Five Days and Counting Until PDPM

As the industry anticipates the implementation of a completely new Medicare payment classification system, it is important to keep in mind a few fundamental concepts:

1) The basic Medicare program benefits and coverage criteria have not changed.
2) The MDS still follows a standard process for scheduling, data collection and interpretation.
3) An accurate and complete bill is the desired outcome of a billing process.

For the past few months, providers have been focusing on learning the new payment classification system. Clinical software systems will complete the calculations that staff has been learning to do manually; however, leaders will want and need to understand how the calculations work in order to determine if all the information needed is complete and have the information coded accurately on the MDS. PDPM uses the resident’s diagnoses, conditions and special treatments to calculate payment categories.

Leadership Considerations

Medicare Clinical Coverage Criteria: The PDPM classification system does not change the basic Medicare benefits and coverage criteria. The admission staff and the members of the facility’s interdisciplinary team (IDT) should be knowledgeable about identifying the technical and Clinical Coverage criteria for SNF Part A stay coverage. The RUGs classification system has been driven by therapy days and minutes, which also defined Medicare coverage for the SNF stay. The PDPM system does not provide a simple connection between payment classification and Medicare coverage.

The resident must meet technical eligibility criteria to be covered in a Medicare Part A SNF stay. A period of three consecutive midnights must be spent as an inpatient in an acute hospital to access the SNF Medicare benefit. In February 2019, the Office of Inspector General (OIG) completed a small claims review project that identified improper payments of approximately $481,000.00 because the dates of the qualifying hospital stays did not meet this technical criterion on sixty-five claims.1

For the past few years, the majority of SNF claims were billed for Rehab RUG categories and Medicare clinical coverage was easy to be determined by the amount of therapy provided. October 1 will usher in a new period when the specific Medicare Clinical Coverage criteria must be identified. There are five Clinical Coverage categories:

  • Skilled Therapy
  • Skilled Nursing
  • Assessment and Observation
  • Management of a Plan of Care
  • Teaching and Training

Therapy evaluation and treatment documentation does not have to change to support skilled therapy five days per week.


For all Clinical Coverage Criteria, the following medical record elements are needed:

  • A physician’s order for the skilled care.
  • An estimated length of coverage documented by the provider (physician or extender).
  • A description of the skilled need and the interventions planned to meet it, documented by the nurses of the facility. This can include a well-defined care plan problem statement and resident- specific interventions.


Nursing documentation for the clinical coverage categories beyond Skilled Therapy will be the responsibility of the nursing department. Daily skilled nursing is based on the skilled need that can only be met by the special skills of a licensed nurse, and the special treatment being provided to the resident, seven days per week, by a licensed nurse. This documentation is usually found on a flow sheet or treatment administration sheet. The need for and administration of the skilled nursing treatment is straight forward. Additional daily charting that reflects the resident’s status and response to treatment is needed beyond the flow sheet format.

Assessment and Observation is a less familiar coverage category. It is designed for the resident with a medically unstable condition(s). In addition to the required record elements described above, the unstable condition must be described, and all interventions and care plan changes need to be recorded. The condition of the resident and their response to treatment needs to be described at least daily. Medicare coverage under this criterion would end when the resident’s condition is stable. It is helpful to describe what “stable” looks like as the care plan goal.

Management of a Plan of Care is the coverage criteria for residents with multiple non-skilled needs that require a licensed nurse to develop a plan of care that prevents decline and complications and maintains the resident’s safety. Once the care plan is fully developed, and the resident is maintained in a steady state, the Medicare coverage would end. The care plan goals should describe the maintenance status of the resident.

Medicare coverage for Teaching and Training supports a resident’s education about a new medical condition or treatment that the residents and/or family care-giver will manage after discharge. Describe how you will know that the resident has learned what you have taught in order to know when Medicare coverage should end.

Without the RUG categories to help us determine when Medicare coverage ends, we will need to address each of the coverage categories applicable to the Medicare stay. Residents will likely qualify in more than one Clinical Coverage Criteria during a SNF stay. Identify each criterion that is met at admission and throughout the stay to recognize when a resident’s stay is no longer coverable by Medicare Part A.2

MDS Scheduling: There are far fewer MDS assessments to complete for the PDPM payment classification system. In many cases, the Medicare initial assessment, the 5-day MDS, will be the only payment MDS completed during the stay.

Identification of the Rehab RUG category will be used to drive the selection of the Assessment Reference Date (ARD). Remember that a 5-day MDS must be submitted, even if the resident leaves before Day 8 of the stay, in order to be paid above the default rate. The resident must be in a Medicare stay when the MDS is opened in the clinical software. If the Medicare stay has ended or the resident is discharged, the MDS cannot be opened and the facility must bill default. Consider teaching the admitting nurse to open the Medicare 5-day MDS with the ARD of the day of admission. The ARD can always be moved to a later date by the MDS Coordinator.

“The facility is required to set the ARD on the MDS Item Set or in the facility software within the required time frame of the assessment type being completed. This concept of setting the ARD is used for all assessment types (OBRA and PPS) and varies by assessment type and facility determination.”3

The Interrupted Stay policy requires that the OBRA assessment and the PPS assessment schedules be managed separately. The determination of the beginning and end of a Medicare Part A stay has nothing to do with the OBRA Discharge MDS schedule or need for an Entry tracker.

CMS has provided a Fact Sheet about the Interrupted Stay policy. Click to download.

Accurate and Complete Claim: The purpose of the PDPM payment classification system is to provide a structure for Medicare payment to the SNFs. The desired outcome is a bill that accurately reflects the resident, their clinical conditions and the type and amount of services provided to the resident during the Medicare Part A stay.

I strongly encourage you to spend time with the IDT to review the claim information, the MDS information and the supporting medical record documentation prior to billing PDPM for the first time. Use the claim form as the end point of the process and work your way backwards. Confirm the demographic information, the MDS coding and the daily skilled charting associated with the Part A stay. In this way, you will submit a claim without errors or missing information and be paid at the PDPM rate reflective of the resident’s needs and services provided.

Keep your focus on producing consistent, accurate medical record documentation that flows reliably to the claim for efficient claims processing.

Karolee Alexander
Director of Reimbursement and Clinical Consulting