In October 2019, Medicare changed the method that it uses to adjust nursing facility payments for patient acuity from Resource Utilization Groups (RUGs) to the Patient-Driven Payment Model (PDPM). Many state Medicaid programs currently use RUGs, and so this change has implications for states in terms of both base and supplemental payments to nursing facilities.
In this presentation, we compare case-mix weights under RUGs and PDPM for Medicaid-covered nursing facility residents. In addition, we examine the implications of PDPM for the calculation of the Medicaid upper payment limit, which affects the amount of supplemental payments that nursing facilities can receive. Overall, we find that PDPM is not an accurate measure of care needs for Medicaid nursing facility residents with long stays, suggesting that Medicare’s PDPM model cannot easily be applied to Medicaid.
