Home Health & Hospice Week

The 2023 home health proposed rule contains more reimbursement-impacting provisions than the draconian behavioral adjustment cut — some expected, some less so.

As in 2023 proposed payment rules for other provider types including hospices, the Centers for Medicare & Medicaid Services pitches the idea of capping negative wage index changes from one year to another at 5 percent for home health agencies (see policy details, HCW by AAPC Vol. XXXI, No. 12).

The 5 percent cap is “a permanent approach to smooth year-to-year changes in providers’ wage indexes,” CMS says in the home health rule released June 17. It “increases the predictability of home health payments for providers and mitigates instability and significant negative impacts to providers resulting from changes to the wage index,” claims the rule published in the June 23 Federal Register.

Commenters on this provision in the hospice rule have generally been supportive of it, although many have called for a lower cap — for example, 3 percent (see HCW by AAPC Vol. XXXI, No. 21).

One problem persists for wage index, however, notes the National Association for Home Care & Hospice in its rule analysis. “Certain areas had significant declines in their wage index in 2022 without the protection of a 5 percent cap,” NAHC notes. “CMS does not propose to protect these providers for 2022 despite providing that protection to inpatient hospitals,” the trade group points out.

CMS also proposes Low Utilization Payment Adjustment threshold changes in the home health rule.

Reminder: “In the CY 2019 HH PPS final rule … we finalized that the LUPA thresholds would be set at the 10th percentile of visits or 2 visits, whichever is higher, for each payment group,” CMS says in the rule. “This means the LUPA threshold for each 30-day period of care varies depending on the PDGM payment group to which it is assigned.” They go from a low of two visits to a high of seven.

CMS didn’t change LUPA thresholds last year because “visit patterns and some of the decrease in overall visits in CY 2020 may not be representative of visit patterns in CY 2022,” mainly “due to the COVID-19 PHE,” the rule says.

Now CMS wants to update LUPA thresholds based on 2021 data. “Visit patterns have stabilized,” the agency claims. “Our data analysis indicates that visits in 2021 were similar to visits in 2020. We believe that CY 2021 data will be more indicative of visit patterns in CY 2023 rather than continuing to use the LUPA thresholds derived from the CY 2018 data pre-PDGM.”

Breakdown: “There is not much variation in the updated LUPA thresholds,” CMS maintains. The majority of case-mix groups, 280, “had no change in their LUPA threshold. There are 120 case-mix groups that had their LUPA threshold go down by one visit and 18 case-mix groups that have their LUPA threshold go up by a visit. There are 12 case-mix groups that had their LUPA threshold go down by two visits and 2 case-mix groups that had their LUPA threshold go down by three visits,” CMS details in the rule.

CMS lays out the LUPA threshold changes in Table B26 in the rule.

And CMS plans to strip $40 million via “a proposed update to the fixed-dollar loss ratio (FDL) used in determining outlier payments,” the agency notes in its fact sheet about the rule.

Reminder: The FDL indicates when outlier payments kick in. “A high FDL ratio reduces the number of periods that can receive outlier payments,” while “a lower FDL ratio means that more periods can qualify for outlier payments,” CMS explains in the 2023 rule. CMS established an FDL ratio of 0.56 for 30-day periods of care in 2020 and maintained that in 2021. For 2022, CMS estimated that outlier payments would be about 1.8 percent of total HH PPS final rule payments if it maintained an FDL of 0.56 in CY 2022, so the agency bumped it down to 0.40 to get closer to the 2.5 percent outlier payment goal.

Now, CMS proposes to inch that figure back up to 0.44.