Debunking Common PDGM Primary Diagnosis Myths

In order for home health providers to see reimbursement success, they need to be able to separate myths from facts when it comes to the Patient-Driven Groupings Model (PDGM).

But one specific point of confusion has been primary diagnosis clinical groups.

“There are a lot of rumors and myths floating around out there,” Robbi D. Funderburk James, coding and OASIS manager at BlackTree Healthcare Consulting, said during a Tuesday webinar. “I see a lot of times that we are interacting with our coders, our physicians and maybe causing frustrations all the way around.”

Overall, there are 12 primary diagnosis clinical groups under PDGM.

One popular myth is that all unspecified codes are unacceptable PDGM primary codes. On the contrary, there are many unspecified codes that are acceptable to bill as PDGM primary and fall into a clinical diagnosis group.

Some examples of this are CHF unspecified, AFib unspecified and COPD unspecified.

“What is true about unacceptable codes under PDGM is that if you have an unspecified anatomical location on the body or unspecified laterality. Those codes will typically not bill under PDGM,” James said. “What CMS is saying is that if we have an arm fracture, in order to appropriately treat this, we would need to know whether the fracture is the right arm or left. CMS requires the physician to state that. It can’t be clinician observed.”

Another myth that has gained traction is that all R codes, more commonly known as symptom codes, are unacceptable primary codes.

Unlike the last myth, this one is mostly true with one exception, according to James.

“The exception to that is the R.13.1 Dysphagia codes,” she said. “In our final rule in 2020, CMS agreed with those in our industry who spoke up and said [that] we must treat dysphagia and we can’t always wait for there to be a confirmed etiology. We need to be able to do that in a timely fashion to prevent subsequent harm to the patient.”

Another myth that frequently pops up has to do with codes that are unacceptable as primary diagnoses also being unacceptable as co-morbidity diagnoses. In actuality, codes that are unacceptable as primary are acceptable co-morbidity codes.

Still, James urges providers to seek greater specificity from physicians when the circumstances call for it.

“This doesn’t mean that in some instances, we shouldn’t take the time to query our physicians to get more specificity and laterality,” she said. “We definitely want to do those things when it is appropriate and necessary, but if you are unable to, it’s not going to hold your claim up.”

Moving forward, there are a number of measures providers can take to make sure they are getting into the appropriate PDGM primary categories, including building a strong referral and intake department.

“It’s all going to start with your referral team and intake team at your agency level,” James said. “We want to make sure that our referral team has good relationships with our referral sources, and that they take the opportunities to educate their referral sources and the providers on what it is we’re going to need as home health agencies to bill under PDGM.”

Knowing when it is and isn’t necessary to query — and training clinical staff to know, too — is also key.

“There are going to be times when we’re going to need field clinicians to follow up on diagnoses, especially those instances where they find a diagnosis in the home that wasn’t mentioned anywhere on the intake and referral paperwork,” James said.

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Assisted Living Facilities Still Restricting Home Health Providers

Home health providers have been on the front lines of the COVID-19 crisis since its outset, yet a primary concern remains being left behind by legislators, whether that’s on a state or federal level.

Reimbursement for telehealth services is still on the forefront of everyone’s minds. But there are less-covered issues that haunt providers as they continue to deal with the ongoing public health emergency, too.

There are still severe restrictions on access to patients in facilities, for example. Additionally, the existing nursing shortage has only grown worse.

The main concerns moving forward will continue to be taking care of patients and dealing with the challenges of COVID-19 and the Patient Driven Groupings Model (PDGM). But advocating on behalf of the home health industry cannot stop in the meantime, Dr. Steve Landers, the president and CEO of Visiting Nurse Association Health Group Inc., said on a Wednesday webinar hosted by Blacktree Healthcare Consulting

“I think we’ve got to stay really front and center on [telehealth] and not get left behind,” Landers said. “Because other people are going to be providing telehealth into the home and into the community. That’s going to be a part of the delivery system going forward. And I think we in [home health] should be the leaders.”

VNA Health Group is one of the largest independent, nonprofit providers of home-based health services in New Jersey, northeast Ohio and southeast Florida. Headquartered in New Jersey — a part of an area the virus wreaked havoc on early — the provider had already cared for nearly 650 COVID-19 patients by the end of May, Landers told Home Health Care News.

Amid the pandemic, hospitals have been granted the ability to bill for outpatient remote services in the home, yet home health providers are still not able to do so.

There is also a mounting concern over new, restrictive immigration laws that could affect the nursing workforce in home health, Landers said.

“It’s not been a hot topic, but I’d love to see more done for the nursing workforce,” Landers said. “Our nursing schools are turning away tens of thousands of qualified applicants every year because they don’t have capacity to take them on. And on the other end, we’re losing more nurses every year than we’re putting in, … and now we’ve restricted immigration. We’ve got a big nursing challenge, and I personally would like to see some government intervention on expanding training for nurses.”

An additional hurdle in the past has been that nursing programs had prioritized institutional settings, which led students to believe that hospitals and specifically emergency rooms were the be-all and end-all.

Industry insiders are hoping that stigma changes with care moving further into the home during COVID-19 and better home health education becoming more ubiquitous.

“[There was always] this mindset that you had to have all this acute care experience before you can be successful in the home,” Mary Gibbons Myers, president and CEO of Johns Hopkins Home Care Group and president of Home & Community-Based Services for Johns Hopkins Health System, told HHCN in May. “But what we’ve been thinking over the last couple years is that we really need to go upstream and look at the institutional or the educational setting, making sure that the curriculum is changed so that instead of focusing people on critical care and hospital settings, [we’re looking] at the entire continuum of care … .”

One measure that was applauded at the beginning of COVID-19 in some circles, but has since become problematic, is the isolation of home health workers from institutional settings over the last five months.

That’s put the patients at an even further risk at times, Brent Korte, chief home care officer at EvergreenHealth, also said on the webinar.

“[We’ve been trying to] fight back to make sure that we have access to assisted living facilities and skilled nursing facilities,” Korte said.

EvergreenHealth was one of the first providers in the entire country to be hit by COVID-19 in the U.S., way back in February. Based just outside of Seattle, it is one of the largest home health and hospice providers in the Pacific Northwest.

The not-for-profit provides about 250,000 visits per year and is affiliated with a local hospital system.

A few months ago, when EvergreenHealth was blocked from seeing a patient to check on wounds, she eventually developed a stage-4 tunneling cubitus ulcer that led to her death.

“There can obviously be a very negative impact from not being able to see patients,” Korte said.

The cutoff from facilities has also had other negative impacts as well, such as staggering declines in mental health for isolated seniors unable to see their families.

New legislation decisions — or lack thereof — are bound to be a topic throughout the COVID-19 crisis, including whenever a new stimulus package is agreed upon. For home health providers, each one could mean the world.

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Elara Caring Targets Physicians as Home Health Providers Rethink Referrals

In the build-up to 2020 and the Patient-Driven Groupings Model (PDGM), many home health providers began shifting their referral strategies to focus more on hospitals, skilled nursing facilities (SNFs) and other institutional sources.

Generally, providers realized that patients coming from such settings likely meant more Medicare dollars under PDGM, especially when patients were also classified as “early” in terms of timing. While that’s still true, the COVID-19 emergency has seriously disrupted home health admissions patterns, forcing many providers to rethink community-based referrals.

Now, some operators — including Elara Caring — see non-institutional referrals and relationships with community-based physicians as a core part of their future plans.

The decision to double down on referrals from physicians in the community originally stemmed from access challenges during the early days of the public health emergency, Elara Caring CEO Scott Powers told Home Health Care News.

About 80% of Elara Caring’s patients historically have come from institutional settings. But with hospitals suspending elective surgeries and some SNFs restricting visits from outside staff, the Addison, Texas-based company knew it had to make a change.

“It’s been a wild year, obviously,” said Powers, who came to Elara Caring after leading the rapidly growing Medicare Advantage organization Alignment Healthcare. “We’ve done a pretty good job trying to recruit more physicians for referral sources, just given some of their access challenges. We’ve been actively thinking about physicians and how we partner with them beyond just the usual skilled nursing and hospital systems.”

Formed in 2018 after Great Lakes Caring, National Home Health Care and Jordan Health Services merged, Elara Caring currently has more than 225 offices across 16 states. Its more than 35,000 employees care for about 60,000 patients daily.

Since the public health emergency started, Elara Caring has increased its referrals coming from community sources by about 10%.

That means roughly one-third of its referral base now comes from the community.

“If I have it my way — and we continue to do things the way we’re doing them — that will be 50% or more a year from now,” Powers said.

Unexpected upside

The early part of this year played out as expected when it comes to referral patterns, data from Strategic Healthcare Programs (SHP) shared during last month’s Financial Management Conference shows. The virtual conference was hosted by the National Association for Home Care & Hospice (NAHC).

In January, 47.8% of home health referrals came from institutional sources. Similarly, over 32% of home health referrals came from institutional sources in February.

But then those figures took a nosedive.

In March, 30.8% of home health referrals came from institutional sources, according to SHP data. That then fell to just 23.2% in April, when the U.S. health care system felt the full impact of the coronavirus.

“In the early days of PDGM, and in January and February, what we saw was basically what we expected,” Nick Seabrook, principal and founder of BlackTree Healthcare Consulting, said while discussing the SHP figures during a presentation at the Financial Management Conference. “We expected to see a lot of those early-institutional patients.”

For the most part, the decline in institutional numbers was unplanned — and it will likely prove short lived.

In fact, referral patterns are already starting to stabilize, with most providers seeing their home health census recovering to pre-coronavirus levels as well.

“We saw dips early on in COVID,” Powers said. “At least from a skilled home health perspective, our census has rebounded above pre-COVID levels. It’s been there for the last three or four weeks.”

But there’s unexpected upside to community referrals, too, even for those that fall under the “late” timing category.

While “early-institutional” cases have higher reimbursement rates associated with them, it typically requires more time and resources to care for those patients.

Meanwhile, “late-community” cases often have a lower resource use, meaning margins are actually higher.

“When you look at early-institutional periods, they’re going to give you the highest cash flow, but we also have the highest resource use for those,” Dave Saling, consulting manager at BlackTree, said at the Financial Management Conference. “What we’re seeing with late and community is a significant decrease in resource use and actually higher margins with some of those [cases].”

That means late-community cases may be more beneficial to agencies’ bottom lines in the long term, Saling noted.

Telehealth leverage

On its end, Elara Caring is working to beef up its community-based referral strategy by becoming a “partner of choice” for physicians.

That means making physicians’ lives as easy as possible by providing high-quality care across the entire post-acute continuum.

In addition to its home health business, Elara Caring also maintains large hospice and personal care services (PCS) lines. It additionally has a growing behavioral health business.

“In the year ahead, we not only expect to grow by adding more physicians, but we expect to grow by being the easiest to do business with in the markets in which we operate,” Powers said. “We’re going to bring all our assets to bear. So if we have a skilled home health relationship in one place, we’re going to bring our PCS business into that and be more forceful, more thoughtful about that.”

During the public health emergency, Elara Caring has also made major inroads with physicians by leveraging its telehealth capabilities, which are powered by Health Recovery Solutions (HRS).

“We’re using our telehealth platform as a partnership tool with physicians, primarily those who don’t have telehealth platforms themselves,” Powers said. “There are still many specialists, primary care doctors and geriatricians out there who need access to their patients, but haven’t been able to see them.”

Apart from its referral strategy, Elara Caring has its sights set on continued growth.

Its behavioral health business, in particular, is “growing like a weed,” according to Powers.

“In the back end of the year, as our strategies come together and our integrations come together, you’re going to see us on an even faster growth trajectory,” he said. “Now that we’ve got things plugged together … and the right team in place, I think you’re going to see a really strong year for us.”

Elara Caring’s most recent leadership hires include Chief Medical Officer Dr. Joe Jasser and CFO Bruce Jarvie.

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Early Data Shows PDGM’s Regional Winners, Losers 

The impact of the Patient-Driven Groupings Model (PDGM) doesn’t appear to be universal.

In fact, each home health care agency’s performance under the model seems to depend on a few somewhat uncontrollable factors, new PDGM data suggests.

“CMS created a model that was based on all claims nationally, but depending on where you are and the types of patients you’re seeing, I’m expecting we’re going to see some real winners and losers,” Chris Attaya, vice president of product strategy at Strategic Healthcare Programs (SHP), said.

Attaya shared those insights during a recent webinar hosted by BlackTree Healthcare Consulting, during which he and BlackTree Managing Principal Nick Seabrook shared PDGM performance data from the first few months of the year.

So far, PDGM’s winners and losers appear to be regional.

For example, the data shows that for the first five months of the year, the Southwest had the lowest average case-mix weight for non-Low Utilization Payment Adjustment (LUPA) episodes of any region in the country, at 0.997. Meanwhile, the Northeast saw the highest average case-mix weight of 1.179.

Under PDGM, case-mix weights help determine how much agencies get paid by the Centers for Medicare & Medicaid Services (CMS). Specifically, they’re used to adjust providers’ base payment amounts for each 30-day unit of home health care. 

There are 432 possible case-mix adjusted payment groups under PDGM. A higher case-mix weight generally generates a higher payment adjustment, while a lower case-mix weight usually means a lower reimbursement rate.

Case-mix weights for each unit of care are determined by five different factors: admission source, timing, clinical grouping, functional impairment level and comorbidity adjustment.

Timing appears to be among the most important of those when it comes to case-mix weight, Attaya said on the webinar, pointing to data to back up his claims.

“It’s pretty correlated,” he said. “The early-late against your case-mix weight is the biggest reflection of how well you’re going to do in terms of the case-mix weight.”

In other words, regions that saw a lower percentage of early cases were also likely to see lower case-mix weights, the data suggests.

Case and point: The Southwest — which has the lowest average case-mix weight — saw the lowest percentage of early cases, at 27.6%; the Northeast — which had the highest average case-mix weight — saw the highest, at 51.5%.

Similarly, the home health industry has also seen regional winners and losers in terms of LUPA rates, Home Health Care News previously reported.

Like case-mix weights, LUPAs impact agencies’ reimbursement rates. If an agency doesn’t provide the appropriate number of visits determined for a patient in a period of care, they can be hit with a LUPA and, in turn, receive lower reimbursement. Under PDGM, there are 432 different LUPA scenarios, with visit thresholds ranging from two to six.

Since the coronavirus hit, home health agencies in states with a higher number of cases generally saw higher LUPA rates for the first few months of the year, according to the data presented during the webinar.

That includes states like New York and Washington, hit early and forcefully by the virus. Both saw LUPA rates well above the national average for the first few months of the year.

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PDGM Data Shows Reality-Versus-Expectations Mismatch for Case-Mix Components

The Centers for Medicare & Medicaid Services (CMS) was a little bit off with some of its predictions related to the Patient-Driven Groupings Model (PDGM). 

At least, that’s true when it comes to the first four months of 2020, according to Strategic Healthcare Programs (SHP) data unveiled on a recent BlackTree Healthcare Consulting webinar.

The webinar covered data and trends related to the impact of PDGM and COVID-19 on home health agencies. As part of the presentation, experts compared SHP data to CMS projections on the various components of PDGM.

CMS detailed those projections in its 2020 final rule, using 2018 claims data paid through July 31, 2019, to inform its calculations. When put up against SHP data from January through April, it appears some of CMS’s predictions have yet to align with reality.

Take comorbidity adjustment, for example. It’s one of the five levers used to determine which of the 432 case-mix groups a case falls into under PDGM — and in turn, the reimbursement level that goes with it.

Under the new framework, there are three different comorbidity buckets: no adjustment, a “low” adjustment” or a “high” adjustment.

According to its models, CMS expected 56.4% of home health cases would have no adjustment; 35.5% would have a low adjustment; and only 8.1% would have a high adjustment.

In reality, 14.1% of cases had a high adjustment in the first four months of the year, according to SHP data. Those high adjustment cases are associated with a combination of secondary diagnoses that are tied to higher resource use when reported together — thus yield higher reimbursement.

“Some of that might be we’re doing a better job at secondary diagnosis coding, we’re paying more attention to that [or] we’re seeing more codes on the claim versus maybe what was just put on the OASIS,” Chris Attaya, vice president of product strategy at Strategic Healthcare Programs (SHP), said during the webinar.

Meanwhile, the expectations-versus-reality mismatch in functional impairment lever came as the biggest shock, according to BlackTree Managing Principal Nick Seabrook.

“The one area that surprised me the most is just the disparity in terms of the functional impairment scores,” Seabrook said during the webinar.

Like comorbidity adjustment, PDGM’s functional impairment lever is broken into three categories — low, medium and high — each of which comes with varying degrees of reimbursement. A higher impairment generally means higher reimbursement.

While CMS anticipated a fairly even split between all three functional categories, nearly 44% of cases have fallen into the high category. That’s over 12% more than what CMS expected, according to the data.

Source and timing trends are also slightly different from CMS’s expectations. Generally, the SHP data suggests that the industry is seeing far more “institutional early” cases and far fewer “community late” than CMS expected.

Specifically, CMS projected 61.4% of cases would be community late, while SHP found that only 54.4% were. Additionally, CMS estimated that 18.5% of cases would be institutional early, compared to 27.4% in reality.

Attaya wasn’t surprised by that mismatch, however.

“We’re seeing a higher [percentage] of early because … we’re still new with PDGM,” Attaya said. “Community late — we haven’t quite caught up yet, but I think we’ll see numbers continue to get closer to CMS [projections] as we go forward through the year when we have more opportunities for recerts that would continue to grow that ‘community late’ period.”

Other subcategories under the source and timing lever include “institutional late” and “community early,” which were on par with CMS’s expectations.

While the data provides a lens into the first four months of PDGM, it only tells part of the story. Home health providers were grappling with the COVID-19 emergency for the last several weeks of that four month period.

“As we kind of look at some of the trends, you’ve got to remember that [COVID-19] is included in there,” Attaya said. “That’s going to have some impact as you look at your overall numbers.”

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Home Health Cash Flow Has Yet to Recover from Post-PDGM Dip

Even before the coronavirus hit, cash flow was poised to be a problem for home health providers in 2020.

The Patient-Driven Groupings Model (PDGM) shortened home health billing periods from 60 days to 30, creating a cash flow crunch for agencies during their first few months under the new model, which took effect Jan. 1.

On top of that, the Centers for Medicare & Medicaid Services (CMS) began its phase out of pre-payments — or Requests for Anticipated Payments (RAPs) — this year. RAPs have historically been an important tool for smaller providers in managing their cash flows and payrolls.

Then, just when agencies were expected to bounce back, the COVID-19 emergency hit in March.

The trio of unfortunate events has meant a negative cash flow trend for home health agencies all year — or at least for the first four months of 2020, according to BlackTree Healthcare Consulting data.

King of Prussia, Pennsylvania-based BlackTree shared those numbers on a recent webinar. They show the monthly cash flow trends of home health clients for which BlackTree completed billing and collections functions from January through April.

Overall, BlackTree’s findings suggest that home health care providers’ cash flow dips were less pronounced than the firm expected them to be for the first two months of 2020; However, the coronavirus prevented agencies’ cash flow from ever trending back up above December 2019 levels and normalizing in April, as BlackTree anticipated in a pre-coronavirus world.

“What actually happened was January and February were pretty close to what we expected,” BlackTree Managing Principal Nick Seabrook said during the webinar. “But — what the impact of COVID was — in March, we never saw that spike back above those January numbers. We got it back to right around even numbers to December, and then it started to climb back down in April.”

In January, BlackTree clients saw their cash flows fall by 14% compared to December, with agencies faring better than the 22% dip BlackTree originally projected they would see.

In February, the firm’s predictions were more closely aligned with reality: Agencies’ average cash flow drop was 32% from December, while BlackTree predicted a 37% dip.

In a COVID-19-free world, March would have ushered in a home health care cash flow comeback, according to BlackTree.

“We were expecting a nice spike in March — an increase of about 12% [from December],” Seabrook said. “And then [for] it [to] start to normalize in April and beyond.”

Instead, the coronavirus hit. Providers saw elective surgeries cease nationwide, with a growing number of patients turning away care, LUPA rates rising and telehealth becoming a necessary yet non-reimbursable reality.

As a result, home health cash flow trended in line with December numbers in March — then fell 7% in April. While BlackTree did not share numbers from May during the June 30 webinar, it’s clear cash flow remains top of mind for agencies in the home health space.

“We asked in the poll [of webinar attendees]: What are currently your biggest operations concerns? 22% of you said cash flow,” Seabrook said. “There’s been a lot of relief funding come through for COVID … but cash flow is definitely something you still want to keep an eye on.”

With cash flow up in the air, some industry insiders expected ample M&A action in 2020. That has yet to pan out, largely due to the relief funding and other financial lifelines created by the federal government during the COVID-19 crisis.

As relief starts to disappear, many providers will feel PDGM’s cash flow crunch more acutely, perhaps opening up acquisition opportunities for buyers. If that happens, though, buyers will need to consider potential implications tied to the Paycheck Protection Program (PPP).

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