Home Health & Hospice Week

Everybody loses under massive reduction.

If four years of rebasing cuts and repeated case mix creep reductions haven’t shut your doors yet, Medicare’s new PPS overhaul just may do it.

In the 2018 Home Health Prospective Payment System proposed rule issued July 25, the Centers for Medicare & Medicaid Services officially proposes the new payment model it revealed last winter — with just a few minor tweaks. Major features of the PPS revamp include eliminating therapy as a payment factor altogether, and reducing HH PPS episodes to 30 days (see more details about the Home Health Groupings Model, p. 304).

But home health agencies should be paying closest attention to the reimbursement impact of the system, experts warn. CMS estimates Medicare would cut home health spending by a massive $950 million — a 4.3 percent cut — just in the year it’s implemented, according to the final rule published in the July 28 Federal Register.

Alternative: CMS does mention the option of implementing HHGM is “a partially budget-neutral manner” instead, resulting in a $480 million (2.2 percent) cut in 2019, although it seems to prefer the entirely non-budget neutral approach.

If HHGM is implemented as proposed with the nearly $1 billion cut, the impact on HHAs will be “devastating,” warns attorney Robert Markette Jr. with Hall Render in Indianapolis.

The cut is “just insane,” says reimbursement consultant Melinda Gaboury with Healthcare Provider Solutions in Nashville, Tennessee.

Where Is The Budget Neutral Option?

“The use of a non-budget neutral transition to HHGM will have a negative impact on virtually all HHAs,” says William Dombi, VP for law for the National Association for Home Care & Hospice. “Closures in states that have a saturation of small providers are likely. High cost rural areas are also at risk,” Dombi tells Eli.

“We are not opposed to a new case mix adjustment model,” Dombi continues. “But it must be done in a budget neutral manner and be validated as reliable so that all classes of Medicare home health patients have access to care and that the HHAs that serve them are fairly paid.”

Losers: By design, episodes for patients receiving therapy services will see the biggest reimbursement hit under HHGM. The Medicare Payment Advisory Commission for years has been railing against including therapy utilization as a PPS factor, and CMS has agreed. HHGM is the avenue for finally making that elimination happen. But agencies that have a high ratio of therapy patients will see a significant pay cut as a result.

“If you’re an agency with a lot of therapy, you need to reconsider your model quickly,” Markette advises.

Expect to see HHAs facing steep losses to go after the more lucrative patients under HHGM, advises finance expert Pat Laff with Laff Associates in Hilton Head Island, South Carolina.

Winners: And who will those lucrative patients be? “HHAs with complex medical patients needing extensive nursing supports should see improved payment,” Dombi observes.

But whether Medicare will reimburse adequately for those supposed winners is an unanswered question, says Joy Cameron with the Visiting Nurse Associations of America. “Our concern is that they are not appropriately weighing the multiple chronic conditions and the growth of cognitive impairments (Alzheimer’s, dementia, etc.),” Cameron says. “We are still modeling exactly what the impacts would be for a variety of levels of care.”

“We need to make sure that the model appropriately pays for the needs that patients have,” Cameron tells Eli. “The average Medicare home health patient has 5 ADLs and multiple co-morbidities.”

Industry representatives aren’t the only ones worried about HHGM’s impact. Stock prices for publicly traded home health companies dropped by double digits on news of the payment reform rule provisions.

“The ever-changing payment structure for home healthcare makes this industry riskier than others,” said investment advising site The Motley Fool. “The reduction in payments for next year is smaller than this year’s cut, but beginning in 2019, the CMS plans to completely revamp its payments model in a manner that could reduce payments by 4.3 percent on a non-budget-neutral basis, or by 2.2 percent on a partially budget-neutral basis.”

What’s The Rush?

Industry experts agree that CMS needs to take radical payment reform slower than what’s indicated in the rule.

Right now, HHGM’s biggest problem is the speed with which CMS plans to implement it, Markette contends.

“HHGM was crafted and proposed by CMS without meaningful input from home health providers,” said Amedisys Inc. CEO Paul Kusserow in a July 27 earnings conference call. “Providing the industry only 60 days to comment on a total payment redesign after no prior collaboration with the industry seems to run counter to the current administration’s goal of transparency and reducing the regulatory burden for clinicians’ providers and patients in a way that increases quality of care and decreases costs,” Kusserow said.

CMS spent only two pages of its 2017 HH PPS final rule on HHGM, presented an overview of a preliminary HHGM in an Open Door Forum last August (see Eli’s HCW, Vol. XXV, No. 32), then issued a more detailed technical report about the model at the end of the year (see Eli’s HCW, Vol. XXVI, No. 44), and then held a related call in January.

“While we believe in and support payment reform that seeks to better align resource use and outcomes with reimbursement, we strongly urge CMS to leverage the experience and expertise in the industry to craft a new and viable payment model,” Kusserow continues. “This proposed payment model contains many uncertainties and carries with it the tradition of increased regulation and complexity of the Affordable Care Act. We need to be at the table to play the implications through with the policy makers; otherwise unintended consequences will invariably gum this up.”

There are just too many unknowns about the new model to roll it out in less than a year-and-ahalf, Laff says. CMS needs to make some major refinements to HHGM and test it with a demonstration project, Laff argues.

Plus: CMS’s rationale for HHGM seems to be all based on cost and claims data. The agency needs to provide some clinical foundation for choices such as moving to a 30-day episode, Markette contends.

And the cost data it’s using is woefully insufficient, finance experts claim. For example, many HHAs don’t include Nonroutine Supply (NRS) costs on their claims at all, Laff points out. That’s because there’s no direct reimbursement impact — NRS payments are set with a case mix system regardless of what supplies agencies include on the claim.

Likewise, cost reports no longer have a direct reimbursement impact either. Accordingly, HHAs don’t spend much time and resources on them, cost report experts relate.

When CMS goes to calculate agencies’ costs, they are significantly underrepresented due to problems like these. It follows the “Garbage In, Garbage Out” rule, Markette observes. If the data going in is skimpy, the results aren’t worth much.

“The industry has shot itself in the foot” with inadequate claims and cost reporting, Laff rues.

“Part of this we’ve done to ourselves” with the data omissions, Markette agrees.

If CMS fails to slow its implementation and forges ahead with a non-budget neutral HHGM approach, the agency may find it’s got a fight on its hands. Expect the lack of a budget-neutral approach “to be viciously attacked by all constituents,” says reimbursement expert M. Aaron Little with BKD in Springfield, Missouri.

“HHGM is our highest priority so we will take all necessary action to protect access to care,” Dombi vows.

Don’t be surprised if that means lawsuits, multiple industry veterans indicate.

“We question whether CMS has the unilateral authority to make such a proposed change without action by Congress,” says Keith Myers, chair of lobbying group The Partnership for Quality Home Healthcare, in a release.

Industry members are “hoping for reasonableness” from CMS, Markette says.

“It would be prudent for CMS to step back and consider a demonstration to make sure that all the aspects of HHGM are worked out prior to full implementation,” Cameron urges.

Meanwhile, CMS can expect a “robust response” to the rule via the stakeholder comment option, Markette expects. “They’re looking at their survival,” he notes.

HHAs are more between a rock and a hard place under this rule than in the past, due to the years of rebasing cuts they’ve already faced, Dombi notes.

“Very few HHAs closed as a result of the four years of rebasing cuts,” he acknowledges. “However, this time, these HHAs will have fewer options available to withstand rate cuts because the best options were already used from 2014-2017.”

A silver lining: HHAs that do make it through the implementation of the new Home Health Conditions of Participation and the HHGM revamp may find themselves in a better position than before, Markette predicts. That’s because those two stressful changes will eliminate some of the competition.

Note: See the proposed rule at www.gpo.gov/fdsys/pkg/FR-2017-07-28/pdf/2017-15825.pdf.