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The purpose of this bulletin is to notify providers of direct care operating rate and grouper updates for nursing facility Patient Driven Payment Model (PDPM) rates effective for dates of service on or after October 1, 2025.

This bulletin informs nursing facility providers of new direct operating base rates effective October 1, 2025. The new rates are adjusted using case mix indices determined using the Patient Driven Payment Model (PDPM). The shift from Resource Utilization Groups IV (RUG IV) to PDPM adjustment is being applied in accordance with Item 288.IIIII of the 2025 Appropriation Act. Other components of the overall nursing facility per diem rate, indirect care, capital, nurse aide training competency and evaluation program (NATCEP), and criminal records check (CRC), remain unchanged from the amounts effective on July 1, 2025. 

The updated rate information and case mix indices can be found on the DMAS website at https://www.dmas.virginia.gov/for-providers/rates-and-rate-setting/nursing-facilities/. The rates can be found in the file entitled “Nursing Facility Price-Based Reimbursement Rates Effective October 1, 2025 through June 30, 2026”. The weights can be found in the file entitled “PDPM Weights Effective October 1, 2025”. The changes described in this bulletin will apply to all nursing facility claims for members served in fee-for-service or managed care delivery systems.

Managed Care Reimbursement

Effective October 1, 2025, MCOs are required to pay nursing facilities no less than the PDPM adjusted per diem rate for Medicaid covered calendar days, using the Department’s methodology. 

Billing

Nursing facilities will be required to submit PDPM codes instead of RUG codes on claims for dates of service on and after October 1, 2025. Claims with dates of service prior to October 1, 2025, should be billed with a RUG-IV code. Claims must include only one type of code, RUG or PDPM. Claims can only contain dates of service within the same calendar month. 

Nursing facilities will continue to use the current Centers for Medicare and Medicaid Services (CMS) Minimum Data Set (MDS) Assessment Version 3.0 to determine each member’s applicable PDPM code. However, the Optional State Assessment (OSA) will no longer be needed for dates of service on or after October 1, 2025.

Billing guidance can be found in the Nursing Facility Provider Manual at http://www.dmas.virginia.gov/ under Virginia Medicaid Portal, Provider Resources, Provider Manuals, Provider Manuals, and select Nursing facilities from the drop down menu.

Structure of PDPM

Under PDPM, there are five components including Physical Therapy (PT), Occupational Therapy (OT), Speech Language Pathology (SLP), Nursing, and Non-Therapy Ancillary (NTA). The PDPM code contains five characters, the first of which applies to both the PT and OT components. Characters two through four apply to SLP, Nursing, and NTA, respectively. The fifth character is used to identify the type of assessment from which the PDPM code was determined. DMAS will accept all valid assessment types. The assessment type for Medicaid primary claims will have the fifth character of PDPM code submitted as a “6” (Omnibus Budget Reconciliation Act -OBRA). Providers should limit PDPM billing codes to valid values as determined by CMS and the RAI Manual. 

Determining Medicaid Allowed Amount on Medicare Crossover Claims

For Medicare Crossover claims, DMAS will continue to utilize the methodology for calculating the Medicaid Allowed Amount in which the case mix index is set to 1.0. 

Use of Older Assessments

Providers may bill PDPM codes from a OBRA assessment completed prior to an OSA assessment when billing for dates of service on and after October 1, 2025, provided the Medicare assessment accurately documents the current health status of the resident and complies with federal requirements of MDS assessments.  

Further Assistance

MDS Technical Assistance and guidance is available from the CMS website https://www.cms.gov under Medicare, Nursing Home Quality Initiatives, and MDS Technical Information. 

For RAI/MDS questions, please contact the State RAI Coordinator through: http://www.vdh.virginia.gov/licensure-and-certification/contact-us/

RAI Manual: 

https://www.cms.gov/files/document/finalmds-30-rai-manual-v1201october2025.pdf-0.

If you have any questions regarding the nursing facility payment methodology, you may contact DMAS at the following email address: PRD-ratesetting@dmas.virginia.gov.