Question of the Month: Patient Driven Payment Model

How are you preparing for the shift to the Patient Driven Payment Model (PDPM) for Medicare/Medicaid-reimbursed services, which goes into effect Oct. 1?

Plan ahead

By Frank Small

Chief Investment Officer

Greystone Healthcare Investments

In anticipation of the new reimbursement regime, we added two due diligence analyses to our wide-ranging review of potential investment opportunities.

First, we analyze historical clinical operating performance utilizing the projected PDPM reimbursement methodology to determine the economic impact of PDPM, assuming no change in operating strategy. 

Second, we compare hospital discharge data to PDPM reimbursements to find opportunities to increase facility acuity by expanding the facility’s service offerings profitably.


Get operators ready

By Mark Lamb

Chief Investment Officer

CareTrust REIT

At CareTrust, we are working closely with our tenants to ensure they are preparing for the upcoming change to PDPM. 

Because we are a triple-net lessor, we don’t participate in the operation of the individual facilities, but we can ensure that our tenants/operating partners understand what the “market” is for new therapy and other ancillary contracts that are being renegotiated ahead of the change. We also help them understand what other operators are doing to prepare from a staffing, assessment and training perspective.


‘Just a bump in the road’

By Adam Heavenrich

Managing Director

Heavenrich & Company

While the skilled nursing industry has hit some major potholes over the last several years, PDPM will likely be just a bump in the road for most operators. 

The bigger industry impacts have been: the introduction of Medicare managed care plans; public policy that has shifted support to in-home senior care; assisted living communities providing post-acute therapy services that compete with nursing homes; and continued downward pressure on Medicaid reimbursement in some states. 

PDPM will have little impact on operators that have been through the periodic adjustments in reimbursement that come with the territory. As an industry broker, we are not anticipating increased transaction activity with the implementation of PDPM.