Patient-driven payment model (PDPM)

The Patient-Driven Payment Model (PDPM) is a payment system implemented by the Centers for Medicare and Medicaid Services (CMS) for skilled nursing facilities (SNFs) in the United States. It was introduced on October 1, 2019, replacing the Resource Utilization Group (RUG) system. PDPM is designed to reimburse SNFs based on the specific care needs of each patient, rather than the volume of services provided.

Under the PDPM, payment is determined by a patient's clinical characteristics and needs, rather than the number of therapy minutes provided. This model aims to shift the focus from therapy minutes to patient-centered care, ensuring that patients receive appropriate and individualized care based on their unique needs.

To better understand the Patient-Driven Payment Model, let's explore its key features:

1. Patient Characteristics: PDPM considers five main patient characteristics to determine payment:  

a. Physical Therapy (PT): This factor assesses the patient's functional status and mobility.  

b. Occupational Therapy (OT): It evaluates the patient's ability to perform activities of daily living (ADLs) independently.  

c. Speech-Language Pathology (SLP): This factor assesses the patient's cognitive and communication abilities.  

d. Non-Therapy Ancillaries (NTA): It takes into account the patient's comorbidities and special care needs.  

e. Nursing: This factor evaluates the patient's nursing needs and the complexity of care required.

2. Case-Mix Classification: PDPM classifies patients into distinct case-mix groups based on their clinical characteristics. Each group has a specific payment rate associated with it. This classification ensures that patients with similar care needs are grouped together for accurate reimbursement.

3. Payment Components: PDPM consists of five payment components:  

a. Physical Therapy (PT): This component covers the costs associated with physical therapy services.  

b. Occupational Therapy (OT): It covers the costs of occupational therapy services.  

c. Speech-Language Pathology (SLP): This component covers the costs of speech-language pathology services.  

d. Non-Therapy Ancillaries (NTA): It covers the costs of non-therapy ancillary services, such as medications or medical supplies.  

e. Nursing: This component covers the costs of nursing services provided to the patient.

4. Variable Per Diem Payments: Unlike the previous RUG system, PDPM offers variable per diem payments. This means that the payment rate can change throughout a patient's stay, reflecting their evolving care needs. The payment rate is highest during the initial days of care and gradually decreases as the patient's condition stabilizes.

To better understand the significance of PDPM, it is essential to highlight the key differences between PDPM and the previous payment system, RUG-IV (Resource Utilization Group, Version IV):

1. Payment Determination: RUG-IV primarily relied on the volume of therapy minutes provided to determine payment. In contrast, PDPM focuses on patient characteristics and care needs, shifting away from therapy minutes as the primary payment driver.

2. Therapy Provision: Under RUG-IV, therapy minutes played a significant role in determining payment. However, PDPM reduces the emphasis on therapy minutes and instead emphasizes patient-centered care. This change ensures that patients receive appropriate care based on their individual needs, rather than being driven solely by therapy minutes.

3. Case-Mix Classification: RUG-IV classified patients into 66 groups based on therapy minutes and nursing needs. In contrast, PDPM classifies patients into distinct case-mix groups based on five main patient characteristics, resulting in more accurate reimbursement.

4. Payment Components: RUG-IV had three payment components: therapy, nursing, and non-therapy ancillaries. PDPM expands the payment components to include physical therapy, occupational therapy, speech-language pathology, non-therapy ancillaries, and nursing. This change allows for a more comprehensive assessment of patient needs and appropriate reimbursement.

To illustrate the practical application of PDPM, let's consider a few examples:

Example 1: A patient is admitted to a skilled nursing facility following a hip replacement surgery. The patient requires physical therapy to regain mobility and occupational therapy to relearn activities of daily living. Under PDPM, the facility would receive reimbursement based on the patient's specific needs for physical therapy, occupational therapy, nursing, and any additional non-therapy ancillaries required.

Example 2: Another patient is admitted to a skilled nursing facility with a diagnosis of Parkinson's disease. This patient requires speech-language pathology services to address communication difficulties and cognitive impairments. PDPM would consider the patient's specific needs for speech-language pathology, nursing, and non-therapy ancillaries to determine appropriate reimbursement.

These examples demonstrate how PDPM ensures that reimbursement is aligned with the individual needs of each patient, promoting patient-centered care and appropriate resource allocation.

In conclusion, the Patient-Driven Payment Model (PDPM) is a payment system implemented by CMS for skilled nursing facilities. It focuses on patient characteristics and care needs to determine reimbursement, shifting away from the volume of therapy minutes as the primary payment driver. PDPM offers a more accurate and patient-centered approach to healthcare revenue cycle management in skilled nursing facilities.