Home Health & Hospice Week

CMS doesn’t budge from 5-8% figure in final rule.

Home health agencies and their representatives had plenty to say about a value-based purchasing program slated for 2016, but will CMS listen?

Reminder: This summer, the Centers for Medicare & Medicaid Services revealed plans to implement a “value-based purchasing” program, formerly known as pay for performance, for home health agencies in up to eight states in 2016. CMS expects to reward or penalize agencies from 5 to 8 percent based on their performance with as-yet-named outcome measures (see related story, p. 314).

While not formally proposing the program, CMS told agencies to expect rulemaking next year on the topic and to offer thoughts about a VBP program structure.

Commenters who addressed the topic were almost universally against using such a large re-ward/penalty pool. The pool size is a bad idea be-cause the “Medicare margin for [the] HH benefit is small,” said Allina Health’s Tracey Stanich With-erow in a comment letter. “The suggested amount of payment withheld places affected HHAs at risk of eliminating resources necessary to achieve high performance and potentially at risk of closure,” she told CMS in her letter.

For beneficiaries, “the proposed withholds of 5 to 8 percent would reduce payments that, in combination with the ongoing ACA-mandated cuts, will negatively impact beneficiary access to home health services in participating states,” insisted Tonya K. Wells with Trinity Health in Michigan, in her comment letter.

Big picture: “With the type of penalty you are recommending, there will be a risk for more home health agencies to go out of business and create access issues for patients to home health, which is the least expensive care in the continuum,” said Advanced Home Care in North Carolina in its comment letter. “This will further drive up health care costs as patients either seek other more costly health care options or fail to address health issues,” Advanced told CMS.

“It concerns us that the potential risk embedded in the proposed HHA VBP is significantly larger than in previously implemented VBP models,” said John Beard of Alacare Home Health & Hospice in Alabama, in his comment letter. CMS notes in the 2015 HH PPS final rule that the hospital VBP program puts only 1.25 percent of a hospitals’ payment at risk, and that figure will cap out at 2 percent in 2017. The up-to-8 percent pool is “potentially too large for many in the home health industry to bear in light of current and proposed payment reductions,” Beard said.

The problem is that hospitals average a much smaller Medicare profit margin than HHAs, points out consultant Pat Laff with Laff Associates in Hilton Head Island, S.C. Hospitals’ average margins usually run 1 to 2 percent, while HHAs have been in the high teens during PPS’s most profitable times. Even though HHA average profit margins are on the wane — 14.4 percent in 2012 and 12.6 percent projected in 2014, according to the Medicare Payment Advisory Commission — they are still considerably higher than hospitals’ margins.

HHAs need a large reward/penalty pool for motivation, CMS says in the final rule published in the Nov. 6 Federal Register. “We believe the payment adjustment at risk would provide an incentive among all HHAs to provide significantly better quality through improved planning, coordination, and management of care,” CMS maintains.

Guinea pigs: The HH VBP model “presents an opportunity to test whether larger incentives than what have been previously tested will lead to even greater improvement in the quality of care furnished to beneficiaries,” CMS says in the rule.

CMS is also basing the larger reward/penalty pool on conclusions drawn from the P4P demonstration that ran in 2008 and 2009. “The results of that Demonstration found limited quality improvement in certain measures,” CMS says in the final rule. “One important lesson learned from the HHPFP Demonstration was the need to link the HHA’s quality improvement efforts and the incentives. The Demonstration suggested that future models could benefit from ensuring that incentives are reliable enough, of sufficient magnitude, and paid in a timely fashion to encourage HHAs to be fully engaged in the quality of care initiative.”

Commenters: Choose Outcomes Carefully

Many commenters also had concerns about which outcome measures CMS will use to determine the payments. “The current OASIS measures, although risk adjusted, leave much to be desired as a comparative measurement,” said Pamela Hall of Athens Regional Home Health in Georgia, in her comment letter on the proposed rule. “Inter-rater reliability in scoring OASIS can never be totally eliminated despite CMS interpretive guidance and ongoing staff education, not when so many clinicians across the country are involved in scoring OASIS questions,” Hall pointed out in the letter. 

Gaming concerns: Multiple commenters questioned the reliability of self-reported OASIS data for determining VBP payments. “It is … hard to understand how some agencies’ numbers can im-prove 10 percentage points or more on any given OASIS outcome measure from one quarter to the next,” Hall said. “Frankly, it begs the question of outright ‘fudging’ of patient scores.”

“We need measures that are not just a ‘data dump,’” said one Kentucky commenter in her letter. “The not-so-honest home cares can just mark a higher number on their OASIS scores and see a reward instead of a penalty,” she warned. “If this happens, then the fraud that CMS has already seen in home care will become more out of hand and home cares who are playing by the rules will be penalized even further and will go out of business,” she says. Mean-while, “the for-profit aggressive home care corporations will excel with their fraudulent behaviors.”

The commenter suggested emergent care and hospitalization measures for use. “ACH and Emergent care without hospitalization have become claims-based and are much more accurate in the calculations,” she said in her letter.

On the other hand: Agencies complain ER and hospitalization measures are affected by many factors out of their control.

Bud Langham of Texas suggested that CMS use a panel of industry experts to choose measures.

The Illinois Hospital Association urged CMS to consider different measures for hospital-based and freestanding agencies.

As in the demo, multiple commenters in-cluding the Hospital & Healthsystem Association of Pennsylvania suggested CMS reward agencies who improve the most in addition to the high-achievers.

Keep Your Eyes Peeled In 2015

HHAs should find out next year whether CMS heeds their advice, warnings and suggestions. The agency may include VBP as part of the 2016 HH PPS rule, or it may publish it as a separate rule of its own.

The mechanics of the VBP program will be complicated, and thus require lengthy rulemaking, Laff expects. So don’t be surprised to see a separate VBP rule. 

Note: The HH PPS final rule is online at https://federalregister.gov/a/2014-26057.