Home Health Agencies Conquering Fear of PDGM Boogeyman

The Patient-Driven Groupings Model (PDGM) was one of the largest concerns for the home health industry after it was finalized by the Centers for Medicare & Medicaid Services (CMS) in October 2019.

But now that it has been implemented and agencies have faced their boogeyman, confidence under the new payment model is growing, industry insiders say.

To check the industry’s pulse, Home Health Care News recently connected with Nick Seabrook, managing director at BlackTree Healthcare Consulting; Tony D’Alonzo, Bayada’s VP of clinical strategy and innovation; Donald Lirette, the owner of Louisiana-based Bayou Home Care; and Tim Ashe, the chief clinical officer at WellSky.


These interviews took place before a national emergency was declared due to COVID-19.

The distinct differences between the Prospective Payment System (PPS) will undoubtedly make a mark on the industry in the long run. Still, success under PDGM will come to those who adapt, they said.

Lirette: “PDGM is a fair payment system. Agencies providing clinically and financially efficient services will survive.”


Ashe: “There’s certainly some growing pains in that movement [to value-based care]. But as we get more data, … we’re going to be able to dial in on this. But it really does make a lot of sense to think about this as an opportunity to become more efficient and effective in delivering that perfect amount of care to drive outcomes.”

Success is favoring the prepared

In addition to adaptability, preparedness was crucial leading up to implementation. The legwork that agencies put in early on for PDGM is now paying dividends. For those that haven’t, it’s left them behind.

D’Alonzo: “There haven’t been many surprises, which you could say is a little surprising … We began preparing for PDGM in 2018 and carried that work through 2019, creating several different workstreams in preparation for the payment model change. It’s still early, but we are glad to say that most of our projections were on target. There has been a slight learning curve in our electronic health record (EHR) for some new functionalities related to billing and episode management, but that was anticipated as part of a new payment model.”

Seabrook: “There’s still a lot of agencies that didn’t get the proper education that they needed to prepare themselves for PDGM. We’re definitely hearing some buzz of agencies that are really ill prepared for PDGM and are asking a lot of basic questions. From a consulting standpoint, I think my biggest surprise is just how basic some of the questions that we’re getting are.”

Challenges under PDGM

An overhaul to the payment system was bound to provide challenges, both expected and unexpected. What’s paramount for agencies while they wait for more relevant and complete data, however, is attention to detail — whether that’s keying in on changes in low utilization payment adjustments (LUPAs) or gathering the right amount of information from referring physicians.

Seabrook: “Probably the biggest surprise to me has been how challenging it’s been for some agencies to get relevant data early on … I think it’s probably a product of it still being so early, and some of the numbers and the data that agencies are reporting are a little bit skewed, but that’s probably one of the bigger challenges.”

D’Alonzo: “Because it is still relatively early, we are continuing to dig into national trends to understand where the industry averages sit across some of the key PDGM measures. We use data from external vendors to calculate approximations for national averages, but the sample size remains relatively small. We would like to confirm some of the averages across a variety of measures to determine if our patient population is reflective of the national home health population, or if we vary in any significant ways.”

Ashe: “The other area that organizations are struggling a bit is the workflow, especially with obtaining the right amount of information from the referring physician. I think the intake and referral processes are going to be an area that folks are going to need to dig into and really spend some time doing some process engineering on. Because the right amount of information is going to drive the right primary diagnosis, and then a sequence of secondary diagnoses for each of these admissions.”

Seabrook: “It’s all about how you manage the new key performance indicators (KPIs) under PDGM. How do you look at something like LUPA percentage? That’s a huge factor in determining success.”

Lirette: “If you get sloppy under PDGM, you may find yourself in financial trouble before you realize it — missed visits and staff moving visits a day earlier or later could make the difference in a LUPA or full 30-day payment.”

Ashe: “If the patient requires 30 days of care, but historically, the organization had delivered visits in a sequence or in a pattern that was 40 days in length — that can create LUPAs in that second 30-day billing period.”

Cash flow concerns

One of the major worries for smaller agencies leading up to the switch in payment models was cash flow. The vast majority of agencies — 80% — are experiencing a difference in reimbursement rates under PDGM, 82% of those reporting decreased rates, according to a recent survey of 127 home health agencies by technology firm Ability, an Inovalon company.

CMS targeted bad actors and aimed to eliminate fraud by kickstarting a phase out of requests for anticipated payment (RAPs), which greatly affects agencies’ cash on hand. Broadly, agencies reimbursement rates were not as predictable entering 2020.

Lirette: “In talking to some of my colleagues, it seems the major challenge has been the timeliness of getting documentation processed from their team, which is creating a cash flow problem.”

Seabrook: “We definitely saw the cash flow hit that we expected, in general, for January and February. We knew January was going to be pretty significant and that February was going to be even more significant. But we should see cash start to pick back up in March.”

Moving forward under PDGM

For agencies that have withstood the initial hit of PDGM, there is light at the end of the tunnel.

Lirette: “I believe the key to success moving forward is pretty simple: continue to focus on patient care. Through all the changes over the years, we [continued] to pay more attention to patient care and didn’t focus on behavioral changes.”

Ashe: “I really think organizations need to take a deeper dive on organizing their organizations efficiently, both from a structural and workflow standpoint. Making sure the intake process is eliciting the right amount of information in the most efficient way is a good example of that … . Going back to the basics is something that we’ve talked a lot about at WellSky.”

D’Alonzo: “We are aware that the effects of PDGM may be disruptive for some in the home health industry. We’ve seen the impact on agencies across several of our markets, where we have stepped in as a partner in taking on staff or patients where we can … At Bayada, we [still] see PDGM as a potential driver for positive change.”

Ashe: “Overall, I think moving towards value-based care and performance-based care is a really important stepping stone in the evolution of home health.”

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