PDGM Likely to Shake Up Patient Populations for Home Health Agencies

The latest proposed payment model from the Centers for Medicare & Medicaid Services (CMS) could shake up how the home health industry treats referrals that come from institutional settings versus community-based ones. As a result of changes under the Patient-Driven Groupings Model (PDGM), agencies may start trying to form closer relationships with hospitals or skilled nursing facilities instead of local doctors’ offices, experts say.

PDGM will change case mix weight calculations related to referrals and introduce a 14-day look-back mechanism to determine patient source. Other factors that go into how overall case mix weight is adjusted are clinical group, functional level and comorbidities.

CMS’ move to shake up case mix specifically in regard to referral source is, at least in part, due to data and the agency’s belief that patients coming from institutional settings are typically sicker and, thus, need more care and resources. Home health experts see a problem with that notion, however, as patients with complex chronic conditions are often kept at home for as long as possible.


“I think there’s a misnomer that those being referred [from] the community are just healthier,” Joy M. Cameron, vice president of policy and innovation at ElevatingHome, told Home Health Care News. “It harkens back to the way medicine was done probably 10 or 15 years ago and less how medicine is being done now.”

Alexandria, Virginia-based ElevatingHome is a nonprofit industry organization created in 2017 to advance the home-based care industry. The organization was formed to help unify the 12,000 home health agencies and 6,000 hospices in the United States, according to the organization. ElevatingHome is the parent company of Visiting Nurse Associations of America, an organization that supports and promotes not-for-profit community, home-based care.

“I don’t think PDGM captures the complexities of patients,” Cameron said. “When you start with the premise of did they come from a hospital versus a community referral, that too seems out of touch with patient [needs].”


CMS officials have noted the new model is a move toward value-driven care instead of volume-based care—and that PDGM will further align reimbursement with patient needs.

“I appreciate and we agree with the move to try and move payment to accurately reflect the acuity and the need of the patient, but I don’t know that this algorithm does [that],” Cameron said. “I think we can continue to work with CMS to even more fine-tune. There is a way to capture, truly, the needs of the patient [and] to make sure the payment is accurately reflected.”

Population puzzle

The breakdown of referral sources is different from state to state, but a large portion of patients are typically referred from community-based settings. That raises a red flag when it comes to PDGM, according to experts.

“60% of referrals come from the community,” Gina Mazza, director of the regulatory and compliance division at Fazzi Associates, told HHCN. “Every agency needs to understand how they specifically will be impacted by this new payment model. This is an area agencies really need to think about—what’s my patient population look like? Where do my referrals come from? Are there opportunities for me to make any changes?”

Northampton, Massachusetts-based Fazzi is a research and consultancy firm that focuses on supporting and educating home-based care agencies.

CMS has released online resources for agencies to test themselves against the new model—a patient-specific one and a business-wide tool.

For some agencies, PDGM may be an opportunity to develop more relationships with referral sources.

“Referral source is always an area agencies want to work on, cultivate,” Mazza said. “This is where the patients are coming from and there is competition for patients just as there is competition for staff.”

A case mix weight for a community episode is 0.8782 compared to an institutional referral that has a case mix weight of 1.1855, according to a technical report from Abt Associates with projections and estimates based on 2015 numbers. That means someone that is referred via a community-based setting will receive less of a bump in their case mix weight adjustment.

Staff education key to smoother PDGM transitions

Supporting on-the-ground staff may be the key to an easier PDGM transition.

“Having the resources available to do the education—to stay on top of making sure nurses understand and are able to still spend the amount of time they want with their patients while fulfilling all the new requirements [will be paramount],” Susan Adams, vice president and administrator at Masonicare Home Health and Hospice, told HHCN. “It’s one thing to learn it, it’s one thing to be taught it and it’s another thing to have to go out and implement it, particularly in a patients’ home.”

Wallingford, Connecticut-based Masonicare is a not-for-profit health continuum that offers home health and hospice, among other services. Masonicare has six offices across the state and operates one of the largest nursing homes in the state.

Masonicare has historically reviewed where its referral sources come from and what its patient population is, Adams said, also noting that agencies should continually review their referral sources and follow the ups and downs of where they’re coming from.

Even so, preparing for and making changes to patient populations may be a luxury for some agencies, according to Cameron.

“There is always a conception that there is an unlimited supply of patients that home health agencies see, and that is not the case,” Cameron said. “In many areas, you do not have tons of patients to choose from.”

Workflow with a new workload

If finalized by CMS, there will be a learning curve with PDGM until staff becomes more comfortable with the intricacies of the rule.

“[Agencies] have to [set aside] a significant amount of time and attention so they are able to work with their staff, so that assessments and documentations are really tight,” Cameron said. “I mean, you’re going to want to document the bejesus out of someone, not that you don’t already do so, but you’re going to want to capture all the information you can.”

CMS has noted that it will use an automated system to track patients and that the system should create a seamless transfer of information.

Another area to investigate is whether electronic medical record (EMRs) can accommodate all these changes fast enough. EMRs are where agencies record all their information and where CMS then pulls results from.

“[This] will be a challenge for EMRs to get ready for the big changes that are coming,” Adams said.

Better educating the sources issuing referrals could also help with the transition.

“I think it would be helpful if physicians and physicians practices had some education from CMS, which hasn’t always been the case,” Adams said. “So, for instance, CMS may make a ruling that seriously impacts home health providers but it involves physician alignment and CMS has not been able to step up and ensure the physician understands their potential new role.”

Still time for ‘fine tuning’ 

CMS is currently involved in a comment period that ends Aug. 31.

Some experts are hoping changes are made before the final rule is released, as there are portions they find concerning.

“I think there are still more revisions and fine-tuning to be done,” Cameron said. “I think that we have to really dig in and have conversations.

Other experts report that they do not expect any major changes to be made.

Only time will tell how the final rule shakes out, but the home health industry is continuing to grow, as at least 10,000 people a day become eligible for Medicare and more and more of those people decide to age in place.

“As personal preferences and knowledge about the health care system comes into play, I think we are going to see a natural growth [of home health care],” Cameron said. “I think we need to appropriately make sure that we are not penalized for popularity.”

Written by Kaitlyn Mattson

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