Essentials of Success in PDGM

By Tina Marrelli, RN, MSN, MA, FAAN and Mary St. Pierre, RN, BSN, MGA

Effective January, 2020 Centers for Medicare & Medicaid Services (CMS) plans to implement major changes to the case-mix methodology for home health agencies. CMS will adopt this new model because it relies more heavily on clinical characteristics and, they believe, will place patients into meaningful payment categories and eliminate the use of therapy service thresholds, as required by section51001(a)(3) of the BBA of 2018. The complexity and unknowns of the new home health payment methodology, which is labelled the Patient-Driven Resource Model (PDGM), can be scary and make us question what we know.

Under PDGM, the new payment rates for 30 (rather than 60) day periods were selected by CMS based on historical information about the home health clinical resources expended to meet the needs of patients with similar clinical characteristics. Although functional level, admission source, and period timing are considered in the new PDGM case-mix adjustment, the greatest determinant of patient characteristics driving resource utilization was found to be a patient’s primary diagnosis (primary reason), with certain comorbidities (secondary diagnoses) serving as additional considerations for payment adjustment.

Success with PDGM will revolve around home health clinicians’ compliance with the care planning process. Two key elements to ensuring conformance with PDGM system requirements are:

  1. Knowledge of diagnosis reporting rules and conformance of the diagnoses that are selected and coded on the claim with ICD-10 coding guidance and home health regulations
  2. Reliance on assessment and care planning resources that effectively direct clinicians in the patient assessment and care planning processes that justify the diagnoses included on the home health claim

Diagnoses Reporting

The following summary of diagnosis selection policies will provide insight into the rules for diagnosis selection with which home health agencies will be required to comply.

CMS will make payments to home health agencies based on the diagnoses as reported on the home health claim. This means that diagnosis reporting will not be limited to the 1 primary and 5 secondary diagnoses on OASIS as was required in the past. In accord with ICD-10 coding requirements, payments will be calculated using the primary diagnosis, and up to 24 secondary diagnoses. In light of the potential for a greatly expanded number of diagnoses reported by agencies on the claim, CMS plans to closely monitor coding behaviors to ensure that the selection of specific codes and the number of codes reported are justified based on clinical findings and documentation. Therefore, it is imperative that home health agencies comply with the rules for diagnosis reporting, and plan for and deliver the care necessary to support inclusion of those diagnoses. This applies to selection of both primary and secondary diagnoses.

Selecting Primary Diagnosis: OASIS instructions specify that: The patient’s primary home health diagnosis is defined as the chief reason the patient is receiving home care and the diagnosis most related to the current home health Plan of Care. ICD-10 rules require selection of a primary diagnosis be based on the condition: “shown in the medical record to be chiefly responsible for the services provided.”

Selection of Secondary Diagnoses: Secondary diagnoses reporting has undergone different interpretations over the years. In order to resolve confusion, CMS defined the PDGM policy that they will apply to reporting secondary diagnoses in conformance with ICD-10 coding in the final rule. This policy effectively over-rides current OASIS manual guidance allowing reporting secondary diagnoses that merely “impact” but not addressed in, the plan of care. The preamble to the final rule contained the following policy statement: “We agree that coding guidelines are clear that additional (secondary) diagnoses are only to be reported if they are conditions that affect patient care in terms of requiring clinical evaluation; or therapeutic treatment; or diagnostic procedures; or extended length of hospital stay; or increased nursing care and/or monitoring. We do not expect that HHAs would report comorbid conditions that are not being addressed in the individualized plan of care (emphasis added).

 Assessment and Care Planning Resources

How can home health agencies make certain that the clinicians charged with determining diagnoses that are reported on the claim comply with regulations and policies? ICD-10 requires that diagnoses “are only to be reported if they are conditions that affect patient care in terms of requiring clinical evaluation; or therapeutic treatment; or diagnostic procedures…; or increased nursing care and/or monitoring.” The Conditions of Participation require that patients have comprehensive assessments and receive care to meet the identified needs throughout. The challenges presented by PDGM requirements will be most effectively managed by home health agencies that avail themselves of resources that offer detailed guidance for patient assessment and care planning since these are overarching requirements for diagnosis identification. One such resource is the Handbook of Home Health Standards. The Handbook, like the PDGM system, is separated by systems and diseases to “help resonate how clinicians think” according to CMS. The Handbook offers detailed guidance for system-based patient assessments and a compendium of appropriate interventions to incorporate in all-inclusive plans of care to address problems identified. Use of the Handbook in the care planning process will help ensure that the primary diagnosis and comorbidities reported on the home health claim are supported.