For years, therapy strategy in senior living and skilled nursing followed a familiar playbook. Volume mattered. Minutes mattered. Therapy departments could clearly demonstrate their value by the amount of care delivered and the reimbursement tied to it.
That world no longer exists.
Between the transition to PDPM and the more recent shift to PDPM Medicaid in many states, therapy has fundamentally changed—not just in how it’s reimbursed, but in how it should be managed, evaluated, and integrated into overall operations. Yet many organizations are still relying on rehab models, partners, and assumptions that were built for a system that is already gone.
The result? Misaligned incentives, deteriorating outcomes, increased audit risk, and skilled residents quietly receiving less care than they need.
Understanding what has changed—and how to respond—is no longer optional.
The End of Volume-Driven Therapy
Under the old RUGs model, therapy volume and reimbursement were tightly linked. More minutes meant more revenue, and therapy departments were often the engine driving financial performance in skilled care.
PDPM disrupted that relationship entirely.
Reimbursement is now driven by resident characteristics and clinical complexity, not by how many minutes of therapy are delivered. While this shift was intended to promote patient-centered care, it also removed the most obvious way therapy demonstrated its value inside a building.
For many organizations, therapy went from being a revenue driver to a cost center almost overnight.
That shift exposed a hard truth: many therapy models were optimized for billing, not for outcomes, leadership, or long-term sustainability.
Why Contract Therapy Incentives No Longer Align
Nowhere is this tension more visible than in contract therapy arrangements.
Under PDPM, facilities receive their daily therapy component regardless of whether therapy is delivered. Meanwhile, contract therapy companies absorb the full cost of staffing therapists. In this environment, the fastest way for a contract provider to protect its margins is simple: reduce minutes and push productivity.
This isn’t necessarily malicious—it’s structural.
The problem is that reduced minutes don’t always align with resident needs, particularly in skilled care. We are increasingly seeing situations where skilled residents receive fewer therapy minutes than long-term care residents, a pattern that makes little clinical sense and raises serious concerns about outcomes, length of stay, and regulatory scrutiny.
For operators, the key issue isn’t whether minutes came down under PDPM—they should have. The issue is whether they’ve come down too far, and whether anyone is actively monitoring the impact.
What “Reasonable” Therapy Actually Looks Like Today
Industry data and real-world performance tell a consistent story: skilled therapy programs averaging roughly 30 to 40 minutes per day tend to produce strong outcomes when supported by competent clinical leadership and appropriate interdisciplinary coordination.
Those minutes are often sufficient to:
- Support mobility and self-care improvements
- Meet Section GG expectations
- Reduce avoidable decline
- Limit audit exposure
When average therapy minutes fall significantly below that range, especially without a corresponding improvement in outcomes, it’s a signal worth investigating.
The most dangerous scenario for operators is not knowing where their therapy program sits—or assuming that low minutes are simply “how things work now.”
PDPM Medicaid Changed the Game Again
While PDPM Medicare was a major shift, PDPM Medicaid has been the tipping point for many organizations.
In most states, Medicaid reimbursement is now driven almost entirely by nursing and, in some cases, NTA components. Therapy no longer meaningfully influences case-mix index in the way it once did. This has eliminated one of the last financial justifications contract therapy providers used to demonstrate value in long-term care.
At the same time, the importance of accurate functional coding—particularly Section GG—has increased dramatically. Therapy may no longer drive reimbursement, but functional decline certainly does.
That puts pressure squarely on nursing documentation, MDS accuracy, and interdisciplinary communication. Facilities that fail to adapt to this reality often see reimbursement erosion not because residents improved, but because declines were never properly captured.
Therapy, Nursing, and the New Role of Section GG
One of the most overlooked consequences of these changes is how responsibility has shifted inside the building.
Historically, therapists often played a significant role in supporting Section GG data collection, even when it wasn’t explicitly required. Today, with therapy less involved early in the assessment process, nursing teams must be confident, accurate, and consistent in how functional status is documented.
Without proper training and oversight, errors are common:
- Declines are missed or understated
- Improvements are documented inaccurately
- Auto-populated data is accepted without question
These issues don’t just affect reimbursement—they influence care planning, survey risk, and resident outcomes.
Facilities that invest in education, audits, and cross-disciplinary collaboration are far better positioned to succeed under the current model.
The Bigger Risk: Doing Nothing
Perhaps the greatest risk facing operators today is inertia.
Because the PDPM transition happened years ago, many organizations assume they’ve already “adjusted.” In reality, PDPM Medicaid, workforce instability, and contract therapy cost pressures have continued to evolve—often quietly.
Facilities may not notice the impact immediately. Outcomes erode slowly. Minutes decline gradually. Audit risk builds in the background.
By the time leadership recognizes a problem, it’s often systemic.
A Necessary Gut Check for Operators
If you oversee therapy or skilled services, a few questions are worth asking:
- Do you know your average skilled therapy minutes per day—and why they are what they are?
- Are your outcomes improving, stagnating, or quietly declining?
- Do your therapy incentives align with resident needs, or vendor margins?
- Is your nursing team confident and accurate in Section GG coding?
If you can’t answer those questions clearly, it may be time to reassess your approach.
Where to Go From Here
Therapy is not disappearing from senior living or skilled care—but its role has changed. Organizations that recognize this shift and adapt strategically will be better positioned to protect outcomes, manage risk, and maintain financial stability.
Those that don’t may find themselves reacting to problems long after they’ve taken root.
For a deeper discussion on how these changes are playing out in real buildings—and what operators should be watching closely—listen to Gravity Healthcare Hacks, Episode 64, Why Everything Is Changing in Therapy — and You Should Too.
