Home Health Agencies Prepare for New Patient-Driven Groupings Model (Part Two)

The second article in our PDGM series explores how home health agencies can prepare for the new regulatory changes, including the five factors for determining payment.

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Home Health agencies across the United States are preparing for the Patient-Driven Groupings Model (PDGM) that will create new requirements for the Home Health industry. 

Last month we covered Low Utilization Payment Adjustment (LUPA) and the Home Health Resource Group (HHRG) vs. Health Insurance Prospective Payment System (HIPPS).

Today, we’ll discuss one of the more significant changes introduced by the Patient-Driven Groupings Model, the five new factors for determining payment. Under the new model, the data from these five factors (except for Functional Impairment Level information, which comes from OASIS) is submitted to CMS on the final claim. These values are then used to determine the appropriate HHRG/HIPPS scores.

The five factors for determining payment are as follows:  

1. Admission Source

A source of either “Institutional” or “Community” is determined by the healthcare setting in the 14 days prior to the start of home health, or the start of any 30-day period. The Admission Source category of “Community” is associated with lower resource use per episode and will therefore receive a lower payment rate per episode, whereas the category of “Institutional” is associated with a higher payment. 

According to an estimate by CMS, “Community” episodes would account for approximately 75% of current patients, and “Institution” for about 25% of current patients. 

2. Timing

This is similar to the approach taken in the current Prospective Payment system, and in both models timing is classified as either “Early” or “Late.” However, in the PDGM, the first 30-day period is considered “Early” and all subsequent 30-day periods are considered “Late.” Each 30-day period is assigned a Timing classification, and an “Early” classification is associated with a higher payment rate than a “Late” classification.

3. Clinical Grouping 

This update places 30-day periods into one of 12 clinical groups based on the patient’s principal diagnosis. Some diagnoses that "score" in the current system — meaning, that result in a valid episode for payment — do not fall into one of the 12 Clinical Groupings in the PDGM system. These diagnoses would result in Questionable Encounters and would be returned to agencies for recoding. CMS estimates 20% of current valid diagnoses will not group in the PDGM system.

4. Functional Impairment Level

Thirty-day periods will be assigned a Functional Impairment Level of Low, Medium, or High based on the answers provided to certain OASIS items. As this Functional Impairment Level increases, so does the financial value that it adds to the 30-day period.

5. Comorbidity Adjustment

A Comorbidity Adjustment is applied based on the presence of secondary diagnoses reported on the claim. Each 30-day period will receive a Comorbidity Adjustment of Low, High, or None. A 30-day period will receive a low comorbidity adjustment if there is one reported secondary diagnosis that falls within one comorbidity subgroup. A 30-day period will receive a high comorbidity adjustment if there are two or more secondary diagnoses reported whose subgroups pair in the appropriate way.

How agencies can prepare:

Medicare Contractors (MACs) will use claims from medical facilities and other home health agencies to determine the Admission Source and Timing used for reimbursement. Yet capturing accurate information is still important. Admissions integration with a MEDITECH acute hospital will provide agencies with timely information about hospital discharges, including details on whether the stay was ER, Observation, or Inpatient in the Medical Facility History. 

Agencies can also manually enter the patient’s previous care in the Medical Facility History, and can answer a series of questions to help determine whether the 30-day pay period will be reimbursed as Community or Institutional. If information indicating a qualifying stay or previous home care admission is not entered, MEDITECH Home Care will automatically set subsequent pay periods to be billed as “Community Late.” 

Diagnosis Coding is already important; but under PDGM it will become even more impactful. It is vital that coders understand the financial impact of selecting the correct primary diagnosis to get the highest-paying Clinical Group, and agencies are advised to make sure that coders are educated about PDGM well before the January 1st effective date. 

How is MEDITECH preparing?

In response to this change, MEDITECH Home Care will be assisting coders by giving them real-time feedback as they enter diagnosis codes, displaying both the clinical group and Comorbidity Adjustment level. 

MEDITECH Home Care also created a PDGM page on the Home Care Regulatory Website. The Overview page covers basic requirements and related aspects of PDGM, including the 5 Factors for Determining Payment. To review all content, go to the Home Care Regulatory Website and click the PDGM drop-down menu. 

Next month we’ll conclude the PDGM series by focusing on Behavioral Assumptions.

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