The Impact of PDPM on SNF Billing: What You Need to Know

Skilled nursing facilities (SNFs) play a vital role in providing care and rehabilitation services to individuals in need. However, recent changes in the payment structure, particularly with the implementation of the Patient-Driven Payment Model (PDPM), have significantly impacted SNF billing practices.

In this blog, we’ll delve into the effects of PDPM on SNF billing, shedding light on how these changes influence the journey of healthcare providers. But before that, let’s give an overview of PDPM in SNF:

Overview of PDPM

PDPM, or the Patient-Driven Payment Model, is a reimbursement model implemented by the Centers for Medicare & Medicaid Services (CMS) for skilled nursing facilities (SNFs) in the United States. It replaced the Resource Utilization Group (RUG-IV) system, which primarily relied on the volume of therapy services provided to determine reimbursement.

Under PDPM, reimbursement is based on patient characteristics and needs rather than the volume of therapy services. This shift aims to better align payments with patient care needs and encourage individualized, patient-centered care. PDPM utilizes five case-mix components to determine payment:

  • Physical Therapy (PT)
  • Occupational Therapy (OT)
  • Speech-Language Pathology (SLP)
  • Nursing
  • Non-therapy ancillary (NTA)

Each component is assigned a set of clinical characteristics, or “drivers,” which determine the patient’s classification within that component. These drivers include factors such as diagnoses, functional status, comorbidities, and cognitive function.

For SNF billing specifically, PDPM has implications for how facilities document and code patient information. Accurate coding of patient characteristics is crucial for appropriate reimbursement under PDPM. SNFs must ensure thorough documentation of patient conditions and need to support the classification of patients into the relevant case-mix components. Let’s have a look at the impact of PDPM on SNF billing:

  • Redefining Payment and Quality Measures

PDPM has ushered in a paradigm shift in the relationship between payment and quality measures within SNFs. By realigning payment and quality incentives, PDPM aims to ensure that SNFs prioritize both the quality of care provided and the facility’s financial sustainability. This shift emphasizes the importance of delivering high-quality care while maintaining cost-effectiveness.

According to a study published in the Journal of the American Medical Directors Association, implementing PDPM significantly improved quality measures related to patient outcomes in SNFs.

  • Providing Unique Services

One of the key objectives of PDPM is to encourage SNFs to tailor their services to meet each patient’s individual needs and goals. This personalized approach ensures that patients receive the specific care and rehabilitation services they require, leading to improved outcomes and satisfaction.

  • Reducing Administrative Burden

PDPM can potentially reduce the administrative burden on SNF providers by simplifying the billing process and streamlining documentation requirements. With a focus on patient-driven care and streamlined payment structures, PDPM aims to alleviate administrative complexities, allowing providers to devote more time and resources to delivering high-quality care.

  • Improving Payments

Despite concerns about potential payment reductions, PDPM has the potential to improve overall skilled nursing facility payments without increasing total Medicare expenditures. By accurately reflecting the level of care required by each patient through case-mix adjusted components, PDPM ensures that SNFs are adequately reimbursed for their services.

  • Adjusting Per Diem Payments

PDPM introduces variable per diem payment adjustments for components such as Physical Therapy (PT), Occupational Therapy (OT), and Non-Therapy Ancillary (NTA) services. These adjustments account for resource utilization changes over a patient’s stay, ensuring fair and accurate reimbursement for services rendered.

  • Creating Separate Groups

Under PDPM, patients are classified into separate groups based on case-mix adjusted components, allowing for more precise reimbursement based on individual patient characteristics and care needs.

  • Focusing on Patient Factors

Finally, PDPM forces SNFs to shift their focus from service utilization to patient factors when delivering care. By emphasizing patient-driven care and outcomes, PDPM encourages SNFs to prioritize each patient’s unique needs and preferences, ultimately leading to improved quality of care and patient satisfaction.


Implementing PDPM has significantly changed SNF billing practices, impacting payment structures, quality measures, administrative burdens, and more. By understanding the effects of PDPM on SNF billing, providers can adapt to these changes and continue delivering high-quality, patient-centered care.

In addition to the changes brought about by the Patient-Driven Payment Model (PDPM), outsourcing billing services is another option for skilled nursing facilities (SNFs). By outsourcing SNF billing services to 24/7 Medical Billing Services, SNFs can streamline billing processes, ensure accurate reimbursement, and allocate resources more efficiently. Furthermore, outsourcing billing services can lead to cost savings for SNFs by eliminating the need for in-house billing staff and reducing the risk of billing errors or claim denials.

See also: Strategic Impact: How RUG Rates Drive SNF Billing Success


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