If you are a Home Health Agency (HHA), you must be aware of the new change that is coming your way in a few months – Patient-driven grouping model (PDGM). Does the name itself give you panic attack about what is to come? Does the change seem confusing and daunting? We feel you. However, the change is for the best of the industry – the US healthcare industry needs to evolve from a mere volume-based initiative to a more fruitful value-based, collaborative initiative.

Now, let’s discuss what PDGM is

What is PDGM?

With the aim to overhaul how payment for home health works and to focus on patient needs, promoting innovation, and on reducing burdens for physicians and HHAs, Centers for Medicare and Medicaid Services has introduced a new case-mix classification model, the PDGM model. This new model addresses the drawbacks of the existing Prospective Payment System (PPS).

The major changes that are seen in the PDGM model are:

• Payment under the PDGM model will be on a 30-day period basis instead of the existing 60-day periods
• PDGM will increase the number of payment and case-mix groupings to 432 combinations from 153 offered by PPS
• Based on Outcome and Assessment Information Set (OASIS), the new 30 day periods will be categorized into subcategories. They are:
  • Timing of 30-day period – early or late – the first 30-day admission of the patient is classified early. The subsequent 30-day episodes are considered late.
  • Admission source – institutional or community – An episode of care is termed institutional if the patient is admitted to the HHA within 14 days of acute hospitalization. In this new model, greater preference is given to referral cases from known hospitals and nursing facilities compared to referrals from community sources like primary care physicians.
  • Clinical grouping – On the basis of principal diagnosis, patients will be assigned to one of the six major clinical groups.
  • Functional impairment level – low, medium, or high – An OASIS checklist of eight codes labels cases for low, medium, or high functional impairment
  • Comorbidity adjustment – none, low, or high – depending on whether a secondary diagnosis that requires higher resource use and the number of such diagnoses, patients are coded either as none, low, or high for comorbidity adjustment
• Low Utilization Payment Adjustment (LUPA) will see a major change in PDGM. The 30-day payment periods with low number of visits will not be paid as per case-mix weightage but separately on a per-visit basis at national per-visit rates. Each of the 432 PDGM payment groups has a visit threshold of minimum 2 for the 30-day period in question to be eligible for LUPA

What should HHAs do to reduce financial burden?

After you have understood what basically PDGM is, it’s time to discuss what you need to do to adapt to PDGM and reduce your financial burden. Here are a few tips:

Tip No. 1: Evaluate your existing patient care plan and determine how to save expenses and still provide world-class patient care services

Tip No. 2: Evaluate your HHA’s current revenue report and determine whether your HHA needs to hire more staff or outsource billing team to manage the upcoming influx in billing volume

Tip No. 3: Calculate in advance the financial impact on your HHA’s overall reimbursement due to the implementation of PDGM

Tip No. 4: Coding needs to be done right. Your coding team should be able to accurately code the principal diagnosis, secondary diagnosis, functional impairment level and comorbidity adjustment as per ICD-10 coding for correct case-mix weightage.

PDGM is a budget neutral initiative that will better align patient needs and reimbursement process. CMS’s intention behind this reform 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.”

Have your questions and doubts been answered? Does PDGM now sound less intimidating? If yes, we are glad we could help.