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PDGM & RAP

Home Health: Facing the Biggest RCM Changes in Decades

The home health industry has begun to brace itself for January 1, 2020, the first day of the new Patient-Driven Groupings Model (PDGM) and the beginning of the Request for Anticipated Payment (RAP) phase-out. Many home health organizations are expressing concern that the double-whammy of PDGM and RAP taking place simultaneously will seriously affect their cash flow and may cause some businesses to close their doors.

What has precipitated these changes?
PDGM will align home health reimbursement with other medical providers in terms of compensation for value as opposed to volume. After January 1, therapy volume will no longer determine compensation. Instead, payment will be based on the needs of the patient and the level of care provided.

RAP payment splits will be reduced to 20% up-front and claims will be filed on a 30-day period of care, rather than 60 days. CMS says that the new, shorter payment cycle will give organizations the cash they need for operations; therefore, pre-payments can be scaled back in 2020 and eliminated in 2021. The agency also cites fraud as a significant reason for the changes. It predicts the decrease in RAP and the shorter claim timeframe will discourage ‘pop-up’ home health agencies that submit thousands of RAPs only to disappear after they receive payment.

And, there’s more…
The upcoming changes need to be budget-neutral according to law. To achieve this neutrality, CMS factored in behavioral assumptions about home health billing and coding practices.

These assumptions are controversial for two reasons:

  • Some of the premises are not flattering to the home health industry. For example, the proposal says that home health providers will designate the highest-paying diagnosis as the principal diagnosis, regardless if that is indeed the case.

  • If the assumptions are wrong, it is estimated agencies could lose up to $110 (per 30-day period) out-of-pocket.

How home health agencies can prepare

Home health coders and billers will be very busy in the run-up to the new year! In addition to all the new coding requirements, revenue cycle managers need to be prepared for an increase in claims activity with less payment up-front.

Here are some tips to make sure both administrative and clinical staff are ready for the upcoming changes:

  • Audit your operations to find weaknesses that can be solved
    Whatever problems you have with your revenue cycle now will only grow worse once the new year starts. Now is the time to solve those problems so staff can focus on adjusting to the changes when they occur.

  • Confirm that clinical staff is aware of documentation changes for PDGM
    The saying, “if it’s not documented, it’s not done” is always right. Coders can only code what is in the patient record. Familiarize your clinical staff with the information needed for correct and compliant coding.

  • Build efficiency into your claims cycle wherever possible
    Many organizations will feel the strain of increased claim volume in 2020. Investigate technology that can minimize manual tasks so staff can focus their efforts on problem-solving. One place to start is patient payments. Manual processing of patient payments can be time-consuming and lead to errors in posting. Using technology such as Rectangle Health’s Practice Management Bridge® for payments can significantly reduce manual labor and virtually eliminate human error – creating a smoother patient experience and happier patients.

CMS is aware of how profoundly these changes will impact home health agencies. So, to sweeten the deal, the agency is proposing provisions for home infusion therapies which will allow organizations to generate a new revenue stream.

Time will tell how many agencies will expand into this line of business.

If you need more detail about the upcoming PDGM and RAP changes, or would like to provide feedback on the proposals (you have until September 9), visit the CMS website for information.