As Medicare Advantage Plans Slowly Migrate from RUG to PDPM, Providers Must Avoid Lost Payments

Most Medicare Advantage (MA) plans that used the old Medicare system for calculating reimbursement for skilled nursing facilities are moving to the new system along with the federal government — at least if the early weeks of the Patient-Driven Payment Model (PDPM) are anything to go by.

That said, details on contracts and changes are scarce, making it imperative for SNFs to review the processes for payment before the next billing cycle, according to Erin Shvetzoff Hennessey, the CEO of the operating and consulting firm Health Dimensions Group.

“It seems like, from a high level, most MA plans that were using [the Resource Utilization Group system] are switching to PDPM,” she said on a recent webinar sponsored by Health Dimensions Group,, and Medline. “Now in some cases, this information was provided really late.”


The question of what MA plans would do was a major cause of confusion, right up until the start of PDPM, Hennessey said on the webinar. HDG — which manages 71 communities in nine states — saw a variety of messages from the plans it works with. Some were changing from a RUG-based system to some variation of PDPM; some plans gave a wide margin of notice; some sent notice the week before the new system took effect.

In short, Medicare Advantage providers didn’t have to follow the RUG-based system to the letter, and they don’t have to fall in line with PDPM, either. That lack of firm rules has led to complications for providers seeking answers on how insurers will react to the new system for Medicare reimbursement, which became effective on October 1. In general, operators have had to request information from their managed care partners, and many plans are moving at their own pace.

“Bottom line: MA plans can do whatever they want,” Marc Zimmet, president of Zimmet Healthcare Services Group, told Skilled Nursing News at the start of the month.


The fact that some plans gave notice of their switch from RUGs to PDPM so late could lead to duplications of assessments of residents, Hennessey said.

“We need to make sure that reimbursement is not lost,” she noted. “So my recommendation would be to look at each of your payers and the switch that they were making.”

One odd element that cropped up with MA plans in the early days of PDPM was authorizations coming through for PDPM rates before a Minimum Data Set was submitted, Hennessey said. These “pre-authorizations” were estimating a PDPM rate based on diagnoses and estimated use of ancillary therapy services.

“I don’t know how accurate many of these were,” she said. “But it was something that came across even at the 11th hour that was rather surprising.”

There has not been much detail on contract changes or differences in the claims or authorization processes; plans are notifying their partners that they’re switching from RUGs to PDPM, and no more, Hennessey said.

“Hopefully, here in the next few weeks, we’ll have more information on what that exactly means,” she said. “The information from Medicare Advantage programs on the whole has been: They’re moving to PDPM. But really the how and why they’re doing it has been more vague.”

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