Home Health & Hospice Week

CMS wants to hear from you on wage index woes.

Home health agencies will see an additional $250 million in Medicare payments next year — as long as punishing behavioral adjustment cuts don’t get in the way.

The Centers for Medicare & Medicaid Services will increase payment rates 1.3 percent in 2020, the agency says in the 2020 Home Health Prospective Payment System proposed rule it released July 11. That increase reflects a payment update percentage of 1.5 percent as required by the Bipartisan Budget Act of 2018 (a $290 million increase), and a 0.2 percent decrease due to rural add-on changes also mandated by BBA 18 ($40 million decrease), CMS explains.

But industry experts aren’t so sure those extra dollars will make it into HHAs’ pockets. That’s because CMS’s behavioral adjustment 8 percent decrease may be way off the mark, cutting into agencies’ pay (see related story, p. 194).

Whether the full pay increase filters through to you will also depend on how your patients are paid for under the drastically new Patient-Driven Groupings Model. PDGM cuts therapy as a case mix factor altogether and makes diagnosis coding a much more important factor in designating payment levels, among other changes.

When estimating financial impact, CMS warns that “the combined effects of all of the changes vary,” according to the rule published in the July 18 Federal Register. “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,” the agency qualifies.

You can get help estimating the impact on your agency by using CMS’s grouper tool, which it will update to reflect the newest ICD-10 code inclusions, and the Home Health Claims-OASIS Limited Data Set (LDS), CMS offers. The grouper is available at www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/HH-PDGM.html and the LDS file at www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/Data-Disclosures-Data-Agreements/DUA_-_NewLDS.html.

LUPA Calculations Get A Bit Tricky

CMS’s issuance of new rates is complicated by episodes that will span PDGM’s Jan. 1 start date. Medicare will base payments on an episode’s start date, so 60-day episodes beginning before Jan. 1 but ending after that date will be paid under the old PPS methodology, but with rates updated for 2020. To keep that change as simple as possible, CMS will not revise case mix weights for old PPS as it usually does annually, according to the rule. Those episodes will also receive Nonroutine Supply payments based on updated rates (see chart, p. 197). The base rate for 60-day episodes spanning into 2020 will be $3,221.43, up from $3,154.27 last year, CMS proposes.

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 $1,791.73, CMS proposes.

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. 197).

Reminder: Under PDGM, LUPA thresholds will vary from two to six visits based on the case mix category.

Keep an eye out: Don’t get too used to LUPA thresholds for certain case mix categories. “LUPA thresholds for each PDGM payment group will be reevaluated every year based on the most current utilization data available at the time of rulemaking,” CMS says in the rule.

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 for speech-language pathology.

For example: Using the proposed CY 2020 per-visit payment rates for LUPA periods that occur as the only period or an initial period in a sequence of adjacent periods, “if the first skilled visit is SN, the payment for that visit will be $276.14 (1.8451 multiplied by $149.66), subject to area wage adjustment,” CMS explains in the rule.

Rural Add-Ons Almost Gone In More Densely Populated Areas

The payment levels for rural add-ons will decrease, as finalized in the 2019 rule, CMS confirms in the 2020 proposed rule. Last year’s rule reduced the 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.” But in areas with “a population density of 6 individuals or fewer per square mile,” the add-on was 4 percent in 2019, and will be 3 percent in 2020, 2 percent in 2021, and 1 percent in 2022. All agencies not fitting in those two categories saw an add-on of 3 percent in 2019, and 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

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 proposed 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 proposes increasing the FDL to 0.63.

Watch for: CMS will use updated data for its final rule calculations, and may change the FDL figure accordingly, it reminds readers.

List Of Wage Index Woes Is Long

CMS may finally be ready to fix some of the wage index problems HHAs have complained about for years.

“Historically, we have calculated the home health wage index values using unadjusted wage index values from another provider setting,” CMS acknowledges in the proposed rule — namely, hospitals. “Stakeholders have frequently commented on certain aspects of the home health wage index values and their impact on payments.”

Complaints have included the system’s wild swings in some wage index areas, creating unfair competition for staff with hospitals who can request reclassification to higher categories, using old data, and creating a floor where an area’s index won’t go under the rural index figure for the state (see Eli’s HCW, Vol. XXVI, No. 40-41).

Now’s your chance: “We are soliciting comments on concerns stakeholders may have regarding the wage index used to adjust home health payments and suggestions for possible updates and improvements to the geographic adjustment of home health payments,” CMS says in the proposed rule.

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.

Note: CMS will take comments on the rule until Sept. 9. Instructions for commenting are in the rule at www.govinfo.gov/content/pkg/FR- 2019-07-18/pdf/2019-14913.pdf.

See information on the rule’s quality-related provisions in an upcoming issue of Eli’s Home Care Week.