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TRICARE Adopts Skilled Nursing Facility Patient Driven Payment Model

Wednesday, December 11, 2019

On Oct. 1, 2019, the Centers for Medicare and Medicaid Services (CMS) replaced its skilled nursing facility (SNF) Resource Utilization Groups (RUG)-IV classification system with a new case-mix classification model called the Patient-Driven Payment Model (PDPM). According to CMS, this change aims to improve payment accuracy and appropriateness by focusing on the patient, rather than the volume of services provided. 

TRICARE has adopted PDPM pricing for SNF services on or after Oct. 1, 2019, and is in the process of updating its manuals. Health Net Federal Services, LLC (HNFS) is holding SNF claims for dates of service on or after Oct. 1, 2019, as we await the manual revisions to publish. At that time, we will complete our claims system updates and process held claims.

IMPORTANT: Please split any claims for SNF services that span before and after Oct. 1, 2019, and use PDPM codes for dates of service on or after Oct. 1. Any claims received with RUG-IV codes for dates on or after Oct. 1 will be rejected. HNFS will adjust network SNF contracts as appropriate once the TRICARE manual revisions are published.  

Under PDPM, there are six payment components. Five are case-mix adjusted to allow for variances in diagnoses, severity of illness and other variables associated with the probability of improvement with treatment:

  • Physical therapy (PT) – includes a variable per diem factor
  • Occupational therapy (OT) – includes a variable per diem factor
  • Speech language pathology (SLP)
  • Nursing
  • Non-therapy ancillary (NTA) services – includes a variable per diem factor

Additionally, there is a non–case-mix adjusted component to cover utilization of SNF resources that do not vary according to patient characteristics. 

The payment for each component is calculated as follows:

Patient’s case-mix group X wage-adjusted component base payment rate X day in variable per diem adjustment schedule, when applicable  

The payments for each component are then added together along with the non–case-mix component payment rate. This creates the patient's total SNF PPS per diem rate under the PDPM:   

PT + OT + SLP + Nursing + NTA + Non–Case-Mix = SNF PPS per diem rate

Visit www.cms.gov > Medicare > Skilled Nursing Facility PPS > Patient Driven Payment Model for fact sheets, FAQs, training presentations, and additional PDPM resources.