Patient-Driven Payment Model. What Leaders Need to Know.

Take a deep breath, the new payment categories go into effect October 1, 2019. We have just enough time to get educated and make systems revisions.

The Patient-Driven Payment Model (PDPM) payment categories are determined by MDS information. There are four major case-mix groups and one non-case mix group:

  • Physical and Occupational therapy
  • Speech-language pathology
  • Skilled nursing services
  • Non-therapy ancillary
  • And, Non-Case Mix

The daily reimbursed amount is reduced each day after day 21 of the covered stay.

PDPM uses the resident’s clinical conditions to determine the therapy payment categories, rather than the amount of therapy provided.

  • PT, OT, SLP and Nursing categories use the resident’s functional scores from MDS Section GG to adjust case-mix
  • Physical therapy (PT) and Occupational therapy (OT) use the same scoring methodology.
  • Clinical condition on admission + Performance score for select Section GG items
  • Speech and language pathology treatment has a different scoring method
  • Clinical condition + Cognitive impairment + Comorbidities + Swallowing problems or mechanically altered diet
  • Skilled nursing categories use twenty-five RUGS IV nursing categories.
  • Nursing categories use depression symptoms and restorative nursing services to further adjust the case mix index score.
  • Therapy categories are initially determined by the resident’s primary diagnosis.
  • A new MDS item asking for the resident’s primary diagnosis will be included on Medicare 5-day MDS, beginning October 1, 2018.
  • Non-therapy ancillary (NTA) services are used to case mix adjust the overall score using a score for the number of comorbidities coded on the MDS. There are fifty comorbidity conditions considered for the NTA score.

The MDS 3.0 will undergo changes on October 1, 2018 to support the new payment classification system.

  • Eighteen items will be added to the Medicare PPS Discharge MDS to capture the total amount of therapy provided during the Medicare stay.
  • The Medicare 5-day and the Medicare PPS Discharge MDS will be the only MDS assessments required for PDPM starting October 1, 2019.
  • The 5-day MDS will establish the PDPS payment category for the entire Medicare stay unless an Interim Payment Assessment is warranted.
  • An Interim Payment Assessment may be used to capture significant changes in resident condition during the stay.

Leadership Insights: What You Can Do to Prepare

  1. Review systems for medical diagnosis coding.
    • ICD-10 CM coding must be accurate and consistent in the medical record, on the MDS and on the claim. The primary diagnosis for the SNF stay must be established upon admission and represent the reason for admission to the SNF related to the prior qualifying hospital stay.
  2. Review the process for coding MDS Section GG.
    • According to the MDS 3.0 manual, Section GG coding represents the resident’s “Usual function” during the first three days of the Medicare stay, and before therapeutic intervention has an impact on the resident’s function.
    • Some facilities are using data coded by therapy and imported to the MDS from therapy software. Residents typically function at a higher level during therapy treatment than during the evening and night time and in the environment of their room. If the facility accepts the Section GG data from therapy, they are likely under-coding Section GG. In the PDPS this will result in a lower payment category for the entire Medicare stay.
    • Section GG coding is to be a professional assessment of the resident’s Usual function, rather than a count of dependency levels charted by nursing assistants.
  3. Develop a team approach to accurately code the resident’s Usual function for Section GG at both admission and discharge from the Medicare Part A stay.

Pathway Health can support and assist your facility to prepare for the new PDPM.

Contact us to learn how the experts at Pathway Health can help your organization reach higher to achieve success.


Karolee Alexander,
Director of Reimbursement and Clinical Consulting,
Pathway Health