Home Health & Hospice Week

For once, HHAs have no rebasing or case mix creep cuts to contend with.

For the first time in nearly a decade, Medicare is proposing to increase home health agencies’ reimbursement rates instead of cut them.

While the rate increase for 2019 would be only a modest 2.1 percent, it comes after eight years of reductions — 0.4 percent in 2018; 0.7 percent in 2017; 1.4 percent in 2016; 0.3 percent in 2015; 1.05 percent in 2014; 0.01 percent in 2013; 2.3 percent in 2012; and a whopping 5 percent in 2011. In 2010, the last Medicare payment rate increase was 1.75 percent.

The 2.1 percent bump would mean a 60-day episode base rate of $3,151.22, up from $3,039.64 for 2018, notes the Centers for Medicare & Medicaid Services in the Home Health Prospective Payment System proposed rule released July 2.

The proposed increase, which would raise Medicare spending by $400 million next year, “reflects the effects of a 2.1 percent home health payment update percentage ($400 million increase); a 0.1 percent increase in payments due to decreasing the fixed-dollar-loss (FDL) ratio in order to pay no more than 2.5 percent of total payments as outlier payments (a $20 million increase); and a -0.1 percent decrease in payments due to the new rural add on policy mandated by the Bipartisan Budget Act of 2018 for CY 2019 ($20 million decrease),” CMS notes in a fact sheet about the rule scheduled for publication in the July 12 Federal Register.

“Any kind of proposed increase to the home health rates in today’s payment environment is a great thing,” says reimbursement expert M. Aaron Little with BKD in Springfield, Missouri. An increase of “2.1 percent certainly seems positive,” Little tells Eli.

Outliers To Be Slightly Easier To Obtain

CMS proposes decreasing the fixed-dollar loss ratio from the current 0.55 to 0.51 because analysis shows the current benchmark would result in outlier payments equaling only 2.3 percent of total estimated PPS payments in 2019, the rule says. Medicare aims to make 2.5 percent in outlier payments.

Refresher: The FDL sets how much of the outlier cost agencies must shoulder before the outlier payments kick in. Back in 2015, CMS raised the FDL from 0.45 to 0.55 because it estimated outlier payments would equal 2.8 percent under the 0.45 figure.

The FDL used to be much higher before CMS implemented the 10 percent cap on outlier payments after rampant outlier fraud and abuse in South Florida under PPS. The FDL was 1.13 percent in 2004.

CMS proposes keeping the loss-sharing ratio at 0.80 percent. Under that mechanism, Medicare pays 80 percent of the additional estimated costs above the outlier threshold amount, while agencies pick up the other 20 percent. The loss sharing ratio “preserves incentives for agencies to attempt to provide care efficiently for outlier cases,” CMS said in a previous PPS rule. Of course, if an agency’s real costs are below those estimated by CMS, the share it actually “pays” is lower than 20 percent.

BBA 18’s Rural Add-On Changes

In the rule, CMS includes a provision implementing the rural add-on mandate in the Bipartisan Budget Act of 2018 that was enacted back in February.

Reminder: BBA 18 reduces the reinstated 3 percent add-on to 1.5 percent in 2019 and 0.5 percent in 2020 for agencies “in the highest quartile of all counties ... based on the number of Medicare home health episodes furnished per 100 individuals” (see Eli’s HCW, Vol. XXVII, No. 8). But in areas with “a population density of 6 individuals or fewer per square mile,” the add-on will be 4 percent in 2019, 3 percent in 2020, 2 percent in 2021 and 1 percent in 2022, the law says. All agencies not fitting in those two categories will see an add-on of 3 percent in 2019, 2 percent in 2020, and 1 percent in 2021.

The rule goes into more detail about how CMS will place agencies into the “high utilization,” “low population density,” and “other” categories under the new add-on system. And it notes that “the determination applies for the entire duration of the period for which rural add-on payments are in place.” In other words, “there would be no changes in classifications” from 2018 to 2022.

How it will work: HHAs will “enter the FIPS state and county code, rather than the SSA state and county code, on the claim,” CMS says in the rule. “Many HHAs are more familiar with using FIPS state and county codes since HHAs in a number of States are already using FIPS state and county codes for State-mandated reporting programs.”

Note: The rule is at https://s3.amazonaws.com/public-inspection.federalregister.gov/2018-14443.pdf.