Looking to maximize your patient-driven payment model (PDPM) reimbursements? Your facility's success hinges on capturing each patient's full clinical picture, not just counting therapy minutes. This shift affects every aspect of your revenue cycle, from how you assess new admissions to how you document care.

Getting the details right — from accurate ICD-10 coding to MDS assessments — makes the difference between optimal reimbursement and leaving money on the table.

In this article, we'll cover:

• What PDPM is and how it works

• How SNFs can optimize reimbursements

• PDPM meaning, billing mistakes and how to avoid them

What is PDPM? Understanding the payment shift in SNFs

Medicare introduced PDPM in 2019 to replace the old RUG-IV system, marking a major shift in how SNFs receive reimbursements. The key difference is that your payments now depend on your patients' clinical needs and complexity rather than the number of therapy minutes provided.

Under the previous RUG-IV system, many facilities felt pressure to deliver more therapy minutes to increase reimbursements — even when patients might not need that level of service.

PDPM changes this dynamic by tying payments to each patient's actual medical conditions, diagnoses, and care requirements.

Here's why this matters for your facility.

Instead of tracking therapy minutes, you'll need to focus on capturing accurate clinical data, including:

• Primary diagnoses and comorbidities

• Functional abilities and limitations

• Cognitive status

• Medical complexity

• Special care needs

This new approach helps ensure patients receive care tailored to their specific needs while giving your facility fair compensation for treating more complex cases. Rather than a one-size-fits-all payment model, PDPM recognizes that different patients require different levels of resources and care.

How does PDPM work?

PDPM breaks down your reimbursement into distinct categories, each reflecting different aspects of patient care. Think of it as a comprehensive snapshot of your patient's needs — from their primary medical condition to their daily care requirements.

Here's what drives your PDPM reimbursement:

• Patient's primary diagnosis: Your ICD-10 coding choices matter more than ever. The primary diagnosis sets the base rate for therapy components and influences overall payment.
  
  

• Functional status: MDS assessments capture how much assistance patients need with daily activities like eating, mobility, and transfers. More dependencies mean higher reimbursement to cover increased care needs.
  
  

• Cognitive performance: A patient's cognitive abilities affect both therapy and nursing components. Accurate assessment of memory, decision-making, and communication needs helps determine appropriate payment levels.
  
  

• Medical complexity: Conditions requiring specialized nursing care or monitoring increase your reimbursement rate. This includes IV medications, wound care, and other clinically complex services.
  
  

• Non-Therapy Ancillaries (NTA): These cover things like medications and medical supplies. The more extensive these needs are, the higher your NTA component will be.
  
  

• Depression status: Yes, this matters too. Depression can significantly impact recovery and care needs, affecting your nursing component rates.

Getting these assessments right directly impacts your bottom line. Each component contributes to your total reimbursement rate, making accurate documentation essential at every step.

PDPM vs. RUG-IV: Key differences

|                Proper Patient Transfer                |                  Patient Dumping                 |
|:-----------------------------------------------------:|:------------------------------------------------:|
|       Medical screening completed and documented      |          Limited or no medical screening         |
|          Transfer based on medical necessity          |   Transfer based primarily  on financial status  |
| Receiving facility contacted  and confirms acceptance |      No confirmation from receiving facility     |
|          Complete medical records transferred         |       Incomplete or no medical records sent      |
|          Appropriate transportation arranged          |     Inadequate or no transportation provided     |
|            Follow-up care plan established            |          No follow-up care arrangements          |
|   Patient and family informed  and consent obtained   | Limited or no communication  with patient/family |
|       Clear documentation  of transfer rationale      |           Poor or missing documentation

This shift fundamentally changes how SNFs need to operate. The most immediate impact comes from the new payment structure. Where facilities once received higher payments for providing more therapy minutes, PDPM bases payments on the actual clinical needs of each patient.

This means a patient with complex medical conditions but minimal therapy needs can generate appropriate reimbursement for the care they require.

The new assessment schedule reduces administrative burden while putting more emphasis on accuracy. While RUG-IV required frequent assessments throughout a patient's stay, PDPM focuses primarily on comprehensive assessments at admission and discharge. This makes initial documentation critically important — missing clinical details at admission can affect reimbursement for the entire stay.

Documentation has also evolved under PDPM. Rather than tracking therapy minutes, your team needs to capture precise clinical information, including comorbidities, functional scores, and detailed care requirements.

Each documented condition or impairment contributes to the overall reimbursement calculation, making thorough clinical assessment and accurate ICD-10 coding essential skills for your staff.

The therapy component has seen perhaps the biggest change. PDPM removes the incentive to provide therapy based on payment thresholds, instead encouraging clinically appropriate levels of service. The 25% cap on group and concurrent therapy ensures patients receive adequate individual attention while allowing for beneficial group interactions when appropriate.

How is PDPM reimbursement calculated?

PDPM bases your Medicare reimbursement on five distinct payment categories, each capturing different aspects of patient care. The total payment combines all these components to reflect your patient's comprehensive care needs:

1. Physical Therapy (PT): Base rates adjust according to your patient's primary diagnosis and functional abilities. The payment reflects the resources needed to improve mobility, strength, and balance. Initial assessments of activities like bed mobility, transfers, and walking directly impact this rate.
   
   

2. Occupational Therapy (OT): This focuses on daily living activities and self-care tasks. Your reimbursement varies based on the patient's level of independence with activities like eating, hygiene, and dressing. Like PT, the primary diagnosis influences the base payment rate.
   
   

3. Speech-Language Pathology (SLP) Rates: These depend on factors including cognitive impairment, swallowing disorders, and communication needs. Presence of neurological conditions or speech/swallowing difficulties increases this component's payment.
   
   

4. Nursing Component: This reflects the nursing care intensity required. Complex medical conditions, extensive services, depression status, and restorative nursing needs drive this rate. Accurate MDS coding of conditions and services is crucial here.
   
   

5. Non-Therapy Ancillaries (NTA): This covers costs like medications, medical supplies, and lab work. The first three days have a higher rate to account for admission costs. Points are assigned based on specific conditions and services, with higher points leading to higher payments.

Each category uses a distinct calculation method, but they all rely on accurate clinical documentation and MDS coding. Missing even one qualifying condition or service level can reduce your reimbursement across multiple categories.

Strategies for medical teams to maximize their PDPM reimbursements

From precise diagnosis coding to timely MDS completion, each step in your documentation process affects reimbursement. Here's how your medical team can capture appropriate payment for the care you provide.

Optimize ICD-10 coding for higher reimbursement

Most SNFs lose thousands in potential reimbursement due to imprecise diagnosis coding. Your primary diagnosis code influences every PDPM component, from therapy categories to nursing rates.

Getting the right code — and backing it with proper documentation — can mean the difference between optimal payment and leaving money on the table. Here’s how you can do that:

• Prioritize specificity in primary diagnosis selection. A code for "post-operative pneumonia following joint replacement" yields higher reimbursement than a generic "pneumonia" code.
  
  

• Document supporting evidence for each diagnosis, including detailed clinical findings, physician notes, therapy evaluations, and treatment responses.
  
  

• Create systems to capture comorbidities that affect multiple payment components, such as swallowing difficulties that influence both SLP and nursing rates.

Improve MDS assessment accuracy

MDS errors consistently rank among the top reasons for payment denials and downgrades. Each section of the MDS feeds into PDPM payment calculations, making accuracy essential at every step. A single scoring error can cascade across multiple payment components, reducing your reimbursement for the entire stay.

Remember to implement section-specific verification protocols, especially for Section O0425 therapy reporting, which affects compliance with group therapy limits.

Develop standardized processes for functional scoring that reflect actual patient performance, supported by therapy documentation and nursing observations.

Leverage Non-Therapy Ancillary (NTA)

NTA points often go uncaptured during the critical first three days when multipliers are highest. This component can significantly boost your reimbursement rates, but it requires swift, thorough documentation.

Many facilities miss qualifying conditions simply because they aren't documented quickly enough.

Remember to:

• Complete comprehensive admission assessments that capture all NTA qualifiers, from IV medications to complex wound care requirements.
  
  

• Track medication changes daily, particularly those that qualify for higher NTA points.
  
  

• Document all specialty medical equipment, isolation requirements, and infection protocols that affect NTA scoring.

Ensure proper care planning and interdisciplinary coordination

Poor communication between departments leads to documentation gaps that hurt reimbursement. Your care planning process needs to connect clinical care, therapy services, and documentation requirements.

When teams coordinate effectively, you capture all qualifying conditions and services while providing better patient care with these strategies:

• Hold structured team meetings that document clinical decision-making and care plan updates.
  
  

• Maintain detailed progress notes linking provided services to patient needs and outcomes.
  
  

• Monitor therapy delivery patterns to ensure compliance with concurrent and group therapy limits while meeting patient needs.

Common billing & documentation mistakes that reduce PDPM payments

Documentation errors can slash your Medicare reimbursements and trigger costly audits. Here are the most frequent (and expensive) mistakes SNFs make under PDPM:

Incorrect ICD-10 coding

Using non-specific or outdated diagnosis codes cuts your reimbursement across multiple components. Example: Coding "unspecified heart failure" instead of "acute systolic heart failure" can reduce both nursing and NTA payments.

MDS Assessment Errors

Inaccurate functional scoring and therapy reporting on the MDS directly impact payment rates. Common problems include inconsistent ADL scoring between shifts and incorrect recording of therapy minutes, especially for group and concurrent sessions.

Missing Comorbidities

Failing to document secondary conditions means lost revenue. Each missed comorbidity could reduce your NTA multiplier and nursing component rates. This includes overlooking conditions like malnutrition or wounds that qualify for higher payments.

Late Documentation

Delayed charting leads to missed NTA opportunities, especially during the critical first three days when multipliers are highest. Late documentation also weakens your position during audits.

What’s the best way to ensure PDPM compliance?

Medicare's auditing process focuses on accurate payment alignment with documented patient needs. Protect your facility with these compliance measures:

• Run weekly internal audits comparing clinical documentation against submitted claims
  
  

• Monitor therapy utilization patterns to stay within the 25% group/concurrent limit
  
  

• Use automated alerts in your EHR to flag missing documentation and potential coding issues
  
  

• Train all clinical staff on proper PDPM documentation, not just billing teams
  
  

• Review denied claims monthly to identify documentation patterns that need improvement
  
  

• Maintain detailed records of all care planning meetings and clinical decisions
  
  

• Schedule quarterly PDPM documentation training updates for all departments

Collect PDPM reimbursements more easily with ExaCare

ExaCare transforms your admissions process by using AI tools to streamline referrals, automate document review, and help you make faster, more informed decisions. Our platform helps you modernize your operations while maintaining the quality of care your facility is known for.

Here are the benefits you can expect from ExaCare:

• Reviews and summarizes lengthy referral packets instantly
  
  

• Extracts key clinical and financial information automatically
  
  

• Integrates with all major referral platforms in one interface
  
  

• Flags potential reimbursement risks before admission

  
  

• Enables quick communication with your team and hospitals

Whether you need support with SNF marketing, admissions, or admin, ExaCare can help your facility make faster, more informed decisions. Our platform is specifically designed for SNFs with multiple locations looking to modernize their admissions process.

Schedule a demo.