The shift from PPS to the Patient Driven Groupings Model (PDGM) has forced most home health providers to optimize how they deliver patient care in order to ensure financial viability.

To understand why this has occurred it is worth quickly revisiting the key aspects of the PDGM framework that went into effect January 1, 2020.



The major impact of PDGM was how providers are paid by Medicare for home health services rendered. Prior to January 1, 2020 the Prospective Payment System (PPS) was the governing set of regulations. Under this model the amount of revenue per patient was based on a combination of the anticipated clinical, functional, and service utilization needs of the patient along with a quality and performance variable. Revenue was provided through a Request for Anticipated Payment (RAP) to Medicare which was expected to cover 60 days of treatment.

Under PDGM there were a number of significant changes made to this payment model:

  • RAP episodes changed from a 60-day to a 30-day period. The change from 60-day episodes to 30-day periods means that agencies must plan, deliver, document, and bill for care twice as often.
  • The first 24-48 hours from start of care (SOC) will be critical to optimize reimbursement: a HHA clinician must assess the patient’s needs and document a plan of care (POC) as soon as possible.
  • Billing will be every 30 days under PDGM, which means that the initial Request for Anticipated Payment (RAP) and the final claim will occur in a much shorter time-span. A second RAP for a second 30-day period must be submitted on or after day 31.
  • Service utilization (largely in the form of therapy visits) was eliminated from the payment calculation.
  • Many agencies and providers have drastically cut therapy services for patients as a result of this change. However, the elimination of the therapy threshold does not mean that therapy services will no longer be paid for (and more importantly that they are not needed for the patient to progress). The new model now ties therapy payments to patient clinical characteristics and patient needs, particularly through the new Functional Impairment Level in determining the case mix group for the patient.
  • A defined list of 432 mix case groups was created with a base payment attached to each. These case mix groups are based on”
    • Timing: The first 30-days are “early”, everything else is “late”.- Source: “Institutional” or “Community”. Basically, did the patient have an acute or post-acute stay within 14-days of start of care (SOC).
    • Functional Level. OASIS codes will be utilized to determine if classification is “low impairment”, “medium impairment” or “high impairment”.
    • Comorbidity Adjustment. “no adjustment”, meaning none of the 11 comorbidity diagnoses apply, “low adjustment”, meaning there is 1 qualifying comorbidity, and “high adjustment”, indicating 2 or more qualifiers.
    • Clinical Grouping. Patients will be assigned to 1 of 6 major clinical groups, based on principal diagnosis.
  • OASIS assessments must still be completed within five days of admission and again within the last five days of the certification period (no later than 56-60 days from SOC). However, if there is a significant change in the patient’s condition that impacts HHA services, CMS will require a new RAP along with supporting OASIS documentation and physician orders.
  • As part of this coding process it is imperative that agencies correctly code their patient to this highest paying diagnosis code present in the patient as the principal diagnosis to optimize revenues. However CMS has put all providers on notice that inappropriate elevations of a diagnosis (such as making a higher paying secondary diagnosis a primary diagnosis on the RAP) are likely to trigger reviews or audits.

Documentation Is Critical

PDGM is one step in an ongoing journey to reduce fraud and inefficiency in the delivery of Medicare and Medicaid based services. An additional component which is slowly being rolled out state by state is the implementation of Review Choice Demonstration (RCD),

RCD is designed to give applicable organizations options for compliance. Those options include:

  • Pre-claim review
  • Post-payment review
  • Opt-Out of voluntary review (which comes with a hefty 25% payment reduction).

A focus on accurate documentation underpins the RCD project (and directly ties to more accurate case mix grouping for the patient via PDGM). For both RCD and PDGM, it is therefore imperative that:

  • The OASIS assessment is accurately completed and transmitted on time.
  • A compliant Face-to-Face (F2F) certification is collected before any services are provided;
  • That correct orders detailing the diagnosis and treatment required is signed and dated by the referring medical provider;
  • That an accurate Start of Care (SoC) is performed to validate the orders, identify all necessary information for optimal coding, and to support the generation of a Plan of Care (PoC) that will demonstrate patient progress, achieve a quality outcome, and be a profitable episode for the provider with no errors in the event of a review or audits.

Achieving Quality and Profitability in Home Health

In order for home health providers to deliver maximum quality profitably under these new payment structures and regulatory requirements, there are six main areas of business operations that must be reviewed:

  1. Care Planning and Case Management

  2. Training and Education

  3. Remote Solutions

  4. Digital Workflows
  5. Sales and Referral Processes

  6. Staffing Optimization


PDGM represents a fundamental change in home health reimbursement, and agencies will feel its effects for years to come.

This new payment structure reimburses services based on quality over quantity, challenging many agencies on how to best market, manage, and deliver services under PDGM.

As a result, , agencies must triage and consolidate their services while also taking advantage of less costly methods of patient contact, such as telehealth or expanded use of assistants and aides.

Initial Start of Care

Identification of ALL comorbidities, functional limitations and anticipated needs at initial start of care is necessary to capture the patient’s primary needs and risks such that essential services can be delivered in a cost-effective way while maintaining patient progress and subsequent Star ratings.

Complete initial identification and documentation enables a more holistic and comprehensive approach to the patient’s care and increases the likelihood that appropriate resources will be provided to maximize the patient’s recovery and resultant satisfaction levels.


One of the most impactful changes under PDGM is the importance of the patient’s primary diagnosis which determines the payment group and, thus, the bulk of episodic payments. Ultimately, the payment structure has a goal of providing enough funding to support the patient’s essential needs based on a cost average of similarly diagnosed individuals.

Identifying and documenting not only an appropriate primary diagnosis, but all comorbidities and contributory factors, leads to more comprehensive care and rationalizes the utilization of a wider array of therapies.

Integration and collaboration with adjunct therapies, including OT, PT, and SLP have been clinically shown to effectively improve functionality and client satisfaction levels. Historically, these therapies were widely utilized, however they will see a significant reduction under PDGM. Agencies will now have to consider best time and use in absence of the therapy threshold model under PPS.   


Telehealth resources can also play a key function in plan of care decisions by utilizing technology to reduce unwarranted visits, while managing overall care and maintaining high levels of patient communication.

Customized information and education can be provided directly to a patient’s email via hand-out materials, white papers or even on-line training modules for patient, as well as caregiving family or friends.

Communication of the plan of care to the patient, along with a clear understanding of expectations and goals is the final step in ensuring best outcome and highest satisfaction.


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Changes in Medicare reimbursement style will inevitably lead to changes in the way your field staff must do their work, as well as how your office and billing staff must function. For the transition to be effective and smooth, training and education must be an intricate part of the process.

Field Staff

As already discussed, upfront identification of all comorbidities and a fully identified and documented functionality analysis at start of care will be crucial for your company to be successful under the PDGM program. Training on that program, thorough and appropriate documentation needs, plan of care adjustments and collaboration suggestions are all areas of additional training to consider.

Other steps your organization will need to implement for your field staff include:

  • Review discharge and hospital notes prior to visit with patient. Have a clear understanding of their status, limitations and anticipated outcomes.
  • Validate findings with verbal and observational review. Document that validation thoroughly and clearly.
  • Establish base line status and limitations with front loaded visits. You need a minimum of daily for first three days to fully document the base line.
  • Consider having dedicated SOC clinicians who open and plan the care and hand off to a case manager. This allows you to have an “expert” in setting up the patient for a PDGM-compliant plan of care.

Office Staff/Billing Staff

There is no question your office or billing staff will need tremendous levels of training on the new requirements and guidelines the CMS will require. However, there are other concerns, less immediately obvious, that you must also consider and address related training and knowledge:

  • As part of PDGM, CMS added a behavioral adjustment to the new payment system which has the potential of a rate reduction from 6.42% to 8.01%.
  • If the behavioral adjustments persist, your company’s challenge will be how to operate effectively, efficiently and ethically while remaining profitable.   A unified or consolidating care planning approach will likely yield the best results over time due to efficient utilization while maintaining the appropriate care needs.
  • RAPs and final claims will need to be submitted twice as often. This means billing and payment activities are effectively doubling for agencies, but not necessarily the revenue. Care plans must integrate this change effectively. Staffing requirements may also need adjustment.
  • The Home Health Resource Group (HHRG) determinants will become more complex with the introduction of of comorbidities, removal of therapy, and admission source/timing being added. A clear grasp of each area and its application within your organization is critical.  This further highlights the necessity of gathering a complete history and physical.
  • Finally the change in the RAP will adversely affect the finances and the viability of the agency unless the agency has had managed to secure a line of credit or savings to carry them through the first three months of program change. Smaller agencies are at particularly high risk during the transition time.

With disparate training and education requirements, offering training and education online is an absolute must. Online/remote training not only gives your company the flexibility to customize modules to discipline, it also gives your staff the flexibility to attend those training's within a time most conducive to their schedule.

You must integrate testing and skill checks with your training program, to verify comprehension and retention of the new materials being presented.


The removal of the therapy portion of reimbursement is particularly worrisome to many home-based healthcare organizations. For organizations that are therapy-heavy, it is urgent they become more cost effective and solution creative.

One underutilized solution could be supplementing therapy services with telehealth and/or telemonitoring, where appropriate.

Agencies previously benefited from therapy utilization as a revenue driver. Under PDGM, where it is skilled service and results that are driving reimbursement, the potential for positive results from a telehealth solution is promising.

Used appropriately, telehealth can eliminate the need for certain therapy visits without negatively impacting patient care. In some instances, such as a patient who can complete their own home exercise program, remote monitoring by the therapist could be used to supplement in-home care.

Thanks to technological advancements, telemonitoring no longer requires the advanced equipment necessary when the technology was first introduced. In fact, many systems allow for remote monitoring to be done via cell phone or iPad.

Telemonitoring is not only appropriate for therapies. Other forms of care, such as monitoring for patient stability, providing educational visits and addressing medication questions are all potentially appropriate for telemonitoring or telehealth services.


There are so many ways in which utilization of a digital workflow system will make your organization more profitable during and after the transition, while still maintain quality of care and improving staff efficiency. Here are just a few:

  • Obtain physician’s signed order authorizing care prior to or during admission to establish start of care.
  • Obtain signed orders and protocols for medications, DME, oxygen support, and/or therapeutic interventions.
  • Reduction of errors, by always getting signatures, never miss a checkbox, ensuring all potential coding is identified during start of care.
  • HHA staff onboard the new patient: During the admission process, HHA staff can visit the patient’s home to handle the complex onboarding process. That process is burden-ridden with forms that must be prepared and signed. Paperwork with illegible or incorrect information complicates the process and forces nurses to manually rekey data back at the office. By digitizing these form packages, HHA providers save time and eliminates costly errors .
  • Submit forms to CMS for reimbursement: After providing care, HHAs must submit required forms and patient information to CMS within the new 30-day window to get reimbursed. Transitioning to digital forms simplifies the submission process for agency staff and patients.
  • Replace paper-based tasks with faster solutions, which increases your staff’s time for direct patient care, improves patient interaction and maximizes therapeutic value of treatments each and every session.
  • Enables your HHA to transmit ongoing documentation faster to patients, physicians, intake personnel, schedulers, billing and so forth. It also reduces “pending” files and improves cash flow.
  • When utilizing a telemedicine or telehealth program, digital workflow systems will expedite signature collection requirements.

This is in no way an exhaustive list of opportunities for your digital workflow system to improve your bottom line. Those opportunities are limited only by your own creativity.


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Skill Checks and Compliance

 As a result of changes under the PDGM, your agency must start trying to form closer relationships with hospitals or skilled nursing facilities instead of local doctors’ offices or other community-based referral sources.

PDGM will change case mix weight calculations related to referrals and introduce a 14-day look-back mechanism to determine patient source. Your reimbursement is directly tied to that source.

A case mix weight for a community episode is 0.8782 compared to an institutional referral that has a case mix weight of 1.1855, according to a technical report from Abt Associates, with projections and estimates based on 2015 numbers. That means someone that is referred via a community-based setting will receive less of a bump in their case mix weight adjustment.

The breakdown of referral sources is different from state to state, but a large portion of patients are typically referred from community-based settings.

sales and referral processes

As a result of changes under the PDGM, your agency must prioritize forming closer relationships with hospitals and skilled nursing facilities. While local doctors’ offices or other community-based referral sources remain important—their referrals will be weighted differently. However, MDs, ALFs and other community partners can be excellent “bird dogs” to acute care stays as they may alert you to an inpatient stay and can help you navigate directing a discharge onto your services. In many cases, a community referral source can bring about an “institutional” referral. MDs remain essential as following physicians—critically necessary to bill according to CMS regulations.

PDGM will change case mix weight calculations related to referrals and introduce a 14-day look-back mechanism to determine patient source. Your reimbursement is directly tied to that source.

A case mix weight for a community episode is 0.8782 compared to an institutional referral that has a case mix weight of 1.1855, according to a technical report from Abt Associates, with projections and estimates based on 2015 numbers. That means someone that is referred via a community-based setting will receive less of a bump in their case mix weight adjustment.

The breakdown of referral sources is different from state to state, but a large portion of patients are typically referred from community-based settings.


To position your home-based healthcare agency or organization in an optimal location, your sales and marketing staff must assess your primary referral sources and make a conscientious and intentional decision to pursue hospitals, SNFs and LTACs as new referral sources. Your competition unquestionably will be doing so.

Your sales staff is not the only staff to consider. Delivering quality care requires highly effective clinical teams best staff. Due to home health teams being remote and largely independent, leadership and oversight are necessary to sustain performance over time.  This means periodic knowledge and skill checks, targeted training, and avoidance of turnover. Having technology available to deliver education and process updates remotely and at low cost are key to keeping the highest quality staff and maximizing ROI from training activities. 

You need stable and appropriate compensation plans (to ensure high quality staff aren't poached by competing providers), integrated solutions (to improve quality of life for employees by optimizing their time for administrative activities outside of treatment hours) and an online onboarding process that is quick and effective, in order to replace staff that you will, ultimately lose to other sources.


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Key Takeaways

Under the Medicare PDGM guidelines, it is possible to achieve both quality patient outcomes and profitability. But it will take some reinvention of operations to make this work for most home-based healthcare agencies.  Key areas that should be reviewed and addressed as needed include:

  • Care Planning and Case Management. Comprehensive, complete and accurate identification of all diagnoses, comorbidities and limitations. Identification for appropriate collaboration opportunities, and the use of appropriate technologies sets your agency in an optimal position during the transitional phase.
  • Training and EducationTraining of your field, office and sales staff independently, with a focus on their unique roles within the next paradigm must be accomplished. To do so effectively will require the use of remote or online training, ongoing skill checks and intermittent testing capabilities. Ideally, your system will allow for reporting capabilities that identify areas of weakness to allow for remedial training.
  • Remote Solutions. The use of remote technologies like telehealth and telemedicine integrated with ongoing direct patient care will maximize patient satisfaction and quality of care, while reducing unnecessary visits and associated loss of time.
  • Digital Workflow. Implementation of cloud based online forms and workflows eliminates potential errors and ensures swift transmission of documents and signatures. Ensuring you can quickly receive orders matching all identified patient conditions is critical to optimal care delivery and episode reimbursement.
  • Sales and Referral Processes. Reevaluation of referral sources and a renewed focus on hospitals, SNFs, and LTACs as strong potential referral partners.
  • Staffing Optimization. Your staff, whether field, office or sales, is your greatest resource. Good staff is the foundation of a strong, profitable, and high quality HHA. It is incumbent on your organization or retain, train and support this resource.

ClinicalHQ provides free, no-obligation, strategy sessions to assess the needs of any healthcare business to balance quality and profitability. Contact us to schedule a session today.