PDGM: The Hidden Risks of Behavioral Change


Joe Osentoski, BAS, RN-BC

ADR and Appeals Specialist

Gateway Home Health Coding & Consulting LLC


The Centers for Medicare and Medicaid Services (CMS) has issued MLN Matters article SE2005 related to the role of therapy services in the Patient Driven Groupings Model (PDGM). They remind home health agencies that the CMS coverage requirements for therapy services (found in 42 CFR 409.42) have not changed since the implementation of PDGM. They specifically state “The need for therapy services under PDGM remains unchanged.”


While this is true for all home health services and not just therapy, it has received significant attention under PDGM since the payment made for therapy HAS changed. And this change may be driving a therapy utilization change as agencies assess the impact of PDGM on their bottom line. The MLN article is viewed as a warning to home health agencies to carefully assess what they are doing to their therapy use in the new model. In other words, a warning to agencies about the behavioral change that may be happening with therapy.


Well, this begs a question: just what did CMS expect when they removed the single biggest factor in Prospective Payment System (PPS) reimbursement? They caused the behavioral change that they are now commenting on. And while many in home health are commenting on the immediate effect of any change in therapy utilization, there is another risk that agencies may be creating for themselves by altering how therapy is provided.


So far there has been much attention given to the current effect of PDGM on agency reimbursement. The change in the elements that generate the Home Health Resource Group (HHRG) and resulting payment eliminates therapy utilization itself as a payment factor. Since PDGM itself was partly driven by an overall increase in therapy utilization by home health agencies over time, there was a good case to be made that home health agencies did provide services that in addition to addressing patient needs would also maximize agency reimbursement. Now that the specific incentive for therapy service is gone, it clearly follows that therapy utilization will be adjusted to the reality of PDGM HHRG generation. This is a behavioral change.


Now comes the hidden risk of this change: Medical Review. Both the Targeted Probe and Educate (TPE) process and Unified Integrity Program Contractor (UPIC) audits are triggered by “edits.” An edit is some factor in claims billed that has been identified as presenting a risk to the Medicare Trust Fund of wasteful, fraudulent, or abusive billing. In other words, something about an agency’s billing is unusual or not in accordance with similar agencies in its region (usually state).


By significantly changing how much therapy is being provided under PDGM, this can trigger a possible TPE review of 20-40 claims to see what is occurring in these records in 2020 that did not occur in prior (PPS) billing by that agency. A bigger risk is from a UPIC audit to check if prior paid claims should have provided the amount of therapy that was given under PPS. These UPIC audits are done on claims prior paid, and run the risk of an extrapolation of the results to all claims in the review period.


The most common problem in any comparison of PPS to PDGM therapy utilization are the questions:

  • If the agency is providing less therapy per patient under PDGM, was it over utilized under PPS?

  • If the agency is providing less therapy per patient under PDGM, is it being underutilized under PDGM?

Either of these will put the agency’s clinical documentation to the test to support that the proper amount of therapy was provided in each payment model. And given that any review triggered is by definition targeted to look at these questions, this may pose a problem for a successful review outcome.


So making any radical change to how much and how therapy is being provided under PDGM can pose a hidden risk of medical reviews and their inherent financial and compliance implications. In the process of adjusting to the new PDGM payment model, keep in mind that CMS is watching for those behavioral changes that home health said would not happen.


There are many suggestions and comments being offered on how to cope with the revised payment under PDGM. The simplest one is this: provide the home health service the patient needs, consistent with the identified needs, to achieve an optimal outcome from that service. If that is done, then any potential fallout from changes in therapy utilization will be moot.

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