New for 2020? The Home Health Patient-Driven Groupings Model

To comply with requirements outlined in the Bipartisan Budget Act of 2018, the Centers for Medicare and Medicaid (CMS)has proposed a new payment model for Home Health services that would be implemented on January 1, 2020. This new model is called the Patient-Driven Groupings Model, or PDGM, and is designed to address 2 main items:

  • 1) To ensure access to care for vulnerable patients, and
  • 2) To eliminate therapy volume (that is, the number of therapy visits) as a payment factor, a long-standing concern of CMS, MedPAC, Congress, and the industry.

PDGM is essentially a revision of the Home Health Groupings Model, or HHGM, proposed by CMS last year. The biggest difference between HHGM and PDGM is that PDGM is designed to be implemented in a budget-neutral manner, whereas HHGM included $950 million in cuts to the home health industry.
Key components of PDGM include:

  • Changing to a 30-day unit of payment from the current 60-day payment episode
  • Payment based on patient characteristics
  • The elimination of the therapy thresholds as a component of payment
  • 216 possible case mix groups (CMGs), a change from the 153 available in the current payment model

There are 5 separate categories affecting payment under PDGM:

  • 1. Admission source – Institutional vs. Community
  • 2. Timing of the 30-day period – Early vs. Late
  • 3. Clinical Grouping – 6 Clinical Categories
  • 4. Functional Level – Low / Medium / High
  • 5. Comorbidity Adjustment – None / Low / High

Each of these 5 categories is determined individually and then combined to form the final Case Mix Group, which sets payment for the applicable 30-day period. Payment could be further adjusted (decreased) if less than 2-6 visits (i.e., the LUPA, or Low Utilization Payment Adjustment, threshold) are furnished during the 30-day period, depending on the specific PDGM group.

Admission Source:

Each 30-day period will be classified as Institutional or Community, depending whether or not the individual received acute or post-acute (skilled nursing, inpatient rehab, long-term care hospital) services within 14 days of beginning care under home health. Thirty-day periods classified as Institutional are paid at a higher rate than those classified as Community.

Timing of the 30-day Period:

The first 30-day period of any patient’s home health stay is considered Early; all other 30-day periods are considered Late. The Early period is paid at a higher rate than Late periods.

Clinical Grouping:

The patient’s diagnosis (ICD-10-CM code) that describes the primary reason the person requires home health services will be used to classify the patient into one of 6 clinical categories or groups. The 6 Clinical Groups described by CMS in PDGM are:

  • Musculoskeletal Rehabilitation
  • Neuro/Stroke Rehabilitation
  • Wounds (both surgical and non-surgical)
  • Behavioral Health (including substance use disorder)
  • Complex Nursing Interventions
  • Medication Management, Teaching, and Assessment

Functional Level:

In PDGM, Functional Level score is determined from 8 items in section M of the OASIS. There are 3 functional levels per clinical group – low, medium, and high impairment.

Comorbidity Adjustment:

The comorbidity adjustment payment (none, low, or high) depends on whether individual comorbidities or specific “subgroup interactions,” or comorbidity combinations, are present. A single secondary diagnosis that is found on CMS’s list of 11 comorbidity subgroups qualifies the patient for a low comorbidity adjustment; two or more diagnoses that result in one of the 27 subgroup interactions described by CMS would result in a high comorbidity adjustment.

Although implementation of this new system is required by law to be budget neutral, this does not mean individual home health agencies won’t see the impact on their individual financial performance if PDGM is implemented. For example, CMS estimates that free-standing, proprietary (for-profit) agencies will see an over the decrease in revenue of 1.2%, while facility-based, proprietary agencies will see an increase of 4.4%.

Click here for additional information on the Patient-Driven Groupings Model.

Click here for “The 2019 Home Health Proposed Rule”.

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