Home Health & Hospice Week

New PDGM is HHGM with a few tweaks.

If you didn’t like Medicare’s ideas on home health payment reform last year, you’re probably not going to be happy with its newly proposed model either.

Why? The Patient-Driven Groupings Model unveiled in the 2019 Home Health Prospective Payment System proposed rule is largely the same as the Home Health Groupings Model that the Centers for Medicare & Medicaid Services proposed — and then withdrew — in 2018’s rule.

One big difference, however, is the price tag. As required in the Bipartisan Budget Act of 2018 enacted earlier this year, CMS has proposed the new PDGM payment reform model as budget neutral. That’s in sharp contrast to the agency’s plan for HHGM to strip nearly $1 billion from home health spending in its first year alone.

“Budget neutrality is certainly a good thing,” even if it “was expected based on the Bipartisan Budget Act of 2018,” notes reimbursement expert M. Aaron Little with BKD in Springfield, Missouri.

“Budget neutral is a major improvement — if it holds up,” cautions consultant Joe Osentoski with Quality in Real Time in Troy, Michigan.

While budget neutrality is a major difference, it’s about the only one. As with HHGM, under PDGM agencies would see reimbursement for their episodes determined by four steps once the model takes effect in January 2020:

Step 1: Classify episodes into four categories based on timing and source of admission — Community Early, Community Late, Institutional Early, Institutional Late. Under PDGM, higher reimbursement would go to “institutional” episodes (those with hospital, skilled nursing facility, and inpatient rehab facility stays within 14 days of home health admission) and those that are “early” — the first or only in a series of nonadjacent episodes.

Don’t forget: The “early” versus “late” designation is set by another huge payment change — a switch to a 30-day billing period, as opposed to PPS’s current 60-day episode. HHAs railed against shortening the billing period length last year, but the BBA 18 law required the change.

Based on industry comments, CMS did explore the idea of considering emergency department and/or observation stays for the source of admission, it says in the rule scheduled for publication in the July 12 Federal Register. “Home health stays with preceding observational stays and ED visits show resource use that falls between that of the institutional and community categories,” CMS allows.

“However, the resource use is not equivalent to that of the institutional settings; therefore, we do not believe it appropriate to include observational stays and ED visits in the institutional category for the purposes of the PDGM,” CMS explains.

CMS also looked into developing a third admission source category just for observational stays and ED visits. “Early” periods see a 6 percent increase in resource use and “late” periods see a 10 percent increase, according to the rule. That compares to 19 percent and 43 percent for institutional stays.

But “we are concerned that a third admission source category for observational stays and ED visits could create an incentive for providers to encourage outpatient encounters … thereby potentially inappropriately increasing costs to the Medicare program overall,” CMS says in the rule.

Numerous commenters on HHGM urged CMS to make the first two 30-day episodes “early.” CMS again shoots down that request, noting that “HHAs provide more resources in the first 30-day period of home health (‘early’) than in later periods of care.”

The early/late categorization “serves to better align payments with already existing resource use patterns. This alignment of payment with resource use is not to be interpreted as placing a value judgment on particular care patterns or patient populations,” CMS maintains in the rule. “Our goal in developing the PDGM is to provide an appropriate payment based on the identified resource use of different patient groups, not to encourage, discourage, value, or devalue one type of skilled care over another.”

Step 2: Slot episodes into six clinical groupings based on principal diagnoses reported on the claim: Musculoskeletal Rehabilitation, Neuro/Stroke Rehabilitation, Wounds — Post-Op Wound Aftercare and Skin/Non-Surgical Wound Care, Behavioral Health Care (including Substance Use Disorder), Complex Nursing Interventions, Medication Management, Teaching and Assessment (MMTA). They are the same categories proposed under HHGM.

In last year’s rulemaking, many HHAs gave CMS an earful about the inadequacy of the groupings, particularly the MMTA category. CMS mostly dismisses the complaints, although it notes “we did … review and re-group certain codes based on commenter feedback.”

For example: “With regard to the classification of N39.0, Urinary tract infection, site not specified as an invalid code to group the home health period of care, we do agree that absent definitive information provided by the referring physician, a home health clinician would not know the exact site of a urinary tract infection (UTI),” CMS says. Therefore CMS will group N39.0 “under MMTA, as the home health services required would most likely involve teaching about the treatment for the UTI, as well as evaluating the effectiveness of the medication regimen” under PDGM.

CMS explored using MMTA subgroups, but found that “overall, using the MMTA subgroup model would result in more payment groups but not dramatic differences in case-mix weights across those groups,” according to the rule.

Step 3: Assign episodes as Low, Medium or High functional levels based on OASIS responses (see OASIS items, p. 188).

CMS rebuffs suggestions to add more OASIS items to the functional methodology.

The rule also notes that “the functional level adjustment is not meant to be a direct proxy for the therapy thresholds” that PDGM eliminates.

Step 4: Adjust for comorbidities based on secondary diagnoses. This last step is one place that CMS does make a significant change, compared with HHGM — but it may not be exactly what industry members were hoping for.

The difference: Instead of getting one adjustment level for any and all qualifying comorbidity diagnoses, PDGM would give episodes a “no,” “low,” or “high” comorbidity adjustment. An episode would receive no adjustment if it had no qualifying diagnoses, a “low” adjustment for one qualifying diagnoses from a group of 11 categories, and a “high” adjustment for two or more qualifying diagnoses from a group of 27 categories. (See qualifying diagnoses groups, this page.) Episodes would receive either “low” or “high” adjustments, not both.

In other words, “the low comorbidity adjustment amount would be the same across all 11 individual comorbidity subgroups,” CMS explains. “Similarly, the high comorbidity adjustment amount would be the same across all 27 comorbidity subgroup interactions.”

CMS made the change because “compelling evidence that patients with certain comorbidities and interactions of certain comorbid conditions … have home health episodes with higher resource use than home health episodes without those comorbidities or interactions,” it acknowledges.

The result: PDGM’s four steps result in one of 216 Home Health Resource Groups. That’s up from 144 case mix groups under HHGM, due to the comorbidity methodology change. (Reminder: The original HHGM proposal contained 128 groups.)

What’s Missing?

As with HHGM, PDGM does not include therapy utilization at all in its case mix calculation methodology.

Based on urging from the Medicare Payment Advisory Commission, HHS Office of Inspector General, and others, CMS has expressed an interest in cutting therapy utilization from its HH PPS case mix system for quite some time. But when it proposed the change last year, the agency received a lot of pushback from industry members (see Eli’s HCW, Vol. XXVI, No. 37).

Thanks to BBA 18, that issue is now out of CMS’s hands. “We have no regulatory discretion in this matter,” CMS says, referring to the law that “prohibit[s] the use of therapy thresholds as part of the overall case-mix adjustment for CY 2020 and subsequent years.”

But CMS does note that PDGM “has other case-mix variables to adjust payment for those patients requiring multiple therapy disciplines,” the rule indicates when discussing the model’s functional determination case mix step. “We believe that also accounting for timing, source of admission, clinical group (meaning the primary reason the patient requires home health services), and the presence of comorbidities will provide the necessary adjustments to payment to ensure that care needs are met based on actual patient characteristics.”

Industry observers, however, are less sanguine about the prospect of PDGM making up for the therapy utilization factor elimination.

Be prepared: “Elimination of therapy thresholds will have a significant impact on service delivery: both type and amount,” Osentoski predicts.

Also: Separate Nonroutine Supplies (NRS) rates are also missing from the PDGM methodology. Those rates would be rolled into the case mix group amounts, CMS proposes.

Note: See the 600-page 2019 HH PPS proposed rule at https://s3.amazonaws.com/publicinspection.federalregister.gov/2018-14443.pdf.