August 27, 2020

Partnership Provides 2020 Data Demonstrating 4.36% Assumption-Based Cut to Home Health Must Be Reversed – Urges Elimination of Further Rate Cuts

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WASHINGTON – The Partnership for Quality Home Healthcare – a coalition of home health leaders dedicated to developing innovative reforms to improve the program integrity, quality, and efficiency of home healthcare for our nation’s seniors – submitted comments this week to the Centers for Medicare & Medicaid Services (CMS) in response to the CY 2021 Home Health Prospective Payment System (“HH PPS”) Proposed Rule. In addition to commenting specifically on the policies included in the proposed rule, the Partnership offered comments regarding the impact of COVID-19 on patient care.

The Partnership’s comments focus largely on the implementation of the Patient Driven Groupings Model (“PDGM”), including assumptions (actuarial and behavioral) that were intended to keep payments level, however, have actually resulted in significant cuts to home health payments. These cuts negatively impact both patient access and care delivery at a time when home health care providers are facing enormous challenges due to the COVID-19 public health emergency.

As part of their comments, the Partnership outlines the results of an analysis of 2020 Medicare data completed by Dobson | DaVanzo & Associates, LLC – a health economics and policy consulting firm – which concludes that home health provider’s actual behaviors have been inconsistent with two of the three behavioral assumptions described by CMS in the CY 2020 HH PPS final rule as the basis for their estimate and justification for the prospective reduction to home health payments to ensure budget neutrality. The 2020 actual data confirms that the assumptions used as the basis of the 4.36 percent rate reduction were incorrect and did not reflect actual provider behavior thus far in 2020.

“Their analysis and findings from the first half of 2020 cast significant doubt regarding the accuracy of these behavioral adjustments being applied going forward,” the letter states. “The Partnership believes these findings, which are based on actual Medicare claims data from the first four months of CY 2020, provide justification for CMS to discard any previous CMS theoretical assumptions and projections of providers’ behavioral response to PDGM, and provide more than a sufficient basis to remove the -4.36 percent behavioral adjustment for CY 2021.”

According to the analysis, the two areas where the CY 2020 actual data did not align with CMS’ assumptions were in the Clinical Group Coding and low-utilization payment adjustment (LUPAs) threshold:

  • Regarding clinical group coding, CMS made assumptions that HHAs would likely change their documentation and coding practices in 100 percent of the cases and put the highest paying diagnosis code as the principal diagnosis code in order to generate higher-paying clinical group, however, the Dobson | DaVanzo analysis indicates that did not actually occur.
  • Regarding LUPAs, CMS assumed that in one-third of instances when a case is one or two visits away from the LUPA threshold, HHAs will provide an additional extra visit(s) solely in order to receive a full 30-day episode payment, however, the Dobson | DaVanzo analysis indicates that did not actually occur. According to their analysis, the overall number of LUPAs has been much higher under PDGM, rather than lower as CMS had assumed. The number of LUPAs actually increased upon implementation of PDGM for several months before moderating in April and May. This assumption represented the second most significant reduction to HH payments.

“The proposed -4.36 behavioral adjustment to HH payments for CY 2021 is excessive. Home health providers already face enormous challenges in delivering care to patients as the significant financial and clinical impact of the COVID-19 pandemic continues to affect our nation and health system. While we hope that as a nation, we will move past this public health crisis, the challenges for home health and other providers are likely to remain well into 2021,” the letter continues.

In light of the COVID-19 public health emergency, home health providers have experienced higher financial pressures, including the procurement of personal protective equipment as well as added measures to ensure infection control, protect and train staffing, and maintain overall care delivery, only some of which have been mitigated by CARES Act relief funds.

In addition, the Dobson | DaVanzo analysis quantifies that home health spending is about 21.6 percent lower than projected. This means that patient care for the Medicare home health population is being negatively impacted. “These effects threaten both delivery of care in the short term, particularly in rural areas, and the long term sustainability of the home health benefit if providers are forced to close locations as in other sectors of the economy,” the letter states.

“We encourage CMS to take the lessons learned through the first half of 2020 as information confirming the value and opportunity to ensure Medicare beneficiaries receive the skilled services they need within their home. We encourage CMS to step back on some of the analysis in implementing this new payment model and evaluate what improvements need to be made based on actual data,” the letter concludes.