PDPM Reimbursement: 5 Common Classification Mistakes Costing Your SNF Money

November 19, 2025 12 min read PDPM

Since PDPM replaced RUG-IV in October 2019, skilled nursing facilities have had to master a fundamentally different reimbursement model. Unlike the therapy-driven RUG system, PDPM classifies residents across five separate components—each with its own complexity and potential for error.

After reviewing thousands of MDS assessments, we've identified five classification mistakes that consistently result in lost reimbursement. These aren't rare edge cases—they're systematic errors that affect facilities every day.

Understanding PDPM's Five Components

Before diving into the mistakes, let's review the five PDPM components and what drives each:

Physical Therapy (PT): Clinical category and Section GG functional scores
Occupational Therapy (OT): Clinical category and Section GG functional scores
Speech-Language Pathology (SLP): SLP-related comorbidities, cognitive status, swallowing disorders, and mechanically altered diet
Nursing: Clinical category, extensive services, and nursing case mix
Non-Therapy Ancillary (NTA): HIV/AIDS, NTA comorbidities, and extensive services

Each component is calculated separately, then combined for the total per diem rate. Missing optimization in any single component reduces overall reimbursement.

Mistake #1: Under-Capturing Comorbidities

This is the single most common—and most costly—PDPM error. The NTA and SLP components rely heavily on ICD-10 diagnosis codes to identify comorbidities that increase payment.

The Error: Failing to capture all qualifying comorbidities from physician documentation, hospital discharge summaries, and nursing assessments.

Common Missed Comorbidities

Morbid obesity (E66.01): Often documented but not coded
Malnutrition (E43, E44.0, E44.1): Frequently present but under-captured
Heart failure (I50.x): May be in history but not on active diagnosis list
Aphasia (R47.01): Impacts SLP classification significantly
Hemiplegia/hemiparesis (G81.x): Often missed when not primary diagnosis
Diabetes with complications (E11.21, E11.22, etc.): Simple diabetes coded instead of complicated

How to Fix It

Review ALL available documentation: hospital H&P, discharge summary, consultant notes, nursing assessments
Create a comorbidity checklist based on PDPM's specific NTA and SLP lists
Query physicians for specificity when diagnoses are vague
Don't rely solely on the primary diagnosis—secondary diagnoses often drive NTA payment

Revenue Impact: A single missed NTA comorbidity can significantly reduce reimbursement per day. Over a 20-day stay, that's hundreds to thousands in lost revenue per resident.

Mistake #2: Inaccurate Section GG Functional Scoring

Section GG drives PT and OT classification. Errors in functional scoring directly translate to incorrect reimbursement—both over and under.

The Error: Coding Section GG based on what residents could do rather than what they actually did, or inconsistently applying the coding scale.

Specific Section GG Issues

Confusing setup with supervision: Code 05 (setup) means helper leaves; code 04 (supervision) means helper stays
Inconsistent "more than half" judgments: The distinction between codes 02 and 03 requires careful observation
Coding potential vs. actual: Section GG captures what happened, not what could happen
Using wrong items for PDPM: Not all Section GG items affect PDPM equally

Key Section GG Items for PDPM

Focus accuracy efforts on these high-impact items:

GG0130A (Eating): Affects OT and SLP components
GG0170C (Lying to Sitting): Affects PT and OT components
GG0170D (Sit to Stand): Affects PT and OT components
GG0170J (Walk 50ft): Affects PT component
GG0170K (Walk 150ft): Affects PT component

Related Resource: For comprehensive guidance on Section GG coding, see our Complete Guide to MDS 3.0 Section GG.

Mistake #3: Incorrect Clinical Category Assignment

The clinical category is the foundation of PDPM classification, determining baseline rates for PT, OT, SLP, and Nursing components. Getting it wrong affects every component.

The Error: Selecting clinical categories based on the primary diagnosis alone, without considering the reason for SNF admission.

Clinical Category Determination

PDPM uses ICD-10 codes to assign one of ten clinical categories:

Major Joint Replacement or Spinal Surgery
Non-Surgical Orthopedic/Musculoskeletal
Acute Neurologic
Non-Surgical Neurological
Acute Infections
Cancer
Pulmonary
Cardiovascular/Coagulations
Medical Management
Return to Provider

Common Clinical Category Errors

Defaulting to Medical Management: This is the lowest-paying category and often used when better options exist
Missing surgical windows: Major Joint Replacement has specific timeframes from surgery date
Ignoring secondary diagnoses: Sometimes a secondary diagnosis better captures the reason for SNF care
Using hospital principal diagnosis: The SNF primary diagnosis should reflect the reason for skilled care, not the hospital stay

Compliance Note: Clinical categories must be supported by the clinical picture. Selecting a higher-paying category without appropriate documentation is a compliance violation.

Mistake #4: Missing Extensive Services

Extensive services significantly increase Nursing and NTA payments, but they're frequently under-captured because they require specific documentation and coding.

The Error: Not capturing extensive services that were provided, or failing to meet documentation requirements for services that were coded.

PDPM Extensive Services

Tracheostomy care (while on ventilator): Highest-paying extensive service
Ventilator/Respirator: Must meet specific definition and timeframes
IV Medications: Must be for something other than nutrition or hydration
Isolation for active infectious disease: Must be during assessment period
Radiation therapy: Must meet specific requirements

Documentation Requirements

Extensive services require:

Physician orders active during the look-back period
Documentation of actual service provision
Clinical justification for the service
Correct coding in Section O of the MDS

Mistake #5: SLP Component Under-Optimization

The SLP component is often overlooked because it involves factors beyond swallowing disorders. Facilities frequently miss optimization opportunities.

The Error: Only focusing on swallowing-related items while missing cognitive and communication factors that affect SLP classification.

SLP Component Drivers

Beyond swallowing disorders, SLP classification considers:

Cognitive impairment (BIMS scores): Lower BIMS can increase SLP payment
Aphasia: Any aphasia diagnosis increases classification
Voice problems requiring SLP: Often present but not captured
Mechanically altered diet: Must be properly documented
SLP comorbidities: CVA, ALS, Parkinson's, etc.

Frequently Missed SLP Opportunities

Residents with dementia: Cognitive components affect SLP classification
Post-stroke without swallowing issues: May still have aphasia or cognitive impact
Residents on puree/mechanical diets: Diet texture must be accurately captured
Residents with voice changes: May require SLP evaluation

Stop Leaving Money on the Table

We built MDS Genie™ to analyze clinical documentation and identify missed comorbidities, optimal clinical categories, and accurate Section GG codes—all in minutes instead of hours. Learn how we can customize this solution for your facility.

Learn About MDS Genie™

Building a PDPM Optimization Process

Avoiding these five mistakes requires systematic processes, not just individual awareness:

1. Pre-Admission Review

Before admission, review hospital documentation to identify:

Potential clinical category
Documented comorbidities
Likely extensive services
Expected functional status

2. Interdisciplinary Assessment

Ensure all disciplines contribute to the MDS:

Therapy: Section GG functional scores
Nursing: Section G ADLs, extensive services
Dietary: Mechanically altered diet, nutritional status
Social Services: Cognitive status, psychiatric diagnoses

3. Documentation Review

Before finalizing the MDS, verify:

All comorbidities from available documentation are captured
Clinical category is optimal and supported
Section GG scores align with nursing and therapy notes
Extensive services are documented and coded correctly

4. Regular Auditing

Conduct monthly audits to identify patterns:

Compare facility PDPM distribution to state/national benchmarks
Review for systematic under-capture of specific comorbidities
Analyze Section GG scoring patterns across staff
Track clinical category distribution over time

Summary

PDPM offers significant reimbursement when classified correctly, but the five-component model creates multiple opportunities for error. The five most common mistakes are:

Under-capturing comorbidities: Review all documentation for NTA and SLP comorbidities
Inaccurate Section GG scoring: Code actual performance using correct definitions
Incorrect clinical category: Select based on reason for SNF care, not just primary diagnosis
Missing extensive services: Capture and document all qualifying services
SLP under-optimization: Consider cognitive and communication factors beyond swallowing

Addressing these systematically—through better processes, training, and technology—can recover significant lost revenue while maintaining compliance.