Home Health & Hospice Week

This year’s reimbursement relief, inadequate as it is, may not last long, experts predict.

Home health providers are far from happy that Medicare officials have finalized a behavioral adjustment reimbursement cut for 2024, even if it’s smaller than the original proposal. But that reduction is just the tip of the iceberg.

Recap: Back in July, the Centers for Medicare & Medicaid Services proposed an overall 2.2 percent payment rate reduction for home health agency rates, based on a 5.653 percent cut due to supposed behavioral changes under the Patient-Driven Groupings Model. In the final rule released Nov. 1, CMS implements just half of an updated 5.779 percent rate cut based on new data — 2.890 percent, to set an overall rate increase of 0.8 percent starting Jan. 1 (see HHHW by AAPC, Vol. XXXII, No. 39-40). CMS follows the same playbook it used last year, when it implemented half of the proposed 7.85 percent behavioral adjustment — 3.925 percent, to set the 0.7 percent pay increase for this year.

Providers and their representatives have decried the cut as everything from illegal to immoral, and a lawsuit over it is pending.

“It’s quite disheartening, almost akin to a slap in the face, to see a decrease in payments at a time when Home Health is one of the most vital components of healthcare, particularly within the Medicare program,” said Melinda Gaboury with Healthcare Provider Services in Nashville, Tenn. “CMS has not made any substantial efforts to provide detailed explanations on how this calculation was derived, and the scant details provided do not seem logically sound,” Gaboury said in her Monday Minute with Melinda vlog when CMS issued the proposed rule. “They fail to truly reflect or consider the current state of affairs within Home Health,” Gaboury protested.

“PDGM really changed the financial landscape for a lot of agencies and many have struggled to adapt since then,” notes consulting firm Home Care Answers. “Because of inflationary pressures due to wages, supplies, costs, COVID related expenses, interest rates, et. al, agencies have struggled to balance cost increases with reimbursement rates as the rates have not reflected the inflationary pressure agencies have faced,” says the Utah-based firm in online rule analysis.

But don’t expect CMS to back down on the concept.

Under PDGM, the Bipartisan Budget Act of 2018 “requires CMS to annually determine the impact of differences between assumed behavior changes and actual behavior changes on estimated aggregate expenditures, beginning with 2020 and ending with 2026, and to make temporary and permanent increases or decreases, as needed, to the 30-day payment amount to offset such increases or decreases,” CMS explains in its fact sheet for the 2024 final rule.

CMS’ “halving of the permanent adjustment is in response to commenter concerns about the magnitude of a single-year significant payment reduction,” the agency says. “CMS will have to account for the remaining permanent adjustment not applied in CY 2024, and other potential adjustments needed to the base payment rate, to account for behavior change based on analysis at the time of future rulemaking,” it warns.

Thus far, aside from the behavioral adjustment, CMS has assessed a $3.5 billion “temporary” adjustment to bring PDGM in line with what CMS would have paid under the previous prospective payment system, the agency adds in the fact sheet.

What that means: Between the other half of the 2024 behavioral adjustment and the temporary adjustment for budget neutrality, CMS reckons agencies are overpaid by nearly $4 billion, according to the final rule scheduled for publication in the Nov. 13 Federal Register. And barring intervention from Congress, CMS may decide to come after that money any time. Close to $4 billion in clawbacks is a staggering amount, considering that Medicare home health expenditures were only $16.9 billion in 2021, according to the latest figures from the Medicare Payment Advisory Commission.

CMS says “it will instead apply the remaining adjustment in future years,” points out the American Hospital Association. AHA “remains very concerned about the unprecedented scale of the PDGM budget neutrality cut,” the trade group said in response to last year’s cuts.

This rule “continues a policy that is anticipated to result in further, potentially significant payment reductions in future years,” warns consulting firm SimiTree in online rule analysis.

“What is really starting to concern me is the continued discussion of the need to make up for each year’s partial adjustment,” says attorney Robert Markette Jr. with Hall Render in Indianapolis. “When CMS keeps talking about the need for an increased one-time temporary cut to offset the lack of prior adjustments, it raises some serious concerns,” Markette tells AAPC.

“We are not out of the woods here,” warns Angela Huff with FORVIS in Springfield, Mo. “CMS still has some runway to make ‘behavioral adjustments’ related to PDGM alone through 2026,” Huff emphasizes.

What to expect: “This reprieve may end up being just a pause with a strong potential to rear its ugly head again,” Huff tells AAPC.

Note: The 531-page rule is at https://public-inspection.federalregister.gov/2023-24455.pdf.