PDGM Proposal Merits Close Scrutiny

The Patient Driven Groupings Model (PDGM) recently released by CMS is a good news/bad news scenario for home health organizations. We’ve examined the proposal closely and submitted comments to the Centers for Medicare & Medicaid Services on behalf of our home health and hospice clients.

The good news is that the proposal is budget-neutral. Under the previous Home Health Groupings Model (HHGM), which was withdrawn last year following the public comment period, organizations faced an estimated 15 percent cut in reimbursement. Also, the proposed start date of PDGM is January 1, 2020, so agencies will have time to prepare, regardless of the outcome of the new proposal.

However, PDGM keeps the unit of payment 30-day period, rather than the current 60-day episodes. According to CMS, PDGM “relies more heavily on clinical characteristics and other patient information (e.g., principal diagnosis, functional level, comorbid conditions, referral source, and timing) to place patients into more meaningful payment categories.”

Significant change in comorbidity adjustment methodology

The proposed rule outlines the changes to the comorbidity methodology that could increase the episodic payment. Patient diagnoses will determine if the patient qualifies for a comorbidity adjustment of none, low or high. PDGM analysis from Home Health Care News shows that nearly two-thirds of episodes would not trigger a comorbidity adjustment. A little more than 30 percent would trigger a low adjustment, with an additional payment of about $35. Fewer than 6 percent of cases would qualify for a high adjustment and a $350 estimated supplement. Under HHGM, a $150 increase was triggered with any comorbidity adjustment due to the simple no/yes algorithm.

Upon referral, a patient will be grouped into one of six categories:

• Musculoskeletal rehabilitation
• Neuro/stroke rehabilitation
• Wounds (post-op wound aftercare and skin/nonsurgical wound care
• Behavioral healthcare
• Complex nursing interventions
• Medication management, teaching and assessment (MMTA)

The patient’s functional level (low, medium, high) will be determined from the Outcome and Assessment Information Set (OASIS), then a comorbidity adjustment (none, low, high) will be calculated based on the secondary diagnoses on the claim. Potential comorbidity adjustments can be made based on individual subgroups and 27 comorbidity subgroup interactions.

National Association for Home Care & Hospice (NAHC) President William Dombi described the Patient Driven Groupings Model as “a modestly adjusted and ‘warmed over’ version of the highly criticized [HHGM] re-labeled as [PDGM]. Many of the same weaknesses present in HHGM exist in this new version.”

During our recent webinar on PDGM, NAHC outlined several potential concerns, including a potential loss of volume by home health organizations because incentives are focused on impatient discharges. Changes in costing methodology could reduce payments, as could a change in the Low Utilization Payment Adjustment (LUPA). The behavioral adjustment is seen as a wild card, and the clinical groupings are heavy on MMTA.

PDGM has the potential to substantially impact your home health business and should be watched closely. Learn more from our PDGM focused free webinar, click here.