Home Health & Hospice Week

HHAs’ pay exceeds costs by 34%, according to feds.

If you are shocked that Medicare officials are proposing to strip more than $1.3 billion from home health payments in 2023 due to agencies’ supposed behavior changes, you aren’t alone.

But the Centers for Medicare & Medicaid Services lays out an extensive case for the -7.69 percent behavioral adjustment reduction, addressing:

• Cost report data. “The CY 2021 national, standardized 30-day period payment rate was $1,901.12, which is approximately 34 percent more than the estimated CY 2021 30-day period average facility cost of $1,420.35,” CMS calculates in the rule released June 17. In other words, agencies had a 34 percent profit margin on Medicare payments.
• Claims data. “The average number of visits for a 30-day period of care in 2017 was estimated to be 10.5 visits for non-LUPA, non-PEP 30-day periods of care,” CMS notes in the rule. “Using actual CY 2021 claims data, the average number of visits in a non-LUPA, non-PEP 30-day period of care was 8.81 visits — a decrease of approximately 16 percent.”
• Medicare Payment Advisory Commission. “In MedPAC’s March 2020 Report to Congress, their review of home health payment adequacy found that ‘access is more than adequate in most areas and that Medicare payments are substantially in excess of costs,’” the rule notes.
• Inflation. “Cost growth in recent years has been lower than the annual payment updates,” CMS notes in the rule. Attorney Robert Markette Jr. with law firm Hall Render finds that assertion dubious. “This … claim is hard to fathom given the history of reimbursement updates over the last few years as well as the recent pandemic, record inflation and a significant home health staffing crisis which has driven up employee pay, especially for nurses, which have all contributed to increased costs,” Markette rebuts in online analysis.
• COVID. “We recognize that the COVID-19 PHE presented unique challenges for all healthcare settings, including HHAs,” CMS says. But CMS’s methodology “controls for the effects of the COVID-19 PHE,” the agency insists.
• Law. The Bipartisan Budget Act of 2018 implementing the Patient-Driven Groupings Model “requires that in calculating the standard prospective payment amount ... the Secretary must make assumptions about behavior changes that could occur as a result of the implementation of the 30-day unit of service,” the rule points out.
• History. CMS has been warning agencies about inflated payment rates for a while, it takes pains to point out in the rule. “We initially determined a negative 8.39 percent behavior change adjustment to the base payment rate would be needed in order to ensure that the payment rate in CY 2020 would be budget neutral, as required by law,” CMS notes. “However, based on the comments received and reconsideration as to the frequency of the assumed behaviors during the first year of the transition to a new unit of payment and case-mix adjustment methodology, we finalized … a negative 4.36 percent behavior change assumption adjustment … in order to calculate the 30-day payment rate in a budget-neutral manner for CY 2020,” the agency recalls.

The outcome: CMS expected agencies to change their behaviors around clinical group coding, comorbidity coding, and LUPAs. “The three assumed behavior changes did occur as a result of the implementation of the PDGM,” CMS claims. “Additionally … changes in the provision of therapy and changes in functional impairment levels also occurred,” according to the rule.