Top Challenges Home Health Agencies Face with PDGM Billing and How to Overcome Them

The Patient-Driven Groupings Model (PDGM) was introduced by the Centers for Medicare & Medicaid Services (CMS) on January 1, 2020, as part of an effort to overhaul the home health payment system. The goal of PDGM is to shift the focus from volume-based payments to a system that reflects patient characteristics, leading to more accurate payments for services rendered. However, the transition to PDGM has presented numerous challenges for home health agencies (HHAs), particularly in areas related to billing, coding, and timely submission of claims. These challenges can negatively impact reimbursement rates, cash flow, and the overall financial health of the agency.

In this blog, we will explore the top challenges that home health agencies face with PDGM billing, particularly with regard to coding accuracy, timely submission, and the impact of patient data. Additionally, we will provide actionable solutions for mitigating these challenges.

1. Coding Accuracy and Its Impact on PDGM Billing

Under PDGM, patient classification is heavily influenced by diagnosis codes, particularly the primary diagnosis code, and how it is assigned to the patient. Coding accuracy is one of the most critical components of PDGM billing because it directly affects reimbursement and, ultimately, the agency’s bottom line. Incorrect or incomplete coding can lead to claim denials, reduced reimbursement, or even audits.

Common Coding Challenges:

• Misclassification of Diagnosis Codes: Inaccurate coding can occur when an agency misinterprets the patient’s primary diagnosis or fails to capture all relevant comorbidities that affect the patient’s care.
• Unbundling of Diagnosis Codes: The PDGM model groups patients based on specific diagnostic codes. Failure to properly bundle or unbundle codes may result in incorrect patient groupings, leading to underpayment or overpayment.
• Lack of Specificity: PDGM requires highly specific coding. Generic codes or codes that do not fully capture a patient’s condition or diagnosis can result in incorrect patient classification and reduced reimbursement.

Solutions:

• Invest in Staff Training: Home health agencies must invest in regular and thorough training for their coders to ensure they are familiar with the nuances of PDGM coding. Coders should stay up-to-date with the latest coding guidelines, including the ICD-10 codes, to avoid mistakes and ensure accurate coding.
• Use Technology for Assistance: Advanced coding software can help reduce human error and improve accuracy. Many coding platforms provide real-time coding suggestions, help coders select the most accurate code, and flag potential issues.
• Conduct Regular Audits: Regular internal audits of patient charts and billing codes can help identify areas of improvement in coding accuracy. These audits can help catch errors before claims are submitted, reducing the likelihood of denials and payment delays.

2. Timely Submission of Claims

Timely submission of claims is crucial for cash flow and revenue generation. With PDGM, the timeline for submitting claims is even more critical due to the payment model’s reliance on timely, accurate data entry and claims submission. Home health agencies are required to submit a claim as soon as possible after the 30-day episode of care is completed. Failure to submit claims in a timely manner can lead to delayed payments, which can disrupt agency operations and impact the ability to cover costs.

Common Issues:

• Delayed Documentation: Timely submission of claims relies on timely completion of documentation. If clinicians or staff members fail to complete necessary documentation on time, it delays the billing process.
• Unresolved Payment Issues: Delays in submitting claims can also occur when agencies wait for payment issues to be resolved before submitting claims. This can create backlogs of unpaid claims and complicate cash flow.
• Disorganized Billing Process: Inconsistent or fragmented billing processes within an agency can lead to delays in claims submission, with claims often getting lost or held up due to missing information.

Solutions:

• Create Standardized Documentation Procedures: Home health agencies should establish clear and standardized procedures for documentation, ensuring that all clinicians complete their paperwork in a timely and organized manner. Electronic health records (EHRs) can facilitate quicker documentation and reduce the chance of errors or omissions.
• Automate Billing Systems: Implementing automated billing software can speed up the claims submission process by streamlining documentation review and submission. Automation reduces human error and ensures that claims are submitted as soon as they are ready.
• Set Internal Deadlines: In addition to external Medicare deadlines, home health agencies should set internal deadlines for the completion of documentation and claims submission. Having these internal checkpoints can help keep the process on track and reduce the likelihood of delayed submissions.

3. Patient Data and Its Impact on PDGM Reimbursement

Patient data is the foundation of PDGM billing. Accurate and comprehensive patient data, including diagnoses, comorbidities, and clinical conditions, directly impacts the way patients are grouped and ultimately determines how much reimbursement an agency receives. Home health agencies must be diligent in capturing complete and correct patient data to ensure the right reimbursement rates under PDGM.

Common Issues:

• Incomplete Patient Assessments: Incomplete or incorrect assessments of patients’ clinical conditions can result in incorrect data entry, leading to inaccurate patient groupings.
• Failure to Capture Comorbidities: Under PDGM, the patient’s comorbidities play a role in determining payment. Agencies that fail to document or capture these conditions will face lower reimbursement rates because they may not fully reflect the complexity of care required.
• Errors in OASIS Data: The Outcome and Assessment Information Set (OASIS) is an essential data collection tool used to capture clinical and demographic information about patients. Mistakes in OASIS assessments, such as incorrect data entry or failure to update information, can lead to incorrect PDGM classifications.

Solutions:

• Implement Comprehensive Assessment Procedures: Home health agencies should have a clear, structured process in place to conduct thorough patient assessments, ensuring all relevant diagnoses and comorbidities are captured accurately.
• Train Clinicians to Identify Comorbidities: Clinicians should be trained to identify and document all relevant comorbidities that may affect the patient’s care. This ensures that the billing reflects the full extent of care required and avoids underpayment.
• Utilize OASIS Reviews: Regularly reviewing OASIS assessments before submission is key to ensuring that all relevant patient data is accurately captured. Agencies can implement internal quality control procedures to verify OASIS data before submitting it to CMS.

4. Denial Management and Appeal Processes

Denial of claims remains one of the most significant challenges that home health agencies face under PDGM. Denials can occur due to coding errors, incomplete documentation, or issues with patient data, and they can significantly disrupt revenue flow. A claim denial can result in a lengthy process to resolve the issue, requiring substantial time and resources.

Common Issues:

• Frequent Claim Denials: Home health agencies may experience frequent claim denials due to improper coding, documentation errors, or mismatched patient data. This leads to delays in payments and frustration among staff and leadership.
• Lack of Knowledge of Appeal Processes: Some agencies lack an understanding of how to properly appeal denied claims. Without a structured process in place, they may miss opportunities to recoup payments for services already provided.

Solutions:

• Develop a Denial Management Process: Agencies should establish a comprehensive denial management system that includes tracking denials, identifying root causes, and taking action to resolve issues. Having a dedicated team to focus on claim denials can ensure that denied claims are addressed promptly.
• Invest in Staff Training on Appeal Procedures: Staff members should be trained on how to handle denied claims and the proper appeal procedures. By understanding CMS guidelines and appeal timelines, agencies can improve their chances of successfully overturning denials.
• Use Data Analytics: Data analytics can help identify patterns in claim denials, enabling agencies to pinpoint areas where they are consistently failing. Using this data can help agencies improve their practices and reduce future denials.

5. Adapting to Regulatory Changes

The home health industry is constantly evolving, and regulations around billing and reimbursement continue to shift. This is especially true with PDGM, as CMS periodically makes updates to the model, further complicating the process for HHAs. Staying on top of regulatory changes and adjusting billing practices accordingly can be a significant challenge for agencies.

Common Issues:

• Inconsistent Updates: Regulatory updates to PDGM may not be communicated clearly, leading to confusion about what changes need to be implemented. Without clear guidance, agencies may inadvertently continue to follow outdated billing practices.
• Complex Documentation Requirements: As regulations evolve, so do documentation requirements. Ensuring that agencies are in compliance with updated rules and maintaining consistency in documentation practices can become overwhelming.

Solutions:

• Stay Informed: Home health agencies must stay updated on CMS guidelines and regulatory changes by subscribing to industry newsletters, attending webinars, and regularly checking the CMS website for the latest news and updates.
• Flexible Billing Systems: Agencies should invest in flexible billing software that can quickly adapt to regulatory changes. These systems can help agencies implement new coding or billing practices without causing disruptions to the workflow.

Conclusion

PDGM billing has brought significant changes to the way home health agencies are reimbursed, but it has also introduced a host of challenges. These challenges include coding accuracy, timely submission, patient data management, denial management, and adapting to regulatory changes. By investing in training, adopting new technologies, improving internal processes, and staying informed, agencies can effectively overcome these challenges and ensure the long-term success of their operations. Addressing these issues head-on will not only improve financial performance but also ensure that home health agencies continue to provide high-quality care to their patients.