Home Health & Hospice Week

PDGM to create winners and losers.

A payment rate increase that would usually draw praise is getting largely ignored as home health agencies try to figure out what their finances will look like in 2020 under the Patient-Driven Groupings Model.

Payment changes for next year should increase home health agency reimbursement by $250 million, or 1.3 percent, the Centers for Medicare & Medicaid Services says in the 2020 final rule released Oct. 31. “This reflects the effects of the CY 2020 home health payment update percentage of 1.5 percent ($290 million increase), and a 0.2 percent decrease in payments due to the rural add-on percentages mandated by the Bipartisan Budget Act of 2018 for CY 2020 ($40 million decrease),” CMS explains.

The forecast also includes budget-neutral wage index changes, outlier calculations, and of course, the behavioral cut (see related story, p. 314).

Even with a behavior adjustment that’s nearly half the size of the one proposed back in July, experts aren’t sure the rate increase will actually materialize.

For example: Low Utilization Payment Adjustments are harder to avoid when the LUPA threshold is a moving target for different case-mix categories, points out attorney Robert Markette Jr. with Hall Render in Indianapolis. The money CMS has cut out for that gaming behavior may be lost.

And even if the pay bump comes through in the aggregate, individual agencies will be “winners and losers” based on how the PDGM system hits them, Markette notes.

“The combined effects of all of the changes vary by specific types of providers and by location,” CMS acknowledges in the rule. “Some individual HHAs within the same group may experience different impacts on payments than others due to the distributional impact of the CY 2020 wage index, the extent to which HHAs are affected by changes in case-mix weights between the current 153-group case-mix model and the case-mix weights under the 432-group PDGM, the percentage of total HH PPS payments that were subject to the low utilization payment adjustment (LUPA) or paid as outlier payments, and the degree of Medicare utilization.”

You can get help estimating the impact on your agency by using CMS’s grouper tool and the Home Health Claims-OASIS Limited Data Set (LDS), CMS offers. The grouper is available at www.cms.gov/center/provider-type/home-health-agency-hha-center.html and the LDS file at www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/Data-Disclosures-Data-Agreements/DUA_-_NewLDS.html.

Pay Attention To Which LUPA Rates Apply

CMS’s issuance of new rates is complicated by episodes that will span PDGM’s Jan. 1 start date.

Before Jan. 1: “For 60-day episodes (that is, not LUPA episodes) that begin on or before December 31, 2019 and end on or after January 1, 2020 (episodes that would span the January 1, 2020 implementation date), payment made under the Medicare HH PPS will be the CY 2020 national, standardized 60-day episode payment amount,” CMS explains in the final rule.

To reduce burden on HHAs — not to mention Medicare contractors — CMS won’t revise case mix weights for old PPS as it usually does annually, according to the final rule. Those episodes will receive Nonroutine Supply payments based on updated rates, however (see chart, p. 317). CMS will update the rates with the 1.3 percent increase, it points out in the final rule — it just won’t reshuffle the case mix weights between categories.

The base rate for 60-day episodes spanning into 2020 will be $3,220.79, down slightly from the proposed $3,221.43, but up from $3,154.27 last year.

Jan. 1 and After: For episodes that begin (and end) after Jan. 1, Medicare will pay under the PDGM 30-day billing episode methodology. Unlike with current PPS, NRS rates are bundled into the rate. The base rate for 30-day episodes in 2020 will be $1,864.03, up from $1,791.73 in the July proposed rule.

Low utilization payment adjustment payments will be based on the year in which the visits occur. However, episodes spanning Jan. 1 will be paid under the current five-visit LUPA threshold — even though visits occurring after Jan. 1 will be paid under the updated 2020 LUPA rate (see chart, p. 317).

Reminder: Under PDGM, LUPA thresholds will vary from two to six visits based on the case mix category and will be “reevaluated” annually for change, CMS says.

One LUPA provision will stay the same. PDGM will retain PPS’s policy of paying a LUPA add-on for first visits — 1.8451 for skilled nursing, 1.6700 for physical therapy, and 1.6266, the final rule says.

Tip: Don’t be surprised to see some institu­tional admission source LUPA thresholds that are less than their community counterparts, CMS explains in response to a commenter. “The LUPA threshold does not necessarily relate to the case-mix weight of the 30-day period,” CMS points out.

Ask Lawmakers For Rural Add-On Help

Despite numerous comments on the topic, CMS’s hands are tied when it comes to the rural add-on phase-out, the agency reminds in the final rule. The payment levels for rural add-ons will decrease, as finalized in the 2019 rule, to 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.” But in areas with “a population density of 6 individuals or fewer per square mile,” the add-on will be 3 percent in 2020, 2 percent in 2021, and 1 percent in 2022. All agencies not fitting in those two categories will see 2 percent in 2020, and 1 percent in 2021.

Congressional intervention will be required to save rural add-ons from elimination altogether for “high utilization” counties in 2021, and all other counties except those deemed as “low population density” in 2022.

Outlier Threshold To Increase — But Less Than Proposed

The 2020 rule makes changes to the outlier calculation, raising the bar for outlier payment qualification.

How outliers work: Under the calculation, once an agency exceeds a fixed dollar loss (FDL) figure, Medicare kicks in 80 percent of costs based on average per unit calculations. “There is a trade-off between the values selected for the FDL ratio and the loss-sharing ratio,” CMS explains in the final rule. “A high FDL ratio reduces the number of episodes or periods that can receive outlier payments, but makes it possible to select a higher loss-sharing ratio, and therefore, increase outlier payments for qualifying outlier episodes or periods. Alternatively, a lower FDL ratio means that more episodes or periods can qualify for outlier payments, but outlier payments per episode or per period must then be lower.”

CMS aims to make sure outlier payments do not exceed 2.5 percent of total home health payments by Medicare, the rule elaborates.

CMS proposes to keep last year’s 0.51 FDL for episodes that span the Jan. 1 PDGM start date. But for episodes beginning Jan. 1 or later, CMS will increase the FDL to 0.56. That’s less than the 0.63 FDL proposed back in July.

CMS used “updated claims data and the final CY 2020 payment rates” to reduce the FDL in the final rule, it explains.

No Wage Index Changes — Yet

In the July proposed rule, CMS solicited comments on “concerns stakeholders may have regarding the wage index ... and suggestions for possible updates and improvements to the geographic adjustment of home health payments.”

Commenters gave CMS an earful on topics ranging from a wage index floor to cost reports used as a data source for a new HHA-specific index.

CMS finalizes the wage index changes as-is, but says it “will consider these recommendations for future rulemaking.”

As finalized for 2019, the labor-related share of home health payments — which are subject to the wage index adjustments — will remain 76.1 percent and the non-labor-related share 23.9 percent, the rule says.