Most facilities have fared better than anticipated under Patient-Driven Payment Model (PDPM). What will this mean from the standpoint of Medicare claims audits and how should we prepare for the inevitable start of medical review activity for PDPM claims?  For many years, SNF medical review has focused on validating rehab medical necessity and daily skilled need at the therapy intensity level provided.  Under PDPM, however, reimbursement is driven by numerous patient characteristics and service needs—each with its own set of coding and supportive documentation obligations. This means providers must consistently demonstrate compliant coding based on RAI guidelines for each and every item impacting PDPM reimbursement and maintain charting that validates each payment-impacting MDS item. In addition, facility procedures should continue to address compliant practices for adhering to the unchanged criteria for meeting SNF Skilled Level of care. In fact, interdisciplinary documentation to support these 4 criteria is as important as ever with the expected shift in medical review away from the volume of services and toward clear support for patient-specific characteristics and clinical needs:

SNF level of care is covered if all of the following four factors are met:

  1. The patient requires skilled nursing services or skilled rehabilitation services;
  2. The patient requires these skilled services on a daily basis; and
  3. As a practical matter, considering economy and efficiency, the daily skilled services can be provided only on an inpatient basis in the SNF.
  4. The services delivered are reasonable and necessary for the treatment of a patient’s illness or injury.

“As discussed in Chapter 8, Section 30 of the Medicare Benefit Policy Manual (Pub. 100–02), to be covered, the services provided to a SNF resident must be ‘‘reasonable and necessary for the treatment of a patient’s illness or injury, that is, are consistent with the nature and severity of the individual’s illness or injury, the individual’s particular medical needs, and accepted standards of medical practice.’’ Therefore, we stated that services which are not specifically tailored to meet the individualized needs and goals of the resident, based on the resident’s condition and the evaluation and judgment of the resident’s clinicians, may not meet this aspect of the definition for covered SNF care, and we stated we believe that internal provider rules should not seek to circumvent the Medicare statute, regulations and policies, or the professional judgment of clinicians. (79 FR 45651 through 45652).”

In preparation for medical review, beginning with fundamentals of support for SNF level of care is crucial. In fact, Proactive has assisted providers with several Office of Inspector General (OIG) audits recently related to assessment of SNF admission practices and the support for the SNF level of care. This SNF Active Workplan Item is currently open and focuses on how providers determine skilled level of care, as well as skill related to condition(s) for which the beneficiary received inpatient hospital services or, and that services are reasonable and necessary for the treatment of the beneficiary’s illness or injury.

Preparing for PDPM Audits

Data Analysis

Initial analysis of PDPM billing patterns find that providers exceeded CMS’ predicted billing by an estimated 5%, according to a report issued by Zimmet Healthcare Services Group.  CMS had predicted in its 2017 PDPM projections that 68% of providers would lose and 31% would gain under the new model. In reality, only one-third decreased in dollars reimbursed per patient day, while two-thirds gained.

Providers should anticipate that CMS is assessing payment trends and the underlying data that has contributed to the difference between projected and actual billing. CMS has also been clear on their intent to examine provider behavior, patterns of therapy provision and outcomes under PDPM. It’s clear that CMS realistically understands there will be some shift in MDS coding of nursing care, therapy volume, intensity and treatment modes. But what is the line between normal adaptation to PDPM and aberrant billing patterns? To assess your facility’s medical review risk compared to peers, consider this question in light of the following:

  • Historically medical review probes typically involve high outlier providers and/or are initiated in response to a complaint. How are you monitoring your own trends? Are there complaints from staff, residents or family about a reduction in therapy services or other changes related to PDPM?
  • Medical review activity follows the money. Diligently audit coding, supportive documentation for MDS items that impact reimbursement. In addition, providers should monitor coding trends and assess marked changes that indicate a significant alteration in coding conditions or services from pre-PDPM to post-PDPM (e.g. a sharp increase in coding modified diets.)
  • PDPM has a lot of moving parts. Rate setting is multi-factorial, multi-disciplinary and in order for the coding and documentation to be consistently accurate requires a team approach and updated systems. For example, running the UR/Medicare meeting in the same way that you did under RUGs IV will not be effective. If your facility has not overhauled and integrated systems to meet the new demands of PDPM, you may be vulnerable under PDPM medical review. By way of example, section GG requires the combined assessment of multiple disciplines between days 1-3 to determine usual performance of function. Relying only on nursing, only on therapy, or coding that does not correspond to charting are common problems that we find in QA audits. This is especially concerning considering GG impacts 3 of the 5 components of the PDPM rate. What are your decision-making practices related to optimal patient care and outcomes? Has your focus been on accurate MDS coding and supportive documentation? The answer is in your numbers.

PDPM Medical Review Vulnerabilities:

  1. Significant increases in reimbursement – CMS intended for PDPM to be budget neutral. Is your documentation bulletproof when it comes to clearly supporting HIPPS codes?
  1. Therapy provision patterns – What does therapy delivery look like as compared to FY2019? A recent Nursing Home Benchmark Study analyzed trends between 2014–2018. During this timeframe, the average therapy minutes per patient day never exceeded an increase in change over 3.1%. As an example of change under PDPM, if you’ve noticed average therapy treatments decreasing from 50 minutes per day to 40 minutes per day, this would reveal provider changes at 20%! Only time will tell the percentage CMS considers significant. In the meantime, emphasize the clinical decision-making process for the established therapy plan (including modes of therapy) in documentation, monitor outcomes and make adjustments as needed to meet every individual resident’s needs.
  1. Nursing daily skilled service documentation – Gone are the days of reviewing rehab documentation and ADL coding alone; moving forward we can certainly expect that nursing documentation will be scrutinized to determine that care plans are effectively documented, treatments and services support coded conditions as active, and that nursing is providing skilled daily services.
  1. Changes in case-mix distribution – Does your Facility Assessment support changes in patient acuity as compared to FY2019? The MDS must be accurate, complete, and valid. Does your documentation and care planning clearly support all active conditions and individual services required? Are you integrating QAPI processes to continually monitor clinical interventions and outcomes?
  1. Function Score (Section GG) – Not only does the accuracy of the function score impact PDPM payment rates, but it also affects 5-Star, Quality Measures, and SNF QRP. Is your process for determining usual performance collaborative? Does documentation clearly support MDS coding? Does documentation support that reimbursement aligns with services provided from a therapy and nursing perspective?


Table 1: GG Function Score Audit Results 659 audits Oct. 2019-Feb. 2020

  1. Swallowing disorders and mechanically altered diets – Assess your process to validate documentation supporting K0100A-K0100D and K0500C. Is the mechanically altered diet medically necessary?  Does Speech Therapy involvement support utilization of higher SLP Case Mix Groups (CMGs)?

In short, the accuracy of coding, documentation and data monitoring is vital as we prepare for the inevitable start of PDPM medical review audit activity.   We can be sure that provider data will trigger audits, and anything that drives payment or supports the skilled services as coded on the MDS will potentially be reviewed. Inadequate documentation will result in denials.

For more information on CMS guidance for Medicare Administrator Contractors (MACs) on Medical Review Instructions related to Skilled Nursing Facilities, see Publication 100-08 Medicare Program Integrity, Transmittal 924.

Contact Proactive to schedule a remote PDPM coding and documentation audit or to learn more about Medical Review support services including ADR preparation and Appeals management



Skilled Nursing Facilities in Publication 100-08 Medicare Program Integrity, Transmittal 924

Medicare Benefit Policy Manual Ch. 8

PDPM Reimbursement Analysis Zimmet Healthcare Services Group, LLC

Active SNF OIG Workplan:




Blog by Stacy Baker, OTR/L, CHC, RAC-CT, Director of Audit Services, Proactive Medical Review

Click here to learn more about Stacy and the rest of the Proactive team.