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Cheat Sheet and Contract Considerations:


By now you know that the goal with PDPM is to tie reimbursement to residents’ needs, and thereby disconnect the link between therapy hours and financial gain, which even until recently was getting therapy providers into hot water.

However, this could mean that unscrupulous therapy providers may seek ways to swing the pendulum the other way – from too much therapy to not enough therapy. As they did under RUG IV, they will want to figure out how to make the most money under PDPM, and skimping on therapy could be a way to do just that.

There will be many risks to monitoring therapy under PDPM. Your relationship and agreement with your therapy provider can reduce that risk.


Regulators and attorneys are going to look for situations where nursing homes, which were previously providing a lot of ultra-high therapy, are right around October 1, 2019 suddenly and surreptitiously decreasing the number of therapy minutes per resident. Did those residents all of a sudden need less therapy? Probably not!

The question will be “Who is at risk for being blamed for not providing enough therapy – SNF or therapy provider?”

One way for SNFs to protect themselves is to choose the right pricing model and insert it into a strong contract with their therapy partner.


Here is the CHEAT SHEET we promised with potential pricing models under PDPM and the risk associated with each:

And here are longer explanations for each model:

  • Per Minute Pricing – This is the current way therapy is priced, and if your provider is suggesting it, it’s either because they’re too busy to figure out another pricing method, or it puts the onus on the SNF. If therapy is decreased under this model, profit margins for the SNF will increase.  If you and your therapy provider stay with this pricing model, your outcomes and patient satisfaction could decrease and your facility will be put at risk.
  • Per Patient Day – This model eliminates the levels of therapy (as described two bullets below), and the therapy provider would just charge a daily rate per patient. If data shows that your facility averages 72 minutes of therapy/day for a Medicare Part A patient, then you’d pay a set day rate for all patients, no matter if an individual patient receives 500 minutes a week or 700 minutes per week.  The advantage to the SNF here is you have a known cost and your therapy decides on the “appropriate” amount of care. Your therapy company will also assume the risk of being accused of decreasing therapy to increase profit.
  • Percentage of Rehab – Since under PDPM, there will be dollar amounts associated with PT, OT, and SLP, your SNF could pay a percentage of that to your therapy provider. You must determine what percentage is appropriate (hint – 50% is too much).   With this model, the therapy company assumes the risk.
  • Per Level Pricing – With this model, the SNF and therapy company share in the risk. This is similar to our current RUG IV system, where the IDT will determine which level is appropriate, and levels are based on the number of minutes of therapy received per week. Your SNF will be charged a flat per diem rate for that level.
  • A Percentage of the Total Per Diem – Consider this model only if your therapy company can do more than therapy – like help you with the Nursing and NTA components. With this model, there is shared risk between the nursing facility and the therapy provider.

Two more things to note with your therapy contract under PDPM:


1. Make sure you understand the acronym MPPR and see it in your rehab contract under Medicare Part B.

2. Do not allow your new rehab contract to lock you in on pricing or cancellation for a designated period of time. Make sure you can cancel with appropriate notice, and make sure you have flexibility on your pricing model (since we will all want to assess and adapt under PDPM).


And since you read all the way to the end of this post, here’s your reward!

Since CMS will have to wait until they have enough data to track therapy under PDPM, there will be a window where Part A won’t be heavily scrutinized (probably about a year). What will auditors do with their time then? Well, what better time to dive into Part B practices and billing?!


Need a therapy partner you can implicitly trust as PDPM approaches ?

We are a Michigan-based company focused on providing the highest level service and program customization. Our clients will tell you that we provide “CARE BEYOND COMPARE” for their residents, as well as for leaders and staff at each facility.

We are currently offering PDPM workshops to clients and facilities across the state, including sessions for NADONA area cohorts called, “Preparing for PDPM – A Collaborative Approach is Key,” where Kim Murphy (OTL, President, Therapy Management, Inc.) and Dennis Jakubik (SLP – CCC, VP of Rehabilitation Therapy Management, Inc.)  talk about the change in methodology that PDPM presents and then analyze how actual 5-day MDS submissions will translate to daily reimbursements under PDPM. This is a very interactive session and a must-attend for nursing leaders.

Let us know if you would like us to conduct one of these workshops for your organization.

Call us at 877-TMI-8171 or email us today.