PDGM’s More Complex Approach to Comorbidity Adjustments Raises Doubts

The forthcoming Patient-Driven Groupings Model (PDGM) could potentially alter the way that home health providers are reimbursed for treating patients with comorbid conditions. These proposed changes should be among the elements of PDGM raising concerns for the industry, considering that they add complexity and yet could result in nearly 95% of providers getting very little in the way of increased reimbursements, according to Nick Seabrook, managing principal at BlackTree Healthcare Consulting.

“This one continues to baffle me, how they have this [comorbidity adjustment] set up,” Seabrook said last week in Chicago during the annual leadership conference of the Council of State Home Care & Hospice Associations.

The council is an independent body serving state and national association members. Conference attendees included executives of state associations, as well as leaders with national associations, home health providers and vendors.


Federal legislation passed earlier in 2018 mandated that PDGM be implemented by Jan. 1, 2020.

PDGM is similar in many ways to the Home Health Groupings Model (HHGM), a payment reform approach put forward last year, but ultimately quashed after industry pushback. However, under HHGM, providers would have either qualified for a comorbidity adjustment or not, based on whether a patient had a certain secondary diagnosis.

Under PDGM, there are three options: no adjustment, a “low” adjustment” or a “high” adjustment.


“It’s all based on resource use,” Seabrook said, referring to when a comorbidity adjustment would be triggered.

More specifically, the Centers for Medicare & Medicaid Services (CMS) looked at the various diagnosis codes and identified 11 “comorbidity subgroups” that would qualify a provider for an adjustment. The subgroups include “heart 11,” which includes heart failure, and “neuro 5,” which includes Parkinson’s disease.

These are conditions that drive up resource use on the part of the agency.

Considering that there were 116 diagnosis subcategories to evaluate, 11 is a “very, very small subset,” Seabrook noted. Under PDGM, a home health provider would qualify for a “low” comorbidity adjustment if there is a secondary diagnosis falling within one of these 11 categories.

CMS also analyzed how resource use increases due to the interaction between particular conditions. The agency evaluated 343 different subgroup interactions and determined that, in 27 cases, the interactions drove resource use up at least $150.

A home health provider would qualify for a “high” comorbidity adjustment if there are two or more secondary diagnoses falling specifically within interacting subgroups. An example here would be “circulatory 10” (which includes varicose veins with ulceration) interacting with “endocrine 3” (diabetes with complications).

In all other cases, no comorbidity adjustment would be made—and this would account for the majority of claims. Looking at calendar year 2017 data, CMS calculated that in 62.6% of claims periods, there would have been no comorbidity adjustment under the PDGM formula. A “low” adjustment would have occurred in 31.6% of periods; a “high” adjustment would have occurred in just 5.8%.

Furthermore, mean resource use only went up about $35 when a low comorbidity adjustment was in play, Seabrook noted. A high adjustment boosted resource use significantly, by about $350.

“My question is, what is CMS trying to accomplish?” Seabrook told Home Health Care News after his presentation at the conference. He stressed that, despite the additional complexity of this approach, it will result in about 94% of agencies receiving no adjustment or a meager bump.

In his opinion, the HHGM approach was preferable, as it provided a more substantial increase of around $150 whenever the comorbidity adjustment was triggered.

In the proposed rule laying out this new approach to the co-morbidity adjustment, put forward in July, CMS explained its rationale.

“We believe that this method for adjusting payment for the presence of co-morbidities is more robust, reflective of patient characteristics, better aligns payment with actual resource use, and addresses comments received from the CY 2018 HH PPS proposed rule and recommendations from TEP [technical expert panel] members,” the agency wrote.

But Seabrook is not convinced.

“[CMS is] basing all this on data … I just still think this piece of the rule needs some adjustment,” he said. “I don’t know what it accomplishes going from two to three [comorbidity adjustment levels], when you have so little money for the low comorbidity adjustment.”

CMS is accepting public comments on its PDGM proposal through the end of this month. It will then craft a final rule to be released later this year.

Written by Tim Mullaney

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