Home Health Providers: Beware of CMS’s PDGM Pendulum Swing

Home health providers looking to bet the farm that the Patient-Driven Groupings Model (PDGM) goes through in its current form should be warry, industry executives say.

Although it’s important to adjust to the upcoming payment overhaul, the Centers for Medicare & Medicaid Services (CMS) has a history of changing its tune after regulatory actions trigger unforeseen consequences. Under PDGM, just a few of those unforeseen consequences could include a drastic reduction in therapy utilization and diminished home health availability in rural areas.

More broadly, they could even include wholesale access to care issues across the country if large numbers of home health providers are pushed out of business.

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“If this hits full force, there will be carnage, unfortunately,” Amedisys Inc. (Nasdaq: AMED) CEO and President Paul Kusserow said in September during the 2019 Home Health Care News Summit in Chicago. “And then there will be a lack of available home health care services.”

Some home health experts predict that up to 30% of agencies could wind up exiting the industry because of PDGM, the most significant payment change since the Prospective Payment System (PPS) was put in place two decades ago.

That figure could be even greater if CMS moves forward with its proposal to eliminate the Requests for Anticipated Payment (RAPs) by 2021. Currently, many home health providers use RAPs to help meet payroll and fund other regular expenses.

Opening up new lines of credit may be an answer for some providers.

However, the majority of the roughly 11,500 agencies in the market don’t have easy access to financing, according to Kusserow.

While all U.S. home health providers will be affected by PDGM, the overhaul’s impact will be magnified in rural areas, thanks to CMS’s plan to cut rural add-on payments until they’re phased out entirely.

Ultimately, if policymakers start receiving phone calls from angry Medicare beneficiaries in North Dakota, Wyoming and other rural states who can’t receive much-needed services, they may have to walk some of their plans back.

“[The] thing I’ve learned about this business and CMS is that the pendulum is always at extremes,” Kusserow said. “If CMS gets its way and does [PDGM as proposed], the pendulum will swing way up.”

Then there will be cases to care issues, and the pendulum will swing the other way.

Founded in 1982 and headquartered in Baton Rouge, Louisiana, Amedisys is a home health, hospice and personal care provider that serves more than 376,000 patients and clients per year.

Overall, the company has roughly 21,000 employees working in 471 care centers in more than three dozen states. 

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