[Updated] CMS Finalizes PDGM and $420 Million Increase for 2019 Medicare Payments

Despite industry concerns, the Centers for Medicare & Medicaid Services (CMS) has finalized the Patient-Driven Groupings Model (PDGM) planned to start in 2020. The agency has also finalized several other changes to how home health providers are reimbursed for their services starting in 2019, tweaking remote patient monitoring rules and refining the Value-Based Purchasing Model (VBPM).

CMS projects that Medicare payments to home health agencies in calendar year 2019 will be increased by 2.2% — or $420 million — based on its finalized policies, announced Wednesday.

The reimbursement rate increase is the first the home health industry has received in a decade — and slightly more than what CMS initially suggested in July’s proposed payment rule. The agency originally projected that home health payment changes would increase Medicare payments to home health agencies by $400 million.


Among its provisions, PDGM is designed to remove current incentives to over-provide therapy services by more strongly weighting clinical characteristics and other patient information, according to CMS. PDGM would also mean that the traditional 60-day unit of payment would be halved to 30 days.

PDGM — mandated to be budget neutral by the Bipartisan Budget Act of 2018 — takes into account certain behavioral changes that policymakers expect home health providers to make after the model is implemented. In particular, they include assumed changes to clinical and co-morbidity coding behavior, along with how Low Utilization Payment Adjustment (LUPA) claims are handled.

If no behavioral assumptions are made, CMS estimates that the 30-day payment amount needed to achieve budget neutrality would be $1,873.91. With the behavioral assumptions, that amount drops to $1,753.68 — a 6.42% decrease.


Home health stakeholders have widely criticized the behavioral assumptions, even teaming up with several members of Congress to get them changed or removed in PDGM via multiple pieces of legislation — S. 3545, S. 3458 and H.R. 6932.

“While we had hoped CMS would consider modifications outlined by the home health provider sector when finalizing this rule, this announcement reinforces the need for the industry to continue our advocacy to get the new home health payment system right,” LHC Group (Nasdaq: LHCG) CEO and Chairman of the Partnership for Quality Home Healthcare Keith Myers said in a statement. “We will continue to work collaboratively with CMS and lawmakers in Congress to refine this new payment system to ensure it is based on a data-driven approach and will support the delivery of uninterrupted, high quality home healthcare to older Americans.”

Although language for PDGM is included in CMS’ final home health payment rule for 2019, that does not mean the payment model is set in stone, Amedisys, Inc. (Nasdaq: AMED) CEO Paul Kusserow told investors during a conference call Tuesday. Stakeholders will likely have until Jan. 1 2020 to secure modifications on the model, he said.

The final rule’s implementation language differs than the proposal’s, Joy Cameron, vice president of policy and innovation for ElevatingHOME, told Home Health Care News via email. The proposed rule stated PDGM will be implemented on Jan. 1, 2020, while the final rule states “on or after” Jan. 1, 2020.

“Time to make sure we have it right and necessary vendors and CMS are fully online,” Cameron said.

The final rule’s PDGM language includes 216 more Home Health Resource Groups (HHRGs) than originally proposed because of a Medication Management Teaching and Assessment (MMTA) split, she said.

In addition to the rate increase and finalization of PDGM, the home health final rule also solidifies CMS’ proposal to define remote patient monitoring in regulation for the Medicare home health benefit and to include the cost of remote patient monitoring as an allowable cost on agencies cost reports.

“This home health final rule focuses on patient needs and not on the volume of care,” CMS Administrator Seema Verma said in a statement. “This rule also innovates and modernizes home health care by allowing remote patient monitoring.”

The Partnership for Quality Home Healthcare supports the final rule’s move to include costs associated with tele-monitoring. The Washington, D.C.-based organization also supports changes in the final rule aimed at better payment accuracy related to the MMTA clinical group.

The home health final rule also solidifies substantial changes to rural add-on payments, namely by categorizing counties and equivalent areas into one of three new buckets with varying add-on levels.

The full rule can be accessed here.

Written by Robert Holly