PDPM and Physical Therapy

The Center for Medicare and Medicaid Services (CMS) rolled out a new reimbursement model for patients in Skilled Nursing Facilities (SNF). Effective October 2019 the new model called Patient-Driven Payment Model (PDPM) replaced the Resources Utilization Group (RUG) Model. Both models require physical therapists to evaluate patients and classify them. In the RUG model, reimbursement was based on utilization of services for sixty-six types of patients. The PDPM model prioritizes the individual needs of the patient considering their individual diagnosis, comorbidities, and functional status grouping them into four classifications, each with four functional levels.


Consider a 68-year-old male who recently underwent heart surgery and needs rehabilitation because he can’t yet make it up the stairs or carry his groceries. Under the RUG model, the SNF would be reimbursed for time spent in each service (PT, OT, Speech, etc.) The facility was paid based on how much care they provided resulting in an incentive to treat patients to the maximum amount allowed, even if care wasn’t needed. If the patient was in poor physical health prior to his heart attack, the SNF providers could break up his care into multiple smaller sessions per day to provide several hours. If he was in better shape, he may have had a single longer session of care which he may – or may not – have actually needed all of. From a physical therapist mindset, these approaches both worked to get the patient ready to go home, but reimbursement depended on the care provided rather than the patient’s needs.


Under the new PDPM model, reimbursement for this patient will be based on the classification they fit into from their diagnosis and level of function. Under PDPM, patients should receive the services they need regardless focusing on the patient’s status and goals. There are opportunities to have the payment re-assessed as their status changes. The categorization of patients under the PDPM model is much simpler than the RUG system and should ultimately reduce the documentation burden.

Overall the intent is to optimize care and reduce waste and patient care should improve under the new PDPM model.