Despite Challenges, Some See Upside in PDGM’s Therapy Overhaul

The Patient-Driven Groupings Model (PDGM) is still months away, but its projected impact on therapy utilization is already sending shockwaves throughout the home health industry.

With an eye toward 2020, many providers anticipate cutting back on therapy and shifting their business models more toward nursing services, especially when it comes to higher-paying areas such as wound care. The trend has already happened in the skilled nursing arena, which transitioned to the similarly structured Patient-Driven Payment Model (PDPM) on Oct. 1.

Since PDPM went into effect, thousands of physical, occupational and speech therapists have reportedly been laid off.


“I think all providers had a strategy going into PDPM that they are implementing as we speak,” Aegis Therapies CEO Martha Schram told Home Health Care News. “We’ll all have to gather more information over the next weeks and months to be sure, and I’m sure as an industry we will all find some adjustments we need to make.”

Frisco, Texas-based Aegis is one of the country’s largest providers of contract rehabilitation and wellness services. The company — which works with skilled nursing facilities (SNFs) and home health providers alike — currently has more than 1,400 locations in 41 states.

“[PDPM] is a huge change, and just as we have seen in the past, there are different approaches to implementation,” Schram said. “I think it is too soon to say how those will ultimately play out.”


In many ways, PDGM is meant to correct what Centers for Medicare & Medicaid Services (CMS) officials see as a blatant overuse of therapy under the current Prospective Payment System (PPS) for home health care. To do so, PDGM ties therapy reimbursement to patient characteristics rather than the sheer volume of services delivered.

For therapy-heavy home health providers, the evolution from PPS to PDGM is projected to be game-changing.

For example, home health agencies in the very top quartile for therapy utilization are projected to have 10.2% less revenue under PDGM than PPS, according to CMS’s calendar year 2020 agency-level impacts spreadsheet. Being in the top therapy quartile means nursing only accounts for 25% — or less — of all visits made.

Meanwhile, the clinical groupings with the highest therapy utilization — “MS Rehab” and “Neuro Rehab” — are projected to have reductions of 13% and 9.7%, respectively, in terms of PPS to PDGM revenue. That’s according to a BlackTree Healthcare Consulting analysis of the PPS Limited Data Set (LDS) file.

“The simple reality of PDGM is that agencies providing the most therapy visits today are projected to see the greatest reduction in revenue,” Nick Seabrook, managing principal and founder of BlackTree, told HHCN. “Those agencies need to determine what, if anything, will be changing in their therapy delivery as we approach PDGM.”

Flipping a switch

The National Association for Home Care & Hospice (NAHC) is among the industry groups that have tried to shed light on what PDGM means for therapy utilization next year.

In June, a NAHC survey of hundreds of home health providers found that about half plan to decrease utilization in 2020 in response to the payment overhaul.

Not all provider types expect to curb therapy equally, however. 

Less than 36% of health system-based home health agencies that participated in the NAHC survey plan to decrease therapy utilization next year. Along those lines, only one-in-three nonprofit agencies plan to pursue the strategy.

Additionally, when trying to glean PDGM insights by following PDPM’s industry alterations, it’s important to note the two models come with very different implementation timelines, Dawn Greaves, vice president of home health for Aegis, told HHCN.

“The PDPM event was like a light switch, with all patients transitioning to the new model on Oct. 1,” Greaves said. “For PDGM, patients who begin episodes — and care plans — prior to Dec. 31 will receive episodic payment for that episode, even though the episode continues into the new year.”

In other words: Any changes the industry sees may be delayed a bit.

In talking to industry peers, Greaves said she has heard from providers anticipating to reduce therapy utilization “to some degree.” But she has also connected with those that maintain a commitment to therapy, keeping patient outcomes in mind.

From its perspective, Aegis actually sees increased opportunity because of PDGM, she noted. 

“Care plans today need to be individualized to the specific patient,” Greaves said. “That continues to be even more true in the PDGM patient-characteristic driven model.”

Furthermore, many agencies don’t have an in-house therapy clinical leader to help streamline the transition into PDGM.

“Aegis brings this expertise to the agency allowing for the development and delivery of patient-centered, evidence-based treatment approaches that can contribute to the accomplishment of patient goals in an efficient manner and support outcomes,” Greaves said.

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