Understanding the Patient Driven Payment Model

On October 1, 2019, Medicare shifted from a Resources Utilization Groups (RUGs) model to a new reimbursement model called the Patient Driven Payment Model (PDPM). This change has and will largely affect skilled nursing facilities (SNFs) such as physical therapists, speech pathologists, and audiologists. Considering how recent this change is, however, many physicians do not understand the intricacies of PDPM. Here we go through everything you need to know so that you can better control your facility’s finances.

What is the Patient Driven Payment Model?

Understanding the Patient Driven Payment Model

PDPM is essentially a Medicare reimbursement system model that replaces the previous RUGs model. Under PDPM, facilities will no longer use “therapy minutes” as a basis for payment. Instead, they will rely on a case-mix classification model that uses resident classifications and clinical needs to determine reimbursement rates for the duration of a patient’s stay. By doing so, reimbursement rates will no longer be based on the volume of services provided, but rather a particular patient’s needs.

How will it affect SNFs?

Under this new model, the every-day business of skilled nursing facilities may not change, but they will still feel some impact. There are three main ways that SNFs may be affected by PDPM:


The biggest way that PDPM will affect SNFs is that it will change which patients will be profitable to a facility. Under RUGs, patients who required long-term therapy were the most profitable. Under PDPM, however, “clinically complex patients” will be the most profitable.

Staff responsibilities

The new model will also decrease demands on therapists. This is largely due to the fact that PDPM is shifting away from the therapy minutes model, which in turn could discourage facilities from over-delivering therapy services.  

Providing care

As stated previously, PDPM focuses on an individual patient’s needs rather than the amount of time they spend in therapy. This means that how you deliver care will impact reimbursement levels. In that respect, PDPM will incentivize facilities to provide the right amount of care to each patient instead of over- or under-delivering services.

If you have further questions on the new Patient Driven Payment Model, contact Medical Revenue Associates today at 215-497-1001.

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