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Understanding PDPM & the MDS Intelligence PDPM calculator

How is PDPM calculated?

The MDS Intelligence PDPM calculator uses the payment for each component and is calculated by multiplying the case-mix index (CMI) that corresponds to the patient’s case-mix group (CMG) by the wage adjusted component base payment rate, then by the specific day in the variable per diem adjustment schedule when applicable. The payments for each component are then added together along with the non-case-mix component payment rate to create a patient’s total SNF  Prospective Payment System (PPS) per diem rate under the PDPM.

Find out how Inovalon can help you successfully navigate PDPM. Contact us for a demo.



What is PDPM?

The Patient-Driven Payment Model (PDPM) is the official model as indicated by CMS effective October 1, 2019, for the case-mix classification system for classifying skilled nursing facility (SNF) patients in a Medicare Part A covered stay into payment groups under the SNF Prospective Payment System. PDPM replaced the Prospective Payment System (PPS).

According to CMS, PDPM eliminates the incentive to provide unnecessary or ineffective therapy, and classifies residents into payment groups based on specific, data-driven characteristics while simultaneously reducing administrative burden on SNF providers.


What does PDPM do?

PDPM determines Medicare payments based on a resident’s conditions and care needs, as opposed to the previous Resource Utilization Group (RUG-IV) system that primarily focused on the therapy minutes provided.


What determines payment?

There are six clinical components that determine payment

Five are case-mix adjusted components:


  1. Physical therapy (PT)
  2. Occupational therapy (OT)
  3. Speech-language pathology (SLP)
  4. Non-therapy ancillary (NTA)
  5. Nursing

The final component is not case-mix-adjusted and covers SNF resources that do not vary according to patient characteristics. Patient characteristics are used to determine classification into a case-mix group (CMG), and these CMGs drive payment.


How to use PDPM?

The new PDPM system tapers rates for PT and OT over time. To succeed under PDPM, providers need to identify new opportunities for reimbursement. The new reimbursement structure incentivizes caring for medically-complex patients requiring nursing and non-therapy ancillary services. But to be successful in taking on more complex cases, it’s imperative to ensure staff is trained for the challenge.


Tips for Navigating PDPM


  • Assess the information you’re getting from the discharging hospital today and determine if you’re currently getting the appropriate diagnosis codes and surgical procedure history to support the coding of the five-day PPS assessment.
  • The newly created Interim Payment Assessment (IPA) has its own item set. A facility will be able to obtain a projected billing code prior to doing the MDS.


Additional PDPM Resources:



By Inovalon