Taking Stock: How the Patient-Driven Groupings Model (PDGM) Has Affected Home Health

November 09, 2021

Jamal Ali


Home health agencies are a hugely important sector of healthcare. They provide a wide array of services including nursing care, social work, aide services and physical, occupational and speech therapy. Licensed professionals assess home health needs and develop a complete care plan for their patients.

While the goal of home health agencies is, of course, to care for their patients, they also have to worry about their bottom line. Prior to 2020, the Centers for Medicare and Medicaid Services (CMS) calculated payment for home health services from a physical assessment and diagnosis claim. Payment was fixed, which meant reimbursement didn’t change regardless of frequency or number of services provided.

However, therapy services were handled differently. Because agencies were able to charge per therapy visit, most agencies turned to a therapy-based model. This company-focused model frustrated many nursing organizations.

Enter the Patient-Driven Groupings Model (PDGM), a huge change to home health that went into effect at the beginning of 2020. It eliminates the therapy-driven model and adjusts the way agencies are reimbursed in a way that better benefits patients.

After a year of PDGM, what has the industry learned?

More agencies are taking a patient-centric approach. They now place more emphasis on looking at patient information on the front end – initial assessments, health history, recent diagnoses, etc. – to predict what services a patient might need. Agencies that are thriving in this new payment model are looking at long-term goals and combining interdisciplinary groups to give their patients the care that they need and deserve.

How did the pandemic affect home health?

Telehealth services increased tremendously due to the pandemic, which has resulted in financial changes to the industry. For some services, telemetry allows for quality patient care without the financial burden of physical visits. Additionally, thanks to technological advancements, telemonitoring no longer requires the specialized equipment that was necessary when the technology was first introduced. In fact, many systems allow remote monitoring to be done via cell phone or iPad.

Although reimbursement is not currently available for telehealth in home health, industry experts expect it to be a continued point of discussion and eventuality.

What’s next for home health?

CMS continues to monitor the payments and outcomes of home health agencies while making annual adjustments to the calculations of reimbursement claims. It’s also testing a value-based care model in five states. This model rewards agencies with higher reimbursements for improved quality and patient outcomes.

With the new Patient-Driven Groupings Model, CMS is sending a message to home health agencies: prioritize your patients and improving the care you provide.

Stay up-to-date on the nursing industry and patient care best practices. Explore American College of Education’s fully online nursing programs.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of American College of Education.
Jamal Ali
Jamal Ali, MSN

Jamal is a Registered Nurse and the director of healthcare services for Briarwood Home Health and Interim Hospice. He is pursuing his master's in nursing from ACE, with a focus in nursing administration.

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