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Home Health & Hospice Week

Patient-Driven Groupings Model:

Thanks For The HH Rate Increase — But We Need More, Agencies Say

Published on Fri Sep 24, 2021

Hold off on budget neutrality adjustments, case mix recalibration, commenters urge.

The clock is ticking down to the release of the home health final rule, and the major changes it will require. Home health agencies hope the rule comes with some revisions.

Recap: On June 28, the Centers for Medicare & Medicaid Services issued the 2022 home health proposed rule, which included a 1.7 percent increase to HHA rates and a recalibration of all Patient-Driven Groupings Model case mix categories, among many other provisions (see HCW by AAPC, Vol. XXX, No. 24-25). CMS usually issues the HH final rule in late October or early November, which is when agencies will find out whether their requests, criticisms, and suggestions have fallen on fertile ground or deaf ears.

This year, 207 comment letters on the rule were submitted, according to regulations.gov. That compares to 364 letters in 2014, 120 letters in 2015, 89 letters in 2016, 1,350 letters in 2017 (when PDGM’s predecessor, HHGM, was introduced), 1,345 letters in 2018 (when PDGM was proposed), 587 in 2019, and 166 last year.

On the reimbursement front, agencies were generally pleased with the 1.7 percent pay bump. “UnityPoint at Home appreciates the proposed rate increase,” note execs Margaret VanOosten, Jenn Ofelt, and Cathy Simmons with Iowa health system UnityPoint Health in the system’s letter to CMS.

However, “due to the increased demand on the home health industry as a result of the COVID-19 pandemic as well as the lack of coverage for home health services delivered remotely, I strongly encourage CMS to implement a larger increase,” urges Lori Webb with Southwestern Illinois Visiting Nurse Association in her letter. “Annual increases ... have not kept pace with recent increases in the cost of labor and other resources necessary to deliver care. The significant increase in such costs adds to financial pressure on providers already facing numerous challenges and impacts access to care for patients.”

Plus: “The market basket and annual update factors in recent years do not align with recent increases in home health providers’ staffing and other costs,” Webb points out. “CMS should consider rising labor costs in particular when finalizing rates for CY 2022.” she urges.

“Payment adjustments over time have not kept pace with increased costs attributable to labor, technology, and mileage,” the UnityPoint letter stresses. “This is due in part to CMS’ overly broad application of behavioral assumptions beginning in CY 2020. As a nonprofit with small operating margins, we struggle with embedded assumptions that are in reaction to bad actors and penalize an entire industry that is meeting patients at their preferred point of care — their homes.”

Instead: “We would reiterate our request that CMS employ a targeted approach to behavioral assumptions,” VanOosten, Ofelt, and Simmons plead. “CMS has the data to make informed enforcement decisions, yet we are perplexed at the continued use of behavioral assumptions that are adversely impacting small and nonprofit HHAs.”

Many commenters also take aim at the data bombshell CMS dropped in the rule regarding budget neutrality. “We determined the CY 2020 30-day base payment rate was approxi­mately 6 percent higher than it should have been, and would require temporary retrospective adjustments for CY 2020 and subsequent years until a permanent prospective adjustment could be implemented in future rulemaking,” CMS said in the proposed rule published in the July 7 Federal Register.

CMS is proposing to “establish a methodology aimed at ensuring budget neutrality that is projected to produce a further rate reduction,” blasts Marcia Tetterton with the Virginia Association for Home Care and Hospice.

“There are deep concerns with the strength and applica­bility of the data collected during a pandemic when services to patients was impeded by concerns of spread of the virus, the availability of personal protection equipment, patients delaying medical care and procedures and other components that could skew estimated usage and behavior,” maintains Humana official Joy Cameron in the insurer and Kindred at Home parent’s comment letter.

Humana is one of many commenters that cite “various independent data analyses that show that there has been an underpayment of home health agencies during the initial rollout of the Patient Driven Grouping Model.” The most commonly referenced source is the study by health economics consulting firm Dobson DaVanzo & Associates that shows PDGM payments are as much as 22 percent under budget-neutral levels (see HCW by AAPC, Vol. XXIX, No. 33)

Instead: CMS should “withdraw any changes proposed to the PDGM Model that are based on 2020 care utilization data” — such as that 6 percent overpayment figure — “and do not use model year 2020 as a basis for payment,” urges Providence CEO Rod Hochman in the Washington health system’s comment letter.

The budget neutrality issue intersects with the -4.36 percent behavioral adjustment cut CMS applied when PDGM launched in 2020. “Based on analysis of CY 2020 Medicare claims data, home health providers’ actual behaviors are inconsistent with assumptions related to clinical group coding and LUPAs, which provided the basis for most of the of the -4.36 percent reduction applied by CMS in the rates,” maintains Tetterton in VAHC’s letter. “In light of data showing that these assumptions were not borne out, we do not believe CMS’ proposal to continue the -4.36 percent payment adjustment is justified.”

Instead: “CMS should replace its suggested methodology for assessing whether behavioral changes of HHAs resulted in PDGM achieved budget neutrality in comparison to the HHPPS HHRG payment model with a methodology that focuses on behavioral changes, not change in average case mix weight,” urges Rachel Hammon with the Texas Association for Home Care and Hospice in its comment letter. “The proposed methodology is fatally flawed in that it does not assesses whether HHA behavior changes under PDGM impacted Medicare home health spending in 2020.”

CMS also needs to scrap its total PDGM case mix recalibration, many commenters have told the agency. “Annual recalibration is not required under the statute and, in fact, CMS has refrained from rebalibrating case mix weights in previous years of the home health prospective payment system,” points out Ascension exec Peter Leibold in the St. Louis-based health system’s comment letter. “Given this flexibility and the impacts of the [Public Health Emergency], we encourage CMS to refrain from recalibrating the case mix weights for CY 2022. It is unclear at this stage the degree to which home health care delivery in 2022 will be comparable to care delivery and utilization in 2020.”

Tetterton agrees, noting that “given atypical trends, the use of CY 2020 data for rate-setting or case-mix recalibration may be inaccurate and cause distortions in payment as CY 2020 data may not be representative of utilization in CY 2022. Instead, CMS should maintain the current set of case-mix weights for CY 2022 and reevaluate more recent data in future rulemaking,” she urges.

Bottom line: “The pandemic hit acute care and skilled nursing facilities hard and fast with a lot of media attention. Home health was impacted on a bit of a delay as events unfolded and is still dealing with the short- and long-term impacts with respect to patient acuity and the increased demands for care in the home,” Cindy Krafft with Kornetti & Krafft Health Care Solutions says in her comment letter. “Please consider that the data for 2021 and beyond will be impacted by this and decisions about ... enacting behavioral adjustments or changing PDGM should not just look at numbers of visits, functional levels or coding with as assumption of payment alone causing these changes,” Krafft requests.

Note: The 143-page proposed rule is at www.govinfo.gov/content/pkg/FR-2021-07-07/pdf/2021-13763.pdf.

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