In the months and weeks leading up to the Patient-Driven Groupings Model (PDGM), many industry insiders predicted the downfall of small and mid-size home health providers due to the disruption of cash flow and therapy utilization, as well as the complicated new documentation and coding processes.

It’s undeniable that small and mid-size agencies will feel the impact of these PDGM-related blows, but carving out a strategy for the payment overhaul will enable many agencies to maintain success moving into 2020 and beyond. 

One such agency — a case study, of sorts — is Phoenix Home Care, a Burr Ridge, Illinois-based home health provider that serves the state’s Cook, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will counties.

Phoenix Home Care has been preparing for PDGM since the Centers for Medicare & Medicaid Services (CMS) revised the Conditions of Participation (CoPs) roughly 36 months ago, according to Peter Miska, owner and president of Phoenix Home Care.

Under PDGM, therapy — once a big reimbursement boost for home health providers — has been thrust into the spotlight. Prior to PDGM’s implementation on Jan. 1, 2020, many agencies stated plans to significantly lower therapy utilization due to the elimination of volume thresholds.

In fact, about 25% of providers that participated in a 2019 NAHC survey said they plan to reduce therapy utilization by more than 10% this year. For many providers, the Patient-Driven Payment Model (PDPM) in the skilled nursing space served as a preview of what to expect in terms of possible therapy-staff layoffs.

Phoenix Home Care has been able to avoid whole-sale therapy cuts or staffing reductions by implementing utilization metric tools, according to Miska.

“We have been using utilization metric tools to make sure that therapy utilization is based on the [functional needs] of the patient and diagnosis,” he said. “I don’t think we are going to see a lot of changes. We are going to get a reduction with PDGM, but I don’t see us changing how we are using therapy to date.”

Similarly, larger companies such as Birmingham, Alabama-based Encompass Health Corporation (NYSE: EHC) also rely on analytics tools when it comes to therapy utilization.

“Some patients are getting far more therapy visits while others are getting far fewer — but on balance,” April Anthony, CEO of Encompass Health’s home health and hospice business, recently told HHCN. “We’re not changing our staffing needs. We’re reallocating among the patient population to drive better outcomes. Frequently, I think what happens is there’s this knee-jerk reaction. People hear or see things, then over-correct.”

When working with home health providers of all sizes, PDGM concerns are similar across the board. The types of resources each company has access to are what make the difference, according to J’non Griffin, president and owner of Carbon Hill, Alabama-based consulting company Home Health Solutions LLC.

“A large company like an Amedisys Inc. (Nasdaq: AMED) or LHC Group Inc. (Nasdaq: LHCG) has a lot of resources,” Griffin told HHCN. “They have people that can study what utilization patterns should be, for example. A smaller agency’s biggest struggle is figuring out how to work with what they have.”

For Phoenix Home Care, implementing various new technologies has also been a key strategy when dealing with new challenges.

“Sometimes, it was as simple as implementing Dropbox, which is HIPAA compliant, so we could get documents to organizations in real-time,” Miska said “We also use ContinuLink by Complia Health, and we were able to customize care plans. We also have portable printers, so that clinicians can give patients documents in real-time.”

In some ways, Phoenix Home Care stands in contrast to other small agencies when it comes to the technology side of PDGM.

“Most of the smaller companies can’t really afford a lot of technology,” Griffin said. “I’ve not really seen the smaller companies [I work with] bring on things like Medalogix or anything that will help with utilization. I think they are just trying to wing it.”

Nashville, Tennessee-based Medalogix is an increasingly popular predictive-analytics company serving home health and hospice providers. Amedisys and Encompass Health are among minority investors in the company, which offers a variety of tools designed to help providers determine what level of care is best for patients — and when.

Consultants have played a big role in setting Phoenix Home Care up for success under PDGM, according to Miska.

“We brought in multiple consultants at every level of the business,” he said. “We’ve had therapy experts, compliance consultants and people on the billing side. I’m not doing this alone.”

While pricing is all over the board depending on the area of focus, consultants can cost home health agencies anywhere from $100 to $250 an hour.

In addition to changes to therapy utilization and the implementation of new technologies, one of the biggest changes is an inherent disruption to cash flow.

And CMS’s phase out of pre-payments — or Requests for Anticipated Payments (RAPs) — creates problems for small and mid-sized providers who would otherwise receive 60% of an episode’s anticipated payment at the beginning of care.

Of course, Phoenix Home Care won’t be able to get the full picture of the impact of their efforts until more time under PDGM has passed. But for now, the company continues to move forward, with Miska urging small agencies to continue preparing for the future.

“You have to look at this as a bigger picture,” he said. “Twelve months from now is going to be here before you know it. And by the time you recover — if you recover — from the effects of PDGM this year, next year is going to be worse.”