Overview of the Patient-Driven Groupings Model

The Patient-Driven Groupings Model (PDGM) uses 30-day periods as a basis for payment. Figure 1 below provides an overview of how 30-day periods are categorized into 432 case-mix groups for the purposes of adjusting payment in the PDGM. In particular, 30-day periods are placed into different subgroups for each of the following broad categories:

• Admission source (two subgroups): community or institutional admission source
• Timing of the 30-day period (two subgroups): early or late
• Clinical grouping (twelve subgroups): musculoskeletal rehabilitation; neuro/stroke rehabilitation; wounds; medication management, teaching, and assessment (MMTA) – surgical aftercare; MMTA – cardiac and circulatory; MMTA – endocrine; MMTA – gastrointestinal tract and genitourinary system; MMTA – infectious disease, neoplasms,
and blood-forming diseases; MMTA – respiratory; MMTA- other; behavioral health; or complex nursing interventions
• Functional impairment level (three subgroups): low, medium, or high
• Comorbidity adjustment (three subgroups): none, low, or high based on secondary diagnoses.
In total, there are 221233 = 432 possible case-mix adjusted payment groups. The remainder of this overview provides more detail on each PDGM grouping category and additional adjustments to payment that are made within the PDGM.

How Physicians Will Be Impacted Under PDGM


Because the new model reduces the billing cycle for HHAs to 30 day periods agencies will need to have the patient’s certification, POC, and all interim orders signed by the physician much sooner than under the previous payment model.

In order to maintain timely billing and adequate cash flow HHAs will be contacting physicians more frequently and sooner after the patient’s admission to services than in the past.

Physicians should expect plans of care and verbal orders to be sent for signature within one to two days after their completion. If the documents are not returned within one week, HHAs will be contacting the physician’s office. Physicians may also see an increase in visits from agency personnel to obtain signatures on outstanding plans of care/orders.


Under the PDGM, the first 30-day period is classified as early. All subsequent 30-day periods in the sequence (second or later) are classified as late. A sequence of 30-day periods continues until there is a gap of at least 60-days between the end of one 30-day period and the start of the next. When there is a gap of at least 60-days, the subsequent 30-day period is classified as being the first 30-day period of a new sequence (and therefore, is labeled as early). The comprehensive assessment must be completed within five days of the start of care date and updated no less frequently than during the last five days of every 60 days beginning with the start of care date (as currently required by the Medicare Conditions of Participation at 42 CFR 484.55). As a result, information obtained from the Outcome and Assessment Information Set (OASIS) used in the PDGM may not change over the two 30-day periods the OASIS covers. However, if a patient experiences a significant change in condition before the start of a subsequent, contiguous 30-day period, for example due to a fall; a follow-up assessment would be submitted at the start of a second 30-day period to reflect any changes in the patient’s condition, including functional abilities, and the second 30-day claim would be grouped into its appropriate case-mix group accordingly.

Functional Impairment Level

The PDGM designates a functional impairment level for each 30-day period based on the following OASIS items:
CMS estimates a regression model that determines the relationship between the responses for the listed OASIS items and average 30-day period resource use. The coefficients from the regression are used to assign points to a 30-day period. Responses that indicate higher functional impairment and a higher risk of hospitalization are associated with having larger coefficients and are therefore assigned higher points. The points are then summed, and thresholds are applied to determine whether a 30-day period is assigned a low, medium, or high functional impairment level. Each clinical group is assigned a separate set of thresholds. On average, 30-day periods in the low level have responses for the listed OASIS items that are associated with the lowest resource use. On average, 30-day periods in the high level have responses on the above OASIS items that are associated with the highest resource use.

Comorbidity Adjustment

The PDGM includes a comorbidity adjustment category based on the presence of secondary diagnoses. Depending on a patient’s secondary diagnoses, a 30-day period may receive no comorbidity adjustment, a low comorbidity adjustment, or a high comorbidity adjustment. Home health 30-day periods of care can receive a comorbidity adjustment under the following circumstances:
· Low comorbidity adjustment: There is a reported secondary diagnosis that is associated with higher resource use, or;
· High comorbidity adjustment: There are two or more secondary diagnoses that are associated with higher resource use when both are reported together compared to if they were reported separately. That is, the two diagnoses may interact with one another, resulting in higher resource use.
A 30-day period can have a low comorbidity adjustment or a high comorbidity adjustment, but not both. If a 30-day home health period of care does not have reported comorbidities that fall into one of the adjustments described above, there would be no comorbidity adjustment applied.

Determining Case-Mix Weights for the Patient-Driven Groupings Model

The case-mix weight for each of the 432 different payment groups under the PDGM are determined by estimating a regression where the dependent variable is the resource use of a 30-day period and the independent variables are categorical indicators representing the five dimensions of the model described above (timing of a 30-day period, admission source, clinical group, functional impairment level, and comorbidities). Case-mix weights are produced by dividing the predicted resource use for each PDGM payment group by the overall average resource use of all 30-day periods. The case-mix weights are then used to adjust the 30-day payment rate. Figure 2 (Page 5) describes how 30- day periods are paid and when payment adjustments are made.

Additional Payment Adjustments for the Patient-Driven Groupings Model

Payments for 30-day periods with a low number of visits are not case-mix adjusted, but instead paid on a per-visit basis using the national per-visit rates. Each of the 432 different PDGM payment groups has a threshold that determines if the 30-day period receives this Low-Utilization Payment Adjustment (LUPA). For each payment group, the 10th percentile value of visits is used to create a payment group specific LUPA threshold with a minimum threshold of at least two for each group. A 30-day period with a total number of visits below the LUPA threshold are paid per-visit rather than being paid the case-mix adjusted 30-day payment rate. A 30-day period with a total number of visits at or above the LUPA threshold is paid the casemix adjusted 30-day payment rate rather than being paid per-visit.

When a 30-day period of care involves an unusually large number or a costly mix of visits, the HHA may be eligible for an additional outlier payment (See Figure 3). Once the imputed cost of a 30-day period of care exceeds a threshold amount, the HHA receives a payment equal to 80 percent of the difference between the imputed costs and the threshold amount.

Payments would be adjusted if a beneficiary transfers from one home health agency to another or is discharged and readmitted to the same agency within 30 days of the original 30-day period start date. The case-mix adjusted payment for 30-day periods of that type is pro-rated based on the length of the 30-day period ending in transfer or discharge and readmission, resulting in a partial period payment.


PDGM does not change the certification requirements for home health services. A F2F encounter that is related to the primary reason for home health services will continue to be required in order for HHAs to bill for care. The diagnosis on the encounter note does not need to match the primary diagnosis for home health care but the physician encounter must be related to the reason the patient requires home health services.

Agencies need to obtain physician encounter notes that contain information related to why the patient is receiving home health care.


PDGM is designed to encourage, and the federal regulators instruct, agencies to discharge a patient and readmit to home health when ever a patient is transferred to a post-acute care facility (i.e. skilled nursing facility, inpatient rehabilitation facility, long term care hospitals and Inpatient psychiatric facility). This could occur with a direct admission to postacute care or a post-acute care stay after an acute care stay.

This means that the HHA agency will need to submit new plans of care and certifications for home health services more frequently for such patients. The agency may be contacting you for new orders even if the plan of care has not changed.

• The PDGM is a new payment model for the Home Health Prospective Payment System (HH PPS) that relies more heavily on clinical characteristics and other patient information to place home health periods of care into meaningful payment categories and eliminates the use of therapy service thresholds.
• PDGM will take effect January 1, 2020.
• In conjunction with the implementation of the PDGM there will be a change in the unit of home health payment from a 60-day episode to a 30-day period.
• As noted previously, the PDGM will not be implemented until CY 2020.
• However, to provide HHAs with a sense of the payment amount for a 30-day period of care, we estimated that if the PDGM was implemented in CY 2019, the estimated
national, standardized 30-day payment would be: $1,753.68
• This does not include any case-mix or geographic wage adjustment.
• This 30-day payment amount will be updated for CY 2020.

Periods are Grouped by Primary Reason for Home Health under the PDGM
• Clinical groups are intended to reflect the primary reason for HH services
• Defined by the principal diagnosis reported on HH claim
• Twelve total groups used in the PDGM

Periods are Grouped by Functional Impairment Level under the PDGM
• 30-day periods are categorized into one of three functional impairment levels
• Certain OASIS items are used to create the levels

Periods are Grouped by a Comorbidity Adjustment
• The PDGM includes a comorbidity adjustment category based on the presence of secondary diagnoses
• A 30-day period may receive

  • No comorbidity adjustment,
  • Low comorbidity adjustment,
  • High comorbidity adjustment

So What Does the PDGM Mean for Therapy Services?

While there are two clinical groups where the primary reason for home health services is for therapy, therapy can be provided regardless of the clinical group.
• The principal diagnosis helps define the primary reason for home health services but it does not in any way dictate what services should be included in the plan of care.
• Therapy continues to be a valued and needed service under the Medicare home health benefit.
• The physician, in conjunction with the therapist, should develop and follow a plan of care when therapy is deemed reasonable and necessary.
• The national, standardized, 30-day period payment plus the case-mix and geographic wage adjustments is to cover all services identified in the home health plan of care, including therapy services.
• The PDGM does not restrict or limit the types of disciplines provided or the frequency or duration of visits.

• Patients receiving home health services will only receive therapy if they have been discharged from an institutional setting.