Ensuring the accuracy of your home healthcare clients’ insurance can be particularly labor-intensive for your staff following Medicare’s annual “open enrollment” period.  Overlapping Medicare’s “open enrollment” period in 2019 (from October 15 – December 7) is your agency’s preparation for Medicare’s switch to the Patient-Driven Groupings Model (PDGM). However, documenting your clients’ accurate insurance information remains essential. While a client may have been previously-covered for home health services provided by your agency, this may no longer be the case if a different Medicare Advantage plan was chosen during the “open enrollment” period.

Described below is one way to maximize the likelihood that you will not receive a denial of payment due to incorrect insurance documentation, and how claims reimbursement determinations will be made under the upcoming Patient Driven Groupings Model (PDGM).

Necessity of a Client’s Legal Assumption of Financial Responsibility

An assumption of financial responsibility by the client of a home healthcare agency in the event insurance does not pay for services is typically documented by a form signed by the client (plus a witness’ signature). Although a client may have utilized your agency at some point in the past (such as following the given client’s first knee replacement surgery), a new request for home care services requires re-documentation.

Quality management tasks include ensuring that each client’s records include all required signed documents (and a systematic process of “double-checking” is a sensible strategy). Also sensible is ensuring that your agency establishes a contractual relationship with those Medicare Advantage insurers most apt to be covering elderly people needing home health services in your geographic area.

Main Components of Patient-Driven Groupings Model (PDGM)

When the PDGM becomes effective on January 1, 2019, six aspects will become the primary determinants of reimbursements for billing claims submitted by home healthcare agencies to the Centers for Medicare and Medicaid Services (CMS). These are:

  • Classification into one of the 432 payments groups.
  • Admission source as institutional (g., hospital) or community (with lower payment for clients admitted from the “community”);
  • Timing of payment episode as “early” or “late”.
  • Clinical grouping based on referring provider’s primary diagnosis into one of 12 sub-group options;
  • Functional level (specified as “low”, “medium” or “high” for each functional aspect).
  • Co-morbidity adjustment based on secondary diagnoses (determined as “none”, “low”, or “high”).

Patients with diabetes as the primary or secondary diagnosis are considered more likely to be linked to higher overall Medicare claims’ reimbursement amounts than patients with certain secondary diagnoses (e.g., psychiatric and substance abuse disorders). Meanwhile, patients with dementia as their primary diagnosis – but without a mobility impairment or diabetes diagnosis – are more likely to garner lower Medicare claims’ reimbursements under this value-based payment system.

Decreasing the Employment Status of Clinical Therapists

Physical, occupational, and speech therapists who are full-time employees may need to be shifted to part-time status once the Patient-Driven Groupings Model is implemented. As reported in Home Health Care News on June 4, 2019, nearly 50 percent of all home healthcare providers expect to decrease therapy utilization for their Medicare-enrolled clients under this payment model.

The punitive reaction by the CMS to reimbursing clinical therapy visits for home healthcare clients is ostensibly due to the level of home healthcare agency fraud linked to billing for unnecessary clinical therapy home-based visits. Since cash-flow is expected to tighten for many home healthcare agencies under the PDGM, reducing the status of your agency’s clinical therapists from full-time to part-time (or shifting to the use of non-employee therapists) may mitigate the financial stress promoted by the change to this new value-based payment system.

Tracking Your Clients’ Home Health Resource Group (HHRG) Classification – Why It Matters

The ability to predict your revenue stream is predominantly linked to the percentage of your clients at any given time in a high-reimbursement Home Health Resource Group (HHRG) under the Patient-Driven Groupings Model (PDGM).  Since the HHRG is composed of five of the aforementioned six main aspects, a quality management task at your agency will be to ensure that the correct HHRG has been determined. 

However, implementing a system to track – on a monthly basis – the percentage of your clients in each possible HHRG may give you a better sense of your likely revenue stream. In turn, it can also enable you to ascertain if you need to avoid assuming accepting more referrals for clients with a certain configuration of primary and secondary diagnoses in tandem with high functional levels that are also considered “community” referrals. Instead, embarking on approaches to attract more hospital referrals of patients with low functional levels and more than one co-disorder may be needed to boost your Medicare revenue potential.

Lessening Dependence on Request for Anticipated Payments (RAPs)

The CMS rationale for reducing RAPs under the Patient-Driven Groupings Model (PDGM) has been to reduce the likelihood of fraud by home healthcare agencies (and especially “for-profit” agencies). Due to a major outcry by home healthcare industry organizations (such as the National Association for Home Care and Hospice [NAHC]), RAPs will be phased out for existent home healthcare agencies rather than totally eliminated at the commencement of the PDGM.

A Home Health Care News article in July 2019 reported that the CMS wants to “cut” RAPs by 20 percent in 2020; this represents a huge decrease as home healthcare providers currently receive 60 percent of anticipated Medicare payments at the beginning of a client’s care episode.

Decreasing the Need to Re-Submit Medicare and Medicaid Billing Claims

Administrative staff needs may be increased (including the need for temporary additional billing staff) while your agency is adjusting to the PDGM. One of the most damaging occurrences for your cash-flow as a home healthcare agency is the need to re-submit Medicare billing claims due to billing claims errors. Not only can documentation errors result in denied billing claims, but these can result in frequent re-submissions. Consequently, this can delay Medicare billing claims payments, and be detrimental to your overall cash-flow.

Clinical, administrative, and/or billing staff may all need more hours to perform correct data entry, and adhere to correct PDGM procedures. (This is especially the case since 30-day payment periods will replace 60-day episodes of care.) However, allowing additional staff time for the cross-checking of all coding and documentation in the early months of the PDGM may be the best strategy to prevent needless re-submission of Medicare billing claims due to your employees’ documentation errors.

Physicians at hospitals and Skilled Nursing Facilities (SNFs) may also report incorrect primary and secondary diagnoses on their referrals, and your designated clinical coordinator may need to institute a communication system to promote rapid attention on the part of the referring facility to quickly correct such referral errors.

Liberty Consulting and Management Services offers billing and financial services for home health and hospice agencies. Let us aid you in handling the Medicare claims billing demands inherent in transitioning to the PDGM, so you can focus on the non-financial areas important to your home healthcare agency’s growth.