Understanding Diagnosis Coding Under the New Payment Driven Patient Care (PDPM) Model

The new Medicare fee-for-service reimbursement model known as Patient Driven Payment Model (PDPM) will drastically change how reimbursement will be determined. In the past, the Resource Utilization Groups (RUG-IV) have determined reimbursement, in which the amount of therapy a resident received played a significant part in the amount of reimbursement the facility received for that resident. Reimbursement will transition away from the volume-based payments of RUG-IV toward the new PDPM model. With PDPM, ICD-10 codes will be a crucial driver for reimbursement. 

Starting Oct. 1, 2019 ICD-10 codes will be utilized to determine which one of the PDPM clinical categories the resident will be assigned to for reimbursement. The PDPM clinical categories will define the five payment components for Physical Therapy (PT), Occupational Therapy (OT), Speech-Language Pathology (SLP), Nursing Services and other Non-Therapy Ancillary (NTA) costs. The changes purposed to reimbursement in PDPM mean Skilled Nursing Facilities will need to review and possibly improve how diagnoses are captured and coded. For your skilled nursing facility (SNF), there is no better time than now to start to reviewing and refining the diagnosis process. Skilled nursing care providers’ Medicare revenue will depend on the accuracy of MDS coding AND ICD-10 diagnosis coding. 

In the past, many SNFs have not prioritized diagnosis coding, as the majority of diagnoses do not impact RUG-IV reimbursement. However, under PDPM, failure to accurately capture and code diagnoses will result in under-reimbursement. The primary diagnosis will determine the patient’s clinical category. The primary diagnosis code will be recorded in MDS item I0020B. Some ICD-10-CM code can map to a different clinical category from the default depending on the patient’s prior inpatient procedure history. The patient’s surgical history will be indicated in section J of the MDS. The NTA score will be impacted by capturing many ICD-10 diagnosis codes in MDS item I8000, as well as items coded throughout the MDS assessment.

Many ICD-10 diagnosis codes will trigger “return to provider” status on claims if selected as the primary diagnosis. Diagnosis codes that lack specificity, as well as some commonly used treatment diagnoses, will trigger the “return to provider” status on claims under PDPM. If you have not yet reviewed which codes will trigger “return to provider” status on claims, please access the SNF PDPM Clinical Category Mapping. Reviewing the codes that will trigger the “return to provider” status and avoiding listing them as the primary diagnosis will prevent claims from being rejected for primary diagnosis errors.

The following steps can assist with preparation for implementation of PDPM on October 1:

1. Review current diagnoses utilized most frequently as primary diagnosis for specificity and identify whether the diagnosis would trigger “return to provider” status on claims.
2. Collaborate with your physicians and other health care practitioners to help ensure their documentation includes specific diagnoses to obtain the correct ICD-10 codes.
3. Work to ensure that staff entering ICD-10 codes are educated on the new requirements.

Interested in learning more about how PDPM will affect your facility? Join us for our Nine Steps to PDPM Webinar Series. Click here to learn more.

Contact Richter

Do you have questions about diagnosis coding under PDPM, or other clinical challenges? Call Richter’s clinical education consultants at 866-806-0799 to schedule a free consultation.