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PDPM Overview

Introduction to Patient Driven Payment Model (PDPM)

The Patient Driven Payment Model (PDPM) is Medicare's case-mix adjusted prospective payment system for skilled nursing facilities (SNFs), implemented on October 1, 2019. PDPM replaced the Resource Utilization Group Version IV (RUG-IV) system and represents a fundamental shift in how Medicare reimburses SNF care.

Core Principles

PDPM is designed to:

  • Focus on Patient Characteristics rather than therapy volume
  • Improve Payment Accuracy by better reflecting resource use
  • Reduce Administrative Burden by eliminating therapy minute requirements
  • Encourage Appropriate Care by aligning payment with patient needs

PDPM Components

PDPM adjusts payment across five distinct components, each reflecting different aspects of SNF care:

1. Physical Therapy (PT) Component

Case-Mix Weight: 1.45 Classification Factors:

  • Primary diagnosis
  • Functional status (Section GG scores)
  • Cognitive impairment

Key Categories:

  • Major Joint Replacement or Spinal Surgery
  • Other Orthopedic conditions
  • Medical Management
  • Infections
  • Other conditions

2. Occupational Therapy (OT) Component

Case-Mix Weight: 1.41 Classification Factors:

  • Primary diagnosis
  • Functional status (Section GG scores)
  • Cognitive impairment

Alignment: OT component generally follows PT component classifications but may differ based on cognitive factors.

3. Speech-Language Pathology (SLP) Component

Case-Mix Weight: 0.64 Classification Factors:

  • Acute neurologic conditions
  • Speech and language disorders
  • Cognitive impairment
  • Swallowing disorders

Special Considerations:

  • Mechanically altered diet requirements
  • Acute neurologic diagnoses (stroke, traumatic brain injury)
  • Communication barriers

4. Nursing Component

Case-Mix Weight: 0.89 - 1.26 (variable) Classification Factors:

  • Clinical complexity
  • Depression diagnosis
  • Restorative nursing services

Nursing Levels:

  • Low: Basic nursing care (0.89 weight)
  • Medium: Moderate complexity (1.06 weight)
  • High: Complex nursing needs (1.26 weight)

5. Non-Therapy Ancillary (NTA) Component

Case-Mix Weight: Variable Classification Factors:

  • Extensive services (dialysis, chemotherapy, radiation)
  • High-cost drugs and biologicals
  • Complex medical equipment

PDPM Calculation Process

Step 1: Primary Diagnosis Classification

The patient's primary diagnosis determines the initial PT/OT classification:

Major Joint Replacement → PT/OT Category A-D (based on function)
Other Orthopedic → PT/OT Category E-H (based on function)
Medical Management → PT/OT Category I-P (based on diagnosis & function)

Step 2: Functional Assessment

Section GG functional scores determine the specific classification level:

  • Score 0-5: Lowest functional level
  • Score 6-9: Low-medium functional level
  • Score 10-23: Medium-high functional level
  • Score 24: Highest functional level

Step 3: Component-Specific Factors

PT/OT Components

  • Use primary diagnosis and functional score
  • Apply cognitive impairment adjustments if applicable

SLP Component

  • Check for acute neurologic conditions
  • Assess speech/language/swallowing disorders
  • Apply mechanically altered diet considerations

Nursing Component

  • Evaluate clinical complexity indicators
  • Check for depression diagnosis
  • Assess need for restorative nursing

NTA Component

  • Identify extensive services
  • Calculate high-cost drug usage
  • Assess medical equipment needs

Step 4: Final Rate Calculation

Daily Rate = (PT Rate × PT Weight) + (OT Rate × OT Weight) +
             (SLP Rate × SLP Weight) + (Nursing Rate × Nursing Weight) +
             (NTA Rate × NTA Weight) + Non-Case-Mix Component

Implementation

Automated Classification

The system automates PDPM classification by:

  1. Diagnosis Analysis - ICD-10 code mapping to PDPM categories
  2. Functional Assessment - Section GG score calculation
  3. Clinical Indicators - Automated detection of relevant factors
  4. Component Calculation - Real-time PDPM rate computation

Data Requirements

For accurate PDPM calculation, the system requires:

  • Primary Diagnosis (ICD-10 code)
  • Secondary Diagnoses (relevant comorbidities)
  • Functional Scores (Section GG data)
  • Clinical Indicators (depression, cognitive impairment, etc.)
  • Medication List (for NTA component)
  • Treatment History (therapy services, nursing needs)

Validation Features

  • Diagnosis Code Verification against ICD-10 standards
  • Functional Score Validation for Section GG requirements
  • Clinical Indicator Checking for completeness
  • Rate Calculation Verification against CMS specifications

Key Differences from RUG-IV

Aspect RUG-IV PDPM
Therapy Focus Therapy minutes drive payment Patient characteristics drive payment
Components Single RUG category Five separate components
Assessment 5-day and 14-day assessments Primarily 5-day assessment
Complexity 66 RUG categories Multiple component classifications
Gaming Prevention Vulnerable to minute manipulation Reduces therapy minute gaming

Common PDPM Scenarios

High-Value Referrals

  • Major joint replacement with good functional potential
  • Complex medical conditions requiring extensive nursing
  • Patients with multiple therapy needs

Moderate-Value Referrals

  • Medical management cases with rehabilitation potential
  • Patients with some functional limitations
  • Standard nursing care requirements

Challenging Cases

  • Very low functional patients (may not qualify for SNF)
  • Patients with primarily maintenance therapy needs
  • Cases with unclear diagnoses or documentation

Documentation Requirements

Essential Documentation

  • Hospital Discharge Summary with primary diagnosis
  • Functional Assessment data (Section GG)
  • Medication Reconciliation for NTA calculation
  • Clinical History including depression screening
  • Therapy Evaluations if available

Quality Indicators

  • Accurate ICD-10 coding
  • Complete functional assessments
  • Proper clinical indicator documentation
  • Appropriate level of care justification

For technical implementation details, see the internal documentation.