PDGM For Dummies

by Keith Grunig

PDGM Are You Ready Roadsign

PDGM for Dummies


We're nearly a year into PDGM.  With the pandemic, many agencies weren't able to fully implement the learnings and training on PDGM as they understandably had to focus on COVID.  We have prepared for a long time to help home health agencies answer the questions they didn't know they had.  Many didn't understand the full impact PDGM would have on the agency.  We'll answer some of the common questions we get for PDGM and how to improve.

PDGM- What does PDGM Stand for?

PDGM stands for Patient Driven Grouping Model.  PDGM replaces the previous reimbursement model called Prospective Payment System  (PPS for short) which was implemented in 2000.  PPS used three parts to determine reimbursement.  ICD-10 Diagnosis Coding, OASIS Data, and Therapy Utilization.  Centers for Medicare and Medicare Services (CMS) used PPS for 20 years with updates along the way.  Over time, CMS continued to issue guidance on important items in reimbursement- particularly diagnosis coding and therapy utilization.  CMS wanted all along to have diagnosis coding be at the highest level of specificity and to use therapy for what the patient needed.  Therapy over utilization and coding became problematic and PDGM was proposed several times over the years but finally was implemented January 1, 2020.  

At its core, PDGM isn't that complex.  PDGM removes therapy utilization as part of the reimbursement model and uses onlyICD-10 diagnosis coding and certain questions from OASIS to determine reimbursement.  Therapy was being overutilized by home health agencies to compensate for poor coding and inaccurate OASIS.  PDGM is an attempt by CMS to give agencies the reimbursement necessary based on the estimated cost of care for the patient according to the diagnosis coding and OASIS assessment.  

PDGM uses ICD-10 diagnosis coding to develop 6 clinical groupings and 6 more sub groupings.  CMS also developed another grouping called "Questionable Encounters" that identifies primary diagnosis codes that described symptoms rather than underlying cause for the focus of care.  CMS developed a large list of acceptable ICD-10 Primary Diagnosis Codes that can be used for the primary diagnosis code in M1021 on OASIS.  Too many agencies were using "weakness," "gait abnormality," "unsteadiness on feet", or other unspecified diagnosis as the basis for home health care.  CMS never did like that, so it asked agencies to code with the highest level of specificity to properly identify the cause of weakness or unsteadiness.  One of the things that CMS did do was to create a list of comorbidities that agencies can receive higher reimbursement 


PDGM- How to improve?

Home Care Answers helps many agencies across the country with varying census from 15 patients to over 500.  Many ask what they can do to improve.  We provide a complimentary chart audit to create enough data to give some guidance.  Almost without fail, one of our first suggestions is improving documentation.  

As a diagnosis coding, OASIS review, and data analytics company, we review thousands of OASIS a month.   One of the difficulties that agencies have with PDGM is accurate documentation.  We cannot make diagnoses up.  We can code what is documented.  Only the referring physician or primary care physician (PCP) can verify and diagnose diseases.  

OASIS and Diagnosis Coding are really instruments and ways to describe what the condition of the patient is at the time of assessment (Start of Care, Resumption of Care, Recertification, etc.)  If we were to compare it to painting, ICD-10 diagnosis coding and OASIS paint a picture, in code form, of what the patient looks like.  Documentation is the paint, if you will.  If it isn't documented, then it can't be coded.  Nurses absolutely can document and send to physician to verify what the nurse documents or if something isn't found in an History and Physical summary.  If a diagnosis isn't relevant to a physician, they may not document it, but it could certainly impact the care and outcome of a patient.  

Documentation for Coding- what do I need?

In order to properly and accurately perform coding and OASIS review, the following is necessary and some are nice to have.


  • History and Physical
  • Nursing Summary 
  • Medication Log

Nice to have:

  • Therapy Evals for all disciplines


Here is a link that is helpful to think about for PDGM and clinicians.

Here is another great link from CMS PDGM Overview


PDGM can be complicated, but if nurses and agencies understand the need for documentation, then the picture is much easier to paint for optimal reimbursement. 


Home Care Answers makes things easy for agencies to know what the PDGM reimbursement will be along with the LUPA Threshold and HIPPS number on every chart in a simple report to review.  Here is an example of the report you receive.  Notice the financial gain pre/post audit.  We help provide vital information and maximize reimbursement by assuring accurate coding and OASIS.  We also help make sure that accurate data is sent to CMS to ensure that potential adjustments and tweaks are based on good data.  


PDGM Key Financial Data Financial Summary, LUPA Thresholds Case Mix Summary

Home Care Answers takes the guesswork out of what you expect to receive for Medicare reimbursement.  We'd love to help.



Related content