Patient-Driven Payment Model (PDPM)

As you may know, CMS has discontinued the calculation of RUG scores, which the state has used in the past to adjust Nursing Facility Medicaid rates for acuity. CMS has replaced the RUGS data set with the Patient-Driven Payment Model (PDPM). During the 2024 Session, the State Legislature authorized DSHS to move away from RUG data beginning with the July 1, 2024 rates. Unfortunately this authority did not come with additional funding dedicated to the implementation of PDPM.

For rates beginning July 1, 2024:

Case mix will be determined using the Nursing Component of the HIPPS score. In the interest of stability and enabling a transition period, each facility will see an increase of at least 9% in their direct care rate compared to their direct care rate on June 30, 2024. However, due to the lack of implementation funding, the largest increases will be limited to a 15-16% increase compared to the June 30, 2024 rate.

For rates beginning July 1, 2025:

A workgroup has met once and will continue to meet over the summer and fall to discuss options for fiscal year 2026 (rates starting July 1, 2025) and fiscal year 2027 (rates starting July 1, 2026). This workgroup includes representatives from both professional associations, SEIU, consultants, case mix nurses, and others. The Legislature has asked for a report to be completed by DSHS, due this December, with recommendations on implementing PDPM for those two years. They have additionally asked for a follow-up report at a later time to allow recommended changes based on lessons learned during these first years of implementation. Additional funding for PDPM may be proposed by DSHS in the report or requested during session. As always, if any individual, provider, or group feels strongly regarding PDPM funding, you are encouraged to contact your representatives.

If you have any questions about PDPM, please contact Peter Graham at If you have any questions about your July 1, 2024 rate, the Department expects to send out each facility’s rate letter on June 24, 2024. That letter will contain contact information for questions or appeals.