PDPM Speed Bumps Hint at Unexpected PDGM Challenges to Come

With less than two months left on the clock before home health agencies take their shot at the Patient-Driven Groupings Model (PDGM), questions regarding industry preparedness and education continue to swirl. Some, however, say those questions are better aimed at the Centers for Medicare & Medicaid Services (CMS).

Similar to home health providers, CMS regulators will have a sharp learning curve following PDGM’s Dec. 1 implementation date. Subtle warnings signs related to CMS’s launch of the Patient-Driven Payment Model (PDPM) in the skilled nursing world, however, suggest the agency may face inevitable speedbumps along the way.

PDPM — like PDGM — is a new Medicare payment system for skilled nursing facilities (SNFs). The two seismic overhauls share multiple commonalities, including a shift away from volume-based therapy reimbursement to payment tied to patient needs. 


While PDGM starts at the beginning of next year, PDPM officially went live on Oct. 1.

During that implementation process, CMS immediately experienced unforeseen issues tied to PDPM’s “grouper” — the master file that essentially guides payment calculations. 

In fact, CMS actually changed or corrected the PDPM grouper six times throughout the initial rollout, according to Dawn Iddings, senior vice president and general manager of Netsmart’s post-acute business.


Overland Park, Kansas-based Netsmart designs and sells health information technology, working with thousands of organizations across the continuum of care. 

“CMS basically discovered there were some issues with the grouper,” Iddings told Home Health Care News. “CMS released the grouper on the Friday before PDPM went live, but probably by Saturday morning said they found errors and that we should expect another release. They said, ‘Stay tuned.’”

In the grand scheme of things, tweaking the PDPM grouper isn’t incredibly shocking, considering the model’s sheer complexity and scale.

But even the smallest of changes from CMS can often create huge headaches.

“We had to update our software … Friday so we would be ready. Then we waited until Monday to find out if [CMS] released anything else,” Iddings said. “So they released an update to the grouper, but it was reported there were still errors in the file and that we could expect another one again.”

To ensure it was meeting its clients’ needs, the unforeseen updates meant Netsmart had to have around-the-clock engineering resources ready.

In fact, the organization set up a dedicated “war room,” according to Iddings.

“Clients were calling the support lines asking, ‘What’s going on? We heard CMS pushed another release. How are we going to deal with this?’” she said. “It was a hairy few days.”

A CMS spokesperson confirmed to HHCN that the PDPM grouper was revised at least once after the overhaul’s effective date of Oct. 1.

“This revision was based on corrections made as a result of industry feedback,” the spokesperson wrote in an email.

Why should home health providers care about all this? For starters, PDPM is a relatively more straightforward and less-impactful overhaul than PDGM, industry insiders point out.

Unlike its home health counterpart, PDPM doesn’t come with built-in, assumption-based behavioral adjustments. Additionally, Medicare only accounts for 30% or so of overall SNF volume.

“[PDGM] has the potential to be much more volatile in the home health market than PDPM in the SNF market,” Mike Dordick, president of Wayne, Pennsylvania-based health care consulting firm McBee Associates, told HHCN. “Home health providers have to correct for that behavioral adjustment. And there are home health agencies where their volume is 90% or even 100% in the Medicare side.”

Netsmart acquired McBee Associates in May.

The big takeaway: If CMS made corrections to the PDPM master file after it was released, the home health industry should prepare itself for something similar around Jan. 1.

“If that started to happen with PDGM, you’d have the same scenario,” Dordick said. “It creates something that’s very difficult for software vendors, but even more difficult for agencies. It means the information coming out about what payments could be might change.”

Besides the grouper hiccup, there are other lessons home health providers can learn from PDPM’s launch.

As expected, some SNF operators have begun to shake up their therapy strategies, with reports of physical and occupational therapist layoffs popping up across the industry

Kennett Square, Pennsylvania-based Genesis HealthCare alone reportedly laid off 585 therapy employees in October. The skilled nursing giant expects PDPM’s therapy changes and its staff reductions to eventually trigger up to $30 million in annual savings. 

But Genesis HealthCare’s therapy changes aren’t driven by just profits, according to CEO George Hager.

“We did some research studies and found that appropriate use of group and concurrent therapy can actually be at least equal — if not better, or more efficacious — than one-on-one therapy in certain cases,” Hager said last week during a third-quarter earnings call with investors and analysts.

Under PDPM, group and concurrent modalities can account for a maximum of 25% of each resident’s therapy plan, a figure that’s significantly higher than the roughly 1% seen under the former Resource Utilization Group (RUG) reimbursement system.

Additional reporting by Alex Spanko

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