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Understanding PDPM and the PT/OT Components

February 11, 2019
Reimbursement By Kay Hashagen, Senior Consultant

As you may know, issues with the current Resource Utilization Groups, Version IV (RUG-IV) Prospective Payment System (PPS), were identified by The Centers for Medicare & Medicaid Services (CMS), Office of Inspector General (OIG), MedPAC, and others. Therapy payments under the current SNF PPS Case Mix System is based primarily on the amount of therapy provided to a patient, without consideration for the patient’s individualized characteristics, needs or goals.




The Patient Driven Payment Model (PDPM), effective October 1, 2019, will improve payment accuracy by focusing on the patient characteristics, rather than the amount of services provided and reduce provider burden. There are five case mix adjusted components. Each of the five components will have a calculated per diem payment rate that will be added together with a sixth component, the non-case mix rate component, to get the total per diem patient rate.

The first two components in PDPM are Physical therapy (PT) and Occupational therapy (OT).  The mechanisms for these two therapy components are similar and will be discussed together.  

Primary Factors for Payment Under PDPM

There are two primary factors for payment, a base rate and a case-mix index (CMI) value for each classification group within the case-mix adjusted payment components that will be determined under PDPM. The payment for each of the case mix adjusted components will be calculated by multiplying the component base rate by the component CMI for the resident's classification group, then multiplied by the specific day in the variable per diem adjustment schedule, when applicable.

The variable per diem adjustment schedule is applicable for the PT and OT components as below:


Variable Per-diem Adjustment Factors and Schedule - PT and OT Components

Medicare Payment Days
Adjustment Factor Medicare Payment Days Adjustment Factor
1–20 1.00 63–69 0.86
21–27 0.98 70–76 0.84
28–34 0.96 77–83 0.82
35–41 0.94 84–90 0.80
42–48 0.92 91–97 0.78
49–55 0.90 98–100 0.76
56–62 0.88    


Both PT and OT components will have individual CMIs for payment whether therapy is provided or not since therapy days and minutes do not play a role in payment calculations under PDPM as it does in the current RUG-IV PPS payment system.  For each of the case mix components, there are several case mix groups that a patient may be assigned within that component.  There are 16 groups for each PT and OT case-mix group as shown in the chart below:

Clinical Category
Section GG Function Score PT Case-Mix Group OT Case-Mix Group
Major Joint Replacement or Spinal Surgery 0–5 TA TA
Major Joint Replacement or Spinal Surgery 6–9 TB TB
Major Joint Replacement or Spinal Surgery 10–23 TC TC
Major Joint Replacement or Spinal Surgery 24 TD TD
Other Orthopedic 0–5 TE TE
Other Orthopedic 6–9 TF TF
Other Orthopedic 10–23 TG TG
Other Orthopedic 24 TH TH
Medical Management 0–5 TI TI
Medical Management 6–9 TJ TJ
Medical Management 10–23 TK TK
Medical Management 24 TL TL
Non-Orthopedic and Acute Neurologic 0–5 TM TM
Non-Orthopedic and Acute Neurologic 6–9 TN TN
Non-Orthopedic and Acute Neurologic 10–23 TO YO
Non-Orthopedic and Acute Neurologic 24 TP TP


How to Identify Your Patient's Case Mix Group

To identify the case mix group the patient will fall into, the first step is to identify the primary diagnosis the patient was admitted to the Skilled Nursing Facility (SNF). Starting October 1, 2019, it will be imperative for SNFs to have a staff member trained in ICD-10-CM coding.  Your reimbursement will depend on the accuracy of diagnosis coding in Section I of the Minimum Data set (MDS). The new MDS item I0200B ICD-10-CM code, will determine what clinical category you will be paid for both PT and OT components.  Once the primary diagnosis is identified at I0200B on the MDS, the person coding the section should go directly to the ICD-10-CM Diagnosis Code mapping CMS has provided at to identify if the diagnosis code for reimbursement at I0200B will put you in one of the 10 Clinical Diagnosis Categories or “Return to Provider.”  See example below:


ICD-10-CM Code
Description Default Clinical Category Resident Had a Major Procedure During the Prior Inpatient Stay that Impacts the SNF Care Plan?
M80072S Age-related osteoporosis with current pathological fracture, left ankle and foot, sequela Non-Surgical Orthopedic/Musculoskeletal May be Eligible for One of the Two Orthopedic Surgery Categories
M80079A Age-related osteoporosis with current pathological fracture, unspecified ankle and foot, initial encounter for fracture Return to Provider NA


Note: Some ICD-10-CM codes may map to a different clinical category depending on the patient’s prior inpatient procedure history, otherwise surgical history as indicated by the new MDS sections J2000-J5000.

Once the clinical category is identified by the diagnosis code at I0200B, the next step for the PT and OT components is to calculate the residents Function Score. Section GG of the MDS will be used to determine the Function Score versus section G that is currently used for the RUG-IV PPS System Activities of Daily Living (ADL) Score.  The difference between sections G and GG are the coding legends are opposite.  In section G, the more dependent the higher the score. In section GG, the more independent the higher the score. Over the past few years when section GG went into effect, there has been a lot of discussion of who should be completing section GG and where should the information to support the coding come from. If your facility is still having these types of conversations, you need to put a process in place that is accurate to regulation because  this new PDPM payment system will depend on the accuracy of the resident’s abilities documented in section GG. The following areas of section GG will determine the Functional Score:

  • GG0130C1-Eating Admission Performance
  • GG0130B1-Oral hygiene Admission Performance
  • GG0130C1-Toileting Hygiene Admission Performance
  • GG0170B1-Sit to Lying Admission Performance
  • GG0170C1-Lying to Sitting on the side of the bed Admission Performance
  • GG017D1-Sit to Stand Admission Performance
  • GG0170E1-Chair/Bed to Chair Transfer Admission Performance
  • GG0170F1-Toilet Transfer Admission Performance
  • Then determine if the resident can walk with the following sections:
    • GG0170I1-Walk 10 feet
    • GG0170J1-Walk 50 feet with two turns
    • GG0170K1-Walk 150 feet

To make the Function Score even more complicated, some of the above items are averaged. 

Again, the importance here is to make sure the MDS coding is accurate and the staff completing it has been educated and has mentoring and support.

Next month, we will discuss the Speech-Pathology-Language (SLP) PDPM component.


For more information on preparing for the transition to PDPM, register for our 9-Part PDPM Webinar Series.

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