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In 2019, the Centers for Medicare and Medicaid (CMS) introduced the new Patient-Driven Payment Model (PDPM) Medicare payment system. PDPM is an improved payment system used by the CMS to calculate reimbursements for skilled nursing facilities. It takes a holistic approach and classifies residents into case-mix categories based on:

A nurse providing quality care under the PDPM Medicare payment system,
The PDPM Medicare payment system uses a holistic approach to classify residents.
  • clinical characteristics
  • resident assessments
  • resident diagnosis
  • predicted resources needed to care for a resident during their stay

Unlike the previous RUG-IV model, PDPM assesses each resident individually, taking into consideration the expert opinions of dietitians, social workers, nurses, and the admissions and billing departments, who communicate via the facility’s long term care software system. 

Long term care facilities that successfully calculate PDPM scores use both a nursing home software system and an attentive and well-trained MDS coordinator, who sifts through all MDS documentation. This ensures that these organizations more accurately determine the daily PDPM reimbursement rate for each resident by inputting the correct PDPM codes. 

For this reason, it is of utmost importance that facility administrators prioritize their MDS nurse’s activities by limiting their time on the floor. Instead, MDS nurses should focus on documentation and ensuring a long term care facility is accurately reimbursed. Failure to do so can negatively impact the facility’s financial stability due to inaccurate or untimely PDPM reimbursement claims.

What Is PDPM and the Potential Problems To Overcome

Since the PDPM system was first implemented, there are still some facilities struggling to understand what is PDPM. Therefore, we will first discuss the potential problems that facilities must overcome if they want to maximize their PDPM Medicare reimbursements. 

Unreliable MDS Documentation from Agency Staff 

The COVID pandemic has undoubtedly played a part in today’s national staffing crisis, driving the industry to use more agency staff. Agency staff, as we know, are drafted into a facility for the occasional shift. Therefore, they often do not comprehensively understand a resident, the level of care they need, or the facility’s long term care software.

One of the problems facilities face when using agency staff is that they are not fully integrated into the facility. This means they are unfamiliar with the facility’s protocols or other nursing implications like MDS assessments and processes, which leads to inaccurate documentation. This impacts the reliability of the recorded Minimum Data Set (MDS) documentation and the facility’s PDPM Medicare reimbursement rates. 

If MDS assessments are not accurately diagnosed and completed, facilities will not be adequately reimbursed for their services. Furthermore, residents will not receive the correct level of care and may suffer from unnecessary medical errors. 

Facilities must try to reduce the amount of agency staff used and attempt to retain or recruit more full-time employees who are fully integrated into the facility, resulting in accuracy and consistency in their MDS assessments and coordination of care. 

Impending PDPM Payment Cut

In 2023, the CMS intends to make a $320 million PDPM Medicare cut, putting pressure on skilled nursing facilities to improve their PDPM processes. Now more than ever, it is essential that facilities maximize their PDPM reimbursements with online training courses that upskill their MDS nurses or coordinators to assess documentation and ensure the proper reimbursements are paid accurately.

An MDS coordinator is calculating the PDPM reimbursement payments after reading information on"what is PDPM"
What is PDPM? PDPM is an improved payment system used to calculate reimbursements.

Alternatively, facilities can also use state-of-the-art PDPM tools like Experience Care’s PDPM Maximizer, which automatically scans documentation received from hospitals for PDPM clinical categories, making the process faster, easier, and more accurate for MDS nurses and coordinators. 

This useful tool processes patient documentation by scanning for relevant keywords using its AI database. After a keyword match is identified with the related diagnosis, the patient’s doctor will then review the diagnosis using the long term care EHR. This simple process is extremely efficient, taking up to 30 minutes per patient diagnosis. Facilities can expect to see this revolutionary technology available in the coming months.

Contact us here if you would like to test drive our user-friendly long term care software.

3 Advantages of the CMS PDPM Reimbursement Model

Despite the problems of the CMS PDPM reimbursement model mentioned above, some notable advantages make it worthwhile for facilities to embrace the PDPM Medicare payment system.

1. Enhanced Management and Quality of Care

The Medicare Patient-Driven Model payment system focuses on patient-centered care rather than the volume of therapy to calculate reimbursements. This means that MDS nurses and care coordinators must carefully assess how the facility manages and delivers care to each resident. 

Under the previous RUG-IV model, facilities were incentivized to over-deliver therapy services to receive more funding. The current PDPM model negates this option because the facility will only be reimbursed according to the resident’s case-mix classification. This means that residents are more likely to receive better and more personalized care, thus improving resident outcomes. 

While PDPM prevents over-delivering therapy, it also ensures that therapy is not under-delivered, as that would lead to potential neglect and poor resident outcomes. In such cases, the CMS will issue the facility f-tags and consequently give it a lower star quality rating. Therefore, an MDS nurse must ensure that all documentation and procedures are accurate and personalized precisely to the needs of each resident.  

2. Reduced Staffing Demands

Because the PDPM model is based on the resident’s case-mix classification, it no longer benefits facilities to over-compensate for unnecessary therapist services. This has been particularly helpful in recent times, as the long term care industry is in the midst of a staffing crisis. 

As one learns what is PDPM, they will find that onsite therapists are no longer demanded as much as they were previously; a study published by Health Affairs affirms that between October and December of 2019, the number of physical and occupational therapists working in skilled nursing facilities dropped by five to six percent, with a ten percent drop in physical and occupational therapist assistants. 

This reduction, the study shows, is because onsite therapists tended to be contracted employees more likely to work in more extensive facilities with larger numbers of Medicare-eligible short-stay residents. Meanwhile, therapist assistants were primarily used to generate more individual therapy minutes under the previous system, making it common for facilities to over-deliver on therapist services. 

So, in this way, the PDPM model has inadvertently reduced the need for therapists and, to a certain degree, relieved staffing stress during these troubled times. 

3. Improved Financials

The PDPM Medicare system helps to improve a facility’s financial stability through accurate reimbursement calculations for the services rendered. Its primary purpose is to offset the loss of therapy reimbursements with more accurate calculations so that facilities can maximize their PDPM reimbursements while providing exceptional care.  

When facilities are accurately reimbursed, this will, in turn, free up resources in their budget, thus allowing them to reallocate these resources into other areas of nursing and the facility. 

From a revenue perspective, many facilities have also made significant savings because they no longer need as many contract therapists, improving their profit margins. And fewer therapists allow residents to build stronger relations with the therapists, as they will likely see the same therapist rather than different ones. Ultimately, this will increase resident satisfaction and outcomes.  

Of course, facilities may still need additional information about PDPM. A quick search for “how does PDPM work” will result in finding helpful online resources to improve their understanding, including this blog on 15 PDPM Resources and Links and a page with 13 MDS Resources and Links.

How To Improve the Accuracy of PDPM Medicare Reimbursements

A physician takes a payment under the CMS PDPM reimbursement payment model.
The CMS PDPM reimbursement model enhances the quality of care in SNFs.

Despite the potential problems associated with the PDPM Medicare system, such as relying on agency staff and the impending Medicare payment cut, a facility can enhance its PDPM processes by improving PDPM training for MDS nurses and coordinators, which will help them avoid unnecessary coding errors and inaccurate or missed payments, while helping their financial stability. 

Furthermore, long term care teams can also look at PDPM tools like Experience Care’s PDPM Maximizer, which can be integrated into an efficient long term care EHR software system to improve workflow efficiency and prevent missed diagnoses, which can increase a facility’s reimbursement payments. MDS nurses and coordinators will soon be able to easily select a diagnosis and automatically enter it into EHR. In the coming months, this revolutionary technology will be available nationwide for all facilities. 

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