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[Blog Series] Preparing for the Patient Driven Payment Model (PDPM): Week 6

August 16, 2018
Reimbursement By Armi Hernandez, Consultant

Thank you for joining us for week 6 of our blog series, “Preparing for the Patient Driven Payment Model (PDPM).” This week, we will discuss length of stay as it relates to PDPM.




The Centers for Medicare & Medicaid Services (CMS) has stated that the PDPM is budget neutral. This means that reimbursement under the PDPM will be the same compared to the current Resource Utilization Groups classification system (RUG-IV) based on the data from FY 2017.

According to the CMS technical report, here is the summary of the advantages of PDPM:


Advantages of PDPM
  • Removes therapy minutes as the basis for therapy payment.
  • Establishes a separate case-mix-adjusted component for NTA services, thereby improving targeting of resources to medically complex beneficiaries and increasing payment accuracy for these services.
  • Enhances payment accuracy for nursing services by making nursing payment dependent on a wide range of clinical characteristics (as originally considered for RUG-IV) rather than being primarily a function of therapy minutes and functional status.
  • Improves targeting of resources to beneficiaries with diverse therapy needs by dividing the single therapy component into three separate case-mix-adjusted components: PT, OT, and SLP.
  • Provides additional resources to facilities for treating potentially vulnerable populations, including beneficiaries with the following characteristics: high NTA utilization, extensive services (ventilator, respirator, or infection isolation), dual enrollment in Medicare and Medicaid, end-stage renal disease (ESRD), longer prior inpatient stays, diabetes, wound infections, IV medication, bleeding disorders, behavioral issues, chronic neurological conditions, and bariatric care.
  • Enhance payment accuracy for all SNF services by: (1) basing payment for each component on predicted resource utilization associated with clinically-relevant resident characteristics and (2) introducing variable per-diem payment adjustments to track changes in resource use over stay.
  • Promotes consistency with other Medicare and post-acute payment settings by basing resident classification on objective clinical information while minimizing the role of service provision in determination of payment.


Unlike the current RUG-IV system wherein meeting and maintaining the required therapy minutes for the category during the entire episode of care are the keys to the reimbursement rate, the PDPM’s five case-mix groups: Physical Therapy (PT), Occupational Therapy (OT), Speech Language Pathology (SLP), Nursing, and Non-Therapy Ancillary; comprises the calculation for the reimbursement rate. Each of these case mix groups have their own formula for calculation.

Under the PDPM system, facilities with a length of stay of approximately 20 days or less would fare well. That is true when looking at the PDPM PT and OT case-mix rate calculation within the first 20 days of the SNF stay. Starting from day 21, the PT and OT case-mix rate decreases by 2% every 7th day.


Day in Stay
PT/OT Adjustment Factor
1-20 1.00
21-27 0.98
28-34 0.96
35-41 0.94
42-48 0.92
49-55 0.90
56-62 0.88
63-69 0.86
70-76 0.84
77-83 0.82
84-90 0.80
91-97 0.78
98-100 0.76


The length of stay is only one factor that would affect the reimbursement when the PDPM goes into effect. There are several aspects of this payment model that must be considered as well. Facilities would have to assess their current practices and programs to make the appropriate changes on how to provide the necessary care for each of their patients. Dealing with this as early as possible would assist in the facility’s successful transition to the PDPM. One thing is for sure, the focus is still achieving positive clinical outcomes.

To recap our series from the beginning, check out week 1.


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