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Background.  On January 1, 2020, the Centers for Medicare & Medicaid Services (CMS) began implementing a new Medicare payment system—“Patient Driven Groupings Model” (PDGM)—for home health services. Under PDGM, home health agencies have a new set of financial incentives to consider when admitting and continuing care for Medicare beneficiaries. Unfortunately, those financial incentives are harmful to beneficiaries, particularly those with chronic conditions and longer-term health care needs.

PDGM’s financial incentives include higher rates for beneficiaries who are admitted after an inpatient institutional stay (hospitals and skilled nursing facilities) and lower rates for those admitted from the community. (The “community” category includes hospital outpatients and hospital patients in Observation Status, as well as those who start care from their home, without a prior hospital or SNF stay.) The new payment model, among other changes, also lowers the financial incentive to provide therapy by removing the therapy service utilization payment thresholds. Sadly, the new Medicare payment system and shift in financial incentives have already started harming beneficiaries. For instance, Home Health Care News indicates that there are “[s]tories of widespread layoffs of PTs, OTs and SLPs persist — and now new reports of agencies incorrectly telling their patients that Medicare no longer covers therapy under the home health benefit . . . .”

Official Response.  On February 10, 2020, CMS released a special edition Medicare Learning Network (MLN) Matters article to address continued care and therapy under PDGM. The MLN article makes clear that, while the reimbursement system has changed, “eligibility criteria and coverage for Medicare home health services remain unchanged.” CMS adds that, “as long as the individual meets the criteria for home health services as described in the regulations at 42 CFR 409.42, the individual can receive Medicare home health services, including therapy services.” In light of the Jimmo v. Sebelius Settlement Agreement, the MLN article also states “there is no improvement standard under the Medicare home health benefit and therapy services can be provided for restorative or maintenance purposes.”

Thus, according to CMS, the following remain true under PDGM:

  1. Medicare eligibility and coverage rules have not changed;
  2. Home health services can continue as long as individuals meet the Medicare coverage criteria; and
  3. Beneficiaries can receive home health services to improve their condition, to maintain their current condition, or to slow or prevent further decline.

Contact Us.  For assistance obtaining or maintaining, Medicare-covered home health services, please contact the Center for Medicare Advocacy at

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