News: PDGM implementation leads to home health therapy cuts

Home health agencies across the country are grappling with a significant change in how Medicare pays for services, reported HealthLeaders Media. To qualify for services under the new system, a person must be homebound and in need of intermittent skilled care (less than eight hours a day) from nurses or therapists.

Previously, Medicare's home health rates reflected the amount of therapy delivered: More visits meant higher payments. Now, therapy isn't explicitly factored into Medicare's reimbursement system, the Patient-Driven Groupings Model (PDGM).

Instead, payments are now based on a patient's underlying diagnosis, the presence of other complicating medical conditions, the extent to which the patient is impaired, whether he or she is referred for services after a hospitalization or a stay in a rehabilitation center, and the timing of services. This means that physician documentation now plays a huge role in home health reimbursement, just like it does on the acute care side of healthcare.

Agencies are responding aggressively, according to HealthLeaders Media. They are cutting physical, occupational, and speech therapy for patients. They are firing therapists. And they are suggesting that Medicare no longer covers certain services and terminating services altogether for some longtime, severely ill patients.

Agencies now have a stronger financial incentive to serve patients who need short-term therapy after a stay in the hospital or a rehabilitation facility. At the same time, there are fewer incentives to serve patients who need extensive physical, occupational and speech therapy.

The new system encourages a "holistic" assessment of patients' needs, and there's convincing evidence that home health agencies sometimes provided too much therapy under Medicare's previous system. Between 2000 and 2016, Medicare home health therapy services soared 112%, according to the most recent data published by the Medicare Payment Advisory Commission.

But the risk now is that too little therapy will be offered. The American Occupational Therapy Association is surveying members. Based on 135 responses to date, occupational therapists and assistants are being laid off, asked to decrease the number of visits to clients and directed to provide services for less than 30 days, said Sharmila Sandhu, vice president of regulatory affairs.

In an email to HealthLeaders Media, a spokesman for CMS said the federal agency is "monitoring the implementation of the PDGM, including therapy service provision, at the national, regional, state, and agency level."

"We do not expect home health agencies to under-supply care or services; reduce the number of visits in response to payment; or inappropriately discharge a patient receiving Medicare home health services as these would be violations of [Medicare] conditions of participation," the spokesman wrote.

Editor’s note: This article originally appeared in HealthLeaders Media. To read an ACDIS article focused on setting up a CDI program for home health, click here.