PDGM Explained

March 19, 2019

The Patient-Driven Groupings Model (PDGM) is an alternative payment model that will replace the home health Prospective Payment System (PPS). The planned implementation date is January 1, 2020.

Why the change?

The Bipartisan Budget Act of 2018 (BiBA) requires reform of the current payment model to address several perceived problems in the PPS home health model. Namely, the service domain that gives preference to patients who require a high number of therapy visits. Also, the increase in episodes that are 30 days or less which leads lawmakers to misconceive that home health agencies are getting paid more than they should be paid. The new payment model was created to ensure that payment is calculated solely by the patient’s medical and functional profile using claims data to identify clinical characteristics that require more resource use.

How does it work?

Like PPS, PDGM will have a calculated Home Health Resource Group (HHRG) and a Health Insurance Prospective Payment System (HIPPS) code. Under PPS there are 153 HHRGs with clinical, functional, service and supply domains calculated from OASIS responses. Under PDGM, there will be 432 HHRGs calculated by a combination of OASIS and claims data. And while PPS had 60-day payment periods, PDGM will have 30-day payment periods.

PDGM HIPPS first character

Under PDGM, the first character of the HIPPS code is determined by the admission source and timing of the payment period. There are only two admission sources to consider: Institutional or Community. If a patient has been discharged from a hospital or post-acute care facility in the 14 days before home health admission, they will be considered Institutional for one 30-day period only. The only time a subsequent 30-day period can be considered Institutional is if the patient has a hospital admission in the 14 days prior to each new 30-day period. CMS expects that home health would discharge a patient who is admitted to a post-acute care facility during a home health episode of care and will only allow an episode following one of these stays to be institutional for the first episode (episode “from date” equal to “admission date”).

Medicare will adjust period payments based on billing activity in the common working file (CWF). If there has been no inpatient stay or post-acute stay, the claim will be paid as community unless a condition code is added to the final claim to indicate the stay. CMS advises agencies to maintain proof of the facility stay in the patient chart for auditing. If a period has been paid as community and a qualifying institutional stay is billed after the home health claim is processed, CMS says they will automatically adjust the claim to process as institutional.

There will also be a change to the concept of episode timing. In PPS, an episode was considered early if it was either the first or second in a series of 60-day episodes. Under PDGM, a period will only be considered early if it is the first 30-day period where there has been no home health episode for at least 60 days prior.

In terms of payment period value, an early institutional admission will have a higher case mix than a late community. This supports the idea of focused, goal-oriented care provided as efficiently as possible.

PDGM second character

The second character of the HIPPS code is assigned based on which of twelve clinical groups the primary diagnosis is assigned to. If the primary diagnosis does not belong to any category, the claim will not be paid and will be returned to the provider for recoding. It is essential that agencies begin to review their primary diagnoses now to determine whether current coding will be compliant in PDGM. For example, codes such as Muscle Weakness-General (M62.81), Abnormality of Gait (R26.89) and Low Back Pain (R26.81) are general codes which are not categorized under PDGM. Review the ICD10 DXs tab in the Interactive Grouper Tool on the CMS Home Health Patient-Driven Groupings Model webpage for diagnosis groupings. Please note that the absence of a code on the list does not imply that CMS will not cover treatment, it should only prompt you to seek a more detailed diagnosis that better explains your clinical focus.

Based on average case mix, wound and neuro rehab diagnoses are expected to pay more due to their traditional high usage of resources while surgical aftercare and behavioral diagnoses contribute the least to the case mix calculation.

PDGM third character

The HIPPS code third character is calculated based on how responses to certain OASIS questions score the patient’s functional impairment level. OASIS questions M1800, M1810, M1820, M1830, M1840, M1850, M1860, and M1033 from the most recent OASIS based on the claim’s “from date” will be used to calculate this domain. M1800 and M1033 will be added to the Recertification (M0100=04) and Other Follow-Up (M0100=05) OASIS data sets in 2020. Points will be assigned based on responses, however the range of points that determine whether the level of impairment is low, medium or high will vary based on the clinical group (primary diagnosis) of the 30-day period. Review the Functional Thresholds tab in the Interactive Grouper Tool referenced above for these point ranges.

It will be crucial to complete an Other Follow-Up OASIS when a patient has an unanticipated change in their condition as this will capture their functional decline and lead to more accurate reimbursement in any subsequent 30-day payment periods. Agencies must also ensure that their staff who document OASIS assessments truly understand how to address these critical questions. This provides an enormous opportunity for therapy companies in that therapy education has been traditionally more focused toward evaluating patient level of function. Therapists can serve as valuable resources for education and validation of the functional assessment.

PDGM fourth character

The fourth character of the HIPPS code is based on the patient’s comorbidity group. This calculation occurs based on an examination of all diagnoses on the claim except the primary diagnosis. Where traditional PPS only considered the top 6 diagnoses of the patient, PDGM will be able to examine up to 25 diagnoses and determine whether the payment period is subject to no comorbidity adjustment if no comorbidity categories apply, a low adjustment if select single categories apply or a high adjustment if a certain combination of categories apply. For more information, please check out the Comorbidities tabs in the Interactive Grouper Tool.

Obviously a high comorbidity grouping indicates a clinically complex patient who statistically requires more resources in the provision of care so these groups will have a higher case mix under PDGM. This means agencies need to ensure that all relevant diagnoses are captured at intake, collected and validated by the assessing clinician and confirmed by the ordering physician.

PDGM fifth character

Currently, the fifth character of the HIPPS code is the number 1, a place-holder that allows CMS to continue to examine what additional characteristics may contribute to high (or low) resource utilization and adjust accordingly in the future.

Putting it all together

Home health care episodes will continue to be 60-days. This means the plan of care will apply to the 60-day care episode and recertifications will only be required every 60 days. The payment periods will change to 30-day periods. This means for each 60-day episode, agencies will potentially file 2 RAPs and 2 final claims. For the most part, the RAP and final claim requirements remain in place – completed plan of care and OASIS, Face-to-Face, orders for homecare and first billable visits for RAPs and completed visits and OASIS, compliant frequency, signed plan of care and orders for the final claim. Payments will still be 60/40 for the first period and 50/50 for all subsequent periods. Keep in mind that if your agency obtained initial CMS certification after December 31, 2018 you will be required to submit the RAP but will not receive payment for that RAP. You will receive all payment at the time of final claim.

The Low Utilization Payment Adjustment (LUPA) will continue but the 4-visit threshold will change to a variable 1-5 visits depending on the HIPPS code and the 10th percentile of visits from all home health claims history. See the PDGM Case Mix Weights and LUPA Thresholds on the CMS Home Health Patient-Driven Groupings Model webpage.

Partial Episode Payment (PEP) adjustments will also still apply under PDGM. The only change is that the calculation will be based on 30-day payment periods. For example, if an agency discharges a patient on day 23 and a new agency picks that patient up on day 40, a PEP adjustment would not apply. If the new agency picks the patient up on day 27, the PEP adjustment will only be pro-rated based on the 30-day period. So, if a 30-day period is worth $1800 and this scenario applied, it is calculated as the daily rate of $60 ($1800/30) times 23 days the patient was under the agency’s care so $1380 is the new payment period value (a -$420 adjustment from the original amount).

The outlier would also be similar to PPS under PDGM. The only difference is the calculation would be done per 30-day payment period and not by care episode. The therapy adjustment would no longer apply since no part of the PDGM HIPPS code is determined by number of therapy visits.

A few new occurrence codes have been introduced to help facilitate accurate claims. Occurrence code 50 will require the M0090 date assessment completed from the OASIS used to generate the HIPPS code functional level. Occurrence code 61 will report an acute care hospital discharge date in the 14 days prior to the payment period and occurrence code 62 will report a post-acute discharge date within 14 days of the admission date of the first 30-day period claim. OASIS claim keys will no longer be required but the treatment authorization code field will still be used to report Review Choice Demonstration reference numbers where applicable.

During the transition period, a 60-day care episode that starts before January 1, 2020 will be subject to the established 60-day billing period. Any 60-day care episodes that start on or after January 1, 2020 will be billed and paid under the new 30-day payment model.

So what do we do now?

Everyone agrees that the number one priority in home health is to provide quality care in the home environment and that should not change. Agencies who try to “game the system” by cutting therapy visits or other services when it is not clinically appropriate will see consequences in diminishing performance metrics and potential investigation by Medicare Administrative Contractors (MACs) and Unified Program Integrity Contractors (UPICs). CMS has your claims data and is getting better at identifying patterns of behavior. A sharp decline in service provision for clinically similar patient profiles will lead to the assumption that either you over utilized services under PPS or are under utilizing services under PDGM.

You need to work smarter. Encourage communication with all members of the care team for a more collaborative approach to care provision. Partner with therapy companies to verify assessment personnel are accurately answering OASIS questions that contribute to the functional domain. Invite therapists to present educational inservices to equip nursing staff with tips and tools to help gain a better understanding of how to better assess ADLs and IADLs. When nurses are completing the assessment, have therapists complete ADL/IADL worksheets and compare them to the nursing assessment to verify, or discuss differences in, responses.

Speaking of partnering, revisit those nursing homes that have traditionally been hesitant to refer to home health. Their payment model is also changing (to PDPM) and, like home health, it eliminates number of therapy units as a factor for payment. They also are subject to value-based purchasing which rewards facilities with low 30-Day All-Cause Readmission metrics. Agencies with low readmission rates and good clinical outcomes can demonstrate very real value.

Review PDGM information now to prepare for your future. Visit the CMS Home Health Patient-Driven Groupings Model webpage for PDGM resources. Here you can review your agency’s expected impact if your clinical composition and service provision remain about the same. You can also find links to the Home Health Final Rule, educational articles, and transcripts from informative provider conference calls.

Most important of all, communicate. Yep, you’ve seen it before but the value of communication is skyrocketing. The office must make sure the field staff have all diagnostic and other clinical information from the referral in order to most accurately assess the patient’s needs. It is critical for the care team to talk to each other to ensure everyone is working on same goals without providing duplicate services. Doctors, patients and caregivers need to be kept in the loop to ensure that the complete clinical picture is understood and encourage patient cooperation. These are a few examples of vital communication but all information that affects patient treatment has got to be shared and accessible.

How can we help?

therapyBOSS provides the tools that will help you to be successful under PDGM. Our messaging platform provides a free and secure communication hub for care team members. Documentation from doctors and facilities can be uploaded to the patient referral record to ensure complete access to all clinical information. Our OASIS ADL note attachment allows therapists to assess and communicate the ADL/IADL functions of the patient for comparison and collaboration without having to complete a full OASIS.

For more assistance, you can contact therapyBOSS support by clicking on Contact support on the web or the question mark in the app. To submit questions about this article, connect with us on Facebook.