Why PDGM Neutrality May Be Easier Said Than Done

Home health stakeholders have closely followed skilled nursing facility (SNF) operators during their transition to the Patient-Driven Payment Model (PDPM), another Medicare payment overhaul that launched Oct. 1.

So far, those observations have largely focused on how SNF operators have shifted their therapy strategies in response to PDPM, which is similar in design to the home health industry’s Patient-Driven Groupings Model (PDGM).

More key takeaways are steadily emerging, however, including surprising claims numbers.


Among their commonalities, PDPM and PDGM are both supposed to be budget neutral, more or less meaning there should be as many winners and losers under the payment reforms. Early home health reimbursement projections for 2020, for example, suggest about half of providers will see payment increases next year while others experience relative cuts.

But the Centers for Medicare & Medicaid Services (CMS) appears to have missed that balance in the first round of SNF reimbursements following PDPM, a recent analysis from Zimmet Healthcare Services Group and its affiliated data department, CORE Analytics, found.

Indeed, the first round of claims data under the new Medicare payment model for nursing homes shows that the majority of operators are actually seeing reimbursement boosts.


Specifically, the average SNF saw Medicare reimbursements of $614.96 per patient day during PDPM’s first month. The average figure under the SNF space’s previous payment model — the Resource Utilization Group (RUG) system — was $562.89.

As part of its analysis, the Morganville, New Jersey-based Zimmet collected more than 20,000 claims from a roster of 623 SNFs within its CORE database, which represented operators in nearly three dozen states 35 states as of Nov. 17.

“Financially, October 2019 claims support our belief that PDPM will not maintain budget neutrality, making a rate recalibration (reduction) likely at some point,” the consulting firm noted.

In general, the SNF payout figures were inflated due to the way that CMS handled the transition to PDPM from the start, as residents already staying at a nursing home on Oct. 1 were considered “new admissions,” giving facilities a rate boost.

While that aspect isn’t something that will be repeated moving forward, signs still point to a reimbursement imbalance. Even with a built-in adjustment eliminating that new-admissions effect, the average PDPM rate still came in at $584 per day, $26 more than the RUG baseline.

Zimmet projects the average daily rate under PDPM to climb to $635 by April.

“If this proves even close to accurate, CMS may need a bigger budget,” Zimmet stated in analysis.

In addition to the higher-than-anticipated payments, the Zimmet analysis also suggests some claims included key billing mistakes that could result in missed payments for certain services. Previously, sources also told Home Health Care News that CMS changed or corrected the PDPM grouper six times throughout the initial rollout.

Broadly, these and other PDPM hiccups have given home health providers fuel in their advocacy conversations with CMS, particularly when it comes to PDGM’s assumptions-based behavioral adjustments.

Unexpected consequences are bound to pop up, they say, meaning CMS should jettison the idea of predicting home health provider behavior before PDGM starts. Additionally, PDGM surprises may be even more pronounced, as the home health model is more volatile than its SNF counterpart.

Additional reporting by Alex Spanko

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