The classification of clients into a Home Health Resource Group (HHRG) is undergoing a change under Medicare’s new Home Health Agency-focused payment model. This new model changes the current case-mix payment system into one expanded to 432 possible case-mix groupings. Meanwhile, a referral designation for each Home Health Agency (HHA) client as either institutional or community is incorporated into the HHRG under this value-based payment model –termed the Patient-Driven Groupings Model (PDGM).

Understanding the HHRG impact on payments made by Medicare (or Medicaid) to your HHA after January 1, 2020 can be confusing. Therefore, the following describes the major components of the HHRG under the PDGM. Your employees involved in claims submission may benefit from training provided by Liberty Consulting and Management Services (which provides billing and financial services for HHAs and hospice agencies).

How Clients are Categorized into Clinical Groups within the HHRG under the PDGM

The referring physician’s primary diagnosis can result in categorization within 12 clinical groups under the PDGM. This is combined with the following to determine the HHRG under the PDGM:

  • Admission source and timing;
  • Functional impairment level (categorized as low, medium, or high);
  • Co-morbidity adjustment (based on secondary diagnoses)

As described in a NAHC presentation on Medicare billing on October 2, 2019, the 12 clinical groups are: 1) Neuro Rehab; 2) Wounds; 3) Complex Nursing Interventions; 4) Musculoskeletal (MS) Rehab; 5) Medication Management, Teaching, and Assessment (MMTA)-Surgical Aftercare; 6) MMTA-Cardiac and Circulatory; 7) MMTA-Endocrine; 8) MMTA-GI and GU; 9) MMTA-Infectious and Blood-Forming Disease/Neoplasm; 10) MMTA-Respiratory; 11) MMTA-Other, and 12) Behavioral Health.

According to a Centers for Medicare and Medicaid Services (CMS) overview of the PDGM, the referring physician’s principal diagnosis (as reflected in the clinical group selected among the 12 potential clinical groups) is linked to the primary reason entered for the home health encounter (e.g., therapy [PT, OT, or SLP] for a neurological condition or stroke when “Musculoskeletal Rehab” was selected as the primary clinical group).

Up to 24 secondary diagnoses (co-morbidities) are allowed under the PDGM. Combined with the designated primary diagnosis, this enables 25 potential low or high co-morbidity adjustments for CMS inclusion in calculating the reimbursement amount on the submitted HHA claim. Consequently, HHA billing staff who submit Medicare (and/or Medicaid) claims need to be highly-skilled in ICD-10 coding.

Your Non-Hospital Client Referrals – Ramifications of “Early” or “Late” Episode Timing

Referrals by physicians for post-hospitalization HHA services (such as PT following joint replacement surgery) will generally result in a higher payment adjustment than one for HHA services to a patient in the home environment. Meanwhile, only the first 30-day period of a client’s HHA services are designated as “early” episode timing – which is also linked to a higher payment adjustment. (Episode timing is considered “late” if not within the first 30-day period, and corresponds to a lower payment adjustment.)

Therefore, payment adjustments calculated by the CMS for post-hospitalized clients with “early” episode timing are at the highest rate (as opposed to that calculated for your community clients who continue to receive HHA services following their first 30-day period).

Wound Care – Differences in Payment Adjustments Based on HHRG

Clients discharged from the hospital following either surgery or an injury may be referred by a hospital physician to your HHA for wound care at home. However, the specific HHA services – and especially the duration of services – needed by that client may substantially differ depending upon co-morbidities. For diabetic clients, wound healing is apt to be slower (and the risk for wound infection is increased as compared to non-diabetic clients).

Wound care clients have one of the highest potential reimbursement opportunities of the 12 clinical grouping categories (per a Corstrata blog post in April 2019). Meanwhile, a diagnosis of diabetes is also linked to a high potential reimbursement opportunity. For example, a diabetic client who required hospitalization for removal of a gall bladder could require wound care at home (provided by a nurse), medication teaching related to glucose control and painkiller utilization, and rehabilitative physical therapy.

Assessment of Functional Impairment Level

An assessment of functional impairment level (based on responses to seven OASIS items) is likely to be lower overall for diabetic wound care clients than non-diabetic wound care clients – and thereby impacting HHRG (which then impacts the Medicare claims payment amount).

Functional level (in terms of the ability to self-groom or self-feed) can also differ significantly between clients with the same primary and secondary diagnoses. In turn, this can impact Medicare’s payment determination for a submitted HHA claim.

LUPA Structure Change and Why It Matters

The Low Utilization Payment Adjustment (LUPA) under the PPS payment model occurred when four or fewer HHA visits occurred in during a 60-day episode of care. However, the LUPA is changed under the PDGM since a 30-day payment period for claims billing will replace the current 60-day episode of care. Additionally, LUPAs will be reimbursed on a “per visit” basis (resulting in a decreased payment for the billed HHA service).

The “front-loading” of home health nursing visits during the first 30-day period – which can seem reasonable when a diabetic patient returns home post-surgery, in order to decrease the likelihood of rehospitalization due to poor wound self-care or failure to take prescribed oral hypoglycemic drugs – can lead to only one nursing visit occurring in the second 30-day period. In turn, this can result in a LUPA (resulting in decreased Medicare reimbursement to the HHA).

While “front-loading” nursing visits can seem like the best approach in order to prevent a complication necessitating rehospitalization of the diabetic patient, it can also have unanticipated consequences in terms of Medicare claims reimbursement (and placing a financial strain on your HHA).

For this reason, understanding changes to LUPA under the PDGM is crucial to obtaining anticipated reimbursements for your submitted claims for each Medicare-insured client. However – most of all – accuracy in coding and documentation is essential to avoiding the need to correct (and then re-submit) Medicare billing claims.

Balancing Your Client Population – Why It is Beneficial for Your HHA’s Financial Health

Every person who needs HHA services is not Medicare-insured, and increasing your privately-insured client population can increase your HHA’s financial stability. The increase in joint replacement surgeries in adults in the 40-50 year old age group has resulted in an increased need for home-based physical therapy.

For HHAs that have been chiefly dependent upon Medicare reimbursements, it can be challenging from a marketing standpoint to attract privately-insured clients. However, this can increase the likelihood of financial growth over the long-term – especially for those HHAs that are directly competing for new clients with large (and well-funded) Accountable Care Organizations.

Meanwhile, scheduling a consultation with Liberty Consulting and Management Services as soon as possible can enable you to better prepare your clinical and billing staff for the PDGM.