Patient Driven Payment Model (PDPM) - First Glance Pros & Cons

CMS has released the "final" rule on the replacement for PPS. It's called the "Patient Driven Payment Model" or PDPM. The rule came out late yesterday so there is still much to learn. There is some good information here. This post will be based on first impressions which are subject to change as we learn more.


  1. Fewer RUGs: While each patient still gets 4 RUGs instead of the 1 they get now, however PDPM has far fewer RUGs than the RCS-1 proposal. This is a good change. RCS-1 had far too many RUGs. (Bear in mind that some combinations of RUGs are impossible to achieve due to the way PT/OT and Speech interact.) It is a roughly 80% reduction.
  2. Removing Section G: Using ADL scores to predict therapy expense was a bad idea from the beginning. I blogged about it when RCS-1 was proposed. Without rehashing all that here, I'll just say the RCS-1 ADL scoring scheme was going to backfire on taxpayers. Removing ADL scoring from the PT/OT and speech RUGs is definitely a good move.


  1. Adding Section GG: With RCS-1 Accumen spent a lot of time and energy doing data analysis and presenting me with an argument why using ADL scores was a good idea. Of course I rejected those ideas with an argument of my own and suggested we use outcomes for a final determination of pay. Instead now we're moving towards using Section GG. I will review the regression analysis. Hopefully it's better than the last one.
  2. The new name: This may seem like a minor thing but hear me out. Some of us have been out in the marketplace for nearly a year trying to educate busy people on this new system that is coming and will have a large impact on their lives. I was at a trade show this week and several people I met still had not heard of RCS-1. Now you've made what I consider to be moderate, not major, changes to RCS-1 and you completely rename it. Just call this what it is: RCS-2. This needless renaming just causes more confusion and makes the task of education that much harder. (Why did you even call it RCS-1 in the first place if you never had plans to increment that number?)

I'm sure there will be plenty more in the coming days, but these are my first impressions.