Medicare-certified home health agencies have now had over a full quarter to adapt to the Patient-Driven Groupings Model (PDGM).
While comprehensive claims data is still coming in, a few interesting patterns are already starting to emerge.
Among the high-level takeaways, case mixes appeared to be higher during the first quarter than what the U.S. Centers for Medicare & Medicaid Services (CMS) anticipated, according to Nick Seabrook, managing director and a founding member of BlackTree Healthcare Consulting.
“Case mixes were generally up,” Seabrook told Home Health Care News. “You would have thought the average case mix would have been right around that 1.00 number, because that’s exactly what CMS intended to do — kind of level-set with PDGM.”
Overall, average home health reimbursement per period was up because agencies demonstrated an ability to code accurately and comprehensively, maximizing PDGM’s framework.
That framework is built on 432 case-mix groups and five main levers: admission source, timing, clinical grouping, functional impairment level and comorbidity adjustment.
In the past, home health agencies only needed to really worry about six diagnosis codes, Seabrook noted. Now, under PDGM, they can put up to 20 primary diagnosis codes on a claim, painting a more complete picture of each and every patient.
“We’re seeing a higher volume of diagnosis codes that are even appearing on claims,” he said. “And because of that, some of those additional diagnosis codes could trigger either a ‘low’ or a ‘high’ comorbidity adjustment.”
Broadly, the main lever of “comorbidity adjustment” is broken down into low, medium and high subgroups, each with varying degrees of reimbursement attached. The same holds true for the “functional impairment” lever.
Going into PDGM, CMS projected a roughly even split between low, medium and high functional scores. But due to complete and accurate coding, so far, there has been a larger number of patients under the high subgroup.
Related to coding, questionable encounters (QEs) have been almost nonexistent, Seabrook said. QEs are triggered when agencies bill using primary diagnoses that aren’t allowable under PDGM.
About 40% of the diagnoses allowed under the old Prospective Payment System (PPS) are not accepted under the new payment model.
“One of the main reasons that questionable encounters were next to zero — way, way down — is the preparation that the industry did as a whole,” Seabrook said. “I think there was enough education and resources out there around the primary-diagnosis codes that you aren’t able to be use under PDGM.”
EMR systems that automatically flag QEs have also been a huge help to agencies, he added.
Looking ahead
In other trends from the first quarter of PDGM, there were a lot of “institutional-early” referral combinations, according to Searbook. However, some of that was simply linked to the payment overhaul’s introduction in the first place.
Looking ahead, it will be interesting to see how PDGM shakes out after the second quarter is complete. The home health industry has been dealing with wide-ranging disruption linked to the coronavirus since mid-March, so any major trends from Q1 may end up changing in the near future.
“When you look at the data and the patient population, it’s going to look completely different,” Seabrook said.
Additionally, it will also be interesting to see how — or if — CMS tweaks PDGM’s 4.36% behavior adjustment, which most home health agencies opposed as assumption-based guesswork. In crafting the behavior adjustment, CMS assumed agencies would do everything possible to avoid costly Low-Utilization Payment Adjustments (LUPAs), which kick in if a certain number of in-person visits isn’t reached.
But that hasn’t been possible due to COVID-19 impacts, including patients suddenly canceling visits. According to a survey conducted by the National Association for Home Care & Hospice (NAHC), about 67% of all home health agencies have seen their LUPA rates at least double, with large and small providers both affected.
“We know that the behavior adjustment went in place — a 4.36% reduction. Does that completely go away?” Seabrook said. “Just look at the actual data and how agencies end up being impacted by COVID. One of the components of the behavior adjustment was LUPA percentage, for instance. [CMS] said that we’re going to get much better at LUPAs, so it had a certain percentage of that behavior adjustment accounted for. Well, if LUPAs are going up, what does that mean?”
Something else to keep an eye on: how health system-based home health agencies rebound after the coronavirus.
On any given day, BlackTree has about 150 clients, Seabrook said. Recently, the Pennsylvania-based consulting firm looked at its client base to identify the five businesses most impacted by the COVID-19 virus in terms of census reductions.
All five of those clients were based within health systems.
“We noticed a pattern with all of our health system-based clients,” Seabrook said. “They were most negatively impacted.”
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