PDGM Impact on Home Healthcare Providers
Factors which will increase the potential to increase financials include the opportunity for realignment in the sector, the use of specifically designed data tools, training for coding competency, and accurate assignment of health care disciplines at the start of care. Factors which are expected to negatively impact financials in the sector include focusing on non-complex care patients, missed revenue opportunities due to inability to track metrics efficiently, the elimination of RAP and incorrectly calculating LUPAs.
Factors Affecting Payment
- Visits below the Low-Utilization Payment Adjustment (LUPA) will continue to be paid on a per-visit basis. Each patient group will have a specific LUPA calculated as the lower 10th percentile of the group.
- If the patient's needs are complex and require numerous visits that are a costly mix of services, an outlier payment may be available.
- The fee for 30 day period, when the number of visits is above LUPA, is calculated by multiplying the 30-day base rate by the case-mix weight.
- For internal administrative purposes, the fee is split into two. One is the wage portion that is calculated at 76.1% of the base rate. The government recognizes the disparity in the cost of living across the country. Therefore,76.1% of the fee is multiplied by the wage index adjustment for the geographic area.
- If the patient's status changes during any 30-day period (e.g. discharged, changes agencies), the payment is prorated.
- An individual therapist must be able to provide a metric on the value of the service. Some criteria currently include mobility, use of pain management other than opiods, successful completion of exercises designed to reduce risk of falls and more.
- For the first time in more than ten years, CMS projects a rate increase for home health agencies. CMS expects a 2.2% increase, or $420 million.
- Nearly half of all home health care providers are planning to decrease their therapy utilization in 2020 in response to PDGM. This realignment is an opportunity for agencies who wish to grow to increase staff and fill the void.
- The use of specially designed data tools to maximize income and track outcomes will increase revenue. "...to provide quality outcomes balanced with financial performance ... using data to provide alignment is going to be even more critical than it is now, simply because there is such wide payment variation among each of the classifications".
- Expanded coding requirements could be positive or negative. "Reimbursement will largely depend on coding competencies. Specifically, reimbursement will be impacted by ICD-10 coding (for clinical groupings and comorbidities) and OASIS coding (for functional levels)." In-depth training for coders will ensure maximum revenue.
- Providing the correct health care disciplines at the start of care will ensure maximizing patient outcomes while managing costs appropriately. For example:
— Occupational therapy ordered for respiratory and COPD cases
— Physical therapy for functional issues falls risk and safety concerns
— Nursing for medication management, pain, self-management education needs
— A medical social worker for depression counseling or family conflict resolution
— Home health aides or other ancillary staff ordered to support care practice
- Focusing on non-complex care cases will eliminate the possibility of the case-mix weight addition to the monthly fee.
- Inability to track daily, month-to-date, and year-to-date revenue and value metrics will result in missed opportunities to maximize revenue.
- Requests for Anticipated Payments (RAP) are being eliminated, which may cause cash flow issues for some agencies, along with the potential for a downward spiral. The industry expects a series of M&A's in the coming year.
- LUPA's are no longer a standard of four visits or fewer but are based on the number of visits, number of HHRG's and clinical groups. Incorrectly calculating LUPAs can lead to significant losses. "In some cases, a LUPA can be the difference between a $2,600 payment for an episode of care and an adjusted payment of $300."
Other Potential Readings as Requested
- IBIS report entitled Home Care Providers Industry in the US — Market Research Report provides in-depth data and analysis on Home Health Care Market. Price $925.
- Home Health Care News is an ezine that has published many articles in the last 18 months on PDGM.
- Health-Pro Heritage is a consultancy with a robust series of articles on how to implement PDGM.