The resident was in isolation for an active infectious disease. The staff knew it. The chart noted it. The care reflected it. But the required resident assessment—the document Medicare uses to determine the daily payment—didn’t.
By the time anyone caught the omission, the facility had lost roughly $30,000 in reimbursement.
“Reimbursements are per day,” says Daniel Newman, Director of Clinical Reimbursement for Centers Health Care and Nexus Service Group, describing how a single missed detail can cascade across the length of a Medicare-covered stay. The resident was there “a number of days,” he says. By discharge, it had added up to five figures.
The medical record told the story, but the payment system didn’t read it—because it wasn’t coded into the Medicare assessment.
That gap is where many facilities bleed.
PDPM Makes Small Mistakes Expensive
Skilled nursing facilities (SNFs) bill Medicare under the Patient-Driven Payment Model (PDPM). In practice, PDPM functions like a daily bundle. The facility isn’t paid line-by-line for every action. Rather, it’s paid a per-day rate based on the patient’s classified clinical profile—what Medicare believes the patient is, clinically, during that stay.
The mechanism that creates that profile is the Minimum Data Set (MDS), a required assessment that translates the clinical story into the structured inputs that Medicare recognizes.
When the translation fails, it tends to fail in one of two directions:
- The facility bills a higher-paying profile than the record can sustain. The claim may pay, but it becomes a future problem—denial, reversal, or recoupment.
- The facility bills a lower-paying profile than the record could support. The claim pays cleanly. The “loss” is invisible.
A claims director at Elevance Health puts it this way: a claim can pay and still be wrong. Sometimes it pays too much and comes back later. Sometimes it pays too little, and no one ever flags it.
In both cases, the underlying care can be legitimate. The system’s question is narrower: can you prove the level you billed, in the way Medicare expects to see it?
The Quiet Kind of Underpayment
The hardest losses to fix are the ones that don’t show up as denials. Newman estimates that 30% to 40% of facilities have significant leakage.
And the invisibility, Newman argues, is what makes it persistent. Leadership teams notice denials. They notice recoupments. They notice audit letters. They don’t notice the resident who could have qualified for a higher daily rate—but didn’t, because the record didn’t line up in the right way at the right time.
Newman describes this work less like coding and more like reconciliation. He believes that strong facilities build habits so that the following details align by default, not by luck: what happened clinically, what was captured in the required assessment, and what the underlying documentation can factually support.
Most MDS work is performed by nurses because that’s how most facilities staff the role. The challenge, Newman says, is that PDPM requires an entirely different skill set layered on top of clinical judgment—an analytical, detail‑driven discipline that translates medical care into reimbursement logic.
He describes looking for “puzzle people”—staff who can pull clinical threads together and ensure “everything lines up.” For him, the MDS is where bedside reality gets translated into the rate the facility is paid.
When facilities treat that interface as a form to complete—rather than a workflow to manage—small errors become expensive ones. An operations manager who oversees an offshore billing support team, who wishes to remain unnamed, puts it bluntly: “Providers get set in their ways.” Defaults harden into policy, making it harder to improve systems.
What the Better Buildings Do Differently
Newman is careful to clarify that improved billing is not about “aggressive” billing. In a world where audits are common and documentation is the dominant driver of error, aggression is just postponed pain. The goal is boring, but it’s powerful: accurate billing that is consistently supportable.
In practice, the facilities that improve fastest tend to do four things well:
- Treat the assessment like a summary of proof. Identify the key facts from the chart and make sure the assessment reflects them.
- Standardize what the record must show. For the items that move payment, define the minimum documentation you expect every time.
- Review small samples to find repeat errors. Look for what’s consistently missed and fix those first.
- Use denials as process diagnostics. Track why claims fail, then change the workflow that produced the failure.
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PDPM is less forgiving about the gap between clinical reality and what the assessment captures. That’s why a resident can be in isolation, receive appropriate care, and still cost a building tens of thousands of dollars when a single required element is missed. The resident doesn’t change. The care doesn’t change. The translation changes—and in PDPM, the translation is the payment.
And increasingly, it’s also the risk.
This material has been prepared for informational purposes only, and is not intended to provide or be relied upon for legal or tax advice. If you have any specific legal or tax questions regarding this content or related issues, please consult with your professional legal or tax advisor.
