Is PDGM the most effective payment mechanism for the home healthcare sector?

There has been a growing focus on patient needs and preventive care. This is why CMS has announced the launch of a budget-neutral payment approach. This system has been designed keeping patient requirements into perspective.

Traditionally, home healthcare industry has billed for ‘volume’ of care. However, recent changes to Medicare reimbursements policies will compel home healthcare providers to take a more detailed approach when it comes to patient care.


So, what is PDGM?

Patient Driven Groupings Model (PDGM), is a payment model that will go into effect in January 2020. Under PDGM, patient’s condition, requirements, and other needs will be evaluated in order to determine the reimbursements made to home healthcare providers.

This payment mechanism is unlike any other model previously used in the home healthcare industry. In fact, it is being considered the first major change the sector has witnessed in the past 20 years.


How does PDGM work?

CMS has explained the model in a detailed document. This document provides an overview of the payments and adjustments for in-home care. To help you get a quick understanding, the key points have been summarised here.

Under PDGM, the unit of payment has been changed from 60 day to 30-day periods of care. Other subcategories such as admission source, clinical grouping, functional impairment level, and comorbidity adjustment have also been introduced to help narrow down the requirements of each individual. This can help in providing tailored care.

To ascertain the cost of care in this 30-day period, the patient will be put into one of 432 case-mix groups. The patient will be put into a group based on certain subcategories and sub-classifications within those categories.

For instance, within admission source, there are two sub-classifications; community and institutional. This means that the healthcare setting in which the patient was 14 days prior to home health admission, will affect the reimbursement. If the patient was in an institutional setting, which can be acute care hospitalization or inpatient rehabilitation facility, the reimbursement will be higher.

Twelve clinical groups have also been created to classify the principal diagnosis. In addition to this, based on eight functional Outcomes and Assessment Information Set (OASIS) questions, the patient’s functional impairment is also ascertained.

Lastly, PDGM also takes into consideration comorbidity. The reimbursement is adjusted to account for other medical conditions.


What does it mean for home healthcare providers?

According to CMS, the model has been designed to enable home healthcare organisations to deliver more focused care and achieve better outcomes for the patients.

As previously, reimbursements were based on volume, it was easier to compensate for operational inefficiencies or overlook administrative costs. With this new system, home healthcare companies have to revisit their current operational dynamic to ensure that they can benefit from PDGM.


What should home healthcare organizations do to benefit from PDGM?

Home healthcare providers would have to evaluate the efficiency of their operations. Additionally, they will have to find ways to effectively provide care to the patients. To benefit from PDGM, there has to be a reduction in administrative costs, introduction of technology, and effective management of resources.

For instance, creating a systematic approach to delivering value can help. Organizations can collect data including the health history as well as information on functional impairment and comorbidities. Equipped with this information, the staff will be in a better position to plan and deliver care to the patients.

Secondly, creation of cross-functional teams will also be useful. Information sharing is key to ensuring that all departments have access to details needed to effectively manage the day-to-day operations and provide coordinated care.

Data management is crucial. Investment in technology can help with the collection, analysis and storage of this data. Real-time monitoring and collection through wearables, information storage in the cloud, or data sharing and analysis through customized applications can be useful. Bringing technology in the equation can improve patient care as well as reduce administrative delays.

For instance, AI could be used to predict when an individual may wander. In addition to that machine learning can be used to trigger alarms and alerts the caregiver, in case patient needs assistance. This will ensure that the right care is provided at the right time.

PDGM compensates for value rather than volume. Hence, it is an effective payment mechanism for government entities and Medicare providers. However, it can also be beneficial for home heath-care providers. That is, if they work towards a system of care where there is greater reliance on data as well as increased internal coordination.