mix Group (CMG) for each Payment Component, (except Non-Case Mix Payment is fixed).

Of the five components, ICD-10diagnosis information is needed for Physical Therapy (PT), Occupational Therapy(OT), Speech-Language Pathology (SLP) and it also impacts Non-Therapy Ancillaries(NTAs); for a person that would have comorbidities that would impact the NTA payment.

SNFs should make sure their staff are proficient in ICD-10 coding to ensure accuracy during transition to the PDPM reimbursement system. It is now imperative to capture the correct primary diagnosis in I0020B to drive clinical category, as well as include all pertinent diagnoses in I8000 in order to qualify for all NTA as well as SLP comorbidities under PDPM.

ICD-10 accuracy plays an important role in both payment and resident care. This is the first time in the history of SNF reimbursement that payment is based largely on diagnosis coding.  

Facilities should be assuring they have/are:

·       Ensure at least one copy of a current ICD-10 Coding Manual is available.    Recommended source:

·       Looking for Hospital Surgical Procedures.  Hospital surgical procedures coded in MDS Section J can impact default clinical category.

·       Have a Coding Champion well trained.  You may want to consider having your coder obtain a coding certification such as through AHIMA.

·       Work to improve communication about diagnoses on admission.  This should be an IDT team effort and accuracy is an absolute must.

With a focus on PDPM you can work to assure you are capturing accurate reimbursement for all the treatments and services you are providing.


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