The Centers for Medicare & Medicaid Services (CMS) in November 2018 finalized a new case-mix classification model, the Patient-Driven Groupings Model (PDGM), which overhauls the home health payment system. Effective January 1, 2020, PDGM is designed to ensure access to care for vulnerable patients, and to eliminate therapy volume (that is, the number of therapy visits) as a payment factor, a long-standing concern of CMS, MedPAC, Congress, and the industry.
PDGM is basically a revision of the Home Health Groupings Model, or HHGM, proposed by CMS last year. PDGM is designed to be implemented in a budget-neutral manner, whereas HHGM included $950 million in cuts to the home health care industry. Key components of PDGM include:
- Changing to a 30-day unit of payment from the current 60-day payment episode
- Payment based on patient characteristics
- The elimination of the therapy thresholds as a component of payment
- 216 possible case mix groups (CMGs), a change from the 153 available in the current payment model
There are five separate categories affecting payment under PDGM:
- Admission source (two subgroups): community or institutional
- Timing of the 30-day period (two subgroups): early or late
- Clinical grouping (six subgroups):
- Functional impairment level (three subgroups): low, medium, or high
- Comorbidity adjustment (three subgroups): none, low, or high based on secondary diagnoses
Each of these five categories is determined individually and then combined to form the final Case Mix Group, which sets payment for the applicable 30-day period. Payment could be further adjusted (decreased) if less than two to six visits (i.e., the LUPA, or Low Utilization Payment Adjustment, threshold) are furnished during the 30-day period, depending on the specific PDGM group.
Each 30-day period will be classified as institutional or community, depending whether or not the individual received acute or post-acute (skilled nursing, inpatient rehab, long-term care hospital) services within 14 days of beginning care under home health. Thirty-day periods classified as Institutional are paid at a higher rate than those classified as community.
Timing of the 30-day Period:
The first 30-day period of any patient’s home health stay is considered “early”; all other 30-day periods are considered “late”. The “early” period is paid at a higher rate than “late” periods.
The patient’s diagnosis (ICD-10-CM code) that describes the primary reason the person requires home health services will be used to classify the patient into one of six clinical categories or groups. The six Clinical Groups described by CMS in PDGM are:
- Musculoskeletal Rehabilitation
- Neuro/Stroke Rehabilitation
- Wounds (both surgical and non-surgical)
- Behavioral Health (including substance use disorder)
- Complex Nursing Interventions
- Medication Management, Teaching, and Assessment
In PDGM, Functional Level score is determined from eight items in section M of the OASIS. There are three functional levels per clinical group – low, medium, and high impairment.
The comorbidity adjustment payment (none, low, or high) depends on whether individual comorbidities or specific “subgroup interactions,” or comorbidity combinations, are present. A single secondary diagnosis that is found on CMS’s list of 11 comorbidity subgroups qualifies the patient for a low comorbidity adjustment; two or more diagnoses that result in one of the 27 subgroup interactions described by CMS would result in a high comorbidity adjustment.