Home Health & Hospice Week

Is the budget neutrality cup half full or half empty?

Home health agencies have been dead set against the so-called behavioral adjustment cuts under the Patient-Driven Grouping Model since the payment system’s inception. But Medicare won’t be giving it up any time soon.

In comments on the 2022 home health proposed rule, providers and their representatives urged the Centers for Medicare & Medicaid Services to make a variety of changes regarding the cut, ranging from getting rid of it altogether to targeting it at certain providers to de-linking it to case mix weight (see HCW by AAPC, Vol. XXX, No. 34).

Reminder: In 2020, CMS reduced PDGM payment rates by 4.36 percent based on behaviors it assumed agencies would take in reaction to the new payment model. They related to comorbidity coding, Low Utilization Payment Adjustment visits, and diagnosis coding.

CMS pledges it “will consider all alternative approaches as we continue to develop and refine a methodology for annually determining the difference between assumed versus actual behavior changes on estimated aggregate expenditures.” But changes, if any, are not on deck for 2022. The methodology and any associated payment adjustment based on the difference between assumed versus actual behavior change on estimated aggregate expenditures will be made through future notice and comment rulemaking,” CMS says in the rule published in the Nov. 9 Federal Register.

Although the National Association for Home Care & Hospice “advocated for CMS to roll back the 2020 behavioral adjustment, CMS continues to apply the 4.36 percent adjustment,” NAHC laments in its rule analysis. “This ‘inaction’ is consistent with CMS’s general approach of instituting limited changes until full 2020 data is available for evaluation,” the trade group observes.

“The 4.36 percent payment cut to home health included in the … Final Rule for Calendar Year (CY) 2022 is not supported by data,” protests The Partnership for Quality Home Healthcare in a release. That’s “despite the Partnership’s consistent efforts to present outside data analysis indicating that the behavioral assumption rate cut is unjustified,” the lobbying group notes.

In comments on the proposed rule, “the Partnership outlined concerns related to CMS’ budget neutrality methodology while also highlighting significant increases in labor costs across the home health sector,” it continues. “A recent labor cost survey of Partnership members conducted by Dobson DaVanzo & Associates (DDA) in August demonstrates that wages and associated home health industry expenses rose significantly between 2019 and 2021.”

However: HHAs may want to feel thankful that CMS isn’t implementing even further behavioral adjustment-related cuts. In the proposed rule, the agency noted that “the CY 2020 30-day base payment rate was approximately 6 percent higher than it should have been, and would require … a permanent prospective adjustment,” CMS said in the regulation published in the July 7 Federal Register.

“CMS needed to be cautious at this unsettled time, and we recommended CMS avoid taking premature steps that could disrupt a fragile health care system based on a myriad of assumptions and limited data from a chaotic period,” NAHC President Bill Dombi notes in the trade group’s newsletter. “In that respect, NAHC appreciates that CMS is avoiding taking potential actions without reliance on comprehensive data.”

And a positive change to the behavioral adjustment could lie ahead. “We note CMS’ commitment in the final rule to consider all alternative approaches to the budget neutrality methodology and we look forward on working with them to properly address this in future rulemaking,” notes PQHH’s Joanne Cunningham in a release.