Home Health & Hospice Week

CMS says it will consider ‘empirical evidence,’ according to rule.

Medicare dropped a reimbursement cut bomb on home health agencies in its newly released 2023 proposed payment rule, and agencies will need to counteract it with artillery of their own — cold, hard facts.

Recap: In the rule published in the June 23 Federal Register, CMS proposes a 4.2 percent cut to Medicare home health payment rates under the Patient-Driven Groupings Model, based largely on a -7.69 percent permanent behavioral assumption adjustment (see HCW by AAPC, Vol. XXXI, No. 22-23). That would reduce Medicare home health spending by $810 million in 2023 compared to 2022.

The drastic cut took many HHAs and their representatives by surprise, to say the least. “Somehow, CMS managed to conclude the home health industry was overpaid by $2 billion under PDGM,” notes attorney Robert Markette Jr. with Hall Render in Indianapolis.

“Of course, they also think that reimbursement exceeds costs by 34 percent and that reimbursement has grown faster than costs,” Markette tells AAPC. “It is rather surprising to see them make such a claim, when gas prices have hit historic averages and inflation has hit 40-year records,” Markette adds. “Their cost data is not reflective of the reality the industry is facing and will continue to face,” he criticizes.

Home health industry experts have long pointed out the flaws with Medicare’s cost reporting system, ranging from costs it leaves out to a lack of direct consequences leading to inaccurate data reporting. And with changes finalized in 2019, it was pretty clear CMS would begin comparing costs to reimbursement paid, therefore cutting rates (see HCW by AAPC, Vol. XXVIII, No. 9).

In the rule, CMS cites a number of statistics to justify the significant pay cut. They include falling visit numbers, access assessments by the Medicare Payment Advisory Commission, and therapy utilization changes. But CMS’ take on those stats is off, industry veterans say.

“Perhaps the decline in visits is not due to PDGM, but due to the significant decline in staffing that has resulted from the pandemic,” Markette offers. “I know many agencies that are struggling to make all of the ordered visits, because they lack staff. Many staff left during the 2020 lockdowns and have simply not returned,” he notes.

Telemedicine costs are underreported, says Julianne Haydel with Haydel Consulting Services and The Coders in Baton Rouge, Louisiana. “Telemedicine, in order to count as telemedicine, must be built into the plan of care with a reason why the telehealth encounter would help the patient meet goals,” Haydel tells AAPC. “I have read about a million care plans and I know this hasn’t been done, and I seriously doubt it will be done in the future,” she says. “I think asking nurses to complete another documentation requirement might possibly cause them to spontaneously explode,” she adds.

“I have always hated the use of cost reports, because they don’t really reflect costs and there are a number of factors that lead CMS data to underreport costs,” Markette summarizes. That includes “agencies not completing the reports properly,” he says.

Small HHAs Need To Comment, Too

Despite the limitations of cost report data, HHAs are going to have to show up with some serious statistics to make their case that the -7.69 percent behavioral assumption adjustment goes too far.

CMS makes this point explicit when soliciting comments about how it controls for COVID-19 public health emergency effects on home health cost data. “While we believe the proposed methodology … best controls for the effects of the COVID-19 PHE, we are soliciting comments on how the COVID-19 PHE may have impacted service provision in a manner not reflected in the proposed methodology,” CMS says in the proposed rule. “We expect that such comments will include empirical evidence to support the commenter’s position on how the COVID-19 PHE affected provider behavior,” the rule says.

“I hope that such a drastic change prompts all of home health to mobilize with specific, factual information [on] how this change would impact their agency,” says Joe Osentoski with Gateway Home Health Coding & Consulting in Madison Heights, Michigan. “Just saying it is unfair or being generic about its impact will not sway CMS to reconsider,” Osentoski cautions.

“It will be very important for providers to submit comments,” Markette urges. “CMS makes it clear in the rule that they want objective data about the impact of COVID, if we are going to challenge their behavioral adjustments,” he stresses.