Health Care

Home health sector glad CMS didn’t finalize pay adjustment method

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Home health providers are counting CMS’ decision not to finalize methods for keeping the payment system for home health agencies budget neutral as a win, though they’re still disappointed that CMS decided to move forward with a 4.36% cut for the third year in its final 2022 payment rule.

CMS began the Patient-Driven Groupings Model for home health agencies last year, aiming to cut down on unnecessary therapies and instead emphasize patient characteristics. PDGM also changed the case-mix system and switched to reimbursing agencies based on 30-day periods.

The agency assumed the new system would lead providers to change their coding practices so they could log the highest-paying codes. CMS decided to cut payments by 4.36% to adjust for this assumed behavior change to ensure the payment system didn’t change the overall budget,

The 2022 home health payment rule, released Tuesday, keeps the pay cut for another year, which continues to concern providers, Partnership for Quality Home Healthcare Executive Director Joanne Cunningham said. A study of commissioned by PQHH earlier this year suggested the cut isn’t justified and payments should be increased to achieve budget neutrality, Cunningham pointed out.

This is especially concerning given the current healthcare workforce landscape and other COVID-19-related challenges that continue to impact home health agencies, Cunningham said.

The 4.36% cut isn’t the doesn’t fully explain the staffing issues, but it does affect them, National Association for Home Care & Hospice President Bill Dombi added. “We want to carefully watch what happens, because administrative costs, operation costs – everything – have already been cut to the bone, so we just hope that they don’t cut such things as the volume of care to patients because of this.”

CMS’ proposed 2022 home health prospective payment system also asked for feedback on a proposed method for analyzing the correct behavioral adjustment in the future. The method involved using data from 30-day periods during 2020 to simulate 60-day episodes – the payment standard before PDGM – to figure out what payments would have looked like under the old model. The analysis found that home health agency base payment was 6% higher in 2020 than it should have been, CMS said.

Providers including PQHH, NAHC and the American Hospital Association disagreed with the method CMS proposed and said it would lead to inappropriate and severe payment cuts down the road. NAHC suggested in comments on the proposed rule that CMS’ idea for figuring out whether PDGM spending was budget neutral went against Medicare law, since it was tied to changes in case-mix weight instead of assumed behavior changes.

However, the Medicare Payment Advisory Commission said in comments that the suggested method was appropriate.

CMS acknowledged in the final that most commenters disagreed with the proposed methodology and said it will consider other approaches in future rulemaking.

While NAHC President Bill Dombi would have liked to see CMS alter the 4.36% cut, its willingness to look into other methods is a positive outcome for home health agencies, he said.

“We really think the proper methodology would show an underpayment rather than overpayment. But, you know, as a middle ground between getting what we were asking for, and the risk that CMS could take a deeper cut, we’re okay with where we ended up at the moment,” Dombi said.

Dombi hadn’t anticipated CMS would finalize its methodology this year, but he did expect to see the agency put forward a stronger defense of its proposal in the final rule, he said.

Because CMS didn’t finalize a method in the final rule, Dombi isn’t worried about the legal issues NAHC raised in its comments.

Still, CMS’ response to comments on the proposed rule “didn’t leave me with a feeling that either they fully understood what we were saying or that they felt they needed to respond to the comments one way or another,” Dombi said.

Both Dombi and Cunningham said their organizations plan to continue meeting with CMS about the best way to figure out behavioral pay adjustment ahead of next year’s proposed rule.

“Honestly, I think they appreciate the discussions,” Cunningham said. “We will continue to try to be a collaborative partner and share all the analysis that our data folks produce, and you know, at the end of the day, there will be a reconciliation of the rates at some point — that’s a requirement of the statute. So, you know, we’ll see how that goes.”

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