Skilled nursing facilities: Are you ready for the Patient Driven Payment Model?

Icon of nurse in profile and calendar showing October 1 circled.The Patient Driven Payment Model (PDPM) is a new case-mix classification model for skilled nursing facilities (SNFs). Keep in mind it takes effect October 1, 2019.

PDPM replaces the current case-mix classification system, the Resource Utilization Group, Version IV (RUG-IV). Right now, under RUG-IV, therapy payments are based primarily on the amount of therapy, not on patients’ needs, goals or characteristics.

Here’s what you should know about the Patient Driven Payment Model:

PDPM improves the overall accuracy and appropriateness of SNF payments by:

  • Classifying patients into payment groups based on data-driven patient characteristics
  • Reducing administrative burden on SNF providers
  • Adjusting per diem payments to reflect varying costs throughout a patient’s stay
  • Using clinical factors rather than volume of service to determine payment

PDPM consists of five case-mix adjusted components driven by data and patient characteristics:

  • Physical therapy (PT)
  • Occupational therapy (OT)
  • Speech language pathology (SLP)
  • Nursing
  • Non-therapy ancillary (NTA)

Each patient is classified by groups according to the five case-mix adjusted components listed above. Each component uses different criteria as the basis for classification:

  • PT and OT: clinical category, functional score
  • SLP: presence of acute neurologic condition, SLP-related comorbidity or cognitive Impairment, mechanically altered diet, swallowing disorder
  • Nursing: same characteristics as under RUG-IV
  • NTA: NTA comorbidity score

Read more about the Patient-Driven Payment Model here: PDPM FAQ1

Routsi Lee

Margaret Halstead, is Vice President of Health Economics and Market Access at Medline Industries


  1. Patient Driven Payment Model: Frequently Asked Questions (last revised 2/14/2019). Department of Health and Human Services. Centers for Medicare and Medicaid website. Available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/Downloads/PDPM_FAQ_Final_v2_508.pdf. Accessed February 25, 2019.