No, PDGM is not a new disease. It is, instead, the way Medicare now pays for home health care. Shorthand for The Patient-Driven Groupings Model, PDGM is the Trump Administration’s latest effort to reduce Medicare costs. And it appears to be making it much harder for some patients living at home to receive occupational, physical, and speech therapy.

PDGM is an effort to get control of what many in government felt was excessive spending on these therapies. The Medicare Payment Advisory Commission (MedPac) reports that therapy visits grew from 10 percent of home health visits in 1997 to 39% in 2016. That year, Medicare spent about $18 billion on home care for about 3.4 million beneficiaries. Medicare spending for home health care more than doubled between 2001 and 2016.

In 2018, Congress ordered the Centers for Medicare and Medicaid Services (CMS) to eliminate therapy volume as a determinant of home health payments. After much back-and-forth with industry, CMS adopted the PDGM model, which took effect in January.  Remember, these rules apply to skilled home health care by a nurse or therapist, not long-term personal care, which Medicare does not pay for.

New and complicated

PDGM is enormously complex. Like other recent payment reforms, its goal is to pay based on the most appropriate, cost-effective care for individual patients, not simply the volume of procedures. Instead of paying home health agencies for every therapy visit, Medicare now pays based on a complex calculation of a patient’s need.

The problem is that the new system is both new and complicated. And published reports suggest that many home health agencies, afraid that Medicare no longer covers most home-based therapy at all, are responding by stopping the services entirely for many patients. Here is a nice piece from Judith Graham at Kaiser Health News and another from Robert Holly at Home Health Care News.

Under the old system, a physician certified a patient required home health care for up to 60 days and Medicare paid for those services. Payment was adjusted for a patient’s level of need.

PDGM requires home care agencies to calculate each patient’s level of need in a much more granular way. It is based on four basic categories–the patient’s primary reason for receiving home care, their level of functional impairment, other medical conditions they have, whether or not they have been discharged from a facility such as a hospital or nursing home, and how long their episode of care has run. After factoring in all these variables, the home care agency places a patient into one of 432 groups, and Medicare pays for therapy services based on where the patient lands.

In addition, Medicare now pays home care agencies for each 30 days of care instead of 60 day periods. And there are special new payment rules for home health agencies that provide a small number of therapy visits for an individual patient.

More post-acute, less long-term therapy

These changes appear to be increasing incentives for Medicare home care agencies to focus on the post- acute care of patients discharged from hospitals but they are discouraging them from providing longer-term therapy for, say, people with degenerative disease.

Some home health agencies are using alogrithms to figure how much therapy they can provide based on a patients’ characteristics. And industry leaders are encouraging them to stay in the therapy business. But many home care agencies seem to be abandoning the service entirely, laying off staff and walking away from patients.

That does not seem to be what the CMS rule writers had in mind, and it is possible the agency will make some adjustments over time. But for now, a well-intentioned effort to limit a Medicare service that was being overused may be creating significant disruption for both home care agencies and their patients.