The diagnosis and assessment decisions your team makes before care begins determine how a 30-day period is classified and paid under the Patient-Driven Groupings Model (PDGM). PDGM codes aren’t a separate code set. You need to know which inputs control grouping, who owns each input and where an error changes your home health payment.
Key Takeaways
Validate the primary diagnosis at referral, before it reaches coding.
Compare hospital records against submitted secondary diagnoses every month.
Track LUPA thresholds by case-mix group before the period closes.
What Do PDGM Codes Refer To?
PDGM uses standard ICD-10-CM diagnosis codes reported on your claim to set home health payment for the home health services you bill. Your primary diagnosis sets the clinical group. Your secondary diagnoses set the comorbidity adjustment. CMS sorts every 30-day period you bill into one of 432 case-mix groups under PDGM.
Diagnosis codes carry the weight. Three codes control your payment on the claim:
1. Principal diagnosis: Sets the clinical grouping
For example,an unspecified diagnosis on the referral won’t group. A specific, documented one will.
2. Secondary diagnoses: Set the comorbidity adjustment
For example, a comorbidity noted in the hospital record only counts if it reaches the coder.
3. Health Insurance Prospective Payment System (HIPPS) code: Carries the classification onto the claim
For example, a period with a high comorbidity adjustment, an institutional admission source and a late clinical group produces one HIPPS code. Change any single input, and the code changes with it.
What Each PDGM Code Decision Controls
Input | What It Determines | Where It Comes From | Primary Owner |
Primary diagnosis | Clinical group | Referral and clinical documentation | Coder |
Secondary diagnoses | Comorbidity adjustment | Clinical records and SOC documentation | Coder/OASIS team |
Admission source | Community or institutional | Referral and prior-care history | Intake |
Timing | Early or late period | Prior period and claim history | Intake/Billing |
Functional impairment level | Low, medium or high | Assessing clinician/OASIS reviewer |
These five inputs combine to determine the PDGM case-mix group. CMS sets two admission source categories, two timing categories, 12 clinical groups, three functional levels and three comorbidity levels, producing the 432 case-mix groups into which your 30-day periods are sorted. Those clinical groups span categories like musculoskeletal rehabilitation, an infectious disease group that also covers blood-forming diseases and neoplasms and a GI/GU group covering gastrointestinal and genitourinary conditions.
CMS built this model to rely more heavily on clinical characteristics and other patient information, placing your home health periods of care into meaningful payment categories.
Which PDGM Inputs Can Cost You Revenue When They’re Wrong?
An incorrect input can misclassify your period and affect whether your claim pays, pays late or pays less than it should.
Your primary diagnosis carries the most risk because it sets your clinical group. A diagnosis groups correctly when it maps to one of the 12 accepted categories, from surgical aftercare to behavioral health. It doesn’t group when the code is a symptom code, an unspecified code or one CMS excludes from principal-diagnosis use. When that happens, your claim is denied. It returns to you, the provider, and the chart sits until you send a query and get an answer back.
Your physician ordering process at referral produces the diagnosis on the plan of care, and your intake team accepts it before anyone confirms it.
Workflow Point | What Can Go Wrong | Business Consequence | Control to Add |
Referral/intake | Diagnosis codes accepted without confirming they support PDGM grouping | Query, rework or return-to-provider risk | Validate the specific diagnosis before coding |
SOC/OASIS | Functional impairment level information is incomplete or inconsistent | Incorrect case-mix classification | Review assessment data against clinical documentation |
Coding | Primary diagnosis or secondary diagnoses coded incorrectly or incompletely | Incorrect grouping or missed comorbidity adjustment | Pre-bill coding and QA review to support proper payment |
Billing | HIPPS or period sequencing does not match the underlying classification | Claim correction, payment delay or a missed billing deadline | Verify claim inputs before submission |
Comorbidity Adjustment and Payment
A missed secondary diagnosis produces a lower payment for you.
CMS uses secondary diagnoses on the claim to assign a no, low or high comorbidity adjustment, based on higher resource use for patients who receive services for more than one condition. The services needed are often documented in the hospital record. They just never make it into your coding workflow.
Compare a sample of source documentation against your submitted secondary diagnoses each month. That’s how you find out how much you’re missing.
How Calendar Year 2026 Changes PDGM Case-Mix Weights and LUPA Risk
Don’t use last year’s PDGM numbers this year. CMS recalibrates the case-mix classification model every year, using the most recent complete data available. For calendar year 2026, that means:
- Case-mix weights updated to reflect current patient patterns
- Functional impairment levels, adjusted with new data
- Low comorbidity adjustment and high comorbidity adjustment subgroups, revised for CY2024 patient data
- LUPA thresholds, recalculated per case-mix group
Adjusting payment this way keeps rates matched to the patients you’re serving now, not two years ago. Aggregate payments for home health services are down an estimated 1.3% for the year, so the margin for error is smaller, too.
Your case-mix group sets your LUPA threshold. Each of the 432 groups, including medication management groups, carries its own number. Under PDGM, home health payment is based on a 30-day period of care, and the LUPA threshold applies to that 30-day period. Fewer visits than the threshold result in a per-visit LUPA rate instead of the full 30-day payment. Track the threshold while the period is still open. Find out at billing instead, and the visits you needed may already have been missed.
Check your current figures directly against the CMS final rule. Whatever guide you used last year is already out of date.
Strengthening PDGM Review Capacity Without Adding Headcount
Getting PDGM right takes review at four points: diagnosis validation, OASIS accuracy, coding and LUPA tracking. Most agencies don’t have a dedicated role for that. The function sits inside work you’re already doing: intake, certification, pre-bill hold.
Where External Support Fits
Function | What Gets Handled |
Diagnosis validation | Referral diagnoses reviewed for groupability before the chart moves through the coding workflow |
OASIS review | Defined OASIS elements checked against supporting clinical documentation before final submission |
Medical coding | Primary and secondary diagnoses reviewed and coded according to the agency’s established process |
Pre-bill QA | Completed charts reviewed for defined PDGM and billing inputs before the claim is submitted |
LUPA monitoring | Assigned thresholds and visit status tracked according to the agency’s existing utilization process |
Before You Hand Off Any Function
- Define the checkpoint. Set the exact output, volume, turnaround time and review standard.
- Document the process. Give the reviewer the required steps, decision limits and escalation points.
- Keep the decision internal. External support handles defined review or administrative work. Your team retains responsibility for patient care, coverage decisions and agency priorities.
- Track the result. Monitor turnaround time, coding defects, QA findings and recurring errors to determine whether the added capacity is addressing the actual constraint.
- Use external capacity where the backlog exists. Don’t outsource a function simply because it is part of PDGM. Match the support to the workflow stage that your internal team cannot consistently cover.
Frequently Asked Questions
No. PDGM uses standard ICD-10-CM diagnosis codes reported on your claim, not a separate list. Before PDGM, payment counted therapy visits toward therapy thresholds. Now, your primary diagnosis sets the clinical group, and your secondary diagnoses set the comorbidity adjustment. The codes are the same standard that your coders already use. What changed is how CMS classifies each 30-day period.
The claim returns to you, the provider, until you send a query to the referring physician and receive a specific diagnosis in response. This happens with a symptom code, an unspecified diagnosis, or a diagnosis CMS excludes from principal-diagnosis use, none of which map to one of the 12 clinical groups. The delay stops coding and billing until the chart has a diagnosis that groups.
PDGM uses 432 case mix groups. CMS assigns your period to one of the five categories by combining five inputs: admission source, timing, clinical group, functional impairment level and comorbidity adjustment. Two admission source options, two timing options, 12 clinical groups, three functional levels and three comorbidity levels multiply into 432 combinations. This case mix adjustment relies on clinical characteristics and other patient information.
Yes. Your secondary diagnoses set the comorbidity adjustment for that period. CMS assigns no comorbidity adjustment or high comorbidity adjustment based on which conditions are documented and reach your coder. The adjustment reflects higher resource use for patients managing more than one condition. A comorbidity that exists in the hospital record but is never coded can’t support proper payment for that period, even if the condition is real.
Each case-mix group has its own LUPA threshold, set by CMS. Your assigned group determines how many visits your period needs to earn full payment. Fewer visits than that threshold drops the period to a per-visit LUPA rate instead of the full 30-day rate. Track the threshold while the period of care is still open. Billing applies the LUPA rate automatically once the period closes short.
