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We’re well into 2019, and it seems PDGM (Patient-Driven Groupings Model) is among the most discussed healthcare topics at the moment. From industry trade publications to speakers at national conferences, everyone is talking about how PDGM will affect home health agencies in 2020. The information can be insightful, but it can also be overwhelming. Here is a key-point summary that will help your home health agency prepare for 2020, both financially and operationally.

How Home Health Agencies can prepare for PDGM 


PDGM Financial Implications of PDGM

The obvious concerns with PDGM relates to changes in the structure and methodology of how home health agency reimbursements are handled. By definition, the initiative’s goal is to encourage agencies to focus on outcomes above all other goals. CMS hopes that PDGM will result in better patient outcomes at lower costs.


  • Payments – First, payments will be based on 30 day treatment episodes versus the current 60-day period. The significance of this change is that only the first 30-day episode will be classified as “early” and yield the highest reimbursement rates. Subsequent 30-day episodes will be classified as “late,” with lower reimbursement. Under the current model, the first two 60-day episodes are classified as “early.”
  • Clinical Group Assignment – Agencies will be encouraged to list the highest paying diagnosis code as principal. Secondary diagnoses will allow agencies to claim co-morbidity 30-day periods, which increases reimbursement by up to 20%. Recognized secondary diagnoses codes increase from five to 24, thus allowing for more co-morbidity claims
  • LUPA – (Low Utilization Payment Adjustment) was, and will still be, a double-edge sword depending on an agency’s patient population and practices. But, it’s fair to say that PDGM will mostly encourage agencies to reduce LUPA claims or risk lower overall reimbursement.
  • Therapy – The “Service Use” component of therapy reimbursement is being cut. This change doesn’t completely eliminate the role of therapy. But, it does limit the number of reimbursed visits, which may significantly affect some home health agencies.
  • Referral Source – A dramatic change with PDGM is the classification of referrals as either “Institutional” or “Community.” The former applies to patients who had recent post-acute stays (within 14 days), while others fall under the latter category. This distinction is important for home health agencies, since “Institutional” referrals will reimburse up to $800 more per patient per episode.



 While financial considerations are of first importance to home health agencies, PDGM also presents operational challenges that must be addressed.

  • Care Delivery – Home health agencies must inevitably change certain aspects of their care delivery model as we head into the PDGM era. LUPA, in particular, may prove particularly challenging. Most industry experts expect that nursing visit requirements will increase in order to meet the new threshold. Agencies may need to staff more nurses and fewer therapists.
  • Marketing/Sales Strategy – The distinction between “Institutional” and “Community” referrals (previously addressed) may cause a change in home health agency strategy. Agencies that previously had strong referral streams from “Community” sources will need to quickly build relationships with hospitals.
  • Clinical Documentation – Some experts estimate that PDGM will double the billing workload for home health agencies. Organizations will need to ensure highly-accurate diagnosis coding in order to secure proper reimbursement per the new guidelines. Furthermore, the shorter 30-day episodes and emphasis on co-morbidity adjustments further highlight the need for accurate billing.
  • Nurse/Staff Training – Agency staff, from nurses to office workers, will likely require training to accommodate the demands of PDGM. Nurses may need to learn how to use new EHR or RPM technology, while office teams will likely need education on new coding and documentation requirements.


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Wise planning in 2019 can help prepare home health agencies for the massive PDGM changes scheduled for January 1st 2020.

  • Technology – Home health agencies are still figuring out the exact formula for successfully leveraging technology solutions into their care delivery and business models. However, the pieces are starting to come together. And, it’s clear that technology will play a bigger role in 2020 and beyond.
  • Up-to-date EHR (Electronic Health Records) technology will be critical in the era of PDGM. EHR will help to reduce your staff’s burdensome clinical documentation tasks. It will also ensure that reimbursements are properly billed based on clinical grouping, and that co-morbidity bumps are reflected.
  • RPM (Remote Patient Monitoring) and “Virtual Care” will also enable your agency to operate more cost effectively and can even provide additional reimbursement opportunities. PDGM guidelines will allow for reimbursement on some “virtual visits.” The technology may also help to offset the loss in therapy billing by providing a cost-effective alternative to in-person sessions.
  • Staff – The prospect of higher labor costs can be scary for home health agency owners and management. However, PDGM may warrant additional hires—especially when it comes to clinical documentation. This may be case of not being “penny wise and pound foolish.” Accurate billing will be even more critical once PDGM is in force, and a small investment in staff could yield big returns in reimbursements.


In the end, PDGM presents complex challenges to home health agencies. However, it may also provide opportunity. Forward-thinking companies need to act now and create a plan for 2020. Successes will likely result from technological solutions combined with a realignment of staffing resources.

For more information on PDGM, 60 day summary home health, home health care industry news, or Home Health Software technology, email us at Info@Alorahealth.com



Read the Alora blog to learn more about EHR Software or the Home Health Software industry, including recent news, articles and commentaries, as well as other issues that pertain to Homecare in the U.S and beyond. For more information on our blog, or for questions or feedback, please send us an email to HomeHealthSoftware@AloraHealth.com

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