New Medicare Home Health Care Payment Grouper — Are You Ready?

November 25th, 2019 - Wyn Staheli, Director of Research
Categories:   Home Health|Hospice  
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Home Health’s biggest change in two decades begins January 1, 2020 when CMS will begin using a new Patient-Driven Groupings Model (PDGM) for home health payments. This new system has several key factors:

  • Diagnosis drivenThe payment rate factors in the patient’s primary and secondary diagnoses. More complex conditions will have a higher payment rate.  
    • Primary diagnosisThis describes the primary reason the patient is receiving home health services. The primary ICD-10-CM diagnosis code reported assigns the patient into one of 12 clinical groupings (e.g., neuro rehabilitation, wounds, behavioral health, etc.).
    • Secondary diagnosis(es): These comorbid conditions can affect patient care and are also factored into the payment.
  • Functional Impairment: The functional impairment of the patient (i.e., low, medium, high) is factored in using eight Outcome and Assessment Information Set (OASIS) items related to Activities of Daily Living (ADL). A higher functional impairment level will qualify for a higher payment rate.
  • Reporting periodCare is based on a period of 30 days instead of 60 days.
  • Therapy thresholds removedWith the elimination of the therapy caps, this information no longer factors into the payment.
  • Low Utilization Payment Adjustment (LUPA) revisedThe old system threshold for LUPA was set at five visits during a 60 day period. Under the new system, LUPA is based on the case-mix group (see below) and can range from two to six visits during a 30 day period depending on the group.

Case-Mix Adjusted Payment Group: The following variables are used to calculate the patient’s case-mix adjusted payment group: 

  1. Locationgeographic location where patient care is provided
  2. Admission Source institutional (acute or post-acute care provided within 14 days prior to admission) or community (no acute or post-acute care)
  3. Timingearly (first 30-day period of care) or late (subsequent 30-day period[s])
  4. Clinical Grouping: based on the primary diagnosis
  5. Functional Impairment Level: from OASIS items
  6. Comorbidity Adjustment: based on the secondary diagnoses

Like the RVU for outpatient services, the weight computed by the case-mix is multiplied by a factor (think conversion factor for RVUs) to arrive at an estimated monthly payment.

Medicare Home Health Payment Calculator for 2020

If this sounds complicated, well, it can be. To help home health agencies make this transition, Find-A-Code has a PDGM payment calculator for home health coming soon. All you need to do is fill out the simplified form with the applicable patient information and click the [submit] button. It’s easy, fast, and accurate.


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