Skilled Nursing Industry Split on Whether PDPM Will Boost or Cut Revenues

Leaders from multiple segments of the post-acute and long-term care industry have expressed optimism about increased reimbursements under the new Patient-Driven Payment Model (PDPM), but a survey of Skilled Nursing News readers revealed a much murkier picture.

In the month of December, SNN asked our readership — which includes executives and other leaders at operators, lenders, investors, and vendors — to weigh in on their visions for 2019, a year that will bring the new payment model and other important changes to the landscape.

More than 400 responded, and their answers painted a cloudy picture for the year ahead — particularly with regards to PDPM, which will begin linking therapy reimbursements to patient complexity beginning on October 1. When the Centers for Medicare & Medicaid Services first announced the model last year, the reviews were almost universally positive, with leaders of major national operators and real estate investment trusts (REITs) predicting increased reimbursements and more individualized care for residents.


But because the program is revenue-neutral, providers will still be competing for the same overall share of Medicare skilled nursing dollars, creating winners and losers in the month ahead. Even the most optimistic prognosticators admitted that smaller, mom-and-pop nursing providers might simply bow out of the marketplace altogether rather than deal with the changes, foreseeing a wave of mergers-and-acquisitions activity as these properties hit the marketplace.

SNN’s survey revealed that uncertainty in plain terms. When asked whether PDPM would be an overall positive or negative for their businesses in 2019, 49% of respondents said positive — while a slight majority, 51%, picked either negative or neutral. Furthermore, there was a perfectly even split between those who predicted reimbursement gains and losses, with a plurality of 40% seeing no change ahead.

There was a bit more consensus when we asked exactly how PDPM would affect provider behavior. A clear majority said they’ll place a greater emphasis on coding going forward, as ICD-10 codes form the basis for reimbursements, and 43% said they plan to target more medically complex residents in the future.


Finally, a full 93% of respondents said they’d started to prepare for the new model — but interestingly, there were still 25, or 7%, who have not begun the PDPM preparation process.

For more insights into the industry’s plans for the year, including preferred funding sources and M&A patterns, download the full report for free today.