Home Health Care How PDGM is going to change the home healthcare industry

How PDGM is going to change the home healthcare industry

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The Patient-Driven Groupings Model (PDGM) will dramatically change home health reimbursement beginning in January 2020. PDGM is the most significant change to Medicare’s payment methodology for home health services since the home health Prospective Payment System (PPS) was implemented nearly 20 years ago. During the implementation of PPS, the home health industry experienced a dramatic consolidation of providers; approximately 30 percent of providers vanished because they were unable to (or decided not to) make the significant changes necessary for success under PPS.

Today, successfully implementing PDGM requires agency leaders to flex their projecting, planning, and execution muscles. In essence, it’s all about leadership and leaders’ ability to manage change. Effective change management will be a key driver for the organizations that will succeed during the transition to PDGM. Similar to PPS, there will be a consolidation of providers under PDGM — both through agencies closing and through mergers and acquisitions.

Fundamentally, to succeed under PDGM, agencies will need to examine every corner of their operations from intake to care management to coding and billing. As organizations evolve and create the right architecture — roles, workflows, goals/objectives, use of technology — to effectively navigate PDGM, the real challenges and commensurate opportunities are much bigger in scope and scale than this payment change. These words from renowned educator Peter Drucker especially resonate in the context of PDGM: “The best way to predict your future is to create it.”

The core shift for home health organizations is the larger shift we’re seeing in the overall healthcare industry — organizations need to move from producing volume to creating value. Across all healthcare disciplines, we’re seeing a dramatic shift to value-based care. PDGM for home health is certainly part of that shift, and providers can expect more changes in the future.

Part of PDGM’s mandate disincentivizes therapy/rehabilitation visits, which will change the way many home health providers plan to care for their patients. Further, long-term care facilities and skilled nursing facilities (SNFs) are already facing their own value-based payment changes, including the similarly named Patient-Driven Payment Model (PDPM), which took effect Oct. 1, 2019.

To thrive under value-based care initiatives, leaders across healthcare must evolve their organizations and better position themselves to deliver efficient, high-quality care — while also maintaining their focus on patient/family and caregiver/staff satisfaction.

As the shift to value-based care evolves, demand for healthcare services will continue to increase for all post-acute care providers. In the next 10 years, the 65+ population will grow by 36 million people. Additionally, the medical complexity of the senior population will expand, and 65 percent of that population will have at least two chronic conditions. And the pressure on the healthcare system is not just a problem of growing demand; the supply of professional and paraprofessional caregivers will not keep pace with the demand for services. Post-acute care providers are at an inflection point that will require leaders to innovate and evolve.

There are 5 key areas that leaders of all post-acute care organizations should focus on:

  1. Create a truly value-based, performance-driven organizational structure.
    • Leaders must ensure that their agency’s goals and objectives are supported by an organizational structure that is in alignment with those goals. Here are a few of the key areas of focus for leaders evolving their organizations:
      1. The organizational architecture of all healthcare organizations should be aligned so that best practices — across sales, clinical, operations, compliance, and revenue cycle — are standardized and scalable to reduce overall operational and clinical variability.
      2. Focus on creating an organizational structure where there is functional clarity for each division and for each role within a division.
  • Creating efficient workflows that optimize the use of technology, using process and performance improvement programs — such as lean six sigma — are great ways to create an efficient set of workflows and systems.
  1. Invest in your workforce to ensure your team has the core capabilities they need to succeed in a value-based world.
    • As workforce shortages and staffing pressures mount, and as organizations evolve their clinical and operating models, investment in staff education and development will be key to preparing staff with the right set of core competencies and the retention of the right people.
      1. Create competency programs that are aligned to the core organization capabilities that are needed for success — i.e. clinical assessments, care coordination, and care management.
      2. Use industry-accepted certifications to formalize and measure competence.
  1. Focus on developing world-class clinical care delivery through data-driven, best-practice care plans.
    • Creating advanced intelligent care management models where care delivery is standardized and powered by predictive analytics is key. Hardwiring data-driven best practices into the workflow of professionals and paraprofessionals providing care is essential to driving outcomes at the point of care.
  2. Understand that PDGM and value-based care are about the larger post-acute care continuum — not just one specific care setting.
    • Pursuant to the Improving Medicare Post-Acute Care Transformation (IMPACT) Act, CMS continues to move towards programs that unify the post-acute continuum. Organizations should focus on developing best-in-class partnerships with providers in other care settings to efficiently and effectively manage the transitions from acute to post-acute settings as well as across the various care settings in the post-acute care space.
  3. Get really good at being comfortable in the uncomfortable world of risk.
    • As value-based care models and Medicare Advantage programs continue to grow, organizations must understand how to deliver value and negotiate contracts where they take on partial or full risk for delivering that value.

PDGM is a significant change for the home health industry and agency leaders must prepare for and manage the change necessary for a successful transition. Beyond the granular PDGM details, this change requires post-acute care leaders to evolve their organizations into value-driven, client/patient-centered providers that are able to deliver world-class care in today’s rapidly changing healthcare landscape and beyond.

Photo: diego_cervo, Getty Images

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