Home Health & Hospice Week

Productivity adjustment chips away at inflation update.

A calm home health annual payment rule for 2021 is very welcome in this turbulent year, but the new regulation still has problems.

The Centers for Medicare & Medicaid Services released its 2021 Home Health Prospective Payment System Rate Update proposed rule June 25 and published it in the Federal Register June 30. The rule contains no structural revisions to the Patient-Driven Groupings Model that took effect in January, or other regulatory additions.

The lack of changes to the PDGM structure is “a positive thing,” cheers consultant Pam Warmack with Clinic Connections in Ruston, Louisiana. “Providers have too much on their plates to be worrying with how to adjust to a change in PDGM. Between PDGM, COVID, CMS changes, and the Review Choice Demonstration, my providers can’t deal with much more,” Warmack stresses.

“This major reimbursement change only went into place six months ago,” points out Sharon Litwin with 5 Star Consultants in Camdenton, Missouri. “In addition to COVID, it would be hard for HHAs to absorb more changes in PDGM now.”

A combination of the lack of PDGM data and the pandemic’s impact influenced CMS to abstain from any PDGM adjustments at this time — particularly a behavioral adjustment, CMS confirms in the rule. “While we continue to monitor the impact of [PDGM’s] changes on patient outcomes and Medicare expenditures, we believe it would be premature to release any information related to these issues based on the amount of data currently available and in light of the current public health emergency resulting from the COVID-19 pandemic outbreak,” CMS says in the rule. “Therefore, for CY 2021, we are not proposing to make any additional changes to the … 30-day payment rate … other than the routine rate updates,” the rule continues. “In future rulemaking, we plan to determine whether any changes need to be made … based on the analysis of the actual versus assumed behavior change.”

Likewise, CMS isn’t shuffling case mix weights for its 432 categories as it said it could — and would — on an annual basis. “We do not have sufficient CY 2020 data from the first year of the new case-mix methodology … to recalibrate the case-mix weights for CY 2021,” the rule says. “We believe this approach for CY 2021 is more accurate given the limited utilization data for CY 2020 and will be less burdensome for HHAs and software vendors, who continue to familiarize themselves with this new case-mix methodology,” CMS allows.

“Stabilization in the reimbursement structure is positive, as we barely had time to adjust to PDGM before the pandemic hit,” applauds consultant and physical therapist Cindy Krafft with Kornetti & Krafft Healthcare Solutions.

Overall, Krafft notes “how little change is in [the rule] compared to other years.” For example, CMS includes no quality reporting program changes at all.

The downside: Even with no PDGM or other big regulatory changes, agencies are suffering. For example, “many agencies have been hit with more community referrals, since hospitals have limited their admissions, and therefore discharges,” in the pandemic, points out consultant J’non Griffin with Home Health Solutions in Carbon Hill, Alabama.

Doing no harm with this rule, plus a somewhat modest inflation update, may not be enough to save HHAs on the edge, experts agree.

Some More Good News

In addition to leaving PDGM relatively untouched, CMS is also proposing the largest payment rate increase for HHAs in a decade at 2.6 percent which will equal an additional $540 million in home health spending. CMS calculates the increase by reducing the full health market basket update of 3.1 percent by a business multifactor produc­tivity (MFP) adjustment of 0.4 percentage point for 2021, the rule explains. “In effect, the proposed home health payment update percentage for CY 2021 is a 2.7 percent increase,” the rule explains. Another 0.1 percent reduction is imposed by the phase-out of the rural add-on, CMS says in a release about the rule.

The 2.6 percent increase compares to last year’s 1.3 percent rise, and the previous eight years’ cuts — 0.4 percent in 2018; 0.7 percent in 2017; 1.4 percent in 2016; 0.3 percent in 2015; 1.05 percent in 2014; 0.01 percent in 2013; 2.3 percent in 2012; and a whopping 5 percent in 2011. Before 2020, the last Medicare payment rate increase was 1.75 percent in 2010.

CMS proposes a 30-day episode base rate of $1,911.87, up from $1,864.03 this year. (See per-visit rates in chart, p. 198. In PDGM, reimbursement for supplies is bundled into the payment rates.)

The 2021 proposed increase “is great news,” Griffin cheers. Home health went “so long … without even a proposed increase,” Griffin notes.

Given the history of cuts, and “with all the events that have beset home health this year, any increase is good news,” says Joe Osentoski with Gateway Home Health Coding & Consulting in Madison Heights, Michigan. And it’s certainly better than “a decrease when more uncertainty is generated from the pandemic during the Public Health Emergency,” Osentoski adds.

The stability in the rule and the larger-than-average proposed increase are good news, allows finance expert Mark Sharp with BKD in Springfield, Missouri. But it could be better.

“It’s ironic that we are celebrating a less than full inflation update,” Sharp tells Eli. With the 0.4 percent reduction to the 3.1 percent market basket update figure, the increased rate is still below inflation, he points out.

The MFP adjustment is mandated by the Affordable Care Act, CMS points out in the rule.

But what better time to lift such a reduction than during a once-in-a-lifetime pandemic, observers ask.

Whether your agency will actually see a pay increase in 2021 depends on a number of factors, including case mix, how the new wage index designations fall (see story, p. 199), whether you operate in a rural add-on area (see story, this page), and whether you incur penalties for late submission of no-pay RAPs.

Other reimbursement provisions in the rule address:

• Outliers. As with other PDGM mechanics, CMS proposes leaving the outlier formula as-is for the next year. However, it accidentally published incorrect numbers for the formula. While a section of the rule says the loss-sharing ratio will remain at 0.80 and the Fixed Dollar Loss ratio at 0.63, the FDL should actually be this year’s 0.56, CMS has told the National Association for Home Care & Hospice, according to the trade group.

Watch out: Don’t be surprised if CMS initiates outlier changes to agencies’ detriment in future years, however. In 2017, CMS shifted outlier calculations from per visit to per 15-minute time unit, due to concern about outlier maximi­zation for extremely short visits. It also caps how much time per day can be counted toward outlier calculations. “We will continue to monitor the visit length by discipline as more recent data become available, and we may propose to update the rates as needed in the future,” the proposed rule says. CMS shoots to limit outlier payments to 2.5 percent of total home health spending.

• LUPAs. In another effort at stabilization, CMS is keeping LUPA thresholds the same for PDGM’s 432 case mix categories in 2021. This is despite the fact that many agencies report incurring LUPA episodes at a rate much higher than CMS’ aim of 7 to 8 percent of total episodes.
• RAPs. Last year, CMS finalized no-pay Requests for Anticipated Payment for all agencies starting Jan. 1, 2021. (This year, no-pay RAPs are just for new agencies.) CMS is sticking with that plan, as well as the schedule to convert them to Notices of Admission in January 2022, the proposed rule indicates.

And noncompliance with those requirements now will carry a financial penalty. “For both the submission of the RAP in CY 2021 and the one-time NOA for CYs 2022 and beyond, we finalized a payment reduction if the HHA does not submit the RAP ... within 5 calendar days from the start of care,” CMS reminds providers. If an HHA fails to submit a timely RAP or, later, a timely NOA, “the reduction in payment amount would be equal to a one-thirtieth reduction to the wage and case-mix adjusted 30-day period payment amount for each day from the home health start of care date until the date the HHA submitted the RAP or NOA,” the rule says.

In other words: “The one-thirtieth reduction would be to the 30-day period adjusted payment amount, including any outlier payment, that the HHA otherwise would have received absent any reduction,” CMS clarifies.

The RAP-based penalty goes for LUPAs, too. “For LUPA 30-day periods of care in which an HHA fails to submit a timely RAP or NOA, no LUPA payments would be made for days that fall within the period of care prior to the submission of the RAP or NOA,” the proposed rule confirms.

What’s ahead: Enjoy this year of relative calm, even in the face of the COVID-19 pandemic. Expect a “next set of changes as PDGM continues,” Osentoski advises. From behavioral-based cuts to case mix rebalancing to more wage index changes, HHAs can count on revisions small and large ahead.

Note: The 48-page proposed rule is at www.govinfo.gov/content/pkg/FR-2020-06-30/pdf/2020-13792.pdf. Comments are due by Aug. 31, and a final rule is expected in late October or early November.