According to Castelluci, the Patient-Driven Payment Model (PDPM) is a newly proposed Medicare payment framework designed to replace the Resource Utilization Group (RUG) system. The RUG system categorizes patients into various groups according to their care requirements and determines reimbursement according to the volume of care provided. Unlike the RUG system, in which reimbursement rates depend on therapy minutes, the PDPM system is a case-mix model in which the patient’s classification and individual healthcare needs are used to determine payment. As the implementation of the PDPM model is set to begin soon, there is uncertainty as to how nursing facilities with a high number of Medicaid-insured patients will generate income. Nevertheless, the PDPM model bears crucial changes, as discussed below.
- Focus on patient needs.
Unlike the RUG model, the PDPM framework determines reimbursement in line with the patient’s care needs. According to the PDPM model, the patient’s needs fall within five measures: physical therapy, nontherapy ancillary, occupational therapy, speech-language pathology, and an additional measure termed the adjusted daily rate (Castelluci). Using these metrics, nursing facilities will conduct an MDS assessment on a patient for eight days after arrival and during the end of their stay at the facility. During the MDS assessment, the nursing team does not only on the primary diagnosis but instead carries a profound examination of the patient’s health history and engages their family to determine their needs (Castelluci). Besides, as the model recommends, there will be interdisciplinary training and coordination between nurses, social workers, and therapists to enhance the accuracy of the MDS assessment. Through a thorough MDS examination and other mechanisms, the PDPM framework places more importance on patient care needs than the time they spend in the nursing facilities.
- Decreased therapy demand
Under the RUG model, the period spent by the patient in therapy determines the reimbursement levels. In this way, more therapy minutes translate to increased revenue for nursing facilities. This situation prompted nursing facilities to put patients under unnecessary therapy for the sake of generating revenue (Castelluci). The PDPM framework, however, recognizes the value and quality of the services offered to the patient. From this perspective, nursing facilities should scale down on delivering unnecessary therapy since patients will receive services according to the MDS assessment results.
- Profitability
Observably, the PDPM model affects the nature of the services offered at nursing homes and their profitability. Initially, under the RUG model, nursing facilities that mostly offered therapy services received high reimbursement since the emphasis was on therapy minutes. However, this situation will dramatically change because the PDPM model relies on patient needs rather than therapy to determine reimbursement, and there has been a significant decrease in therapy patients in nursing facilities because most of them are sent home to receive post-surgery care (Castelluci). Due to this situation, facilities offering therapy services should redefine their operations to avoid losses and stay in business. Although the circumstances may be unfavourable to some quarters, nursing care facilities providing care to critically ill patients will profit from the PDPM model since most of their patients require specialized care more than therapy services. Initially, these facilities received lower payments and made losses since they registered lower therapy minutes which were the primary payment basis under the previous reimbursement model.
Works Cited
Castellucci, Maria. “Nursing Homes Brace For New Medicare Payment System”. Modern Healthcare, 2019, https://www.modernhealthcare.com/post-acute-care/nursing-homes-brace-new-medicare-payment-system. Accessed 13 Sept 2021.
