The Business Side of PDPM

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PDPM is now less than 1 year away, yet according to experts at the NASL annual conference in San Diego, our attendees reported that many providers have yet to formalize contract re-negotiations and plan for this significant change.  When considering contract therapy services and payment models, providers should consider the following.

Quality measures are not going away. The need for effective therapy service delivery can reduce re-hospitalization rates and impact areas such as wounds, falls and functional status.  Providers that marginalize therapy services risk referral source dissatisfaction, patient and family frustration, and tarnished community image.  The key is balancing appropriate therapy service delivery with financial responsibility.  To achieve this goal, several pricing models have been proposed by industry experts.

Pricing models that are based on a therapists’ time in the facility make billing easy. Another easy billing model is based on a cost per minute of therapy service delivery. Both of the models carry inherent risk to the integrity of both the provider and the therapy contract agency, thus Arbor Rehabilitation is not advocating for these approaches at this time. Reimbursement based on time alone may incentivize providers and/ or contract agencies to inaccurately allocate services and not support the best clinical outcomes.   

Pricing models that support one flat capitated per diem rate are simple to apply but also carry risks. Since PDPM is a new model, there is no historical basis to determining the most appropriate rate. In addition, as patient acuity may change, this model may not effectively capture any necessary pricing adjustments and places either the therapy company or the provider at a financial inequity.  

Pricing models that are based on a per diem relative to PDPM rehab groups ( 16 for OT/PT and 12 for SLP)  may present the best option for a shared risk. This approach allows for shifts on patient population, equally incentivizes parties to provide appropriate service delivery and thereby supports quality measures.

Arbor Rehabilitation is continuing to prepare our therapists for the changes ahead. In addition, many of our customers are in frequent conversations with our operations team to discuss effective approaches for this change given the complexion of each facility. We are ready to tailor services and contracts based on what is to everyone’s best advantage so that ultimately our residents, and therefore our customers, come out on top! 

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