MedPAC Launches PDGM Study Analyzing Home Health Payment Accuracy

The Medicare Payment Advisory Commission (MedPAC), the nonpartisan agency that advises Congress on Medicare, is launching a study to determine whether the Patient-Driven Groupings Model (PDGM) accurately aligns home health payments with patient care costs.

The study, announced at a Friday MedPAC meeting and described by the commission as exploratory, will analyze home health and skilled nursing facility (SNF) payment data to investigate patient selection, coding practices, and cross-setting coding patterns.

MedPAC analyst Evan Christman said the work is exploratory but reflects "concerns about patient selection in home health." Analyst Carol Carter said researchers will examine whether high-profit and low-profit case mix groups are distributed unevenly across providers, which could stem from market characteristics or provider capabilities.

For patients with a prior hospital stay, researchers will compare SNF and home health coding patterns against how the same cases were coded during the preceding hospitalization, and will compare coding changes for patient assessment items used in payment versus those not used for payment.

Commissioner Kenny Kan warned that providers may already be leveraging AI tools to inflate coding intensity or reported patient complexity to optimize revenue cycle management, describing the trend as potentially inflationary for overall health care costs. MedPAC plans to begin presenting findings in fall 2027.

The study follows a proposed CY 2027 home health payment rule that includes a 3% temporary adjustment tied to recouping what CMS considers PDGM-related overpayments, a move the home health community broadly criticized.