The Importance of Correct OASIS Coding Under PDGM
The Devil is in the details
by Corinne Kuypers-Denlinger

When the Centers for Medicare & Medicaid Services (CMS) begins reimbursing home health agencies for services using the Patient-Driven Groupings Model (PDGM), it will have a dramatic impact on agency operations from intake through discharge. Arguably, the biggest potential threat to an agency’s bottom line once PDGM replaces the Home Health Prospective Payment System (HH PPS) on Jan. 1, 2020, is the degree to which proper documentation, outcome and assessment information set (OASIS) accuracy and correct coding will have a direct impact on episode payment.

Gone are the days when payments increased as the number of therapy visits increased. Therapy isn’t even factored into the equation under PDGM, although providing therapy appropriate to the patient’s need is still required. Instead, episode payments are based on the clinical characteristics of the patient, as described using ICD-10 diagnosis codes, and the patient’s functional score derived from responses to eight OASIS items. These responses are combined to determine low, medium or high resource use by clinical group. Higher points are awarded to responses that suggest a patient has a greater functional impairment or higher risk of hospitalization.

Furthermore, episode payments are adjusted based on episode timing and admission source. “Early” means the first 30-day period of care or the first episode of care after a 60-day break in service.

“Late” episodes are all 30-day periods of care after the first 30 days. Admission source designates referral from an “institutional” setting (e.g., a hospital, inpatient rehabilitation, inpatient psychiatric, skilled nursing facility or long-term care hospital) or “community,” which is all other referral sources.

Nonroutine supplies are factored into the episode base rate. A low or high comorbidity adjustment is calculated from the interactions of up to 25 ICD-10 codes (one primary and up to 24 secondary) reported on the claim. Understanding how the comorbidity adjustment works is critical to receiving proper payment, as the comorbidity adjustment can increase payment by up to 20%, according to guidance from CMS.

There also are significant changes to low-utilization payment adjustments (LUPA) claims. Under the current model, if four or fewer visits are provided in a 60-day episode, CMS reimburses on a pay-per-visit basis. Under PDGM, a threshold of two to six visits (depending on clinical groupings) will replace the four or fewer determinant. It’s actually more complicated—but that’s a subject for another article.

Getting Primary Diagnosis Right

Under PDGM, each 30-day period of care is assigned to one of 12 clinical groupings, each of which has its own base payment rate adjustment. The 12 groupings have separate groupings for the functional score previously mentioned. CMS has identified 43,287 ICD-10 codes (out of 68,000) as valid primary codes and has mapped each to one of the 12 clinical groupings. All other ICD-10 codes are not considered valid primary codes. Using a nonvalid code as primary will result in a submitted claim being returned to the agency for code adjustments, which has potential longer-term consequences. Agencies that repeatedly submit nonvalid codes as primary will likely be scrutinized by regulatory authorities.

There are several challenges for agencies as they endeavor to comply with PDGM:

  • The primary code selected must be a valid primary code.
  • The selected code must accurately describe to the highest level of specificity the principal reason the patient is receiving home health services. The selected code must also comply with current coding conventions and guidelines.
  • The chart must evidence medical necessity. Documentation in the chart and the OASIS assessment must capture the patient’s homebound status and accurately reflect functional status.

Of course, these elements are in place under HH PPS, but with PDGM, they set the payment calculation in motion.

While this may seem straightforward, it isn’t for many reasons—not the least of which is that there is no simple way to verify whether a code is a valid primary code or not. More importantly, agencies have an extremely difficult time getting documentation from referral sources that supports the need for skilled home health services. Codes affixed to referral source documents often lack the level of specificity needed in PDGM to properly assign a valid primary code.

Additionally, a 30-day period of care carries greater urgency to submit a request for anticipated payment (RAP) in a timely manner. CMS reports that the average days to RAP submission is currently 12. Five days to RAP is considered best practice—but in PDGM, three would be the desired timeframe. Under PDGM, getting the level of detail necessary to select the correct primary code on intake will be among agencies’ most important tasks.

Home health coding experts have already identified numerous instances where the PDGM final rule guidance directly conflicts with current coding conventions and guidelines. Follow the rule, and there is a chance you’re out of compliance with the guidelines. Follow the guidelines, and there is a chance your claim will be returned for lack of a valid primary code.

Adjusting for Comorbidity

Recognizing that patients with multiple comorbidities likely require more complex skilled nursing care than the average patient, CMS allows for a comorbidity adjustment. Adjustment levels are none, low or high. The calculation is made based on the interaction of certain comorbid conditions with others. CMS has posted a Comorbidity Interaction Table on its website, but it is not searchable.

To calculate the comorbidity adjustment, CMS will be extracting the primary diagnosis and all comorbidities from the claim. The claim allows for up to 24 secondary diagnoses. While the final rule does not offer sequencing guidelines for the secondary diagnoses, there is no reason to believe that current guidelines will not prevail. Agencies are advised to ensure that all comorbidities are captured on the claim to ensure the episode payment is properly adjusted, as reimbursement can be increased by as much as 20%.

Here is the challenge: Often, comorbidities are not clearly outlined in the documentation received from the referral source. To ensure all comorbidities are captured, staff will need knowledge of ICD-10 codes, including conventions and guidelines, medical terminology and disease processes, as a relevant comorbidity might be hidden in the patient history and physical, in a visit note or in an OASIS item response.

Ensure OASIS Assessment is Accurate

CMS assumes that home health agencies will change behaviors to maximize reimbursement. It assumes that agencies will actively avoid LUPAs by adding visits to the plan of care that may not be justified, and that agencies will change documentation and coding practices to ensure episodes are placed in higher-paying clinical groupings. To compensate, CMS will enforce up to a 6.42% base-rate adjustment.

While industry advocates work to address behavioral adjustments with CMS, agencies should be ensuring that clinicians are adept at completing an accurate OASIS assessment that fully captures a patient’s condition at the start of care. Whether using in-house coding staff or outsourcing, agencies need to know that episodes are being coded to the highest level of specificity and that documentation supports the OASIS assessment and the code selection and sequencing.

Analysis of the top 200 ICD-10 codes used as primary on claims today reveals that 13% of those codes will not be valid primary codes in PDGM, including the fourth-most frequently used diagnosis code as a primary reason for home health: muscle weakness (generalized).

Accurate OASIS assessments, compliant coding and comprehensive documentation to support the plan of care has always mattered, but now it means the difference between being properly reimbursed for services provided or perhaps not being reimbursed at all.

Corinne Kuypers-Denlinger is the vice president of post-acute care growth strategies for Quality in Real Time, a provider of multilevel internal and outsourced coding, billing and consulting for the post-acute industry. Visit