Home healthcare providers are bracing for the switch to the Patient-Driven Groupings Model (PDGM) in January, 2020. Meanwhile, the switch to the Patient-Driven Payment Model (PDPM) by rehab centers and nursing homes occurred in October, 2019. These are both value-based payment models of the Centers for Medicare and Medicaid Services (CMS) that impact reimbursements for services provided to patients (or clients) covered by Medicare or Medicaid.

Since fee-for-service (FFS) reimbursements were the cornerstone of predictive cash-flow accounting systems (and clients are often referred for home health services by rehab centers), understanding the combined effect of both of these new CMS models on home healthcare and rehab facilities is important.

In order to prepare for the switch to the PDGM, consider utilizing the professionals of Liberty Consulting and Management Services (a billing and financial services company for home healthcare and hospice agencies).

Switch to 30-Day Payment Period and Admission Source under PDGM – Increased Potential for Coding Errors

Alignment with the OASIS data submitted to the CMS by the home healthcare agency (HHA) is vital to avoid a denied claim. Meanwhile, a patient discharged post-surgery to a rehab center may require HHA services for a different issue than the original reason for hospital admission. In contrast to OASIS coding that enables one primary and five secondary diagnoses for a client, the PDGM allows for one primary and 24 secondary diagnoses.

Moreover, admission source can impact payments, and an article in Home Health Care News notes that HHA clients who received institutional care in the prior 14-days are more likely to generate higher CMS reimbursements. Therefore, speed in documentation and coding accuracy – along with a process to maintain close communication with referring physicians and rehab centers  – will be critical to limiting rejected claims and the need for claim re-submittals (per an article in September, 2019 in HomeCare Magazine).

The Need for Employees with a High Degree of ICD-10 Coding Expertise

Not all existent ICD-10 diagnostic codes will map to one of the 12 clinical grouping options allowed under the PDGM. For example, M62.81 (muscle weakness) does not map to one of the 12 clinical grouping options. Therefore – for a client referred for home-based physical therapy due to muscle weakness – the underlying reason (e.g., calf injury or Cerebral Vascular Accident [CVA]) needs to be determined and then utilized in coding.

An example of the complexity in correct ICD-10 coding of a single physical therapy visit for a client with muscle weakness can be illustrated as follows (per the American Physical Therapy Association [APTA]):

  1. Code 161.159 – Hemiplegia and hemiparesis following nontraumatic intracerebral hemorrhage affecting right dominant side.
  2. Code 169.152 – Hemiplegia and hemiparesis following nontraumatic intracerebral hemorrhage affecting left dominant side.
  3. Code 169.153 – Hemiplegia and hemiparesis following nontraumatic intracerebral hemorrhage affecting right non-dominant side.
  4. Code 169.154 – Hemiplegia and hemiparesis following nontraumatic intracerebral hemorrhage affecting left non-dominant side.

Consequently, a higher overall level of HHA staff expertise in elucidating the primary and secondary diagnoses – and their correct coding – will be necessary under the PDGM to minimize claims payment denials. Embarking on training staff (or hiring new staff with extensive ICD-10 coding knowledge) in advance of the PDGM commencement-date is a good idea.

Collaborating with Skilled Nursing Facilities as a Way to Potentially Boost Revenues

Competition between HHAs and Skilled Nursing Facilities (SNFs) – rehab centers and nursing homes – has been customary under the previous CMS payment model. This is not a sensible approach under the PDGM to maintain financial stability. SNFs are more likely to receive higher payments under the PDGM for a shorter stay by a given patient transferred from a hospital. Therefore, a patient discharged following rehab subsequent to surgery (e.g., removal of the lung or colon due to cancer) may have a higher need for home-based nursing services upon discharge to the home setting.

Since 37 percent of HHAs closed due to financial difficulties following the CMS switch to the previous IPS and PPS models, careful preparation for the switch to the PDGM to enable a sufficient revenue stream for viability is imperative. Indeed, by establishing a collaborative relationship with hospitals and SNFs, a HHA that is dependent upon CMS claims payments may be better-positioned to survive the switch to the PDGM than an HHA without such collaboration. 

Episode Referral Time as Early or Late – Impact on Potential Reimbursement Amounts

The classification of referral timing as early or late affects payments (along with clinical grouping and admission source) under the PDGM. While referrals from an institution will be paid at a higher rate than referrals from the community, early referrals are also paid at a higher rate. An “early” HHA referral is one that occurs in the first 30 days (as long as the client was not referred for HHA services in the previous 60 days).

An exception to the normal classification of referral source is that an SNF-stay in the 14 days prior to a late home health 30-day period is not considered an “institutional” referral under the PDGM, unless the SNF patient had been discharged from home health services prior to the SNF stay.

Re-certifications will also be classified as late referrals (unless there is a break in HHA services for more than 60 days). Consequently, instituting a referral “look-back” for each new HHA client is advisable in order to promote accurate referral source and timing documentation.

As noted by the National Association for Home Care and Hospice (NAHC), a delay in providing a client needed care can risk STAR ratings – so a smooth care transition between the SNF and HHA can aid both types of healthcare service entities in preserving their above-average STAR ratings.

Possible Unexpected Consequences of PDGM and PDPM

A letter from AARP dated September 9, 2019 to the CMS suggested that – under the PDGM – HHAs may not have as much incentive to provide clinical therapy (e.g., occupational therapy) since therapy assistants are enabled under the PDGM to provide restorative (but not maintenance) therapy.

In turn, this may result in a shift by HHAs to maintaining only therapy assistants as full-time employees. Meanwhile, SNFs may be more likely to discharge rehab patients as quickly as possible (since the PDPM is linked to a higher reimbursement rate for caring for more “complex” patients).

If SNFs cannot remain financially viable under the PDPM, a potential effect on HHAs may be a reduction in capacity to obtain nearby institutional referrals – adversely impacting future HHA financial viability. Forming a liaison with financially-strong SNFs could make the most sense for a financially-struggling or vulnerable HHA.

Consulting with Liberty Consulting and Management Services is a proactive way to prepare your HHA or hospice agency for the PDGM.