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Understanding PDPM and the Interim Payment Assessment

August 13, 2019
Reimbursement By Kay Hashagen, Senior Consultant

In our “Understanding PDPM” blog series, we have discussed the specific components for Physical Therapy (PT), Occupational Therapy (OT), Speech Language Pathology (SLP), Nursing, and Non-Therapy Ancillary (NTA). The Centers for Medicare & Medicaid Services (CMS), in an effort to simplify the assessment process, has identified that the 5-day MDS can support the reimbursement for the patient’s entire length of stay under the Patient-Driven Payment Model (PDPM). This would significantly decrease the administrative burden for completion of MDS assessments that are currently required under PPS.




However, the idea that one assessment could support the entire length of stay is contrary to the current practices under RUGs IV PPS. Patient characteristics will drive PDPM payment, supported primarily by the diagnosis coding. This means that providers will have to ensure that the documentation in the medical record supports the diagnosis coding which in turn is used to support the reimbursement. If there is a change in the diagnosis coding, then there should be a change in the PDPM plan.

CMS has provided two options. The first is a discharge assessment. When the patient no longer meets the skilled criteria for a Part A Medicare stay, the patient should be discharged from Part A. This requires monitoring of the documentation to ensure that it meets the four requirements for Part A found in the Medicare Benefit Policy Manual, Chapter 8, §30. Reasonable and necessary care related to the primary diagnosis coding will be necessary for both nursing and therapy. 

Another CMS option under PDPM is to implement the Interim Payment Assessment (IPA). The IPA may be completed by providers in order to report a change in the patient’s PDPM classification, rather than discharge the patient from receiving Part A services. CMS has made it clear that the IPA is an optional assessment. However, CMS has stated that they still expect that providers will complete IPAs when indicated to provide the most accurate assessments. A provider can complete an IPA when a resident undergoes a significant clinical change that results in a change to a tier 1 classification. Currently, CMS has stated that because the IPA is completely optional, there will be no late assessment penalties for that assessment.

The date the facility chooses to complete the IPA should relate to the triggering event that causes the facility to determine that the IPA is indicated. The IPA changes payment beginning on the Assessment Reference Date (ARD) and continues until the end of the Part A stay or until another IPA is completed.

It is important to remember that the Section GG items calculated for nursing, PT, and OT, as part of the PDPM calculation, will be reassessed at the time of the IPA reflecting the resident’s current functional status. On the IPA, GG items will be derived from a new column “5,” which will capture the interim performance of the patient. The look-back for this new column will be a three-day window preceding and up to the ARD of the IPA (ARD plus two days before).

Completion of an IPA does not impact the Variable Per Diem (VDP) schedule. Under PDPM, if a facility completes an IPA, and more points are achieved in the NTA component, the first 3 payment days of the IPA will NOT have the adjustment factor of 3% like it would at the start of the Medicare stay. It is important that the completion of an IPA does not reset the VPD. If an IPA is completed on day 23 of the stay, the only adjustments would be the 2% decline in OT and PT components which apply to days 21–27.  CMS has answered IPA-related and other questions in a FAQs document that can be downloaded from the CMS PDPM website here.

It is important that facilities remember that a mandatory IPA will be required to transition from RUG-IV to PDPM on October 1, 2019. The transition between RUG-IV and PDPM will be a “hard” transition, meaning that the two systems will not run concurrently at any point. RUG-IV billing will end on September 30, 2019 and PDPM billing will begin on October 1, 2019. To receive a PDPM HIPPS code that can be used for billing beginning October 1, 2019, all providers will be required to complete an IPA with an ARD no later than October 7, 2019 for all SNF Medicare Part A patients. October 1, 2019 will be considered Day 1 of the variable per diem schedule under PDPM, even if the patient began their stay prior to October 1, 2019. The HIPPS code derived from the transitional IPA should be used to bill for dates of service beginning October 1, 2019.  Any transitional IPAs with an ARD after October 7, 2019 will be considered late and the late assessment penalty would apply.

If a resident is admitted at the end of September 2019, an ARD would need to be set at the end of September to support payment under RUGs IV PPS for the days in September.  For example, a resident admitted on September 28, 2019 would require an ARD in September to support payment for September 28, 29, and 30. An ARD will also be set for the transitional IPA from October 1, 2019 to October 7, 2019 to remain in compliance of starting PDPM process for October 1, 2019.

Important information related to the new IPA for PDPM:

  • Currently, CMS is stating that the IPA is optional. However the proposed rule states, “the SNF’s responsibility in this context would include recognizing those situations that warrant a decision to complete an IPA in order to account appropriately for a change in patient status,” which seems to indicate that a SNF could be held accountable if an IPA is not completed on a patient who is determined to have experienced a change in status. Stay tuned for the Final Rule to see if any changes are made to this statement.
  • Be prepared to transition to PDPM on October 1, 2019 using the IPA assessment with an ARD between October 1, 2019 and October 7, 2019.
  • Set up a system with the Interdisciplinary team (IDT) to review patient characteristics to identify if there are changes that would indicate an IPA, or a discharge from Medicare Part A services.

If you have questions concerning how to identify if an IPA is something your facility should perform, contact Kay Hashagen, Senior Consultant by calling 410-777-5999 or email


Looking for help preparing for the transition to PDPM, inquire about our PDPM PREP program.

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