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What Is PDGM and What Will it Mean for Your HHA?

Posted by eSolutions on Mar 11, 2019 2:45:20 PM

PDGM-Keys-to-Success-SymbolIf you’re a home health agency (HHA), the Patient-Driven Grouping Model (PDGM) and its January 1, 2020, deadline have probably been on your mind a lot lately. And for good reason – analyst and investment firm TripleTree has called it “the most significant regulatory and reimbursement reform since the creation of the Prospective Payments System (PPS) 20 years ago.”

You may feel a little frazzled or confused by PDGM and the changes it will bring starting in 2020, but don’t hit the panic button. First, you should know what PDGM is and what it’s expected to do. Required by the Bipartisan Budget Act of 2018, PGDM was developed to improve reimbursement for all types of patients eligible for home health benefits and remove perceived incentives to over-provide therapy services, according to Home Health Care News.

No doubt, PDGM is poised to change the way HHAs currently operate. CMS said its intention with PDGM is “to reduce volume-based reimbursement that doesn’t necessarily align with a patient’s condition and for home health agencies to develop closer, more collaborative relationships with hospitals and skilled nursing facilities.” If you’re like most HHAs, however, you just want to survive the PDGM deadline and learn how to manage your operations and play according to the new rules.

In short, PDGM will present both challenges and opportunities for HHAs, as the new rules will drive them to better align their operating model with a U.S. healthcare industry that is quickly evolving toward more value-based rather than volume-based care initiatives.

So it’s game on. The countdown is on to the PDGM deadline. How will it change the game for your organization?


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PDGM Is Coming – What Will Change?

CMS said PDGM is its attempt to modernize Medicare Home Health. [The] “rule overhauls how Medicare pays for home health, refocusing on the needs of patients, promoting innovation, and reducing burdens for physicians and home health providers,” said CMS Administrator Seema Verma. When the PDGM rules go into effect January 1, 2020, here’s what will change:

  • New payment episode timings: PDGM will break up the standard 60-day episode of care into one of two 30-day periods. That means 30-day periods will be implemented as a basis for payment vs. the 60-day periods used now. Each 30-day period is grouped into one of 12 clinical categories based on the patient’s main diagnosis.

  • Payment groupings: PDGM will increase the number of payment groupings and unique case-mix potential from 153 to 432. PPS allowed for 153 combinations, but with PDGM each 30-day period can be categorized into one of 432 case-mix groups.

  • Elimination of therapy thresholds: PDGM will eliminate therapy thresholds as a primary determinant of reimbursement, so therapy visits will no longer determine reimbursement. The number of therapy visits will no longer impact the case-mix weight.

  • brain-keyOASIS assessments: The Outcome and Assessment Information Set (OASIS) will remain on a 60-day cycle, but there will be two payment periods within that cycle instead of one. Based on an OASIS assessment, new 30-day periods will be categorized according to five subgroups:

    • Timing of 30-day episode (early or late): Only the first 30-day episode would qualify as “early,” with all subsequent episodes qualifying as “late.” Currently, the first two 60-day periods are considered early.

    • Admission source (community or institutional referral): The 30-day period would be classified as “institutional” if the patient had an acute or post-acute stay within 14 days of the start of care.

    • Clinical grouping: Patients would be assigned to 1 of 6 major clinical groups. Each 30-day period is grouped into one of 12 clinical categories based on the patient’s main diagnosis.

    • Functional impairment level (low, medium or high): OASIS codes would help designate a patient’s level as “low impairment,” “medium impairment,” or “high impairment.”

    • Comorbidity adjustment (none, low or high, based on secondary diagnoses)

  • Increased claims: The number of claims and the Requests for Anticipated Payments (RAPs) submissions are expected to nearly double under PDGM, so you may need additional staff to process the influx.

  • Low Utilization Payment Adjustments (LUPAs): LUPAs will undergo a major change, as each Home Health Resource Group (HHRG) will have its own LUPA visit threshold (2-6 visits) and the LUPA count will reset every 30-day payment period.

  • Diagnoses: About 40% of the diagnoses allowed for under PPS will not be accepted as primary diagnoses under PDGM. Also, if providers don’t get new diagnosis codes right, they will be denied immediately.

hourglass-halfThe intent of PDGM is to allow HHAs to focus less on administrative duties and more on delivering care, which will benefit patients and providers. The model was created to address problems that exist under PPS; however, some industry leaders are worried that some parts of PDGM – such as case-mix changes and widely opposed behavioral adjustments – may hurt agencies and even ding their bottom line. After the proposed rule was published in July 2017, the National Association for Home Care & Hospice (NAHC) and a number of major homecare providers, including LHC Group and Amedisys, spoke out in opposition to a number of the proposed changes.

So how might the PDGM rules affect your HHA?

  • CMS projects that changes imposed by PDGM will increase payments to HHAs by 2.1% (or $400 million) during calendar year 2019.

  • PDGM is slated as “budget neutral,” but HHAs are expected to experience a -6.42% behavioral adjustment as CMS assumes agencies will change diagnosis codes and add visits to reduce LUPAs.

  • While CMS projects that PDGM will increase payments to HHAs, some experts estimate that more than 44% of home health providers will experience a decrease in reimbursements under PDGM next year, according to a PointClickCare article.

Beyond preparing your organization and training your staff for PDGM, the best way to ensure that you’re ready to play in a new PDGM world is to ask a trusted expert. If you have questions about preparing for PDGM, eSolutions can help. You can trust our tools and solutions to get your organization ready for PDGM. With eSolutions on your team, you’ll not only survive, but also thrive under the new rules.

Look for our next blog in this series, which will offer advice from industry experts on preparing your HHA for PDGM.

Playing in a New PDGM World

It’s important to begin preparing today to ensure that your organization not only survives PDGM, but also wins under the new rules. As an HHA, you should take time now to evaluate the current state of your organization’s operations and assess what steps you need to take between now and the January 1, 2020, deadline to get your organization ready. These steps may include:

  • Assessing the care you provide and evaluating your discharge plan
  • Understanding clinicians’ and coders’ OASIS requirements
  • Collecting patients’ complete health histories, including a complete history of comorbidities
  • Increasing your understanding and use of ICD-10 coding for diagnoses
  • Working with cross-functional teams to provide coordinated care
  • Determining how you will address an influx of claims that PDGM is expected to bring

Learn more about PDGM

Topics: Home Health and Hospice