Being Prepared for PDGM: A Closer Look at the Changes

Home health agencies need to start preparing for the biggest shift in reimbursement since the introduction of PPS in the late 90s. The Patient Driven Groupings Model (PDGM) is going to introduce home health agencies to new scrutiny and completely change the way your agency operates.

As discussed in previous editions of Home Health Today, reimbursement is going to be based on a 30-day episode and therapy utilization (visits) are removed from the payment factor. Rather than base your reimbursement on volume of patient care, PDGM is going to focus on the needs of the patient.


The first 30 days of a patient’s episode is going to be considered an early period and each episode after this would be a late episode. To qualify for a reset in the early vs. late periods, patients would need to remain off service for at least 60 days. This is an important concept to make sure staff are aware of. The proposed reimbursement for an early episode is $2,114 but a late episode is set at just $1,312.

Referral Sources

Where do your patients come from?  We’ve always talked about the lucrative and quality referrals from hospitals, but now CMS believes that institutional patients carry more weight than those from the community.  Under the new model, a patient that is discharged from a hospital or skilled nursing facility is going to be reimbursed at a higher and better rate than that of a patient that is referred and admitted from a physician’s office. To qualify as an institutional patient under PDGM, the patient will need to have been discharged from a facility within 14 days of being admitted to an agency.


The patient’s diagnosis is going to be a driving factor in reimbursement with PDGM. The principle diagnosis is going to determine which of the clinical groups the patient falls into. These groups are designed to determine if the patient will meet the qualifications to be a legitimate home health patient. The 6 groups are:

  • Musculoskeletal Rehab
  • Neuro/Stroke Rehab
  • Wounds, Post-Op Aftercare, and Skin/Non-Surgical Wound Care
  • Behavioral Health
  • Complex Nursing Interventions
  • Med Management, Teaching and Assessment (MMTA)

Patient diagnosis would need to fit in the predetermined list that CMS has approved, or the claim could be rejected. Agencies would need to review the documentation and admission then resubmit.

Functional Level

Utilizing current OASIS measures, certain questions familiar to you will still be present. Points will be based on whether the patient’s function is low, medium or high. The 8 OASIS items currently, include:

  • M1033 – Risk of Hospitalization
  • M1800 – Grooming
  • M1810 – Dress Upper Body
  • M1820 – Dress Lower Body
  • M1830 – Bathing
  • M1840 – Toilet Transfers
  • M1850 – Transferring
  • M1860 – Ambulation

Stay tuned for our next post, which will discuss changes to billing and reimbursement under PDGM!