Why PDGM Didn’t Impact Most Home Health Agencies

Like many agency owners I was not looking forward to learning a new payment system. When CMS finalized a new case-mix classification model, the Patient-Driven Groupings Model (PDGM), effective beginning January 1, 2020, I was less than enthusiastic.

The PDGM relies more heavily on clinical characteristics and other patient information to place home health periods of care into meaningful payment categories. One case-mix variable is the assignment of the principal diagnosis to one of 12 clinical groups to explain the primary reason for home health services.

In addition, we had the stress of learning what would be a LUPA and how do we keep good outcome scores. Little did we know that 2020 would be a year unlike any other faced by the home health, home care, and hospice industries.

Many have been writing that PDGM has not taken the toll that many expected. I decided to go right to an expert that works with agencies around the country. I interviewed Jim Plonsey, of Medicare Training and Consulting, https://medicareconsulting.net/.

Jim Plonsey

Medicare Training & Consulting, Inc., located just outside Chicago, Illinois, has been providing health care consulting for nearly 30 years. Founded by James Plonsey, MTC provides individual as well as group training to home health agencies, hospices, federally qualified health clinics, and hospitals.

 

Jim is the owner and a dear friend of mine.

I asked Jim,

“Why do You think PDGM hasn’t impacted the home health industry as anticipated?”

Jim responded, “The main reason Home Health Agencies have not felt a great financial impact as anticipated falls into the following 4 categories.”

1.   PPP Loans – The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. SBA will forgive loans if all employee retention criteria are met, and the funds are used for eligible expenses.

2.   EIDL Loans – In response to the Coronavirus (COVID-19) pandemic, small business owners and non-profit organizations in all U.S. states, Washington D.C., and territories can apply for an Economic Injury Disaster Loan (EIDL). EIDL is designed to provide economic relief to businesses that are currently experiencing a temporary loss of revenue. EIDL proceeds can be used to cover a wide array of working capital and normal operating expenses, such as continuation to health care benefits, rent, utilities, and fixed debt payments.

3.   CARES Act Stimulus Funds – HHS is distributing $50 billion to providers who bill Medicare fee-for-service in order to provide financial relief during the coronavirus (COVID-19) pandemic. These funds are allocated proportional to providers’ share of 2018 patient revenue. On April 10, 2020, HHS immediately distributed $30 billion to eligible providers throughout the American healthcare system.

4.   Accelerated Payments – The Accelerated and Advance Payment (AAP) Programs are typically used to give providers emergency funding and address cash flow issues for providers and suppliers when there is disruption in claims submission or claims processing, including during a public health emergency or Presidentially-declared disaster.

Since expanding the AAP programs on March 28, 2020, CMS approved over 21,000 applications totaling $59.6 billion in payments to Part A providers, which includes hospitals.

For Part B suppliers, including doctors, non-physician practitioners, and durable medical equipment suppliers, CMS approved almost 24,000 applications advancing $40.4 billion in payments.

The AAP programs are not a grant, and providers and suppliers are typically required to pay back the funding within one year, or less, depending on provider or supplier type.

Jim also shared with me that he felt that many HHAs were suffering a severe cash crunch in March 2020 when the payment started coming in under the new PDGM payment system. The CARES Act funds were issued in April 2020 which provided a lifeline to keep agencies in business. In the same month, HHA obtained accelerated payments from Medicare equal to 3 months of payments.

Jim further comments that he feels that many have delayed the pain.

“Most HHA just delayed the pain until January 2021, when the RAP payments will be reduced from 20% to 0%.  Agencies will have to come up with an additional 30 days of cash and potentially pay back any unused CARES ACT funds.”

 

Friends, 2021 is less than 4 months away.  You have a chance now to increase your revenue to offset 2021 revenue reductions.  Go check out how www.homecaresales.com can help you!

Want to make it quick and easy to learn more? Reach out to Mike at Mike@homecaresales.com to set up a demo (or go here: https://calendly.com/mike-home-care-sales and secure a time to talk to him)