Starting points for 2020 home health business strategy development
by Liz Carey
January 27, 2019

With a little less than a year to go before PDGM goes live for Medicare-certified home health agencies, HHAs are advised to form a PDGM steering committee now if they have not already done so.

Develop your steering committee by identifying key members in the areas of sales/intake, clinical operations, quality and finance/revenue cycle. Collaborate on your drivers and your obstacles.

We’re just scratching the surface now, said the CEO of a Florida home health agency, who with her agency’s financial manager attended the first PDGM National Summit Jan. 23 in Orlando. Part of the task, she says, is to figure out what the care team that will treat the patient will look like under PDGM.

Pre-PDGM, home health agencies and therapists have benefited from a volume-based reimbursement approach. CMS—concerned by costs and patterns in utilization trends— responded by changing the reimbursement model. The new model shifts away from volume and places new emphasis on patient condition. As a result, many agencies (at least the ones at the Florida national summit) predict that they will utilize therapy less, starting in 2020.

“Will the current scope of benefits change under the new payment model?” NAHC President William Dombi posed to attendees. “There will be pressure to do so, but we encourage you to resist that pressure, particularly in the realm of therapy. The reimbursement for an episode of care involving therapy will be reduced and correspondingly, the level of payment that you get for nursing will increase, but the model is built to respect the existence of all those therapy services.”

PDGM: What’s Coming in 2020

About 200 attended the NAHC and Home Care Association of Florida joint event. It’s the first stop on a national educational tour that will wrap up in late March. As usual, the best part of any industry event is the talk in-between presentations, where providers brainstorm their practices and compare notes. The following topics are a good starting point for preparing your home health agency for PDGM.

Payment groups to more than double. In the PDGM era, the number of payment groups will increase from 153 currently to 432. Effect? “Helpful...it more laser targets the level of payment,” Dombi said. With 153, there were a lot of highs and lows within each patient group, and the groupings themselves are changing fairly significantly. Information technology companies should be updating their systems accordingly.

Distinction between early 30-day period care and later 30-day period of care, and referral source: community or institutional. Effect? Higher reimbursement following institutional, lower reimbursement following community.

“Every other element of the patient could be identical—the functional measures, the clinical measures, everything identical. Will that incentivize you and the referral sources as well to put the patient in the hospital first? I think that will be a clinical mistake,” Dombi said, “but some of the hospitals have empty beds, and they probably would invite those types of admissions. It also invites a lot of scrutiny—are these social admissions, are they benefit-related admissions, or are they really clinically necessary admissions.

"But when you are looking at potential behavioral adjustments, if you can get $600, $700, $800 more from the 30-day unit of service by having the patient go three days to the hospital...there will be some influence to make that happen...it’s happened in other sectors as well.” Dombi went on to say that too many people die as a result of hospital-acquired infection and medication errors. The hope is that more will not end up in the hospital as a result of this payment unit change.

Functional level all OASIS-based. And there’s a comorbidity adjustment for secondary diagnosis. Noted: Is your electronic medical record (EMR) system up-to-date on the full range of diagnosis codes? If it is not, your claim may be at risk.

Major changes to diagnostic codes. Noted: Stop using “muscle weakness” to justify therapy. Specific diagnostic codes are available. CMS sees that the greatest likelihood of change in behavior relates to diagnostic codes.

“We expect not just behavioral changes in coding, but we expect business changes...we expect agencies that may be therapy-focused providers will end up putting their arm around other referral sources that don’t refer just therapy patients, in order to get a different balance of patients.” — NAHC President William Dombi at the Jan. 23 PDGM National Summit in Orlando

Imperative need for referral source cooperation. With only 30 days to follow through on care, RAP (Request for Anticipated Payment will continue, at least for now), and claim, time is of the essence to get the details right, early and the first time. Clinicians still cite insufficient order information, such as date or specific diagnosis. Advice: Handle your physician order needs as courteously and quickly as possible, and preferably at intake.

Non-routine supplies (NRS) included in bundled payment for 60-day episode. Pre-PDGM, NRS is an add-on to episodic reimbursement. Noted: Agencies that loosely monitor or don’t monitor their inventory of supplies run risk, so start evaluating your inventory control now. What’s leaving the supply closet that’s not tracked and included on the cost report? Account for it, include it, or risk eventually losing that element of reimbursement.

Anticipated behavioral adjustment. Noted: tendency to upcode on diagnosis, tricky LUPA thresholds. The new model has a completely different LUPA system. Instead of a four-visit or fewer visit standard across-the-board threshold, there will be 432 variations, depending upon the nature of that patient category itself. It could range from two visits to six visits to get a LUPA over a 30-day period as compared to four over a 60-day period. With that change, some agencies that in the past might have provided two visits in that 30-day period might now provide three in order to get a full 30-day unit.

LUPA—The Low-Utilization Payment Adjustment pays an agency per visit, rather than for the episode. High LUPA level should be examined, however it was noted that some agencies with a high LUPA level may actually do better because, in some cases, they will provide services within the new LUPA thresholds. 

Sixty-day episode of care but two 30-day payment units. Everything else will stay 60 day—60-day plan of care, 60-day certification, 60-day OASIS. “That will double the number of bills perhaps for the agencies,” Dombi said, “but you are still working off that same 60-day clinical side and measure side.”

Looking Forward

Only time will tell, but Dombi estimates that the impact of PDGM will be negative for proprietary agencies, negative for southern agencies, positive for agencies in the northeast and midwest, and positive for hospital-based agencies over freestanding. However, Dombi said there is no reason to be fearful of the coming change.


PDGM National Summits take a focused look at the clinical, financial, operational, business analytics and technology impact of the new payment model. Learn more at pdgm2019.nahc.org.