October 09, 2019

Goodbye, RUGS! Hello, PDPM: Fundamental Changes to SNF Medicare Payment

By Mark A. Johnson, Esq. Hooper Lundy & Bookman, PC, San Diego, CA; Matthew I. Lahana, Esq. Hooper Lundy & Bookman, PC, San Diego, CA; Michael Lesnick, Axiom Healthcare Group, Roseville, CA


On October 1, 2019, Medicare payments to Skilled Nursing Facilities (SNFs) began to be reimbursed under a new payment methodology called the Patient Driven Payment Model (PDPM).1  This is the first truly significant change to SNF Medicare payment methodology in more than 20 years.  The last time the Centers for Medicare & Medicaid Services (CMS) changed the reimbursement methodology for SNFs, from a cost-based model to the Prospective Payment System (PPS), nearly 11 percent of all SNF providers went into bankruptcy.2

Any transition, especially one of this magnitude, requires providers to prepare for the change by gaining an understanding of how the new system will work, including the technical and mechanical aspects of the new system.  More importantly, providers need to understand what has to happen on a day-to-day basis at the “ground level” to avoid the types of serious problems the last major transition caused for this profession.  This article aims to point SNFs in the right direction. 


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