Industry Gamed PDPM
Patient Driven Payment Model (PDPM) went into effect Oct. 1, 2019, and was the biggest change to the nursing home reimbursement system in at least a generation — replacing the previous case-mix classification system, Resource Utilization Group – IV. Under RUG-IV, patients were classified into a therapy payment group. The volume of therapy services provided to the patient was the basis for payment classification. The system created a profit incentive for SNF providers to furnish unnecessary therapy to residents.
PDPM classifies patients into payment groups based on specific care issues to improve the accuracy of SNF payments. However, investigators from Oregon State University found (PDPM) led to a “significant reduction” in occupational and physical therapy minutes. Once reimbursement was no longer based on therapy minutes, guess what, the residents did not need or benefit from therapy anymore.
The Journal of Post-Acute and Long-Term Care Medicine published the study which found:
“SNFs responded to PDPM with a significant reduction in individual occupational therapy and physical therapy utilization.”
The MDS is a 43-page assessment tool completed by a registered nurse that covers every aspect of the patient’s status: functional, medical, psychological, and social. These inputs from the MDS go through the PDPM grouper to produce a Health Insurance Prospective Payment System (HIPPS) code. That code determines payment.