What Do RUG Scores and PDPM Mean for Nursing Home Cases?
What do RUG scores and PDPM reveal about the care a nursing home provides? These reimbursement systems can offer valuable insight into staffing, resident needs, and facility decision-making. Understanding them can strengthen a nursing home case. In this week’s episode, nursing home abuse lawyer Rob Schenk welcomes guest Melissa Brown to explain RUG scores, PDPM, and why they matter in nursing home litigation.
Intro
Schenk:
Follow the money and you may find the story behind the care. I’m attorney Rob Schenk. This is the Justice for Residents podcast, and this week I’m talking to Melissa Brown, a healthcare consultant and PDPM nerd, her words, about the role PDPM plays on nursing home reimbursement versus the old RUG model, and what the data can reveal about resident acuity and staffing.
Stick around.
I dug that jingle. That was a good one. Now, Gene, y- it says on my outline that’s Dixieland. I d- I don’t know if I agree with that. I think that’s more of a marching band than Dixieland, but I’ll let the audience decide that. Welcome back to the show, everybody. We have an excellent discussion with Melissa Brown this week.
If you wanted additional homework, if you wanna come into this episode with a little bit more of a background in PDPM, in the MDS process, then I would highly recommend that you go back to, all the way back to 2018, to episode 95, where we talked with Margo Craig about understanding MDS in nursing home assessments.
Also in 2021, episode 166, we talked to Dr. Len about how staffing correlates to quality of care, not staffing correlates to staffing. Staffing correlating to quality of care.
Guest Intro
Schenk:
All right, let’s get into the meat and the potatoes au gratin of the episode. Melissa Brown is the chief operating officer of Gravity Healthcare Consulting, and an occupational therapist with more than 20 years of senior care experience.
Follow Gravity Healthcare Consulting on Facebook for updates and educational resources on skilled nursing care.
Known as a practical PDM, PDPM nerd, she helps providers understand opera- Th- this bio was given to us by her, so don’t get mad at me. She calls herself a nerd. Okay, so where was I? Known as a practical PDPM nerd, she helps providers understand operations, compliance, reimbursement, and documentation in plain English.
She also hosts the Senior Living Executive Strategy Podcast. So I would highly recommend you check out her podcast, too. It’s how the other half lives. And I- I’m not sure, depending on when this goes to air, I will have appea- appeared on her podcast as a guest, so I’m, we did a kind of reciprocal podcast recording at the same time.
What Is RUG and PDPM?
Schenk:
So happy to have her on the show this week. Melissa, right off the bat, just explain what PDPM is.
Brown:
So PDPM stands for the Patient-Driven Payment Model, and the idea behind it was instead of reimbursing nursing home facilities based on how much therapy services they received, they wanted to base it off of the characteristics of the patient.
So how sick are they? How many diagnoses do they have? What are things that they need to receive that cost the facility more more cost along the way? So that’s the main reason behind the patient-driven payment model and why the payment model shifted a little over five years ago.
Learn how Medicare reimbursement has evolved on the impact of preventive health measures in elderly populations under the Patient-Driven Payment Model.
Schenk:
What is the difference between PDPM and the RUG score?
Brown:
So under the old system of RUGs, essentially, the more therapy you provided, the more money you made. It almost didn’t matter at all if the patient had other diagnoses, if they required extensive nursing services, if they had wounds, anything like that. If they got therapy, that was where the reimbursement was, and the unfortunate part is that some bad actors out there over-utilize therapy in order to achieve the highest reimbursement.
And we had people out there giving a patient ninety to 120 minutes of therapy the day the patient died, things like that just clinically probably don’t make a lot of sense. And so there was a, a bit of an overreaction, if you ask me, in, in the way they restructured to PDPM because now therapy basically doesn’t matter at all.
You get paid for PT, OT, and speech every single day of the skilled stay, whether that patient gets any therapy at all or not. And so that has resulted in significant reduction of therapy services across the board across the country, and I think there’s some thought based on what came out in the SNF proposed rule this year that Medicare may be looking to rightsize some of that volume through future regulation.
Schenk:
So do… So we don’t, there are no more RUG scores anymore? Is that what it is?
Brown:
That is correct. Yeah. RUGs, so for a skilled patient, PDPM RUGs are completely phased out. As of October 2025, every state that was using the RUG system had to find a new payment structure. Just about all of them, I think with the exception of one state, went over to PDPM Medicaid.
And some of them did this a couple years ago. Some of them did it right at the deadline. Some of them cheated and said, “We’re gonna freeze the current RUGs rate. You’re just gonna get paid the same no matter what you do from now on, and within two years, we’ll figure out how we’re gonna pay for PDPM.”
So there’s a handful of states left that have put the pause button on and have not officially switched over for long-term care Medicaid patients, but the vast majority of states and the vast majority of patients are under PDPM for both skilled and long-term care.
Explore federal payment policies for skilled nursing facilities on the impact of preventive health measures in elderly populations.
How Did PDPM Change the MDS Assessment Process?
Schenk:
What did the transition to PDPM do with respect to how the RAI or how the, the MDS assessment is conducted or evaluated? Like, how does an MDS look different?
Brown:
So the MDS itself didn’t actually change much at all, and that’s because Medicare was doing research to prepare for PDPM and decide how to structure it for about eight to 10 years before they transitioned over. So they’ve been collecting all this data. What is somewhat unfair, and the SNF proposed rule that came out this year really details how Medicare sees this, which I think is a little inaccurate.
They feel like people didn’t barely record depression before. Now that you can get paid for it, people are recording depression more often, therefore they’re unethically up-coding, where that’s not really true or fair. Back in the day, it didn’t affect reimbursement. Everyone was focused on those therapy minutes.
So yes, if you were doing your MDS correctly, and for accuracy and compliance, you should have captured depression when you should have captured depression. But if you’re not getting reimbursed for it, unfortunately that’s just not where people’s focus and priority is. And so the MDS itself has not really changed, but the focus on MDS is huge.
We actually have to do less MDS assessments than we used to, but we have found that no one has really been able to reduce their MDS staffing levels because the MDSs they’re doing have so much more significance, and they have to do so much more work for the same MDS to get, make sure that it is correct as possible and they’re getting the reimbursement they deserve for the level of services they’re providing.
Gain a better understanding of nursing home assessment and reimbursement systems on the impact of preventive health measures in elderly populations.
Schenk:
Is it, do, would you agree that the, the PDPM correlates to what we would say is acuity of the resident?
Brown:
Yes that’s supposedly the idea. I think they did a fairly good job of it with a few a few missed opportunities, but yes, that’s essentially the idea behind it.
How Is Resident Acuity Measured Under PDPM?
Schenk:
And how does it and th- this is gonna be embarrassing for me to ask the question, but, like, how does w- what does the PDPM look like in terms of one resident is a higher acuity than another?
Is it a number? Is it a… ’cause I think the RUGs you were wr- a bunch of Roman numerals, right?
how, what does PDPM look like in terms of determining one’s high acu- one resident’s high acuity, one resident’s low acuity?
Brown:
On that perspective, it’s basically RUG’s cousin, so it still is alphabet soup.
You end up with something called a HIPPS code. It’s four digits. The first one is your PT and OT designation, because they’re always gonna be the same. Then your speech designation, your nursing, your NTA, and then there’s a number at the end that just says which type of MDS assessment this correlates to.
And so it’s still alphabet soup, and it works off the same principle of based on your alphabet soup, you’re gonna get a higher CMI, a case mix index, which is a one-point-something, a two-point-something, .9, whatever. And what they do is, so you get paid a rate for PT, a different rate for OT, a different rate for speech, for nursing, and for NTA every single day of the skilled stay.
What they do is they say, this year we’re paying $100 a day as our average for PT.” Then they apply that CMI to it. So if you got a .97, you’re getting $97 a day. If you get a 1.3, you’re gonna get $130 a day. So the acuity is represented by that case mix index, that numerical value that is based on Medicare’s research associated with not just how sick the patient is, but I think more importantly, how much nursing and therapy services are required for a patient at that acuity based on the clinical indicators.
Understanding the different types of nursing home staff can help families know who is responsible for different aspects of resident care.
Schenk:
So you just described the alphabet soup of the PDPM number. Where would somebody go to find that number f- with respect to a specific resident and perhaps the resident population?
Brown:
Probably the easiest place to find it is usually right on the MDS. You will find those letters and numbers right there to tell you exactly what code a patient is getting charged.
What Do You Do With That Data?
You’re also going to see it on what’s called in, in the business, the UB-04, the monthly bill that goes out to Medicare. So if you requested your medical records, you would be able to find it in either of those places, and it’s called a HIPPS code, H-I-P-P-S. So you just look on the UB-04 for the box that says that, and you’ll be able to identify from there what, what codes the patient was billed under.
Schenk:
And if somebody wanted to become knowledgeable about those codes, would that be the RAI manual, or would it be some other technical guide?
Brown:
That’s a great question. I think there actually have been a lot of good resources in the nursing home pr- proposed and final rules all the way back to 2018. But probably the easiest place to find the best explanation is in the RAI manual in chapter 6.6 in the PDPM worksheet.
You literally can work right through that and calculate any patient that you want. And e- even if you don’t know tons about the MDS, it’s a pretty good way to be able to understand how the system works together. And one of the things I love about that chapter is if it’s talking about a foot infection, it tells you which item of the MDS they’re pulling that from because there could be a couple different places it would be documented on the MDS, but there’s only one place that counts for PDPM.
So you could, even as a layperson who doesn’t, know MDS at all, you could use that worksheet to go back and look at an MDS you’ve pulled from a medical record and say, “Wow, this was in there,” or, “No, it wasn’t,” something like that. And I think NTA is a really good example. NTA stands for Non-Therapy Ancillary, and it is essentially a nursing add-on.
Learn who regulates nursing homes in Georgia and which agencies oversee resident safety and facility compliance.
In the healthcare world we call it an insurance carve-out, where, maybe a patient comes in and you as a nursing home say, “I’m gonna take this patient in, but they have a really expensive chemo medication. I need the insurance to pay for that separately instead of expecting me to cover that cost as a nursing home.”
And so NTA is the same way. It’s extra reimbursement for nursing and nursing a- associated items like maybe wound management, respiratory therapy, things like that. And what they did was Medicare researched what are the 50 most expensive conditions or services that a facility would have to pay for? Okay, we’re gonna pay you for those and stratify them based not only on their individual costs, but as you exponentially add more and more of these items, then you get exponentially more and more reimbursement because if you just have, let’s say, HIV or AIDS, that’s one of the highest point value ones under NTA, that comes with lots of complexity.
But if you have HIV and AIDS and diabetes and COPD and you have a foot infection, you’re a lot more complex. You have a lot more costs and care that’s required and so it takes account for that as well.
If you need documentation after an injury, our guide explains how to get medical records after a Georgia nursing home injury.
Question of the Week
Schenk:
And I want to interrupt this interview with the nursing home regulation question of the week. This week, folks, the difficulty level is medium-hard.
This means that if you get it right, then if you forgot to give someone a wedding gift, then you get extra time. Because I think the rule is that you have one year from the wedding to get the gift. But if you get this right, give yourself like six extra months. All right, here we go.
Under 42 CFR 483.70, who is the nursing home administrator ultimately responsible to report to? Is it A, the interdisciplinary team, B, the corporate office, or C, the governing body
And that answer is C, the administrator is ultimately responsible for reporting to the nursing home’s governing body.
How Can PDPM Prove Understaffing?
Schenk:
Talk to me about the idea of the PDPM as it relates to the amount of time if it… Or if it do- if it does or does not relate to the amount of time that a nurse or nurse assistant should be touching that resident during the day.
And now the reason why I ask that question is it used to be the case that there was a term called expected staffing in the MDS process, in the RAI manual. Now it’s, as you’ve mentioned, it’s case mix index, right? So talk to me about, w- what is the correlation between that PDPM number and literally the number of minutes and hours that they should, the resident should be seen by a professional.
Brown:
I’m not really aware of anywhere that Medicare’s released if their CMI is a 1.5, this is how much nursing services they should receive. But generally speaking, if you’re going up by a significant amount in the CMI, if you’re going from a 1.5 to a 2.5 for nursing, that patient probably needs more nursing services.
If you’re going from 1.5 to 1.6, that’s probably fairly negligible. And it’s not really just about one of those values going up, it’s looking at the whole picture. If all of those CMIs jump, or especially because of the way PDPM is structured, PT and OT work inversely from nursing and NTA in most cases.
So in other words, if PT and OT go up, nursing goes down, and vice versa. So you may say to yourself PT and OT are higher so maybe we don’t need as much nursing care, but we probably need more PT and OT.” Or if nursing and/or NTA go up, you might wanna think about making sure you’ve got more nursing services allocated.
The truth is good providers out there are not staffing at the minimum staffing standards anyhow, and you should be running your community in a way that allows for some of that enhanced acuity. But I think the real warning is if you’re either right at the minimum or below the minimum and you’ve got super high acuity via a higher CMI, that would be a huge warning sign, especially if it was under nursing or NTA.
Learn how the Minimum Data Set affects resident care in Minimum Data Set (MDS) Report – Episode 95.
Can PDPM Data Estimate Nursing Time Requirements?
Schenk:
So I guess if I understand then you could look at the PDPM of the resident population and based on that, extrapolate the minutes and hours of nursing per day
Brown:
I think you probably theoretically could. What I’m saying is I’m not aware of any me- CMS resource by which you could say, “This is how many hours you should say.”
Now, there are some things that come out in the SNF proposed and final rules every single year that talk about various ana- analyses of certain levels of care. So that can be a place to go look for some guidelines or some some basics to base yourself off of. For example, we found out a couple years ago that the average therapy services dropped to 30 minutes, 30 to 40 minutes per day per discipline.
And so that was a great threshold, because we knew there were providers out there that were only providing 15 minutes a day, and I don’t really know how that stands up to any sort of scrutiny if there’s some sort of concern. Particularly in a case I got called into a community where I think there were a lot of well-meaning people that just had been given bad advice, where all of their skill patients were getting 15 minutes a day because that made them more money.
It was a contract therapy scenario. But all their long-term care patients were getting three or four units a day, 50 to 60 minutes a day, because that made them more money, which makes no clinical sense. You’re here for a short-term rehab stay, and I’m only gonna see you for 15 minutes. You live here.
You have chronic issues, but I’m gonna see you for an hour. Something about that does not add up, so obviously that was an opportunity for them to make some adjustments.
Discover how staffing levels influence resident outcomes in Nurse Staffing and Quality of Care in Nursing Homes.
What Improvements Would You Make to the PDPM System?
Schenk:
Overall, how would you say… because it seems to me that you think PDPM is an improvement over the previous iteration with the RUGs.
But how, what would… And if you had a magic wand, what would be the improvements that you would make to the current system?
Brown:
That is such an interesting question, and literally as a PDPM nerd, that’s the kind of thing I think about all the time. I think there should be a minimum threshold for PT and OT.
If a patient is gonna be skilled primarily for therapy, which in the pre-PDPM era, the general statistic was at least 90%, if not higher than that, of patients are skilled primarily for therapy. If you’re not really providing that much therapy or you’re not even providing it five days a week, which was the old standard, and really still is the same standard today there should have to be really ironclad documentation that proves this patient actually necessitates a skilled level of care in the absence of adequate therapy.
So I think that’s the most important thing that they could change. I’m an occupational therapist, so obviously I care about making sure patients get the services they need. And I think the Medicare tried to respond to a system that was not getting them the results that they wanted, and they almost overreacted, and now we’re getting the opposite result, where there’s a severe under-delivery of services in so many cases.
Certainly not everybody. There’s lots of good actors out there. We oversee therapy programs. We haven’t scavenged the therapy minutes that way because we don’t think that’s right. But I think there needs to be protections added for that. On the nursing side, I think one of the biggest mistakes they made is they went from as- an assessment called the PHQ-9 to the PHQ 2 to 9.
That’s the assessment that you do as part of the MDS process that determines whether or not a patient has signs and symptoms of depression or a poorly controlled mood disorder. So it’s supposed to help us find patients that are very depressed, maybe suicidal. They have, mood destabilizing circumstances going on.
This isn’t about someone that has a diagnosis of depression. This is about us finding unmet needs, and then because we’ve identified them through the MDS process, now we can address them with our care plan and with our clinical interventions and get that patient the services they need. You would be amazed how many times it flies under the radar, especially a skilled patient.
They come in, and they’re doing just fine, and after maybe a week in a nursing home, they’re really not doing fine. This is a lot harder than they thought it was gonna be. This is not the experience that they expected. Sometimes people just get depressed because of the stigma that’s associated with nursing homes, which is not always fair or accurate.
And it… that’s what it’s supposed to do. Now that they’ve changed it to the PHQ 2 to 9, you only have to ask, and only can ask, two questions instead of nine of the patient. And if the patient doesn’t know you or isn’t super comfortable with you or anything about the environment isn’t setting them up to calm down and relax and answer your questions, we’re so much less likely now to find patients that are having some of those signs and symptoms of a poorly controlled mood disorder or depression until it might be much later along their pathway and may have caused significant negatives for that patient.
So I think that’s one of the things that I would change if I could.
Schenk:
Melissa, thank you so very much for coming on the show and sharing your knowledge with us.
Brown:
It was my pleasure to be here. Thank you for having me.
Schenk:
Folks, I hope that you enjoyed the content of this episode. Kinda wonked out a little bit.
Sometimes you gotta wonk out. New episodes of the Nursing on the Loose Podcast come out every single Monday. 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 a guest that you would like for me to talk to, let me know that as well. And with that, folks, we’ll see you next time
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 neglect throughout the state of Georgia. We’ll see you next Monday.