Is Your HIPPS Coding Leaving Money on the Table?
Under Medicare’s Patient-Driven Groupings Model (PDGM), the clinical characteristics of each Home Health patient help determine reimbursement for each 30-day period of care. Those characteristics are summarized through the HIPPS code, which places each period into a case-mix group and ultimately helps determine the Medicare payment.
Understanding the HIPPS Code
Under PDGM, each 30-day period is classified based on five key components reflected in the HIPPS code:
• Position 1 – Admission Source & Timing: Identifies whether the patient is coming from community or institutional settings and whether the period is early or late.
• Position 2 – Clinical Grouping: Identifies primary clinical reason for Home Health care. This is driven largely by the ICD-10 code reported as the Primary Diagnosis.
• Position 3 – Functional Impairment: Classifies the patient as having low, medium, or high functional impairment based on OASIS assessment information.
• Position 4 – Comorbidity Adjustment: Accounts for secondary diagnoses and classifies the patient as having no, low, or high comorbidity adjustment.
• Position 5 – Placeholder: Completes the five-character HIPPS code.
Together, these factors place a 30-day Home Health period into one of 432 possible PDGM case-mix groups, each with its own payment weight.
What Millions of Claims Tell Us
Berg Data Solutions analyzed every 2024 Medicare Fee-for-Service Home Health episode to understand the potential financial impact of coding optimization. For each claim, we recreated possible HHRG scores using the diagnoses already associated with the patient and compared the paid claim's case weight with the highest potential case weight.
This analysis identified approximately $1.1 billion in potential additional Medicare reimbursement nationally, equivalent to an average of 7.7% of Home Health revenue.
Importantly, the opportunity is not evenly distributed across the HIPPS code positions.
The Biggest Opportunity: Clinical Grouping
Of the three HIPPS code positions Berg Data evaluated, Position 2—Clinical Grouping—accounted for 92.5% of the identified national payment opportunity, compared with 4.1% for Admission Source/Timing and 3.4% for Comorbidity Adjustment.
Under PDGM, the Primary Diagnosis drives the Clinical Grouping and can significantly impact the case-mix weight and reimbursement. Berg Data found many instances where appropriate diagnoses were already captured on the claim, but the diagnosis selected as primary did not appear to best reflect the primary reason for Home Health care. Two case studies highlight this point.
One case involved a patient with a primary diagnosis of quadriplegia, who was also receiving wound care. Adding the wound diagnoses improved the comorbidity adjustment, but the largest payment impact came from identifying an appropriate wound diagnosis as the Primary Diagnosis. The modeled payment increased from $2,757 to $3,674 — a $916 difference for that 30-day period of care.
A second example involved a medically complex patient whose Primary Diagnosis related to catheter care, even though the number and type of visits in the claims data indicated that wound care was also being provided. Using the pressure ulcer diagnosis already documented for the patient as the Primary Diagnosis — when consistent with the care being delivered — would have increased the modeled payment by approximately $719 for that 30-day period.
More Coding Isn't Necessarily Better Coding
The analysis found no correlation between the average number of ICD-10 codes reported per episode and the size of an agency's payment optimization opportunity.
In other words, Home Health agencies already devote considerable resources to documenting diagnoses. The opportunity lies in evaluating whether coding processes consistently identify the most relevant and clinically appropriate Primary Diagnosis.
The Takeaway
Berg Data's analysis suggests four important questions for Home Health leaders:
• Is the Primary Diagnosis consistently aligned with the primary reason the patient is receiving Home Health care?
• Are coding practices consistent across coders and across successive plans of care for the same patient?
• Does the agency have a systematic way to identify cases where an alternative, clinically supported Primary Diagnosis should be reviewed?
• Are coding teams evaluating the financial implications of diagnosis sequencing—not simply whether all appropriate diagnoses have been captured?
With more than $1 billion in modeled opportunity nationally, HIPPS coding deserves attention as both a clinical documentation and financial performance issue. The goal isn't to code for higher reimbursement; it is to ensure that the diagnosis codes and sequencing submitted to Medicare accurately reflect the patient's condition and the care actually being provided. When they do, agencies can be more confident they are receiving the reimbursement that appropriate care warrants.
To learn more about your coding optimization opportunity and how we can partner with you, contact Berg Data Solutions at:
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