Blog: Assessing the Impact of the Patient Driven Payment Model (PDPM)-1142548992

Assessing the Impact of the Patient Driven Payment Model (PDPM)

May 14, 2021
May 14, 2021

The Medicare Patient-Driven Payment Model (PDPM) was implemented October 1, 2019. The American Speech-Language-Hearing Association (ASHA), representing one of multiple rehabilitative professions to which the change applies, describes the PDPM as a “major overhaul to the current skilled nursing facility (SNF) prospective payment system (PPS)… designed to address concerns that a payment system based on the volume of services provided creates inappropriate financial incentives. This revised payment methodology is driven by the patient's clinical characteristics rather than the number of therapy minutes provided.” Now that the PDPM has been in effect for more than 18 months, it is time to assess its impact. Here are a few sources that attempt to do that:

More Effective Skilled Nursing Reimbursement

An article in McKnight’s Long-Term Care News offers that the “efficacy of the Patient-Driven Payment Model has never been clearer than now, in the middle of the coronavirus pandemic.” It mentions a recent analysis showing that the “PDPM enabled skilled nursing facilities to see a 9% increase in Medicare reimbursement in the early days of the outbreak.” Converting from Medicare rates “based on the number of therapy minutes provided to any given patient... to a daily reimbursement rate determined by patient classification,” has been a very positive change where payment “is driven by the needs of the patient, not the services rendered.”

COVID-19 Makes It Hard to Predict Long-Term Impacts

The PDPM was designed to ensure patients get better skilled nursing care while preventing the ability of some operators to game the system by providing unnecessary services. According to Skilled Nursing News, even before the pandemic, “The few pre-COVID months of PDPM data raised concerns that far more winners than losers were emerging under the system, which was intended to pay out the same total amount of Medicare dollars on skilled nursing care as…” the previous reimbursement model. Few payment structure changes have been made during COVID-19, which means that “Anyone looking for long-term patterns in the COVID-era PDPM data, however, must do so with extreme caution. The system generated several pandemic-related boosts that are unlikely to continue past the emergency.”

Skilled Nursing Facility Staffing Experienced Pre-COVID-19 Decreases

RevCycle Intelligence reports on a study finding that “physical therapist and occupational therapist staffing levels at SNFs fell by 5 percent to 6 percent from October to December 2019 compared to the period before Medicare implemented the Patient Driven Payment Model (PDPM).” The article offers, “The financial incentives of the PDPM have been associated with SNF staffing changes shortly after implementation, but further research is needed to determine whether staffing changes—or changes in types of therapy, as a result—have impacted patient outcomes.” The past year of the COVID-19 pandemic and it’s impact on much of healthcare may make it impossible to determine whether this decrease was “a ‘right-sizing’ of therapy departments that were previously designed to deliver financially motivated therapy of limited clinical benefit or a form of skimping that limits patients’ access to needed rehabilitation services.”

A HealthStream blog post dating from the transition to PDPM offered the following suggestions: “If more therapy and a more robust rehabilitation program produces better outcomes for elders, are we setting up SNF residents for worse outcomes under PDPM? Possibly. That is not to say we should go back to payments based on therapy minutes. However, we should invest in rigorous measurement and reporting of rehabilitation outcomes under PDPM, so both providers and residents can optimize care, and CMS can adjust payments accordingly.” Unfortunately, it appears that COVID-19 has served to delay the process for understanding and correcting the truly negative impacts of PDPM. Undoubtedly, CMS will be playing catch up with current crisis situations have abated.

Nursing homes and skilled care facilities that continue to excel are those that treat residents as people worthy of respect, regardless of medical condition or funding source—and regardless of the pressures felt by staff. HealthStream works with skilled nursing and LTC facilities to address these challenges, from keeping pace with regulatory requirements to engaging and developing competent staff who can satisfy the demands of increased patient complexity. HealthStream solutions for skilled nursing and long-term care equip organizations to seamlessly manage the pressures of surveyor visits, while remaining focused on high-quality patient and resident care.