Survey: 80% of Home Health Agencies Experiencing Early Reimbursement Turbulence

Under the Patient-Driven Groupings Model (PDGM), 80% of home health agencies are experiencing a difference in reimbursement compared to the old Prospective Payment System (PPS). Of those, the vast majority — 82% — are experiencing a decrease in reimbursement.

That’s according to a recent survey of 127 home health agencies conducted by information technology firm Ability, an Inovalon company.

Although a significant portion of providers said their reimbursement rates have gone down in the early days of PDGM, 54% of surveyed agencies said the decrease was merely “moderate.” David Swenson, a sales engineer at the Ability, discussed the findings Tuesday during a webinar hosted by HHCN.


Apart from the survey results, the transition to PDGM appears to be going smoothly overall, at least compared to the occasionally rocky road that skilled nursing operators faced with their own Medicare reimbursement overhaul.

Medicare Administrative Contractors (MACs) are processing claims timely and with little disruption. Additionally, PDGM’s cash-flow projections have largely played out as expected, according to Brian Harris, consulting director at BlackTree Healthcare Consulting.

“There’s really a lot of positive news here,” Harris said, also speaking during Tuesday’s webinar. “In a lot of the lead-up to PDGM, there were concerns about how Medicare was going to adapt to the change, how their systems were going to process claims. And across all MACs throughout the country, we’re really seeing them operating under the standard pre-PDGM claims processing timelines.”


That isn’t always true, as Harris noted there have been hiccups here and there, such as a small amount of claims being held up in manual processing for up to 30 days. But generally, industry outlook is positive through PDGM’s first 60 days.

“For the most part, we’re seeing those final claims come in and pay at that 10 to 14 [day] timeline, with RAPS (Requests for Anticipated Payment) in that seven- to 10-day timeline,” Harris said. “And generally claims seem to be paying at the reimbursement rates that are expected.”

Home health providers also seem to be finding success in minimizing PDGM’s Questionable Encounter (QE) risk. Broadly, QEs are primary diagnosis codes that are no longer reimbursable under PDGM.

After the first week of 2020, industry analyses showed that 6% of home health periods were still under QE status. While low, that was a surprising percentage considering all the educational efforts that took place in 2019, Harris said.

“That’s definitely an improvement [over what] CMS estimated, but being that this was a huge topic of conversation going into PDGM and a big area of concern, we expected providers to be leveraging their EMRs … to really get out ahead of [this].”

Since Feb. 18, however, that QE percentage has decreased to 0.5%, suggesting home health providers are adapting quickly.

In addition to the previously mentioned findings, the Ability survey of 127 home health providers also found that 84% of agencies are submitting more claims per month. Specifically, mid-sized agencies have reported submitting an average of 110 claims per month. 

As more and more data is available from the first year of PDGM, both good and bad trends will become more apparent. For example, it’s still too early to tell if the overhaul has triggered an over-correction to therapy utilization or a drastic shift away from community referrals.

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