First Few Months of PDPM Triggered Higher SNF Payments. Will PDGM Do the Same?

The Patient-Driven Payment Model (PDPM) — another Medicare payment overhaul in the skilled nursing facility (SNF) arena — could serve as an indicator for what the coming months will look like under the Patient-Driven Groupings Model (PDGM). Naturally, home health owners and operators have been paying attention.

PDPM launched on Oct. 1, which has given observers ample time to see how it is taking shape. The consulting firm BKD recently found that, thus far, PDPM has not been budget-neutral compared to the last model, as it was intended to be.

In fact, the payments in PDPM have instead increased, BKD confirmed.


A previous analysis found that the average daily reimbursements had gone from $562.89 per patient day for an average SNF in the previous model to $614.96 in October, after PDPM was implemented. That was according to Zimmet Healthcare Services Group and its affiliated data service, CORE Analytics.

Before the impact was recognizable, home health stakeholders kept an eye on how SNF operators shifted their therapy strategy with PDPM looming.

The SNF industry’s three-month head start on navigating regulation-change headwinds could give home health providers additional insights on what to expect from the brand new PDGM’s rollout.


SNF executives knew PDPM’s goal of budget-neutrality wasn’t going to hold up by the turn of the year.

“The illusion of PDPM budget-neutrality is already over,” Marc Zimmet, president and CEO of consulting firm Zimmet Healthcare Services Group, told Skilled Nursing News.

BKD experts echoed those sentiments.

“Keep in mind that this new reimbursement system was intended to be budget-neutral while just shifting the focus from where we’ve been focused on the therapy volume to the patient’s condition,” BKD partner Camille Lockhart said on a webinar Wednesday. “However, we are seeing in this first quarter that generally everyone that we’ve looked at has an overall increase on their average reimbursement, based on their respective billing.”

In the webinar, which included a panel of BKD’s experts, they also answered questions on how therapy utilization has changed. Although BKD’s modeling suggests that it wouldn’t be hard for therapy-intensive organizations to eventually implement a 25% reduction in therapist hours, it’s still a tad early to draw any concrete conclusions.

Because the design of PDPM is so similar to PDGM, the early payment rises could be indicative of what home health care providers will experience within the next few months. Many SNF operators, however, are already bracing for the correction from CMS to bring the payments back down.

“We should enjoy the largesse while it lasts, but prepare for the inevitable correction long before 2020’s back-to-school sales are over,” Zimmet said.

If the budget stays neutral, as it’s meant to, the idea is to have as many winners as there are losers under PDGM. But if the PDPM payments have differed this much from the previous model, then it’s possible payments in PDGM won’t mirror those made under the Prospective Payment System (PPS) — at least at first.

Additional reporting by Maggie Flynn

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