PDPM and What it Means for Your Nursing Home Case
What does PDPM mean for nursing home residents and their legal cases? The Patient-Driven Payment Model changed how Medicare reimburses skilled nursing facilities and can have important implications for resident care. In this week’s episode, nursing home abuse lawyer Rob Schenk welcomes Ernie Tosh to explain PDPM and what attorneys and families should know about its impact on nursing home cases.
Intro
Schenk:
Nursing home staffing is not just about who showed up for work. It’s about how much staff is needed to do the job and how the facility seeks reimbursement for it. I’m attorney Rob Schenk, this is the Justice for Residents podcast, and this week, I’m joined by Ernie Tosh, nationally recognized nursing home lawyer and advocate, to discuss the PDPM reimbursement model, how it ties payment to resident acuity, and how acuity should be driving staffing, and also why understanding PDPM can help show what staffing should have looked like on a particular day, even though the staffing schedule didn’t get the memo.
Stick around.
I feel like that, that intro was fitting for Ernie, who is I don’t know if he’s from Texas, but he’s lived in, I think, n- I don’t know if I wanna say Austin. He lives… I should have probably asked him. He lives in Texas. He’s been living in Texas for a long time, so I guess that Western Americana jingle music probably fitting for this particular episode.
Today, we get into the weeds with PDPM, so I would highly suggest that you check out some previous episodes that we had dealing with PDPM, RUG scores, and staffing. And I would direct you to one of our more recent episodes on PDPM, and that’s episode three, 313, which came out in August of ’26, with Melissa Brown, where we talk about RUG scores, PDM, PDPM, and that changeover from RUG to PDPM, what it means.
We also talked to Nicole Snapp Holloway in episode 216 with what acuity means. Like, when we talk about acuity and staffing what’s pr- precisely does that mean? We did that in that episode at length, so that’s definitely a great episode to check out. And also, if you wanna just geek out on data, let’s go back and you can watch and/or listen to episode 214, and that was the first time that Ernie came on the show where we talked about nursing home cost reports.
Guest Intro
Schenk:
So that is your homework, episode 214, 216, and 313, all dealing with PDPM, RUG, acuity, staffing, and data. Now for the Texas brisket and french fries of the episode. Ernie Tosh began his legal career as a prosecutor in Fort Worth, Texas, before finding his passion in nursing home litigation. Today, he represents residents and families nationwide in cases involving long-term care facilities.
A recognized expert on nursing home ownership structures, staffing, and financial operations, Ernie is a leading advocate for improving elder care and has testified before Congress on the impact of private equity in the nursing home industry, and we’re so happy to have him back on the show today. Ernie, here’s the, this, the, the easy question right up front.
What is PDPM?
Schenk:
Can you explain what PDPM is?
Tosh:
Sure. PDPM is an acronym for Patient Driven Payment Model. So PDPM is CMS’s current reimbursement system. S- so when a individual goes into a nursing home, they have an assessment done called a Minimum Data Set. At the end of the Minimum Data Set is a PDPM score that is sent to CMS, and that score is associated with a certain amount of daily reimbursement.
How Does PDPM Relate to Resident Acuity?
Schenk:
Tell me if there’s any correlation between the PDPM of a resident or resident population and w- the amount of acuity of the resident or resident population.
Tosh:
Sure. There’s a direct correlation. So in the PDPM score part of that score is a nursing services score, and that is the acuity measure for the resident
Schenk:
Now tell me whether or not based on the PDPM, we can decipher how much staffing there should be for a nursing home, and whether or not that’s correlated to the c- the reimbursement that they’re getting from that number.
Tosh:
Sure. To answer the second part first, the reimbursement is directly correlated to how much they’re gonna be reimbursed. So the higher somebody’s acuity, and by acuity, what we mean there is how much nursing care or how much healthcare does that person need? So if you’re somebody who has low acuity, maybe you have dementia, and you just need help being redirected, but you can get up and out of bed, you can feed and dress yourself, that’s a low acuity person.
If you’re someone who has debilitated maybe you’ve fallen and you have lost muscle mass and so getting out of bed is difficult, it’s dangerous if you do it by yourself, so you need assistance dressing or eating, you’re gonna be a higher acuity person, meaning you need more healthcare or more nursing care, so your acuity’s gonna go up.
The PDPM score is directly tied to that. So the higher your acuity, the more healthcare you need, the more you’re gonna be reimbursed. So the facility fills out your assessment, send it in, they get reimbursed for that level of acuity. Now, the first part of that question was, can we look at the PDPM and figure out how much nursing care you need?
How Can a PDPM Score Be Converted Into Expected Nursing Time?
Tosh:
Sure. Absolutely. The third character in the PDPM score is the nursing services score. And so you can take it, it’s a alpha character. So let’s say you go in there and it’s a letter M as in Mary, you can actually go to chapter six of the RI- RIS manual, which is the 1,300-page manual about how to fill out the MDS.
In chapter six, there’s actually a table that says an M Corresponds to a certain RUG score. Resource Utilization Group is what that stands for. That’s the old reimbursement model. So you can go in there, and it’s gonna tell you M is this old RUG score. When you know what the old RUG score is, now you can go use a- an older time study that CMS did back in the ’90s that is by RUG score.
It said if your RUG score is this one, you need this much RN time, LPN time, CNA time. So if you go back and do that conversion, you can see to the minute how much time a patient needs based on their acuity.
Schenk: So j- so just so that I can understand, so the audience can understand, when we’re talking about that PDM and the reimbursement and staffing, et cetera, staffing, would only be a component of that, which is y- the reimbursement might be for vent machines or therapy or things like that.
And then as you’ve described, honing in on the what… that alpha character within the PDPM weeds out those other things the, h- supplies, machines, th- et cetera, and gets literally just to the how much money are you gonna have to pay a nurse to look at this person, and that’s that one character, right?
Is that what we’re saying?
Tosh:
That’s correct, ’cause there’s a completely different character for therapy. So yeah, so that’s, that component is removed. There is the… if they have psychological issues that need to be addressed, that is outside this number. So literally, this, this letter in the PDPM score is specifically how much RN, LPN, and CNA time do they need.
So the traditional nursing needs, that’s all that character is.
Skilled nursing professionals can learn more about the PT and OT components of the Patient-Driven Payment Model and how resident characteristics affect reimbursement.
How Does PDPM Shift Incentives Affecting Care?
Schenk:
Can you speak to me about d- th- that current model the way it is- … the PDPM, and that, talking about staffing, are we heading in a, a better direction than we were previously? Or are we h- is- do you think that this, we’re getting worse? ‘Cause it used to be just as you described, the RUG model, and now it’s PDPM.
Just the floor is yours. Are we doing better with respect to how much staff we can expect someone to have based on their acuity?
Tosh:
No, we’re not doing any better. All it did… Okay so the big difference between the two models is that under the RUG system therapy drove the reimbursement amount.
And so under the r- the RUG classifications, you had- The first letter, it was a three-letter or three three-letter score. So you had a RUB. And the first letter, if it was R, meant you were getting rehab. The next letter was how much rehab. So you had low, medium, high, very high, ultra high.
So RU meant rehab ultra high. B was your nursing classification. How much nursing care did you need? And there were five letters are that went into that. So you had one of those five letters was your trailing letter. So when you looked at that score, you could tell immediately, is this person in rehab or not?
Providers can explore how PDPM is used in skilled nursing care to better understand the relationship between resident needs, therapy, and reimbursement.
How is PDPM Manipulation Detected?
Tosh:
How much rehab are they getting? What’s their acuity? The– When CMS created that model, they only predicted that ten percent of the population would need ultra high rehab, which was seven hundred and twenty minutes per week. In practice I think it was more than seventy percent of all residents coming in on Medicare were being placed in ultra high rehab.
So this, the gaming of the system under RUGs was to classify everyone as ultra high or very high rehab, and you would absolutely max out the amount of money you’re getting from Medicare because it was rehab-driven. So CMS decided, okay, we’re going to remove that as the driving force. Therapy is not going to be reimbursed as much, and so they kinda flattened…
There were sixty-six RUG classifications. They flattened it to twenty-four, so we only have twenty-four groupings now. And so they wanted to make the reimbursement between them a little bit less. But what they did was they created a new way to game the system, and the new way is to say that the person has psychological issues that need to be addressed, and specifically, schizophrenia and depression are the ones that will trigger higher reimbursement.
So when the two models transitioned which was Septem- no, October first twenty nineteen, that on that specific day- The nursing home industry fired about half the, the therapists they had, because that was no longer gonna be how they got reimbursed. So you immediately knew, oh if you fired half your rehab people immediately, it’s pretty clear you didn’t need all that rehab.
Understanding reimbursement calculations is easier with resources on evaluating PDPM classifications and payment calculations.
They were gaming. And what we saw was everybody in the nursing home now had to be treated for schizophrenia and for depression which is, in my, my estimation, way worse, because at least before, the person who was going in on Medicaid was getting rehab, which could have some benefit for them, but now instead, they’re being placed on psychotropic medication which they don’t need and can be very detrimental to them being able to get up and move around on their own.
You can actually do what we call chemical restraint. You can actually cause the person to stay in bed, which then they atrophy more and become more and more dependent. So it’s actually a self-fulfilling prophecy that they’re never gonna come out of that nursing home. So back to your question, is the model better?
No. There’s, the model is still being gamed. The staffing hasn’t changed. They still have abysmal staffing within the nursing home industry. They’re just gaming the system in a different way, and the current gaming is way more dangerous than it used to be.
Recent findings provide additional insight on the impact of preventive health measures in elderly populations and the changing delivery of skilled nursing care.
Question of the Week
Schenk:
We interrupt this conversation for the nursing home regulation question of the week.
This week, folks, the difficulty level is medium. All right? So it’s kinda right in the middle. If you get this right, your kids have to pack their own lunch today, and you are allowed to use that time to scroll through Zillow. If you get this right, you gotta get it right. If you don’t get it right, you’re right back to PB&J and putting Doritos into a Ziploc bag
Under 42 CFR 483.90(1), resident bedrooms approved or constructed after November twenty sixteen may accommodate no more than: A, two residents; B, three residents; or C, four residents.
And that answer is A, if a nursing home was constructed after November 2016, then a bedroom can hold no more than two residents
This might sound silly, but we’ve seen the industry game for therapy because therapy gave you high reimbursement. We see the game being manipulated with respect to psychological con- clinical conditions. Why not game the system where, incentivize staffing? Like why isn’t that the next thing that we do then?
Tosh:
I would love to see that. The, the issue with that is that the industry doesn’t want to increase staffing. Every time that a state has tried to impose significant minimum staffing requirements or the federal government has tried to do so, the industry has mobilized like an army, and has got lobbyists and has put pressure everywhere they can to make sure that doesn’t happen, because nursing staff is the most expensive staff…
are the most expensive component of a nursing home’s operation. They will spend more on RNs, LPNs, and CNAs than they spend on anything else including rent. So it is their biggest expense category. They do not want to increase that category. They certainly don’t want to have specific numbers they have to meet, because if you do that, they can’t manipulate that expense category to make more money.
And what I mean by that is currently, because it is almost unregulated as far as how much staffing they have to have they can set that staffing significantly below the acuity level that they’re being paid for, and they can increase their profits markedly. If you make them staff to an actual real acuity number, you’re going to drive their profits way, way down.
Medicare providers can review the requirements of the Skilled Nursing Facility Patient-Driven Payment Model to better understand reimbursement and documentation requirements.
And when you look at who is in the market right now as owners, you’ve got real estate investment trusts, which we call REITs, private equity, which goes by PE. Those are two big driving forces that are investing in the industry, and their entire existence is about maximizing profit.
So when you understand that the owners are there to maximize profit and maximize return to their investors, they do not want to have to staff to acuity, because that cuts their profit way down.
Learn how reimbursement systems can become relevant to litigation in What Do RUG Scores and PDPM Mean for Nursing Home Cases?.
Can PDPM Data Be Used to Prove Understaffing?
Schenk:
You had described that a portion of the PDF, PDPM describes the amount of nursing care the person needs based on their acuity, which relates back to the RUG score, which relates back to a study from the ’90s.
Is this how one can use that information in a nursing home case if you’re gonna make the argument they’re understaffed? Is that how PDPM can be used in a case?
Tosh:
Absolutely, and I actually own a company called Full Financials. I’m also, an attorney, have my own law firm that all we do is nursing home cases. But along the way, I fi- figured out that by using the RUG score, we could calculate exactly how much nursing a facility needed, how much they were getting reimbursed for.
And so we created software that will actually do that. When they transitioned to PDPM, we just had to adjust our software to make the conversion from PDPM to RUGs. So we actually have the ability because we Requested from CMS all of the minimum data sets. That, again, is the assessment that contains the PDPM score.
We requested all of the MDSs in the United States. CMS didn’t want to give it to us because they said it had HIPAA information. But in our request, we specifically asked that they de-identify not give us a person’s name, Social Security number, not even their date of birth. We just wanted a patient tracking number that CMS assigns randomly to each person, and then we wanted certain information from the MDS.
And so we sued CMS, and after a three-year fight we won the right to have MDSs. And so we request MDSs a couple times a year from CMS. So currently my company has about three hundred and fifty million MDSs. We have every MDS that’s been filed in the United States since January first, twenty twelve.
To understand how reimbursement and staffing decisions affect residents, learn what a typical day is like for a nursing home resident.
Because of that, we can calculate the exact nursing needs of each nursing home in the United States for any day since January first, twenty twelve, and tell you exactly how much RN, LP, and CNA time they need every single day. And again, that is that facility’s specific requirements, not a national aver- average or a state average.
It is based on the acuity they are paid for, this is how much staffing they should have. We can do that. The nursing home, it’s their data. They can do the exact same calculations. The exact time studies that we use are CMS’s time studies, so they have access to those. Those are publicly available. So the nursing homes could easily do this e- more easily than I can because they wouldn’t have to go get the data.
They have the data.
Understanding the different types of nursing home staff can help families identify who provides specific aspects of resident care.
What Happened to CMS’s Expected Staffing Measure?
Schenk:
Tell me about the transition, if it means anything, between CMS referring to, and I could be wrong with this, referring to this number as the expected staffing number and now case mix index. Wh- why that transition? What is it– is, is a rose by any other name still the same? Talk to me about that.
Tosh:
No, it’s completely different. And before April first, twenty eighteen, CMS calculated a number called expected staffing, and it was the number that I just described. That is, they would go in when a facility was inspected which is at least annually. And they would go in, and they would pool all the staffing for the last two weeks, and they would pool all the MDSs during that time period, and they would calculate the expected staffing.
And what that number was is, by looking at your MDSs, and which were the RUG scores back then, and the timetable, you needed this much RN, LPN, and CNA time. That was an acuity-based number. And then they would compare it to their actual staffing during that two-week period, and that is how the five-star system worked for the RN staffing and the total staffing stars that are part of the five-star system that they, CMS publishes to the public, so you can go see how a facility looks.
Families can better understand facility accountability by learning who regulates nursing homes in Georgia.
Do I wanna put my mother in this facility? Oh, look, it’s a four-star staffing. That’s pretty good. And so it was, the stars were based on were they meeting acuity? April 1st, 2018, CMS went to a different model, and that was instead of testing the staffing versus acuity, they’re testing the staffing versus how does this facility staff versus other nursing homes in that state.
And so it no longer matters if you meet the acuity of your residents, it’s how do you staff versus the rest of the state? Because the majority of the for-profit facilities understaff, all you’re asking is, do you understaff worse than everyone else, or do you understaff the same?
Documentation can reveal important information about a resident’s condition and treatment, so families should know how to get medical records after a Georgia nursing home injury.
Can Staffing and Acuity Data Be Used to Identify Potential Fraud?
Schenk:
So as far as, so as far as Ernie Tosh is concerned, the, the expected staffing number can still be understood based on the previous- date time studies. That hasn’t changed. And even though they’re no longer calling expected staffing, they’re no longer keeping up with the expected staffing, they’re keeping up with something called case mix index, which is to compare yourself to your neighbor, you can still figure out, according to tho- that old data, how much staff they should have.
Tosh:
Correct. And we’ve gone a step further than just using this in litigation, which we’ve done for the last 15 years. We’ve now built it into a platform with a company called Elliot Nass that’s run by an ex-DOJ attorney. And that platform, we are going and demonstrating to attorney general’s offices around the country how- How to evaluate nursing homes and nursing home change in their state and show how much money they are defrauding from the taxpayer.
You’re being paid for X amount of staffing, but you’re only staffing to Y number. The difference between those two numbers is fraud. And so we’re able to show them tens of millions of dollars of fraud per facility, and that has gotten a lot of traction in the last 18 months. We’re now working with six or seven AG offices actively investigating and pursuing fraud claims with them.
And, my company is… we’re currently beta testing a product that we are going to release to the ombudsman. So people who are not familiar with ombudsman are state employees, that their job is to advocate for nursing home residents. And so they become the voice of the nursing home resident when they have a complaint, and the ombudsman try to help them and the facility work out whatever their complaint is.
Financial records can reveal important information about facility operations, as discussed in Critical Pieces of Data From Nursing Home Cost Reports.
And we are releasing a product to the ombudsman that will allow them to see all the staffing information and all the financial information for these facilities so that they can have meaningful discussions with the director of nursing and with the facility administrators to say no. I can see your profitability last year.
I can see you had plenty of money for staffing, but I can see that you are critically understaffed.” And show them that information, and then maybe be able to have a more meaningful conversation with the s- the leadership in that facility.
Schenk:
Is there any legitimate pushback, or is there any legitimate opposition to the argument that this, the time studies in the 1990s, which forms the basis for the expected staffing that you’re discussing, is no longer valid?
We should do new time studies, ’cause maybe it’s the case that we’re not understaffed, just the old model are based on incomplete studies.
Tosh:
I would certainly support new time studies just because they are almost 30 years old, and you go, “Hey, let’s go back and revisit this.”
Now, I understand that is a costly thing. CMS has not shown any incentive to do that. They did a CNA time study. There was a critique of the original time study. The original time study is known as the STM, so like Sam, Teresa, Mary time study. There was a criticism that the CNA time was not captured appropriately.
So in 2016, CMS commissioned a time study solely on CNAs, and sure enough, the CNA number jumped up in that time study. And they did revisit that one issue. Now, there’s been no indication that they are going to go back and do a new time study. Do I think the old ones are wrong? I don’t see why they would be.
It still takes the same amount of time to help somebody change their clothes, to bathe them, to help them eat, to turn and reposition them in the bed. N- none of the basic care has changed, and they’ve gone… the biggest change is 30 years ago everything was handwritten, and now everything is on the computer.
But the nurses, specifically the nurse’s aides that do most of the hands-on work, they don’t chart. And so the fact that it’s an electronic system doesn’t affect how long it takes to turn and reposition, et cetera.
The only real difference would be does it significantly change how long it takes an LPN or an RN to chart?
And as you and I know from looking at medical records, they’re not spending much time charting.
Resident needs and staffing requirements are explored in What Does Acuity Mean for Nursing Home Care?.
Schenk:
Very true. Very true. Ernie, thank you so much for all the hard work that you do in improving this industry. We really very much appreciate it, and again, I thank you so much for coming back on the show and sharing your knowledge with us.
Tosh:
Oh, absolutely. Anytime.
Schenk:
I hope you have found this episode educational, informative. If everything goes according to plan, this episode will publish on September 21st, and so I hope that everyone pays attention that it is World Alzheimer’s Day, September 21st of 2026, and it’s part of Healthy Aging Month, the month of September.
And we all want to age healthily, health- age healthy and gracefully, more graceful than I’m able to communicate that. So I hope everyone has a fantastic week. If you have an idea for a topic that you would like for me to talk about, let me know. If you have an idea for someone you’d like for me to talk to, please let me know that as well.
New episodes of the Justice for Residents podcast come out every single Monday, and with that, folks, we will see you next week.
Thanks for tuning in to the Justice for Residents podcast. Nothing said on this podcast, either by the host or the guest, should be construed as legal or medical advice, nor is intended to create an attorney-client relationship between the listener and either the host or any guest. New episodes are published every Monday and are available on all your favorite podcast apps, as well as on YouTube and our website, justiceforresidents.com.
Again, that’s justiceforresidents.com. The Justice for Residents podcast is hosted by Rob Schenk, a trial lawyer representing victims of nursing home abuse and neglect throughout the state of Georgia. We’ll see you next Monday.