PDPM: Why Medical Leadership is Critical

May 3, 2019

An engaged medical director, working closely with the interdisciplinary team, can help promote a safe and successful transition from RUGs.

 MAY 2019

 Karl Steinberg, MD, CMD

This October, the Patient-Driven Payment Model (PDPM) will supplant the Resource Utilization Groups (RUGs) as the paradigm by which a nursing center’s Medicare Part A per diem payment for post-acute (skilled) residents will be calculated.

This will significantly de-emphasize the impact of therapy minutes, which has been the primary driver of payment for decades and will bring medical complexity to the forefront in determining reimbursement.

While there is understandable fear and consternation around learning a new system, and concerns that there may be negative financial consequences for some nursing centers, the Centers for Medicare & Medicaid Services (CMS) feels that PDPM represents a move toward value-based care.

CMS wants to recognize that some patients are sicker than others and acknowledge the increased complexity by compensating centers for providing care and rehabilitation to the more ill, complex population. Whereas 80 percent of the calculus of the RUG rate was determined by therapy minutes, a majority of the rates under PDPM will hinge on medical diagnoses and comorbidities, as determined by ICD-10 codes.

Changing Rates

Additionally, cognitive and functional impairment will be taken into account, and PDPM rates for the rehab component will decrease over time—albeit only modestly by 2 percent per week after the first 20 days. It’s probably a safe bet, especially considering congressional budgetary concerns, that for a majority of post-acute residents, the reimbursement under PDPM will be lower than it would have been under the RUGs, at least for ultra-high rehab recipients (who constituted 50 percent or more of the total post-acute population in many facilities).

However, there will be some very medically complex residents whose PDPM per diem rates will be higher than ultra-high RUGs.