A Common Misconception

I am writing this post to clarify what seems to be a common misconception throughout the home health industry; something that I have heard dozens of times so far this year (and we’re only into early Feb) and that is: 

With the implementation of PDGM, Medicare no-longer pays for therapy services under the home health benefit.

Well, that perception could not be more wrong, and I hope that you have not fallen victim to that misunderstanding!

Absolutely nothing has changed under the Benefits provision of home health with the implementation of PDGM; NOTHING!

PDGM Eliminated Therapy Visits as a Driver of Revenue

Something Long Overdue

What did change that is likely causing this confusion, is that Medicare no-longer pays additional amounts for incremental increases in therapy utilization.  That is, therapies are no-longer a driver of revenue.  If you do two therapy visits in an episode, or twenty-two therapy visits, your revenue will not change!  But, therapies are still a covered service under the Medicare home health benefit and anyone that says and/or acts differently is asking for trouble from CMS/Medicare. 

CMS’s move to PDGM was in part to try to get the industry to right-size services provided to our clients.  For too long, visit volume has driven reimbursement; which, for the last 25+ years has driven up visit utilization.  Original PPS was CMS’s first attempt to move away from that reimbursement approach. Unfortunately, they messed-up because they still had reimbursement partially-tied to therapy visits. 

From PPS’s inception in Oct 2000 thru CY2007, there was one therapy threshold: 10.  Well, it was amazing how many episodes suddenly had 10 therapy visits (and greater reimbursement rates); and it remained as such through CY2007.  PPS then went to 9 therapy thresholds from CY2008 thru CY2019, and that further exacerbated the problem as episodes with 15+ therapy visits skyrocketed (and their corresponding reimbursement rates).  This extreme overutilization of therapies (by the industry) caused CMS to implement the Nominal Change in the Case-Mix Weight Adjustment numerous times between CY2008 and CY2019 that cut payment rates by over 22% during that span of time; and this was ALL directly attributable to the overutilization of therapies.

Therapies are still part of the Medicare home health benefit and included in the bundled payment under PDGM, so if a patient needs therapies (and the payment for these services is included in the episodic payment) and an agency fails to provide therapy services, they stand to be in a lot of trouble; potentially even facing the termination of their license.  Again, CMS built the episodic payment rates such that they should be sufficient to include all services/disciplines necessary to properly care for any given patient.

Provide Therapies as Outpatient

Tangential to this issue, I have also heard of agencies considering discharging patients from the services and then re-admitting under the Out-patient benefit.  This is a legitimate approach; but only if the patient was receiving therapy services while they were also considered homebound and on the HHAs roles and were discharged (hopefully, with goals met!).  If a patient needs therapy services, a homebound status is not going to preclude them from obtaining therapy services.  Additionally, any agency that does not provide therapy services for a patient while homebound, and then discharges and re-admits under the Out-patient benefit (which any & all HHAs are already licensed to do) and then begins providing therapy visits, will likely find themselves in the cross-hairs of the MAC or UPICs/ZPICs in the very near future.


Therapies are still part of the home health benefit. If you have a patient that requires therapy services to help achieve their goals, you need to provide therapies for that homebound client. You can provide therapies under Part B-Outpatient afterwards, but the patient must not be homebound and should have been discharged with goals met!

It was CMS’s responsibility to ensure that all episode types were properly resourced (including high-therapy needs patients) . Our job is to provide the necessary resources to move the client towards/independence (to the extent possible). Clinically and financially efficient agencies should be able to do so; and do so with a reasonable to strong profit margin. After all, MedPac recently projected that they expect the average industry Medicare Margins for CY2020 will be 17%.

  • Will your Medicare Margins equal/exceed that projection?
    • Do you even know what your Medicare Margins are? How to get them?
    • You really should!
  • If not, give me a call because I can help.
  • And help in a way that’s compliant with the regs; unlike how many have done it in the past!

Remember, CMS stated over a year ago that they would be paying attention to the therapy utilization patterns of HHAs (both past and present) and would use significant changes in therapy utilization practices to identify HHAs to review (likely via ADRs or, worse-yet, the Probe-and-Educate methodology).  This is not an onus you want to bring upon your agency.