Medicare Home Health Prospective Payment System: The Patient Driven Groupings Model

Audiology and Speech-Language Pathology Services

ASHA, APTA, AOTA, and CMS held a free webinar "Demonstrate Value of Therapy Services Before Home Health Payment Changes Begin" to help you prepare for the transition. 

Listen to the Recording

Home health (HH) agencies that provide services—including speech-language pathology services—to Medicare beneficiaries are paid under a prospective payment system (PPS) through Part A of the Medicare benefit. HH PPS policies are reviewed and updated annually and are effective for the calendar year (January 1 – December 31). As of January 1, 2020, Medicare pays for home health services via a new value-based payment model known as the Patient Driven Groupings Model (PDGM). Under PDGM, many of the policies and regulations dictating the requirements for home health coverage, such as consolidated billing and requirements to provide all medically necessary services to patients, will remain the same. Therefore, it is important to understand how PDGM relates to longstanding requirements that are not changing. 

The most significant change under PDGM is that payment will no longer be driven by the number of therapy visits provided, instead, payment is based on patient characteristics. This will lead to changes in the way SLPs will demonstrate their value in this setting and could lead to unintended administrative mandates in the way SLPs deliver care to patients. More technical information on PDGM can be found below.    

The Centers for Medicare & Medicaid Services (CMS) outlines regulations and guidance related to the home health benefit in Chapter 7 of the Medicare Benefit Policy Manual [PDF] and Chapter 10 of the Medicare Claims Processing Manual [PDF]. Additional policies may be outlined in local coverage determinations from Medicare Administrative Contractors (MACs).

Audiology services are excluded from the HH PPS and may be billed independently by the audiologist under the Part B benefit ( Medicare Physician Fee Schedule). 

On this page:

Qualifying for the Home Health Benefit

The Part A home health benefit is paid in 60-day episodes and includes speech-language pathology, physical therapy, occupational therapy, skilled nursing, home health aide, and/or medical social services. The agency is responsible for providing all of the services a patient requires. If a Medicare beneficiary requires fewer than four visits during the 60-day episode, the home health agency will receive a lower payment, known as a low utilization payment (LUPA), to reflect the lower cost of the short episode. (See also: Consolidated Billing)

A critical factor in qualifying for a Part A episode of home health services is a physician’s determination that the patient is confined to the home, or “homebound.” This means the patient has

  • an illness or injury and requires the aid of supportive devices, special transportation, or the assistance of another person to leave their residence; or
  • a condition that requires the person to stay in the home; and
  • an inability to leave the home or leaving requires considerable and taxing effort. 

A patient that is certified as "homebound" may still leave the home for specific reasons, such as attending religious services or going to medical appointments.

Additional requirements to qualify for a Part A episode for home health services are

  • a face-to-face physician visit with the patient; and
  • a plan of care established by the certifying physician; and
  • a need for skilled nursing on an intermittent basis; or
  • a need for physical therapy; or
  • a need for speech-language pathology services.

A continuing need for occupational therapy can maintain eligibility after one of the initial qualifying services listed above terminates.

For each therapy discipline required for the patient, the therapist must assess the patient’s function at the initial visit and reassess function every 30 days. The amount, frequency, and duration of therapy must be reasonable and supported by documentation.

Part B Services

If a Medicare beneficiary does not qualify for the Part A home health benefit, their services may be paid under the Part B benefit through the Medicare Physician Fee Schedule. For example, if the patient is not deemed "homebound" by a physician, the services may be covered under Part B. In these instances, all of the Medicare Part B coverage criteria apply (e.g., multiple procedures payment reduction [MPPR], annual financial limitations on outpatient therapy services). These services could be provided by the home health agency or by a speech-language pathologist (SLP) in private practice.

How Services Are Reimbursed

The Outcome and Assessment Information Set (OASIS)assessment tool is completed when the patient is admitted. The OASIS places a patient into a diagnostic category, and the agency receives a payment for all of the services that the patient requires. The services are billed through the agency rather than the individual clinician(s) who rendered the services. Current Procedural Terminology (CPT®) codes are not used for billing purposes under the HH PPS. However, they may be used to track services for administrative and productivity purposes. Each agency has its own criteria for tracking services and determining productivity, but these rules are separate from payment policy. 

While the payment system changes January 1, 2020, to the PDGM, this system is being implemented in a budget neutral manner meaning that the agency will still receive the same amount of money as it did under the previous system. However, the financial incentives for how the agency uses these funds may shift. For example, the funds could be used for more nursing services than therapy services.  

Until January 1, 2020, an agency will receive additional reimbursement based on the number of therapy minutes provided to a patient. There has been concern that this payment system may have resulted in some providers or agencies providing medically unnecessary care. Under PDGM, the financial incentives will change, and clinicians may be pressured to restrict service delivery. Regardless of the type of payment system in place, it is critical that services provided are clearly documented and are reasonable, necessary, and individualized to the needs of each patient. 

Consolidated Billing

Home health agencies are subject to consolidated billing. This means that the agency must provide and bill for all Part A and Part B services provided to the patient. Consolidated billing is a mechanism established by CMS to prevent double billing for services. For example, if the agency does not have an SLP on staff, they must contract with an SLP to provide the necessary services. In this scenario, the agency would bill Medicare for the SLP’s services and pay the SLP a negotiated rate. CMS does not dictate the amount a contract employee is paid. 

To ensure consolidated billing is implemented appropriately, beginning in 2022 home health agencies will need to complete a notice of admission (NOA) within 5 days of admitting a patient to a home health episode or face a reduction in payment. The NOA replaces the request for anticipated payment (RAP) which proved to be an ineffective method for ensuring home health agencies complied with their obligations under consolidated billing. 

Considerations for SLPs in Private Practice

Consolidated billing creates unique challenges for SLPs in private practice who may provide services to Medicare beneficiaries in their homes. When a patient is under a home health plan of care through a home health agency, all therapy services are billed by and paid to the agency and may not be separately billed by the private practice SLP. A private practice SLP may not always be aware that a patient is being cared for by a home health agency and could inadvertently deliver services that are subsequently denied by Medicare because of consolidated billing. In these instances, there is little recourse for the SLP in private practice, as the patient cannot be billed for these services. SLPs in private practice who find themselves in this situation could approach the home health agency for payment, but the agency is under no obligation to reimburse the SLP.

It is critical that the SLP in private practice does everything they can to confirm that a Medicare beneficiary is not receiving services through a home health agency. An SLP can take the following steps to attempt to determine a patient’s status prior to initiating services:

  • Ask the patient and/or caregiver(s) if they receive any health care services in their home.
  • Verify the patient’s benefit through the local MAC’s interactive voice response (IVR) system or the Medicare Common Working File (CWF).

It is important to note that home health agencies only submit claims once every 60 days. As such, it is possible that the IVR and CWF systems may not yet reflect that a patient is under a home health plan of care. However, patient self-reporting, the IVR, and the CWF are the only systems available at this time to check on the homebound status of a patient. Contact your local MAC to access the IVR or CWF. When the new NOA requirement is made effective in 2022, there will be a financial penalty applied to agencies that do not claim patients in a timely fashion 

If a patient under a home health plan of care through a home health agency is not receiving medically necessary speech-language pathology services, they should address this directly by requesting these services through the agency, switching to a different home health agency, and/or lodging a complaint with Medicare. 

A private practice SLP may treat a Medicare beneficiary in the home once it is confirmed that the patient is not receiving services through a home health agency. SLPs who provide services in patients’ homes are not eligible for reimbursement for travel costs from Medicare or the patient. When submitting claims, use Place of Service Code 11 to reflect that services were delivered in the patient’s home. 

Student Supervision Requirements

Under Medicare, student supervision requirements vary by practice setting and whether services are covered under Part A or Part B of the Medicare benefit. For example, Medicare is explicit that student services under Part B require 100% direct supervision of the licensed SLP. Conversely, Medicare has largely been silent on the level of supervision required under Part A. 

When determining the appropriate level of supervision of a student, the supervising SLP should consider payer policy, the requirements of the university from which they have received the student intern, state law, ASHA standards, the needs of the patient, and the skills of the student. It is possible that some patients may not be suitable for treatment by a student, regardless of the level of supervision. Additionally, some students may require a greater degree of supervision than their counterparts with more experience. 

See also: Medicare Coverage of Students & Clinical Fellows for Speech-Language Pathology Services

Changes to the Home Health Payment System

Public and private health insurers, including Medicare, are moving toward alternative payment models (APMs) in an effort to reduce costs and improve the quality of patient care. APMs are alternatives to traditional fee-for-service payment. Under APMs, all health care providers—including audiologists and SLPs—are held accountable for the increased quality and lower costs of the care they provide. CMS is shifting the HH PPS to an alternative payment model, as outlined below.

Patient-Driven Grouping Model (PDGM)

In 2018, CMS finalized a major overhaul to the HH PPS to address concerns that a payment system based on the volume of services provided (e.g., therapy visits) creates inappropriate financial incentives. This revised payment methodology—the Patient-Driven Grouping Model (PDGM)—is driven by the patient’s clinical characteristics rather than amount or types of services provided. The PDGM will be effective January 1, 2020. 

Additionally, Congress mandated that therapy be removed as a determinant of payment and that the current 60-day episodes be split into 30-day payment periods. This obligates CMS to implement two of the key elements of the PDGM, also by 2020.

In addition to these Congressional mandates, key provisions of the final rule include:

  • Payment based on the source of admission, either from the community or from an institution such as an acute care inpatient hospital
  • Payment increases of up to 20%, based on the presence of comorbidities
  • Payment adjustments based on three levels of function (low, medium, or high)
  • Payment modifications based on whether the episode is considered “early” (the first 30-day payment period) or “late” (each subsequent 30-day payment period)
  • Calculation of the cost of providing care using Medicare cost reports
  • Payment based on one of 12 clinical categories for which the patient is admitted to home health, including:
    • Musculoskeletal Rehabilitation (to include speech-language pathology)
    • Neuro/Stroke Rehabilitation (to include speech-language pathology)
    • Wounds-Post-Op Wound Aftercare and Skin/Non-Surgical Wound Care
    • Complex Nursing Interventions
    • Behavioral Health Care (including Substance Use Disorders)
    • Medication Management, Teaching and Assessment (MMTA)- Surgical Aftercare, including:
      • MMTA- Cardiac/Circulatory
      • MMTA- Endocrine
      • MMTA- GI/GU
      • MMTA- Infectious Disease/Neoplasms/Blood-forming Diseases
      • MMTA- Respiratory
      • MMTA- Other

Despite reliance on clinical categories as the driver of payment, Medicare regulations (e.g. conditions of participation) make clear that patients must receive all medically necessary services, regardless of the clinical category to which they are assigned. As stated in the 2019 HH PPS proposed rule [PDF]:

“While these clinical groups represent the primary reason for home health services during a 30-day period of care, this does not mean that they represent the only reason for home health services. While there are clinical groups where the primary reason for home health services is for therapy (for example, Musculoskeletal Rehabilitation) and other clinical groups where the primary reason for home health services is for nursing (for example, Complex Nursing Interventions), home health remains a multidisciplinary benefit and payment is bundled to cover all necessary home health services identified on the individualized home health plan of care. Therefore, regardless of the clinical group assignment, HHAs are required, in accordance with the home health CoPs at § 484.60(a)(2), to ensure that the individualized home health plan of care addresses all care needs, including the disciplines to provide such care.”

ASHA actively engaged in the development of the PDGM through formal written comments, meetings with CMS staff, and with speech-language pathology member representation on technical expert panels to ensure a move to such a payment model represents appropriate clinical practice. However, CMS indicated that there was a lack of data supporting the inclusion of more conditions in the payment model. PDGM is based on historic claims and OASIS data and according to CMS, this data was often incomplete (e.g.; it lacked comprehensive diagnosis coding including speech-language pathology treatment diagnoses, incomplete OASIS data). The incomplete data prevented CMS from including more conditions which resulted in a payment model that is not reflective of the clinical complexity of patients and their therapy needs. Moving forward, complete and accurate completion of the OASIS and diagnosis coding on claims will be imperative to effectuate changes to PDGM.

What can I expect?

Since payment is not driven by the number of therapy visits, SLPs might be instructed to change their practice patterns. SLPs should be willing to assist in the identification of efficiencies to improve the quality of care for patients and to ensure the financial viability of the agency but not at the expense of patient care or in violation of federal laws and regulations and professional ethical standards. Some examples of inappropriate administrative mandates SLPs might encounter under PDGM include:

  • Pressure to front-load therapy services within the first 30-day payment period to avoid extending into a second 30-day payment period when the reimbursement is lower. This pressure to frontload services is being applied even though it is not clinically indicated for the patient but rather is driven by a desire to maximize reimbursement or mitigate perceived financial losses.
  • Pressure to discharge a patient within the first 30-day payment period even if the patient needs therapy beyond the first 30-days to mitigate perceived financial losses.
  • Pressure to keep a patient on beyond the first 30-day payment period even though therapy is no longer medically necessary in order to achieve additional payment.
  • Pressure to accept more patients admitted from institutions (e.g. hospitals) or to accept fewer patients admitted from the community. This is because under PDGM institutional admissions receive a high reimbursement than community admissions.
  • Pressure to pick up as many patients as possible so that the volume of individual patients compensates for the “financial loss” that the volume of visits no longer provides.

If you are facing such pressures, it is important to discuss these concerns directly with your leadership (e.g. executive director or nurse manager). If these cannot be resolved internally, you need to consider reporting them to the appropriate oversight bodies, for more information on this process see: ASHA’s Consensus Statement [PDF] and Compliance Reporting [PDF] documents.

Since PDGM was designed to change the payment incentive from volume to value and address concerns regarding overutilization, SLPs may see changes in employment including layoffs, changes in salaries, or changes from full-time to part-time status. 

How can I respond?

Under PDGM there are several ways you can demonstrate your value to your employer, below are some examples:

  • SLPs help prevent costly health care conditions, such as aspiration pneumonia, that can occur after admission to the home health episode. Due to consolidated billing, once these conditions occur the agency is required to provide all services the patient needs.
  • SLPs can assist in the completion of the OASIS, particularly as it relates to function, in order to determine when the agency is eligible for additional reimbursement.
    • Item M1700 of the OASIS deals with the cognitive function of the patient. When coded accurately, this justifies the SLP’s involvement in the plan of care.
    • Additionally, if a patient’s cognitive impairment is accurately identified and coded on the OASIS, the patient could be removed from the star ratings system used by consumers to select a home health provider.
  • SLPs can assist in the identification of quality improvement initiatives including:
    • Quality metrics in the Medicare Home Health Quality Reporting Program (QRP) include re admissions. How can SLPs identify patients at risk for poor outcomes such as re admissions or falls?
    • What educational programming has your agency recently provided? It could indicate a quality deficiency they want to address, and you might be able assist.

See also: Overview of the Home Health Groupings Model [PDF]

Improving Medicare Post-Acute Transformation (IMPACT) Act

In 2014, Congress passed the IMPACT Act in an effort to better understand the differences in payments and outcomes among four post–acute care settings: skilled nursing facilities (SNFs), inpatient rehabilitation facilities (IRFs), home health, and long-term care hospitals (LTCHs). The IMPACT Act requires the standardization of data across the four post-acute care settings. Currently, each setting has its own distinct assessment tool (home health agencies use the OASIS). These separate assessment tools do not collect or track data in a consistent manner, making it difficult to evaluate the distinctions between the settings. However, CMS has already begun—and will continue—to change the assessment tools in order to comply with the mandates of the IMPACT Act. The Act also requires reports examining the possibility of implementing a unified PPS across all four settings.

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Questions? Contact ASHA’s health care policy team at reimbursement@asha.org

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