Maximizing PDPM Reimbursement for Medicaid in 2025

As healthcare providers continue to navigate the evolving landscape of reimbursement systems, the Patient-Driven Payment Model (PDPM) remains a cornerstone for skilled nursing facilities (SNFs) seeking to optimize their financial and operational outcomes. While initially designed for Medicare Part A, many states are adopting or adapting PDPM principles for their Medicaid reimbursement models. In 2025, maximizing PDPM reimbursement requires a strategic focus on audit services, restorative program optimization, and a thorough understanding of state-specific Medicaid implementations of PDPM.

Understanding PDPM in Medicaid

PDPM, introduced in 2019, shifted the focus of reimbursement from therapy minutes to resident characteristics and clinical complexity. Under PDPM, payments are determined by five case-mix adjusted components:

1. Physical Therapy (PT)
2. Occupational Therapy (OT)
3. Speech-Language Pathology (SLP)
4. Nursing Services
5. Non-Therapy Ancillary (NTA) services

While Medicare fully transitioned to PDPM, Medicaid reimbursement varies significantly by state. Some states have integrated nursing services and NTAs into their Medicaid payment structures, while others are still evaluating the best approach. As a provider, understanding how your state uses or plans to use the PDPM model—whether it captures nursing services alone or includes NTAs—is critical to maximizing reimbursement.

Ensuring Proper Audit Services

Proper audit services are foundational to achieving optimal reimbursement under PDPM. Audits ensure accuracy in coding, compliance with documentation requirements, and alignment with state and federal regulations. Here are key strategies to enhance audit outcomes:

1. Conduct Routine Documentation Audits Regular audits of Minimum Data Set (MDS) documentation ensure that assessments accurately reflect residents’ clinical conditions. Inaccurate coding or incomplete documentation can lead to underpayments or penalties.
2. Evaluate Clinical Coding Practices PDPM relies heavily on accurate ICD-10 coding to capture the clinical complexity of residents. Missteps in coding primary diagnoses, comorbidities, or NTAs can significantly impact reimbursement.
3. Review Quality Measures Quality measures tied to Medicaid programs often intersect with PDPM components. Audit quality measures such as pressure ulcer prevalence, rehospitalization rates, and functional improvement to ensure alignment with reimbursement criteria.
4. Invest in Training and Education Staff education is critical for ensuring audit success. Ongoing training on PDPM coding, documentation, and compliance keeps your team equipped to meet the challenges of 2025.

By partnering with experienced audit services or leveraging internal expertise, facilities can identify and address gaps that may hinder reimbursement potential.

Optimizing Restorative Programs for PDPM

Restorative nursing programs play a pivotal role in maximizing PDPM reimbursement by supporting resident outcomes and capturing additional payment opportunities under the nursing component. To optimize restorative programs:

1. Identify Resident Candidates Early identification of residents who can benefit from restorative programs, such as those with potential for functional improvement or maintenance, ensures timely initiation of services.
2. Enhance Staff Competencies Invest in restorative nursing training to build staff capabilities in providing quality care. Training ensures that staff understand the goals of restorative nursing and can implement interventions effectively.
3. Standardize Documentation Practices Comprehensive and consistent documentation is critical to justifying restorative program services. Documenting progress, participation, and outcomes ensures compliance and supports reimbursement claims.
4. Align Restorative Care with PDPM Objectives Restorative programs should align with PDPM’s focus on nursing and functional measures. Activities like range of motion (ROM) exercises, splint or brace assistance, and mobility training directly impact PDPM scores.

By strengthening restorative programs, SNFs not only improve resident outcomes but also enhance their financial performance under PDPM.

Navigating State-Specific PDPM Models

Each state’s approach to Medicaid PDPM implementation varies, requiring providers to stay informed about state-specific rules. For example:

1. States Using Nursing Services Alone In states where Medicaid reimbursement captures only the nursing component, the focus should be on maximizing nursing case-mix scores. This includes accurate documentation of resident acuity, such as pressure ulcers, infections, and dependence on ADLs (activities of daily living).
2. States Including NTAs States incorporating NTAs into their models require providers to focus on capturing high-cost services and comorbidities. NTA points are derived from ICD-10 coding and directly impact reimbursement.
3. States Adopting Hybrid Models Some states may blend PDPM with other reimbursement methods, requiring providers to adapt to dual systems. Understanding the interaction between these systems is crucial for accurate billing.

Strategies for Success

1. Monitor State Updates Stay up-to-date on state Medicaid policies through provider associations, government communications, and professional networks.
2. Engage in Advocacy Participate in advocacy efforts to influence state decisions on PDPM implementation, ensuring that policies reflect the realities of SNF care.
3. Collaborate with Experts Partnering with consultants or organizations experienced in state-specific PDPM models provides valuable insights and support.

Leveraging Technology and Data Analytics

Technology plays a vital role in optimizing PDPM reimbursement. Tools such as MDS software, data analytics platforms, and electronic health records (EHRs) streamline processes and enhance decision-making. Use these tools to:

• Identify trends in resident acuity and service utilization.
• Analyze quality measure performance.
• Track NTA point accumulation.

Investing in technology not only improves efficiency but also supports compliance and maximizes financial outcomes.

Promoting a Culture of Excellence

Ultimately, maximizing PDPM reimbursement requires a holistic approach. Fostering a culture of excellence in clinical care, documentation, and compliance positions your facility for long-term success. Key elements include:

1. Leadership Engagement Strong leadership drives accountability and prioritizes initiatives that support PDPM success.
2. Interdisciplinary Collaboration Effective communication and collaboration among nursing, therapy, restorative care, and administrative teams ensure alignment with PDPM goals.
3. Continuous Improvement Regularly assess and refine processes to adapt to changing regulations and industry trends.

Conclusion

As Medicaid programs increasingly adopt PDPM principles, SNFs must adapt to the complexities of reimbursement systems in 2025. By ensuring robust audit services, optimizing restorative programs, and understanding state-specific models, providers can achieve financial and clinical success. With a strategic approach and a commitment to excellence, facilities can navigate the challenges of PDPM while delivering high-quality care to residents

As healthcare providers continue to navigate the evolving landscape of reimbursement systems, the Patient-Driven Payment Model (PDPM) remains a cornerstone for skilled nursing facilities (SNFs) seeking to optimize their financial and operational outcomes. While initially designed for Medicare Part A, many states are adopting or adapting PDPM principles for their Medicaid reimbursement models. In 2025, maximizing PDPM reimbursement requires a strategic focus on audit services, restorative program optimization, and a thorough understanding of state-specific Medicaid implementations of PDPM.