The Patient-Driven Grouping Model (PDGM) took effect on January 1, 2020, from the Centers for Medicare and Medicaid Services (CMS). The new Medicare payment methodology for home health agencies would significantly impact Home Health’s operations and billing processes. This new payment system has quickly replaced the Home Health Prospective Payment System (HH PPS), which was adopted by caregivers for over 20 years and has become a requirement in no time. The nurses and health care providers would now be paid in 30-day payment periods rather than 60-day payment periods. “Redesigning the home health payment system encourages value over volume and removes incentives to provide unnecessary care,” says CMS Administrator Seema Verma. “This home health final rule mainly focuses on patient needs and not on the volume of care.”

The main objective for CMS to introduce this model was to focus on value-driven therapy rather than time-driven therapy and to reduce unnecessary therapy given to the patients. This would be achieved by monitoring the patient’s characteristics rather than the number of times the patient attended therapy.

In simple terms, through PDGM, the recovery of the patients will be monitored, and the billing process will take place accordingly.

There would be an increase in payments for:

  • Non-profit agencies by 2.9%
  • Agencies with less than 100 episodes in annual volume by 1.9% and
  • Facility-based agencies by 3.9%.

There would be a decrease in payments for:

  • For-profit agencies by 2.2%
  • Freestanding agencies by 1.2% and
  • Agencies with more than 1000 episodes in annual volume by 0.2%.

30 Day Care

The significant component of PGDM for the Home Health Agencies (HHA) is the 30 days of care rather than 60-day episodes. This component came into existence because about 28% of the people who opted for the service were off it within 30 days or less. This meant that they were paying double for resources they did not need any more regardless of whether they were front loaders or not.

This change meant that the HHAs were supposed to plan, deliver, document, and bill the care twice, which means that the initial Request for Anticipated Payment (RAP) and the final claim will take place in a much shorter period. Not everything has been shifted to 30 Day Period. The 60-day certification and the Outcome and Assessment Data Set (OASIS) period would remain the same. It is still mandatory that OASIS assessments occur during the initial and final five days of the certification period. 

Neutral Budget

According to the Bipartisan Budget Act of 2018, the PDGM should be budget neutral which means that there would be no estimated Dollar impact to HHAs, and it would remain the same. Budget neutrality is based on the following assumptions:

  • This would ensure that every patient would be automatically placed in the highest paying clinical group. 
  • There would be accurate coding and documentation will increase by 20% in the 30 days. And finally,
  • This would help HHAs avoid one-third of the LUPA (Low Utilization Payment Adjustment).

Payment Grouping

Under PDGM, the patient is categorised into various Home Health Resource Groups (HHRG) or clinically meaningful payment categories, namely:

  • Admission Source

Every 30 days is classified into community admission or institutional admission. It is organised into community admission when the patient has no acute (hospital) or post-acute care (nursing home) stay within 14 days before access. And it would be classified as institutional admission when the patient has had acute or post-acute care stay in the past 14 days before HHA admission. 

  • Timing 

The patient will be classified into early or late. Early when it is their first 30-day period and last for each subsequent 30-day period. 

  • Clinical Grouping

CMS had designed the grouping to capture the most common care providers. The patients are grouped into 12 groups and subgroups, five groups and 7 Medication Management, Teaching and Assessment (MMTA) subgroups.

The groups and subgroups are:

  1. Neuro or Stroke Rehabilitation
  2. Musculoskeletal Rehabilitation
  3. Wounds: Post-Op Wound Aftercare and Skin/Non-Surgical Wound Care
  4. MMTA: Surgical Aftercare
  5. MMTA: Cardiac/Circulatory
  6. MMTA: Endocrine
  7. MMTA: GI/GU
  8. MMTA: Infectious Disease/Neoplasms/Blood-Forming Diseases
  9. MMTA: Respiratory
  10. MMTA: Other
  11. Complex Nursing Interventions and
  12. Behavioural Health Care
  • Functional Impairment

The functional impairment levels such as low, medium and high of the patient which is based on eight OASIS assessments:

  1. Grooming
  2. Current ability to dress upper body safely
  3. Current ability to dress lower body safely
  4. Bathing
  5. Toilet Transferring
  6. Transferring
  7. Ambulation and locomotion and,
  8. Risk for hospitalisation

According to the OASIS assessment done in the initial five days, the patient with the highest points and highest risk of hospitalisation would be categised as a patient with high functional impairment. 

  • Comorbidity Adjustment

Finally, the comorbidity adjustment would be categorised into none, low and high according to the patient’s secondary diagnoses reported on the claim.