Beating the Buzzer: Why Timing Is Everything Under PDGM

While timing tweaks haven’t received quite the attention therapy and coding changes have ahead of the Patient-Driven Groupings Model (PDGM), beating the buzzer will be more important than ever for home health agencies when the new model takes effect.

For example, the Centers for Medicare & Medicaid Services (CMS) will pay higher reimbursement rates for patients who have received institutional care in the 14 days prior to their home health admissions. On top of that, early episodes — which will be harder to come by under PDGM — will also come with a higher price tag.

Those factors alone can make a difference of $600 or more per patient per payment episode, experts from home health technology firm Axxess told Home Health Care News.


Beyond admission source, the importance of timing under PDGM will touch all aspects of an agency’s operations, from coding to billing and beyond.

Agencies must take notice and plan accordingly to get the most bang for their buck.

Referral source and timing

As providers prepare for PDGM, many agencies are looking to institutional referral sources such as hospitals to tap into new clients, with money being a large motivator. But in the end, the classification and reimbursement rate of a referral comes down to the timing.


Take a patient with Type 2 diabetes and a foot ulcer, for example. Now, assume that patient is a community referral and his or her episode is early, meaning it’s the patient’s first 30 days of care.

“For that first 30 day period, it looks like [an agency] would be apt to make about $1,868,” Jennifer Gibson Osburn, senior clinical consultant at Axxess, told HHCN. “If that changed to an institutional-early episode, the money goes up to $2,134.”

That $266-dollar gap becomes even more pronounced for late episodes of care.

Under PDGM, there will be more late episodes than under the current Prospective Payment System (PPS). Currently, the first and second 60-day period following at least a 60-day interruption of care is considered early. Post-PDGM, however, everything after a patient’s first 30 days of care is late, unless there’s a 60 day interruption of care between discharge and readmission to home health.

“If that same diabetic wound patient is community-late, then payment drops down to $1,278,” Osburn said. “But if it’s an institutional-late, it’s $1,931.”

While the higher price tag of institutional referrals may be appealing, agencies shouldn’t be deterred from fostering relationships with community referral sources. For one, referrals that appear to be from the community can turn institutional if the timing is right.

“Patients may be discharged home from an acute care setting and may follow up with their primary care provider, who then sends a referral to home health,” Osburn said. “If we get them admitted within that institutional 14-day window, we still have an institutional referral source.”

As such, agencies should be educating community and institutional referral sources about the importance of timing, on top of questioning patients about their recent medical histories.

“The quicker we can get a patient admitted to home health, the less likely that patient is to go back to the hospital because we’re taking care of them in their more acute phase,” Osburn said. “By adding those layers, I think we’ll see some changes as far as the information that we get.”

However, it’s worth noting that before going after more institutional patients, home health agencies should ensure they’re equipped to handle a higher acuity population.

“The whole premise of paying more [for institutional referrals] is that patients who are not currently being picked up — who have IVs and feeding tubes and all these other types of illnesses — will finally be taken care of in home health settings,” Osburn said. “That’s the deal with this adjustment, but we need to make sure our agencies can handle those more acute care patients before we go out and start begging to get them.”

Cash flow and coding

On the nonmedical side of an agency’s operations, timing is equally important.

Under PDGM, payment episodes will be cut in half, meaning agencies will have to file twice as many claims and Requests for Anticipated Payments (RAPs). Additionally, claims will require a greater level of detail than they do today.

As a result, industry experts predict a cash flow slow down in the early months of the transition — and that’s if an agency is on top of its game.

“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,” Melinda Gaboury, co-founder and CEO of Healthcare Provider Solutions Inc., said earlier this year. “So if you are a cash strapped agency already, there should be some specific cash flow planning before Jan. 1.”

To ensure efficiency and timeliness, many agencies will likely have to beef up their billing departments or outsource the services altogether to help keep up with the increased frequency of claims submissions, experts predict.

“[You’re] going to have to have more bandwidth in [your] agency to not only drop claims, but then to post payments that are going to be more complex than what we see with our current Prospective Payment System (PPS) system,” Misty Skinner, executive vice president of services for HEALTHCAREfirst, previously told Home Health Care News.

Meanwhile, on the outsourcing side of things, cloud-based software solutions companies are rolling out revenue cycle management solutions to help. Homecare Homebase (HCHB) is one example.

Not only will the company’s new billing function take over the increased billing burden from agencies, but it can also help them get ahead of billing issues to begin with, Luke Rutledge, senior vice president of operations at HCHB, told HHCN.

“We understand [what] all those pain points are that are potentially causing some of your revenue cycle ripple effects,” Rutledge said. “We’ll be able to have a client success representative call the branch director and say, ‘We need to get all these unverified visits out there,’ or, ‘Did you realize your frequency for these diagnoses are causing you to not have any visits in period 2?’”

CMS proposed eliminating RAPs by 2021 in its proposed payment rule, released July 11.

Companies featured in this article:

, , ,