• Julie Gipe

PDGM and PDPM – What Does This Mean for Therapy?

Beginning in 2019, the Centers for Medicare and Medicaid Services (CMS) instituted significant changes to the skilled nursing facility and home health payment systems. The Patient-Driven Payment Model for skilled nursing facilities was put into action in October of 2019, and the Patient-Driven Groupings Model for home health agencies (HHAs) began in January of 2020.

The idea behind these changes was to move Medicare payments away from fee for service toward a system that holds providers accountable for their patients’ outcomes and cost. While there are varying opinions as to whether or not these models will achieve that goal, every therapist should have a general understanding of these payment structures and how they can improve their practice to maximize their impact within the new reimbursement systems.

What the recent changes by CMS to PDGM and PDPM mean to physical and occupational therapists. #patientadvocate #healthcareadvocacy #physicaltherapy #occupationaltherapy #CMS #PDPM #PDGM #SNF #HHA #healthcarereimbursement

Patient-Driven Payment Model (PDPM)

This particular model applies to care given to patients in skilled nursing facilities (SNFs) and completely replaced the RUG-IV system with a new model to calculate reimbursement. PDPM addresses concerns that a reimbursement system based on the amount of services provided creates inappropriate financial incentives.

With the PDPM model, patients are classified into payment groups based on specific characteristics versus the amount of therapy minutes provided. Characteristics include aspects like functional status, primary reason for SNF care, comorbidities, and so forth. This payment structure also limits the use of group or concurrent therapy to no more than 25% of the resident’s total therapy minutes.

Patient-Driven Groupings Model (PDGM)

This model marks the biggest home health reimbursement overhaul in two decades. PDGM shifts payment away from therapy service visit thresholds, towards patient-centered clinical characteristics. The system switches payment from a 60-day episode to 30-day periods of care.

Reimbursement is determined by a multitude of factors, including: whether a patient came from an institution or the community; the principal diagnosis on the claim; functional impairment level from OASIS items; and comorbidity adjustment. Additionally, Medicare will no longer reimburse for therapy or nursing services separately, but instead agencies will receive a bundled payment for all services which can then be allocated based on patient needs.

How Does This Affect Therapy Services?

An initial reaction by home health agencies and SNFs was to scale back on therapy utilization. In an ongoing survey conducted by the American Occupational Therapy Association (AOTA) to understand PDGM’s impact, about one third of the survey’s 526 respondents reported layoffs or reduced hours. In a similar survey conducted by Skilled Nursing News, 43% of respondents said their companies laid off therapists in the initial wake of PDPM. With any change will come an adjustment period, as HHAs and SNFs attempt to find the middle ground between over-utilizing therapy services and providing the care that the patient needs.

In an interview conducted by Home Health Care News with Derek Michael, Regional Vice President of HealthPRO® Heritage, he discusses how a reduction in therapy utilization will result in a reduction of the agency’s overall reimbursement. He states this is because therapy utilization has been accounted for in reimbursement, and that going forward this model will be used to recalculate an agency’s reimbursement annually.

Increased communication and coordination among all disciplines will play a vital role. Again, this model aims to avoid over-utilization of services so it’s important to discuss every patient’s needs with the care team. Sit down with your co-workers and ask, “Does this patient need nursing, occupational therapy, physical therapy, social work” etc. Some patients will need multiple services, but for others it will be important for the case manager to determine what services are medically appropriate at the time.

What Can Therapists Do?

Demonstrate your value

CMS’ goal with these new models is to minimize waste and provide quality outcomes. It’s imperative now more than ever that therapists are able to demonstrate the value that their services bring to their agencies and their patients. Here are some ways to display your value as a therapist:

  • Make decisions based on evidence and be able to back them up with documentation.

  • If you’re doing group or concurrent therapy, make sure to document why you made that decision and how it will provide the maximum benefit to your patients.

  • Use valid and reliable assessments to demonstrate progress.

  • Know your outcomes and how your services impact important metrics such as pain and falls.

  • Suggest opportunities to increase collaboration with other professionals at your facility, such as weekly care conferences.


It’s vital to continue to educate on the benefits of therapy services at your local, state, and national level. Talk to your co-workers about wins with certain patients, and assist your state organizations with their advocacy events. AOTA, the American Physical Therapy Association (APTA), and the American Speech-Language-Hearing Association (ASHA) have had an ongoing dialogue with CMS to continue advocating on our professions’ behalf to ensure that Medicare beneficiaries continue to receive the skilled therapy services that they need.

As a therapist, if you feel like your clinical judgement is being disregarded, care is being dictated, or you are being asked to engage in unethical practices, please bring this to the attention of the appropriate authority. Talk directly with your supervisor about your concerns. If the issue is still not resolved, talking with a compliance officer may help, and they are required to ensure confidentiality.

Additionally, reach out to your state and national organizations as they are tracking how HHAs and SNFs respond to these changes and are sharing that information with CMS. The only way for these organizations to know what is happening at a local level is for therapists to voice their opinions and experiences.

One thing that has not changed with these models is that CMS continues to require that SNFs and HHAs provide high-quality, reasonable and necessary rehabilitation services, and that clinicians use their best judgement to determine appropriate frequency and duration of services.

Any major change in structure involves adjustments and trial-and-error to determine what works and what does not. Throughout all of this change, it’s important that therapists continue to provide best practice care, and advocate for the profession and the patients that receive these skilled services.

Share your thoughts in the comments below on what you've experienced with these payment models thus far.

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