How Home Health Agencies Can Prepare for, Fight PDGM

When it takes effect next year, the Patient-Driven Groupings Model (PDGM) from the Centers for Medicare & Medicaid Services (CMS) is expected to revolutionize home health agency operations and double billing efforts. As the biggest payment overhaul in years, it’s crucial for providers to spend 2019 preparing for — and fighting certain aspects of — PDGM’s sweeping changes.

Industry leaders from Washington, D.C.-based advoacy organization National Association for Home Care & Hospice (NAHC) and Dallas-based home health technology firm Axxess weighed the risks and opportunities of PDGM during a Friday webinar co-hosted by Home Health Care News.

Required by the Bipartisan Budget Act of 2018, PGDM was developed to improve reimbursement for all types of patients eligible for home health benefits and remove perceived incentives to over-provide therapy services, NAHC President Bill Dombi said during the webinar. Additionally, PDGM cuts the 60-day episode of care unit of payment to 30 days.


Dombi urged home health providers not to overreact to PDGM’s changes by drastically reducing their therapy offerings.

“Over the years, concerns have been raised by Congress, by CMS, by the Office of Inspector General (OIG) and the Government Accountability Office (GAO) that the existing model incentives high volumes of therapy services because reimbursements were increased accordingly,” he said. “But we see great value to the therapy services that have been provided under the Medicare home health benefit.”

While the model was created to address problems that exist under the home health care Prospective Payment System (PPS), many industry leaders worry some aspects of PDGM — such as case-mix changes and widely opposed behavioral adjustments — will hurt agencies.


Top PDGM threats

One of the key issues that home health agencies face with the onset of PDGM has to do with diagnoses, David Merk, executive vice president of Axxess, said during the webinar.

For example, about 40% of the diagnoses allowed for under PPS will not be accepted as primary diagnoses under PDGM.

“Bottom line: For the home health industry, PDGM is revenue-neutral for episodes that have a qualified primary diagnoses — and a disaster for those that don’t,” Merk said.

Under PDGM, case mix will be determined in part by patients’ functional deficits. Based on an OASIS assessment, episodes will be assigned to one of 12 groupings; categorized as early or late; assigned a functional score of low, medium, or high; assigned a comorbidity adjustment; and categorized as an institutional or community referral.

This results in 432 different combinations under PDGM, as opposed to 153 under PPS. Additionally, Low Utilization Payment Adjustments (LUPAs) will also be broken down on a more detailed level.

Currently, home health providers are hit with a LUPA claim if they provide four or fewer visits during a 60-day care episode to any category of patient. Instead of getting the full-episode payment, providers only receive a standardized per-visit payment, regardless of the reason for fewer visits. PDGM takes that universal four-or-fewer rule and breaks it down into 216 different scenarios.

CMS estimates LUPA rates will drop from 8% to 7.1% once PDGM goes live, but Merk predicts they’ll go up.

CMS and other estimates have projected that PDGM will be roughly split between winners and losers, with roughly half of agencies expected to see increased reimbursement and half projected to see lowered reimbursement.

Preparing for PDGM

PDGM will affect each agency differently, but, generally, providers can prepare by adjusting their practices and rebalancing their patient populations.

In the first quarter of 2019, agencies should develop a preparedness plan, educate staff and look for industry partners in coding, telehealth and professional services.

It’s also important to ensure coders are prepared for the change and to seek cooperation from referral sources, Tammy Ross, senior vice president of professional services for Axxess, said during the webinar.

“Now that there’s payment tied to comorbidity, we’re going to have to be very careful with those codes, because CMS is going to monitor where the dollars follow,” Ross said. “If we’re coding diabetes as a secondary diagnosis, we’re going to have to make sure we have interventions for that diabetes and a plan and a goal for that diabetes.”

Home health agencies will likewise need to reinforce their billing department, she added.

“We’re going to essentially have double billing demand,” Ross said. “Can you organization support that?”

Despite the negatives, PDGM presents agencies with some new opportunities as well, such as pursuing telehealth and telemonitoring and developing new programs. Additionally, agencies still have time to fight back, Dombi noted.

“Barring some completely unforeseen and extraordinary event, PDGM will go live on Jan. 1 2020,” Dombi said. “However, in Washington terms, we would say it’s not yet fully baked.”

Dombi expects Congress to introduce more legislation to update PDGM within the next few weeks. In particular, NAHC is working on Capitol Hill to push legislation that would prevent Congress from enacting any changes based on assumed behavior instead of real-world observations.

Multiple bills related to PDGM have already been introduced in both the Senate and House.

“That legislation will eliminate CMS’s power to do an in-advance assumption based adjustment,” Dombi said. “It would require CMS to make an adjustment only on the basis of real evidence of change in practices at the home health agencies that’s been triggered by PDGM. And in the event any change requires an adjustment to the rates, those adjustments would have to be phased in if they reach a 2% level.”

Ultimately, the success of such legislation depends on support from home health agencies and industry leaders, who should to voice their concerns and support to their local member of congress, Dombi said.

Companies featured in this article: