How Home Health Agencies Can Stay Compliant with PDGM Billing Requirements

The Patient-Driven Groupings Model (PDGM) introduced by the Centers for Medicare and Medicaid Services (CMS) in January 2020 fundamentally altered the way home health agencies (HHAs) approach billing. Designed to improve payment accuracy, PDGM requires that HHAs adapt to a more complex system, where payment is based on patient characteristics and clinical information rather than volume of visits. However, maintaining compliance with the stringent PDGM billing requirements can be a daunting task. Failure to adhere to these guidelines can result in audits, denied claims, and financial losses.

In this blog, we will discuss key strategies that home health agencies can use to stay compliant with PDGM billing requirements. By following these tips, HHAs can ensure that they are navigating the system effectively, reducing the risk of denials, and maintaining their financial health.

1. Understand the Core Structure of PDGM

The first step in ensuring compliance is a thorough understanding of the PDGM structure. PDGM groups patients into 432 payment categories based on two primary factors:

• Principal diagnosis: This refers to the primary reason for the patient’s need for home health services.
• Case mix adjustment: This takes into account several elements such as the patient’s clinical severity, functional status, comorbidities, and other factors.

Additionally, the PDGM model uses a 30-day episode of care, replacing the previous 60-day episode structure. Under PDGM, reimbursement rates are determined by the patient’s diagnosis, functional status, comorbidities, and whether the episode is the first or subsequent episode of care.

Tip:

Home health agencies must ensure that their clinical and administrative teams are aligned with the definitions and classifications used in PDGM. Keeping up to date with changes in coding requirements is crucial. Agencies should invest in ongoing training for clinical staff, coders, and billers.

2. Accurate Diagnosis Coding is Essential

Accurate and specific diagnosis coding is one of the most critical components of PDGM compliance. The principal diagnosis must reflect the reason for the patient’s need for home health services. Inaccurate or generalized coding can lead to payment delays, underpayments, or denials.

In PDGM, diagnosis codes must adhere to the guidelines set forth in ICD-10. It’s especially important to ensure that the codes used are as specific as possible to the patient’s condition. Under PDGM, the principal diagnosis will significantly affect the grouping of the patient and the corresponding payment rate.

Tip:

Ensure your clinical staff is regularly trained in accurate ICD-10 coding. Having certified coders on the team is highly recommended. For each patient, the agency should document a comprehensive history and reason for care to support the selected ICD-10 codes.

3. Proper Use of Comorbidity Adjustment

Under PDGM, comorbidities are another key factor that affects the payment adjustment for each patient. The presence of specific comorbidities can significantly impact the reimbursement rate for a given patient. CMS provides a list of comorbidities that can impact the case mix index, and these must be carefully documented in the patient’s medical record.

Comorbidities also play a role in the case mix adjustment that influences the patient’s clinical severity score, which impacts reimbursement.

Tip:

Carefully document all comorbid conditions and ensure that the diagnosis codes used accurately reflect these conditions. Even minor comorbidities can have an impact on reimbursement. It’s essential that these conditions are documented in the patient’s plan of care, and coders need to capture these accurately in the claims process.

4. Timing and Accuracy of OASIS Data

The Outcome and Assessment Information Set (OASIS) assessment is another critical element in PDGM. The OASIS data must be collected accurately and submitted in a timely manner. This data is used to assess the patient’s functional status and severity, which are key components of the PDGM case mix model.

CMS relies heavily on OASIS data to determine whether the patient qualifies for home health services and to adjust payment rates based on the clinical severity of the patient. Accurate OASIS responses ensure that HHAs are reimbursed appropriately for the level of care the patient requires.

Tip:

HHAs must ensure that clinicians are trained to complete OASIS assessments thoroughly and accurately. It’s crucial that the OASIS is completed as early as possible in the episode, as any errors or missing information could delay the claim or result in a payment reduction. Having a dedicated OASIS specialist can help reduce the risk of errors.

5. Ensure Accurate Functional Status Documentation

Functional status documentation is one of the key components of PDGM that can affect both case mix grouping and payment. A patient’s level of functioning, including their ability to perform activities of daily living (ADLs), will influence the payment category.

CMS utilizes a scoring system to assess functional impairment based on the OASIS data. The scoring of each functional limitation (e.g., ambulation, self-care, etc.) directly impacts the payment adjustment.

Tip:

Carefully evaluate and document each patient’s functional status. Clinicians should perform detailed assessments of a patient’s ability to perform ADLs, and this data should be reflected in the patient’s OASIS documentation.

6. Track and Manage Patient Episodes Effectively

PDGM operates on 30-day episodes of care. This shorter episode length introduces additional complexity for home health agencies in managing patient episodes and ensuring that all billing requirements are met. The shift from 60-day to 30-day episodes means that agencies must be diligent about accurately tracking the start and end dates of each episode.

Additionally, agencies must also track whether a patient is in their first or subsequent episode of care. Subsequent episodes may have different billing rates, and the requirements for documentation may differ.

Tip:

Invest in a reliable episode management system that helps track each patient’s episode, episode length, and the transition from one episode to the next. Having accurate records will help prevent billing errors and ensure that the agency submits timely and accurate claims.

7. Utilize Advanced Billing Systems

Home health agencies should rely on advanced billing systems that integrate with their patient records and OASIS data. These systems can help streamline the billing process and reduce the chance of error. They can also help identify common mistakes such as incorrect diagnosis codes, missing OASIS information, or improper billing for non-covered services.

Moreover, these billing systems can help ensure that the agency stays up to date with ever-changing coding requirements, reimbursements, and other PDGM-related factors.

Tip:

Invest in a sophisticated billing and coding software solution that is specifically designed for home health agencies. These systems can assist in verifying eligibility, submitting claims, and tracking denials. They will also help ensure that all data entered is consistent with CMS regulations.

8. Audit Claims Regularly

Routine internal audits are essential for identifying any errors in the claims process before they escalate into larger problems. Regular audits help identify discrepancies in diagnosis coding, OASIS data entry, and other documentation. Furthermore, proactive audits can help identify potential fraud or abuse risks before they are flagged by CMS.

A key area for auditing is ensuring that the correct payment group is selected based on the patient’s diagnosis, case mix, and OASIS data. Billing mistakes in these areas are often among the most common reasons for denials and audits.

Tip:

Set up a process for periodic internal audits. Consider using a third-party audit firm to evaluate your billing practices and identify any potential vulnerabilities. Auditors can also assist in identifying staff training opportunities to improve accuracy.

9. Educate and Train Your Staff

Ongoing education and training are crucial for maintaining compliance with PDGM requirements. Clinical staff, coders, and billers must all be well-versed in PDGM guidelines, including how to accurately complete OASIS assessments, select the correct diagnosis codes, and manage patient episodes.

Training should not be a one-time event. Instead, it should be a continuous process, especially as regulations and guidelines change over time.

Tip:

Hold regular training sessions and workshops to ensure all staff members are familiar with the most current PDGM guidelines. Encourage communication and collaboration among clinical, billing, and coding teams to ensure everyone is on the same page regarding documentation and billing practices.

10. Stay Informed on Regulatory Changes

PDGM is a relatively new model, and CMS has made several adjustments to the rules since its inception. Home health agencies must remain vigilant and stay informed of any regulatory changes, updates, or new guidance from CMS. Failure to adapt to these changes can lead to errors in billing and potential denials.

Tip:

Subscribe to CMS newsletters and attend webinars or industry conferences to stay up to date with changes in PDGM regulations. Joining professional organizations for home health providers, such as the National Association for Home Care & Hospice (NAHC), can also provide valuable resources and updates.

Conclusion

PDGM compliance requires home health agencies to be diligent, proactive, and constantly adaptable to changing regulations. By understanding the key aspects of PDGM, training staff regularly, leveraging technology, and conducting audits, agencies can reduce their risk of billing errors and claims denials. With the right approach, home health agencies can navigate the complexities of PDGM successfully and continue to provide high-quality care to their patients while maintaining financial stability.