PDPM got started on October 1, 2019. Before that, we had RUG scores. There’s a big difference between the two and by the time you finish this article in a few minutes you’ll have at least the basics down and you’ll know how much you should be getting paid!

PDPM: Patient Driven Payment Model

PDPM or the Patient Driven Payment Model is the current method for reimbursing Skilled Nursing Facilities (SNFs) for their resident’s time at the facility. It is a per diem payment model that calculates the payment to a facility based on clinical characteristics, patient assessments & diagnosis, and resource needs in the form of coordinated team-based care during a patient’s stay. PDPM assigns residents a case-mix classification that drives the daily reimbursement rate for that person.

This new method was developed for Medicare patients and is a shift from the Prospective Payment System (PPS). The PPS used Resource Utilization Groups (RUG) rates to determine costs. PDPM was created to address issues with the PPS RUG rates payment system that based payments on the volume of service and thus created negative incentives for facilities to boost the amount of services. 

Under PDPM there are 161 Minimum Data Set (MDS) item fields. These are:

  • Physical Therapy (PT): 14 MDS items
  • Occupational Therapy (OT): 14 MDS items
  • Speech Language Pathology (SLP): 33 MDS items
  • Nursing: 129 MDS items
  • Non-Therapy Ancillary (NTA): 33 MDS items 

RUG-IV: Resource Utilization Groups version 4

The RUG scores were broken down into the following groups: 

  • Rehabilitation plus Extensive Services
  • Ultra High Rehabilitation
  • Very High Rehabilitation
  • High Rehabilitation
  • Medium Rehabilitation
  • Low Rehabilitation
  • Extensive Services
  • Special Care High
  • Special Care Low
  • Clinically Complex

RUG scores were determined by 20 MDS item fields which were grouped into:

  • Therapy minutes/days: 12 MDS items
  • Activities of Daily Living (ADLs): 8 MDS items

This method focused heavily on therapy as the driver for payment and as noted above, created negative incentives to drive up the amount of therapy services rendered. 

CM: Case Mix

The Case Mix (CM) is the mix of the different kinds of therapy and services rendered for a resident. The groups for case mixes are:

  • Physical Therapy (PT)
  • Occupational Therapy (OT)
  • Speech Language Pathology (SLP)
  • Nursing
  • Non-Therapy Ancillary (NTA)
  • Non-Case Mix (NCM)

Non-Case Mix (NCM)

This is like your facility overhead. It is counted as the cost of running your business outside of the other groups. This includes things like electricity, water, laundry services, and meals for your residents.

Non-Therapy Ancillary (NTA)

Non-Therapy Ancillaries are things like medications for your patients. They are clinically necessary, but not services rendered or overhead required to run. 

CMI

The Case Mix Index (CMI) is the how much the base rate is multiplied for a particular resident based for each service group above.

Federal Base Rates

Standard base rates provided by the Federal Government. 

Variable Per Diem Adjustment

For the first 3 days of a resident’s stay, there are more costs associated with that resident. So the variable per diem adjust means that for the first 3 days of a resident’s stay, their Non-Therapy Ancillary (NTA) is multiplied by three to account for this additional cost. 

Starting on the twenty first day of the residents stay, physical therapy and the occupational therapy rates decrease by 2% every seven days. So on day 21, they dropped by 2% on day 28, another 2%, and they continue to drop every seven days like that until the hundred days is up. The 100 day benefit period for the resident is up.

HIPPS Codes

Health Insurance Prospective Payment System (HIPPS) rate codes represent specific sets

of patient characteristics (or case-mix groups) health insurers use to make payment determinations under several prospective payment systems. Clinical assessment data is the basic input, and for payment purposes, at least one HIPPS code is defined to represent each case-mix group. HIPPS codes are reported on claims to insurers.

The following table describes how PDPM HIPPS codes are derived for PT, OT, SLP, and NTA groups:

The first, second and fourth positions of the code use this table to translate PT/OT, SLP, NTA Payment Groups into code values:

PT/OT Payment Group SLP Payment Group NTA Payment Group HIPPS Character
TA SA* NA A
TB SB NB B
TC SC NC C
TD SD ND D
TE SE NE E
TF SF NF* F
TG SG   G
TH SH   H
TI SI   I
TJ SJ   J
TK SK   K
TL SL   L
TM     M
TN     N
TO     O
TP*     P

PDPM HIPPS Coding Crosswalk: Nursing Component

Nursing Payment Group HIPPS Character Nursing Payment Group HIPPS Character
ES3 A CBC2 N
ES2 B CA2 O
ES1 C CBC1 P
HDE2 D CA1 Q
HDE1 E BAB2 R
HBC2 F BAB1 S
HBC1 G PDE2 T
LDE2 H PDE1 U
LDE1 I PBC2 V
LBC2 J PA2 W
LBC1 K PBC1 X
CDE2 L PA1* Y
CDE1 M    

 

PDPM HIPPS Coding Table: Assessment Indicator

HIPPS Character Assessment Type
0 IPA (interim payment assessment)
1 PPS 5-day
6 OBRA Assessment (not coded as a PPS Assessment)

The above table links the possible assessment indicators in the last character of the HIPPS code with the PPS assessments that would prompt that character. Part A PPS Discharge assessment isn’t a payment assessment under PDPM.

Here is how the HIPPS PDPM codes come together:

HIPPS Code Classification Build Example

IPA Interim Payment Assessment

If the resident has a significant change in condition, then the facilities can do an interim payment assessment or IPA. This assessment would change the score effectively on the date that they complete the assessment.

Medicare One Hundred Day Benefit Period

For most people working in long term care, this item may seem redundant, but it’s an important note for anyone who is trying to understand how PDPM payments work. 

Medicare covers up to 100 days of care in a skilled nursing facility (SNF) for any benefit period. If a resident needs more than one hundred days of care in a skilled nursing facility the resident must pay out of pocket. When a resident hasn’t been in a SNF or a hospital for at least 60 days in a row or has remained in a SNF but has not received skilled care there for at least 60 days in a row then they can be eligible for another 100 days of care. 

There’s no limit to the number of benefit periods a resident can have. However, once a benefit period ends, the resident must have another 3-day qualifying hospital stay and meet these Medicare requirements before they can get up to another 100 days of SNF benefits.

Bringing it all together to calculate the PDPM Scores

Therapy used to be the big driver for payment with RUGs scores. But as noted above, this caused some negative incentives for groups to pump up the number of hours their patients spent with therapists. With PDPM, therapy minutes are not taken into consideration nearly as much. The overall condition of the resident is more important now. 

These groups are:

  • Physical Therapy (PT)
  • Occupational Therapy (OT)
  • Speech Language Pathology (SLP)
  • Nursing
  • Non-Therapy Ancillary (NTA)

Each of these items gets a component score. 

Spreadsheet Walkthrough

Step 1: Enter your Federal Base Rates. 

Your SNF will either be an urban or rural facility and this will adjust your base rate. You can find your categorization here: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS

Step 2: Enter your Facility Wage Index into the spreadsheet. 

This item is different for most SNFs and you can find yours here: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/WageIndex

Step 3: Determine your code

Figuring out codes is easier than it looks. It’s a step process to figure the code and get it into the spreadsheet.

First, get the codes for each grouping.

The codes come from the MDS. Just line up the MDS code with the HIPPS code in the spreadsheet. 

Next, put the parts of the code together to create your code.

The order is:

  1. PT/OT
  2. SLP
  3. Nursing
  4. NTA
  5. Assessment Type

Just put them in order and you have your code! See the example below to see it lined up for you. 

HIPPS Code Classification Build Example

Finally, enter your code in the spreadsheet

 

See your per diem rates

To see your per diem rates, just look at column AB in the spreadsheet!

That’s it! Now you have your per diem reimbursements!

Please let us know if you have any questions or issues.

PDPM Transcript

Jason Long

Hey everyone, my name is Jason Long. I’m the general manager for Cantata Health’s NetSolutions division. Today I’m here with the accounts receivable with our accounts receivable, product owner and PDPM connoisseur Sue Friesth. Sue is going to take us through how to read and create a PDPM score. So to teach us how we do this, tell me tell me Give me a little bit of background. Tell me what is it and then please walk us through it.

Sue Friesth

All right, well, PDPM came about on October 1 2019, to replace the RUGs scores for long term care. The RUG scores changed to be PDPM scores, and there’s a possibility of 28,800 scores in the PDPM.

Jason Long

That’s a big difference,

Sue Friesth

Each one of those would have a different rate. Therapy used to be one of the big drivers for the RUGs scores. With PDPM therapy minutes really are not taken into consideration at all. We’ve been more looking at the overall condition of the resident not being driven by how much therapy they’re receiving. So there are five, five components to the PDPM score.

I can share a little screen that talks about them. So here are the five components there’s physical therapy, occupational therapy, speech therapy, nursing and non therapy. Ancillaries is the NTA. Okay? So each one of those when they do the MDS, each one of those categories gets a particular component score. And then for the total, they just all get added up. There’s one more component that comes into play. It’s called the non case mix. It’s just kind of like your facility overhead price that you get. Each facility gets that same amount added to each daily per diem score for the resident base. Like I said, kind of for overhead meals, things like that, um, with the PDPM scores. There’s also what they call a variable per diem adjustment. So the NTA the non therapy ancillary is more like your meds that they get usually Within the first three days of a resident being in the facility, there’s more expense going on for that. So for the first three days, whatever score they get for the non therapy ancillary, that’s multiplied by three. So for those first three days, they get triple what they normally would get for the NTA component piece of their rate. Why is that? Because of the fact that it is more expensive for the first three days they have to get everything put together, there’s more expense.

Sue Friesth

To get this resident settled into the room for the first three days and maybe figure out what meds they do need just a little more intense once they’re settled in it after about the fourth day, things calm down a bit, and they’re not spending quite as much time with the resident.

Jason Long

Okay, sounds good.

Sue Friesth

The for this variable per diem, additionally, the physical therapy and the occupational therapy starting on day 21 of the residents stay, those rates start to decrease by 2% every seven days, so on day 21, they dropped by 2% on day 28, another 2% they continue to drop every seven days like that until the hundred days is up. The 100 day benefit period for the resident is up.

Jason Long

Okay. I didn’t realize it was a 100 day benefit period.

Sue Friesth

Yes. Medicare currently that there is the waiver going on with the coven that it may be more than hundred days. Or they may not need a qualified hospital state to come into the facility but with Medicare. in normal circumstances in the normal world, they would have had to have a three day qualifying stay at a hospital prior to coming in to a facility under Medicare guidelines. Okay, sounds good. And then they get 100 days. Once they use up 100 days, if they then go out of the facility, or are not on Medicare for I think there’s a 60 day break. After the 60 days is up. It’s possible they could get another hundred days.

Jason Long

Gotcha. Gotcha. Okay, sounds good. So, do you wanna go on to going through and reading the score? Should we make one up like, what’s the What’s next?

Sue Friesth

Sure, we can. So I have this I have a spreadsheet that I created back when all of PDPM came about, it was partly to help me understand how the scores worked. Um, so it’s a little overwhelming, probably with all the columns on it. These blue columns are the end, the end product, the end rate for each of the components. So in my case, here, I have an ABCD one. The number at the end of the score, a one means it’s an admission assessment, meaning that assessment was done when the resident first came into the facility. There’s a lot fewer assessments that need to be done for PDPM than there were for the RUG scores. In fact, with PDPM, you can do an assessment, an admission assessment, and that score could remain the same for the resident. Their entire stay.

Jason Long

Gotcha.

Sue Friesth

Okay, less. If the resident has a significant change in condition, then the facilities can do what’s called an interim payment assessment or an IPA, which would then change the score effective that date that they complete the assessment, and then it would have a zero at the end of the score instead of a one. That just means it’s in a changing condition or an IPA score.

Jason Long

Is there a certain number of times that you can do those assessments?

Sue Friesth

You can do them as often as necessary? Okay, there is it there is additionally one more assessment that they must do when the resident discharges, but that really has nothing to do with the billing part of it. So it doesn’t affect the dollars that you’re receiving. They just need to do that assessment from a clinical standpoint when they discharge the resident.

Jason Long

Gotcha. So with this ABCD One or the other? Tell me how what are those letters stand for.

Sue Friesth

So the A, the first character is what score they got under the PT, the physical therapy, and also the occupational therapy. So the PT and the OT shared that first, first character in the score itself. Okay, so down here on my little spreadsheet. This is listing out all the different possibilities available for a PT or an OT score. So you have a through P. z means that they’re at a default, meaning you actually didn’t do an assessment for them. So that would be the score that you get paid out if you actually couldn’t have completed an assessment on the resident. Okay. Um, like I said, as I do the MDS within the system, system will calculate these codes for them based on the answers to the assessment questions, so PT and OT would share the same they both go from A to P. These little CMI the case mix index is how much the base rate is kept as multiplied by for the particular resident.

Jason Long

Can you close that real quick for me? Yeah. And then start back at wherever you are right before that came in which I don’t know where you were. Yeah, okay.

Sue Friesth

Okay, um, yeah, so the PT and the OT scores. Will. We used to say they would RUG out at a thing, but they would PDPM out in the assessment at the exact same code itself. Okay. They share the CMI the case mix index is how much the base rates, the Federal base rates for each component, what their multiplier is for this particular resonance. So if if they had an F, it would be the federal base rates times 1.61. Gotcha. The Federal base rates are put out by the government. They’re standard across the country, there’s the rates, there’s world rates and urban rates based on where the facility is located. Rural rates are actually a little bit higher because it’s harder to get staff sometimes so they get paid a little bit more.

Jason Long

Okay.

Sue Friesth

so PT and OT make up the very first code. The first character on the score, the next one is actually the speech therapy and again, there’s fewer of these that you just go from a through L. Again, the case mix, index, and then the score. The third character is the nursing. There’s actually quite a number of those. They go all the way through Z.

Jason Long

Okay, why? What is the HIPPS? What does hip stand for? Again? HIPPS,

Sue Friesth

Ah, good question.

I think of what it is off the top of my head. Okay.

And then the nta the non therapy ancillary group just has the six categories. Okay. So all of these letters are determined by the MDS when it’s completed and it’s a just a variety of it’s not like one section of the MDS determines one of these groups. It’s kind of a combination of a lot of of the questions. There’s probably I think there are over 20 sections on the MDS they go from A to Z, but I think we skipped some waters in between. So, um so the base rates like I said, are standard. Okay. You see, some of them are more expensive or some of the rural are higher than the urban. So this is based on the facility, the facility needs to know whether they’re urban or rural. There are guidelines out on CMS website could tell you which, which you really are. There’s also the facility wage index that comes into play That is facilities specific, again, a little bit based on their location.

Jason Long

And does the CMS put that one out as well? Yes. So CMS gives everybody a different facility wage index.

Sue Friesth

Yes.

Jason Long

Okay. And just to note on the hips code, the hips is the health insurance, health insurance prospective payment system. Thank you. Yeah, no problem.

Sue Friesth

Um, there’s also a labor portion and a non labor portion. So this comes into play as well, in calculating the end, per diem rate. This changes every year. It’s a standard, I believe for 2020 it might be like 71.8 and then the difference 28 point something, okay.

Jason Long

So you just put up So the MDS creates the PT and the nursing and all the different those different.

Sue Friesth

The MDS comes up and it gives you this score.

Jason Long

Gotcha. So when you just fill out the MDS, MDS gives you your PDPM code,

Jason Long

Okay. So when you get that when you get that code can tell me how it applies to how much money like you know, I see your your day ones your, you know, where do I

Sue Friesth

find my spreadsheet here? I just have day one through 100.

Jason Long

Gotcha. So how to plug in this code to get into the code. Just tell me how much money is coming in all the time from all these orders. Tell me a little bit more about the code and the columns that you’ve got on the on the right hand side, or in your spreadsheet. If I just change the code, does it give me Does it change different things in there?

Gotcha. Okay. So if if somebody wanted to use your spreadsheet to do this, to calculate other kinds of variations on the code, I take it that spreadsheets can be available in the blog article that we’ve got attached to this video.

Sue Friesth

Yes, we can put it out there.

Perfect. And they will need to for their facility, they will need to find out and plug in what their wage index is. Okay. And whether they’re urban or rural, and I don’t have that automatically, it’s it would just copy it up into this line up here.

Jason Long

Gotcha. Okay, sounds good. And then tell me about like if I if I’m if I’ve got the PDPM Score here that PDPM code, and I take a look and I look at the patient and I’m like, oh man, like this patient is not bringing in enough money to cover this patient. You know, how does that is there anything about that? Like, what I run another assessment to figure out like, how to make more money, like is there? Tell me how that goes?

Sue Friesth

Yeah, one of the one of the first drivers and coming up with the score is the primary diagnosis that the resident gets that gives them a clinical category, which kind of starts off the whole thing. So they need to be very, very aware of the fact of what that primary diagnosis code is, okay, entered on the MDS, because that, that’s kind of starting off the whole thing. They also need to be very aware of how They are answering making sure that they’re capturing all of the pieces that that resident requires in the MDS to make sure they’re getting the highest score possible.

Jason Long

Okay. Do you by any chance? No. any major mistakes that people make?

Sue Friesth

I think some of them in some of them is not really paying close enough attention to the primary diagnosis code. Okay. I mean, because that the residents will end up with a lot of diagnosis code, you know, they’ll end up with lists of diagnosis codes on them, they need to be very aware of the fact of which one would be the primary.

Jason Long

Gotcha. Okay. And can they use this system to determine which primary diagnosis codes are going to give them the highest payouts?

Sue Friesth

Um, this particular spreadsheet probably it’s, it’s really coming straight off of the code that they get. So there are Other things available that would kind of more help them determine which is the higher paying score, or diagnosis code.

Jason Long

Gotcha. All right, great. And then I’m looking through this. Is there a grand total? Or is that the grand total on the far right on column AC?

Sue Friesth

Oh, actually, the grand The, the total column A B, gotcha. That’s the total per diem that they will receive. Gotcha. For that day. And if you look here, I have the variable per diem. For that non therapy, ancillary fees. It’s multiplying by three for the first three days and then it’s going back to 100% of the score.

Jason Long

Gotcha. Gotcha.

Sue Friesth

The same with PT in the OT. Come down here to day 21 and we have it doing the 2% reduction. for seven days and then another 2% starting on day 28 and another percent.

Jason Long

Okay, sounds good.

Sue Friesth

So these Yeah, these base scores are based on what code they get like here for the first character is a C. So the case mix index for a PT with the code of C is 1.88. So it’s taking the base rate times the case mix index and giving you the score for that back for that day,

Jason Long

I see how it’s all put together. Okay, perfect. Yeah, great. This is super helpful. This This was really enlightening. Any other any other like big things that people miss or people forget or any really important things to bring up out of this.

Sue Friesth

That I can think of have their there is plenty of information out there to help determine how you can get the best score possible.

Jason Long

Okay, do you know where somebody would go to look for that?

Sue Friesth

There’s information out on CMS. And actually, Jason, I probably have something that we can add.

Jason Long

Okay. Yeah. Give me whatever you got. We’ll put it into the blog article.

Sue Friesth

Yeah.

Jason Long

All right. Perfect. So thank you so much. This was incredibly helpful. I’m sure that lots and lots of people will find this really, really enlightening. I know I certainly did. And I look forward to talking to you again, about more.

Sue Friesth

More of the fun details of receivable frivolity of PDPM

Jason Long

Exactly. I’ll talk to you soon. Okay.

Sue Friesth

All right. Thank you.

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