Cash Flow, Timing and Other Practical FAQs About PDGM Answered

There are just nine months to go before the implementation of the Patient-Driven Groupings Model (PDGM), but many home health care agency owners and operators remain uncertain about what the looming payment overhaul will mean for them.

On a macro level, all home health agencies are waiting to find out if reimbursement changes will ultimately be based on observed evidence or assumed behavior, particularly when it comes to upcoding and Low Utilization Payment Adjustment (LUPA) claims. Throughout the industry, providers are also scrambling to figure out how PDGM will impact their long-term finances and how to potentially shake up their delivery of therapy services.

While big-picture questions like these have often taken center stage in the conversation surrounding PDGM, dozens of practical questions about how the model will affect day-to-day operations remain.


Home health owners and operators voiced several such questions earlier this month during a PDGM educational session at the 2019 Illinois HomeCare & Hospice Council (IHHC) leadership conference in Itasca, Illinois. The session was led by Melinda Gaboury, co-founder and CEO of Healthcare Provider Solutions Inc., a consulting firm serving the home health and hospice industries.

Below are several highlights from the session.

If a patient is on service prior to Jan. 1, then needs to be recertified after PDGM takes effect, what happens?

PDGM will begin with any 60-day episodes that begin Jan. 1, 2020 or later.


For providers, that means a 60-day episode of care that starts Dec. 31, 2018, will be paid traditionally under the current Prospective Payment System (PPS) Providers and would then transition to PDGM during a potential recertification.

Many agencies will have to increase their billing departments to keep up with the shortened 30-day billing period under PDGM. Is CMS increasing its billing resources to ensure claims will be processed in a timely manner?

That remains to be seen, according to Gaboury.

But if the 2016 Pre-Claim Review Demonstration (PCRD) in Illinois serves as an example, providers are right to be concerned.

Introduced by CMS as a means of countering improper billing, PCRD required home health providers to submit claims for prior authorization before receiving Medicare reimbursement. At the time, providers reportedly experienced widespread procedural hurdles related to Medicare Administrative Contractor (MAC) Palmetto GBA’s review of their claims.

“Palmetto GBA is the only place doing it this time,” Gaboury told IHHC conference attendees. “I think they’re probably going to be more prepared for the Review Choice Demonstration (RCD) this time than they’re going to be for PDGM.”

While some providers might believe they will be able to “skate right through” PDGM and catch up as needed, she said, that won’t be the case.

“Please hear me loud and clear: When you get into January 2020, you’re going to be filing [Requests for Anticipated Payment] RAPs just like you file RAPs today. … We hope and pray that Medicare MACs can even process these claims and pay us.”

But even if no glitches or hurdles occur, home health providers should expect to get about half of what their RAPs are worth today.

“All things perfect, our expectation and calculation is a 12% to 15% reduction in cash flow in January, [more than 20%] in February and [it will be] March before you see the light of day,” Gaboury said. “So if you are a cash strapped agency already, there should be some specific cash flow planning before Jan. 1.”

Do all the orders that written in the first 30 days have to be back before filing claims?

Any order that has anything to do with the first 30 days of care will have to be signed and dated before you can file that first 30-day claim, according to Gaboury.

“For the second 30-day claim, you’re already going to have to have gotten the plan of care signed,” she said. “Any supplemental orders that are specific to the second 30 days would obviously have to be signed and dated before you bill that second final claim.”

If RCD begins in 2019, what will January look like?

At this point, home health providers shouldn’t have any doubt that RCD will start this year in Illinois, then possibly expand into four other states: Ohio, Florida, North Carolina and Texas.

CMS announced March 4 it had received Paperwork Reduction Act approval for RCD from the White House Office of Management and Budget (OMB). Since OMB approval, the agency has been finalizing the choice selection process for home health agencies.

The combination of RCD and PDGM has the potential to be catastrophic for unprepared home health agencies, experts have warned.

“Last we heard from Palmetto GBA was that if you’re still in the Review Choice Demonstration when PDGM starts, you’ll send in everything for pre-claim review with that first and it’ll carry you the whole 60 days,” Gaboury said. “I think they’ll have to change that based on the allowance of changing the HIPPS [Health Insurance Prospective Payment System] code for the second 30 days and having an additional OASIS.”

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