Top 5 PDGM Changes that Impact the Revenue Cycle


Medicare reimbursement for home health providers will completely change under the Patient-Driven Groupings Model. When the new system takes effect in January 2020, it will require major adjustments to how organizations operate. A new white paper from Axxess provides in-depth detail about the changes and how each stage of the revenue cycle will be impacted by PDGM. For home health providers to thrive under the new model, it will be important to implement new strategies for success. This blog outlines five major changes to the revenue cycle and provides tactics that will make it easier to successfully adapt to the change.

More Frequent Billing

Under PDGM, providers will now have to double the amount of claims they submit in a 60-day episode. The new rules require billing every 30 days. That means a Request for Anticipated Payment (RAP) and a final claim every 30 days. CMS also caused a stir in the industry in July when it proposed reducing the amount of money paid in a RAP. Currently providers receive 50-60% of the anticipated payment; however, CMS has proposed cutting that to just 20%. There is also a proposal to eliminate RAPs entirely beginning in 2021. These changes will impact cash flow, which is why it will become essential for clinical staff to complete documentation in a timely manner. The sooner documentation is complete, the sooner it can be used to submit a claim.

Intake Complexity

Under PDGM, appropriate diagnosis coding will be essential in determining the grouping, which means more details will need to be obtained during the intake process. Receiving more detailed information from the referral source will ensure the diagnosis’ specificity is adequate for the correct grouping. Obtaining additional information for appropriate coding will prevent use of a questionable encounter code and ensure reimbursement. Asking the right questions and collecting additional information at intake will streamline the entire billing process.

Necessary Technology Capabilities

PDGM is a payment model that places greater importance on understanding and managing an agency’s revenue cycle. Software solutions can provide valuable data related to all aspects of the business cycle. Acquiring the correct data can help identify opportunities, and analyzing that data can help isolate potential inefficient processes that can impact revenue resulting from reimbursement delays. Data visualization software can help with running relevant reports and provide greater visibility, but it is important that the correct metrics are identified and monitored to effectively manage the revenue cycle. The right technology will provide a means to measure new operational strategies as they are implemented to ensure the expected positive impact on revenues is achieved. Historical trending can be used to provide predictive analytics that can help agencies position themselves for future growth.

Multiple LUPA Thresholds

The threshold for a Low Utilization Payment Adjustment (LUPA) changes under PDGM, based on the resource grouper. With the new payment model, the LUPA threshold shifts to between two and six visits in each billing period of the episode. As a consequence, a single missed visit in a 30-day period could mean a provider might lose thousands of dollars per episode. Proper scheduling management will ensure LUPA thresholds are identified and reviewed to verify appropriate care plans are applied to each episode. Understanding and managing LUPAs within each group and each patient episode will ensure proper clinical outcomes and maximize cash flows.

Billing Adjustments

Beyond ensuring the correct clinical codes are entered, it’s imperative to make certain accurate admission source information is obtained. The admission source and timing will be determined by information in CMS’s common working file, and the information may not be updated in the common working file at the time of intake. Obtaining additional information for appropriate coding will prevent use of a questionable encounter code and ensure reimbursement. Billing staff need to be trained on how to spot these instances to maintain claim quality.

Prepare for PDGM Now

The implementation of PDGM is just a few months away so it is critical that home health providers begin to train staff on procedures specific to the new model. There are many more strategies for revenue cycle success available in Axxess’ new white paper, “Timing is Everything: The Impact of PDGM on the Revenue Cycle.” Additionally, Axxess is hosting PDGM training seminars nationwide to help providers learn actionable strategies they can implement immediately. A complete list of the dates, locations, and pricing for the seminars is available in our PDGM Resource Center.

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