Beginning Oct. 1, 2019, providers will no longer be paid under Medicare Part A via the Resource Utilization Groups, version four (RUG-IV) Skilled Nursing Facility Prospective Payment System (SNF PPS). Instead, the Centers for Medicare & Medicaid Services (CMS) will flip the switch and immediately change over to the new Patient Driven Payment Model (PDPM). PDPM is expected to improve the accuracy of payment by focusing on resident characteristics rather than on service delivery. 

This means resident days up to Sept. 30 will be paid under RUG-IV, and resident days from Oct. 1 forward will be paid under PDPM. This includes residents who were admitted prior to Oct. 1 and are still receiving skilled care. There is no transition period.

This represents the most significant change in Medicare Part A payments since the SNF PPS was first implemented in 1998 and will require preparation across the entire SNF organization to assure a smooth transition.

Like RUG-IV, the engine that drives PDPM is the Minimum Data Set Resident Assessment Instrument (MDS-RAI). However, PDPM dramatically changes the SNF PPS assessment schedule, creates new types of SNF PPS and State assessments, and adds several new MDS items that are needed for PDPM resident classification.

SNF PPS​​ Assessment Schedule Changes

PDPM radically changes the SNF PPS assessment schedule. Starting Oct. 1, only the PPS 5-Day and PPS Discharge assessments will be required. A third optional assessment called an Interim Payment Assessment (IPA) is being created for PDPM to permit SNFs to report clinical changes that warrant a change in PDPM per-diem payment rates. 

CMS is eliminating the mandatory SNF PPS 14-, 30-, 60-, and 90-day assessments as well the Other Medicare Required Assessments that were typically used to report changes in therapy delivery. 

PDPM does not change the requirement for SNFs to complete Omnibus Budget Reconciliation Act of 1987 (OBRA) assessments for all residents, including upon admission, quarterly, and with a significant change in status. Some PDPM assessments can be combined with an OBRA assessment (for example, PPS 5-Day and OBRA Admission Assessment).

New Types of SNF PPS an​d State Assessments

To implement PDPM on Oct. 1, CMS developed two new assessments—the IPA mentioned above and an Optional State Assessment (OSA). 

The optional PDPM IPA can be completed when providers determine that the patient has undergone a clinical change impacting payment that would require a new PPS assessment. The Assessment Reference Date of the IPA is not fixed, and the facility can choose to complete the IPA relative to a triggering event of the resident’s condition. 

The OSA assessment is not a PDPM assessment but was created to help Medicaid case-mix states that rely on the traditional RUG-IV assessments as a basis for payment. Since CMS is changing the PPS 5-day and Discharge assessments and is eliminating the other RUG-IV PPS assessment types, Medicaid case-mix states may not have needed MDS data that is being eliminated by PDPM. 

To fill this gap, CMS is introducing the OSA on Oct. 1, which may be required by states for SNFs to report changes in patient status, consistent with their case-mix rules. 

SNF PPS MDS Item Changes Effective Oct. 1, 2019

In early January, CMS issued draft versions of the new and updated MDS-RAI forms (see link in box, page 13), which indicate that more than 80 MDS items will be added, changed, or deleted to accommodate for PDPM implementation. 

Nearly 40 new items directly impact PDPM resident classification, and therefore payment rates. Most critical is a new Item I0020B in Section I to report the ICD-10-CM diagnosis code representing the main reason for SNF admission. Also critical are multiple new patient surgical history items (J2100-J5000) that impact the PDPM physical and occupational therapy and speech-language pathology components, I1300 that impacts the nontherapy ancillary component, items specific to swing-bed assessments, and others in MDS Sections A and O for assessment type identification and therapy reporting purposes.

Providers should become familiar with and prepare for these changes using available resources (see below) well in advance of the Oct. 1, 2019, PDPM implementation date. 

CMS PDPM MDS-Related Resource Pages

CMS MDS 3.0 RAI Manual Webpage:​

Dan Ciolek is associate vice president, therapy advocacy, for the American Health Care Association. PDPM Update is a new Provider monthly feature that will bring more details about the new PPS system as they are released by CMS over the coming year.​