Skilled Nursing Facility (SNF) Patient Driven Payment Model (PDPM)

In July 2018, CMS finalized a new case-mix classification model, the Patient Driven Payment Model (PDPM), that, effective beginning October 1, 2019, will be used under the Skilled Nursing Facility (SNF) Prospective Payment System (PPS) for classifying SNF patients in a covered Part A stay.

Issues with the current case-mix model, the Resource Utilization Groups, Version IV (RUG-IV) have been identified by CMS, the Office of Inspector General, the Medicare Payment Advisory Commission, the media, and others.

Therapy payments under the SNF PPS are based primarily on the amount of therapy provided to a patient, regardless of the patient's unique characteristics, needs, or goals.

PDPM will improve payments made under the SNF PPS in the following ways:

  • Improves payment accuracy and appropriateness by focusing on patient, rather than volume of services provided
  • Significantly reduces administrative burden on providers
  • Improves SNF payments to currently underserved beneficiaries without increasing total Medicare payments

Access the below SNF related information from this page.

RUG-IV Components

RUG-IV consists of two case-mix adjusted components:

  • Therapy: Based on volume of services provided
  • Nursing: Nursing Case-Mix Index (CMI) does not currently reflect specific variations in non-therapy ancillary (NTA) utilization
    • Therapy - Therapy Base Rate X Therapy CMI or Non-Case Mix Therapy Base Rate
    • Nursing - Nursing Base Rate X Nursing CMI
    • Non-Case-Mix - Non-Case-Mix Base Rate

PDPM Components

PDPM consists of five case-mix adjusted components, all based on data-driven, stakeholder-vetted patient characteristics.

  • Physical Therapy (PT)
  • Occupational Therapy (OT)
  • Speech Language Pathology (SLP)
  • Nursing
  • NTA

PDPM also includes a "Variable Per Diem (VPD) adjustment" that adjusts the per diem rate over the course of the stay.

PDPM Snapshot

PDPM Components

  • PT - PT Base Rate X PT CMI VPD Adjustment Factor
  • OT - OT Base Rate X OT CMI X VPD Adjustment Factor
  • SLP - SLP Base Rate X SLP CMI
  • NTA - NTA Base Rate X NTA CMI X VPD Adjustment Factor
  • Nursing - Nursing Base Rate X Nursing CMI X 18% Nursing Adjustment Factor (Only for patient with HIV/AIDS)
  • Non-Case-Mix - Non-Case-Mix Base Rate


While RUG-IV reduces everything about a patient to a single, typically volume-driven, case-mix group, PDPM focuses on the unique, individualized needs, characteristics, and goals of each patient.


  • Nursing needs
  • NTA needs
  • Therapy needs

Versus the PDPM which includes the below.

  • PT needs
  • OT needs
  • SLP needs
  • Nursing needs
  • Non-Therapy Ancillary (NTA) needs

Effect of PDPM

By addressing each of a patient's unique needs independently, PDPM improves payment accuracy and encourages a more patient-driven and holistic care model.



Last Updated Nov 09 , 2023

Related Articles

paginationType regular
Articles Source Posted
Skilled Nursing Facility Patient Driven Payment Model PT and OT Functional Score - On-Demand Tutorial Available 02/24/2023
Skilled Nursing Facility (SNF) Patient Driven Payment Model (PDPM) Education On-Demand Tutorials Available 07/11/2022