Understanding PDGM What You Need to Know; What You Need to Do

A lot has been written about PDGM, the new home healthcare Patient-Driven Groupings Model first proposed by the Centers for Medicare & Medicaid Services (CMS) in July 2018. CMS released the final rule on October 31, 2018, and PDGM will become effective on or after January 1, 2020.

PDGM is a revamped version of the Home Health Groupings Model (HHGM) that CMS introduced–and then discontinued–in 2017. It cuts the payment periods in half, and takes therapy volume out of consideration in determining home health agency (HHA) payments.  According to the Federal Register: “This patient-centered model groups periods of care in a manner consistent with how clinicians differentiate between patients and the primary reason for needing home health care.”

CMS describes PDGM as an alternative case-mix adjustment methodology that will further the shift to a value-based payment system and ultimately reduce the cost of home healthcare delivery. “The redesign of the home health payment system encourages value over volume and removes incentives to provide unnecessary care,” says CMS Administrator Seema Verma. “This home health final rule focuses on patient needs and not on the volume of care.”

For Medicare-certified HHAs, the new payment methodology is certainly revolutionary. PDGM will affect how agencies treat referrals and develop plans of care. It has been proclaimed by consultants and industry analysts as the most consequential regulatory and reimbursement transformation in the home health industry in two decades.