Home Health & Hospice Week

New CoP would cost HHAs nearly $3.2 million in first year.

Don’t be surprised if a newly proposed change to the home health Conditions of Participation leads to some fingers pointed at home health agencies for cherry picking patients.

Background: Ever since the Centers for Medicare & Medicaid Services began ratcheting down home health agency payment rates with hotly contested behavioral adjustment reductions, the industry has pointed out how home health utilization figures are dropping and referral sources are having a harder time securing a home health spot for their patients. In other words, access problems are surfacing.

These access issues are coming about because CMS is stripping HHAs of their financial resources, and those agencies can no longer support as many unprofitable patients. Those may reside in rural areas, have high medical complexity, or other costly factors.

In response, CMS has all but accused HHAs of cherry picking only the most profitable patients. The agency often points to sky-high Medicare Payment Advisory Commission-calculated profit margins as evidence, although HHAs have long decried the limitations and shortfalls of MedPAC’s calculation process.

For example, in its latest annual report to Congress, MedPAC pegged freestanding HHAs’ margin at 22.2 percent in 2022 (see HHHW by AAPC, Vol. XXXIII, No. 11). That’s down from an eye-popping 24.9 percent in 2021 and compares to a margin of 20.2 percent in 2020, 15.8 percent in 2019, 15.3 percent in 2018, 15.2 percent in 2017, 15.5 percent in 2016, 15.6 percent in 2015, 10.8 percent in 2014, 12.7 percent in 2013, 14.4 percent in 2021, and 14.8 percent in 2011.

Now it appears CMS is taking the next step to lay the blame for any access problems at agencies’ feet, critics urge.

“We are proposing to add a new standard at § 484.105(i) that would require HHAs to develop, consistently apply, and maintain an acceptance to service policy, including specified factors, that would govern the process for accepting patients to service,” CMS says in the 2025 home health proposed rule released on June 26. “We also propose that HHAs would be required to make specified information about their services and service limitations available to the public,” the agency continues.

The policy aims “to reduce avoidable care delays by helping ensure that referring entities and prospective patients can select the most appropriate HHA based on their care needs,” CMS maintains in its fact sheet about the rule. “The rate of timely initiation of home health care varies significantly, indicating that the referral and acceptance process is in need of improvement,” points out the rule scheduled for publication in the July 3 Federal Register.

Then again, CMS does admit that agencies are running up against labor difficulties.

“Delays in service initiation may indicate not only that referral sources have difficulty locating an appropriate HHA, but also that HHAs are accepting patients when and for whom they are not capable of delivering timely care. We are aware of anecdotal reports of home care agencies not providing care to meet patient needs and reports by agencies of challenges maintaining appropriate staff caseloads to continue delivering care to patients that have been accepted for service,” CMS says in the rule. “We acknowledge that these challenges may be related to workforce shortages.”

However: “HHAs are expected to discharge patients for whom the HHA is unable to deliver care to meet patient needs, and to adhere to the HHA discharge requirements at § 484.58,” CMS points out.

It’s good that “CMS acknowledges that part of the issues with admission may be staffing shortages,” judges attorney Robert Markette Jr. with Hall Render in Indianapolis. But “in my anecdotal experience, that is 100 percent of the problem,” Markette tells AAPC.

The staffing shortage “is driven, in large part, by the artificially depressed rates CMS pays based upon the questionable imposition of ‘behavioral adjustments,’” Markette laments. “To be competitive in the market place, HHAs need to be able to pay higher wages, but they can’t when their reimbursement goes down every year,” he protests.

“We lose nurses to hospitals who pay significantly more. We lose aides to almost everyone, because fast food, retail, etc., are all paying more to recruit,” Markette rails. “CMS demonstrates the fundamental difference between data and wisdom when it concludes that the solution to the delayed admission problem is another standard in the CoPs,” he says.

“Our mission-driven and nonprofit members battle daily in a very competitive labor market to recruit and retain RNs, which are in short supply,” rues LeadingAge CEO Katie Smith Sloan. “Coupled with the Biden administration’s nursing home staffing rule’s nurse-onsite 24/7 component, already stiff competition for RNs will only grow,” she warns.

More Paperwork On The Horizon

CMS wants to require that the policy “address, at minimum, the following criteria related to the HHA’s capacity to provide patient care:” the anticipated needs of the referred prospective patient; the HHA’s case load and case mix; the HHA’s staffing levels, and the skills and competencies of the HHA staff.

The requirement is necessary because “HHAs typically have acceptance to service policies that are categorical in nature, meaning that the policies address entire categories of diagnosis or service types that they are or are not capable of providing care for,” CMS explains. “This proposed rule would not prevent HHAs from maintaining these existing policies and is intended to complement them,” the agency assures.

Plus: “We also understand that an HHA’s case load, case mix, and staffing levels may change over time, and that an HHA may choose to pre-establish methodologies that take into account such fluctuations as part of their acceptance to service policy to ensure consistency and minimize administrative efforts in maintaining the policy,” CMS says in the rule.

“Agencies are already well aware of the anticipated needs of the referred prospective patients; their case load and case mix; their staffing levels of the HHA; and the skills and competencies of their staff,” Markette criticizes. “These agencies are managing their operations in light of this, especially case mix and staffing levels, as they try to accept the referrals they get,” he emphasizes.

CMS also wants to require agencies to use this policy on non-Medicare patients. “While Medicare-participating HHAs may choose to accept other, non-Medicare sources of payment, we expect that HHAs would apply their acceptance to service policy consistently in a manner that is neutral to the source(s) of payment for a referral,” the rule indicates.

Watch out: “HHAs should accept or decline patient referrals based solely on clinical considerations and the capacity of the HHA to safely and effectively deliver care to meet patient needs, rather than on financial factors related to the perceived adequacy of the payment rate that the HHA has already voluntarily agreed to accept upon establishment of relationships with its payment sources,” the rule says.

And: “We also propose, at § 484.105(i)(2), that HHAs make public accurate information regarding the services offered by the HHA and any limitations related to the types of specialty services, service duration, or service frequency, and that HHAs review that information annually or as necessary,” the rule says.

Some of the rule language seems to acknowledge the pushback CMS may be getting from docs and hospitals about placing home health patients. “Making information regarding the services offered by the HHA and any limitations related to the types of specialty services, service duration, or service frequency available to the public, such as sharing it on the HHA’s website and providing the same information upon request for those without access to the website, would facilitate the search for an HHA to meet a patient’s needs, both from clinical referral sources

such as hospitals and physician offices, and from patients and caregivers directly seeking care,” CMS summarizes.

Speak up: “We request public comment on these proposals,” CMS says. “Specifically, we request comment on alternative ways to address the delay of home health care initiation, barriers for patients with complex needs to find and access HHAs, and other opportunities to improve transparency regarding home health patient acceptance policies to better inform referral sources. We also request public comment regarding other ways to improve the referral process for referral sources, patients, and HHAs.”

Plus: “We are seeking public comments on other factors that influence the patient referral and intake processes,” CMS says in the rule. Comments are due by Aug. 26.

“The solution is to increase home health reimbursement so that we can attempt to recruit staff and cover expenses,” Markette argues. “They don’t seem to understand that, as their cuts to home health cause more and more agencies to close, especially in rural areas, CMS will incur far larger costs in reimbursement to other providers — hospitals and SNFs —than they will save from having imposed draconian cuts to home health.”

CMS does acknowledge that the addition of this CoP won’t be without cost. “To develop, implement, and maintain through an annual review the acceptance to service policy, we expect a one-time cost” of $3.08 million for all HHAs and about $66,000 for an annual review, the agency calculates. To “make specified information publicly available,” CMS estimates a one-time cost of nearly $100,000 for all HHAs and more than $33,000 for an annual update.

Note: The CMS fact sheet on the rule is at www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2025-home-health-prospective-payment-system-proposed-rule-fact-sheet-cms-1803-p.