While evidence already confirms that home healthcare is a cost effective care setting with positive clinical outcomes for patients, the Partnership is working to further improve quality and access for the patients we serve.


On January 1, 2020, the Centers for Medicare & Medicaid Services (CMS) began implementing the Patient Driven Groupings Model (PDGM).

The implementation of PDGM that started on January 1, 2020 included a 4.36% rate reduction to the Medicare home health benefit. According to a new analysis, CMS’s purely assumption-based adjustments have been significantly incorrect for two of the three assumed changes predicted by CMS in the CY 2020 HHPPS final rule. These two assumptions are the primary justification for the 4.36% prospective reduction to home health payments to ensure budget neutrality.

The two areas where CMS’s assumptions were largely not in line with actual provider behaviors were Clinical Group Coding and the volume of Low-Utilization Payment Adjustment (LUPAs) care episodes:

  • Clinical Group Coding: HHAs did not change their documentation and coding practices to put the highest paying diagnosis code as the principal diagnosis code in order to generate higher-paying clinical group, as CMS predicted.
  • LUPAs: HHAs did not add extra visit(s) solely in order to receive a full 30-day episode payment and reduce LUPA payments, as CMS predicted. In fact, LUPAs actually increased significantly (due to COVID-19 and other effects) upon implementation of PDGM for several months before moderating in April and May at levels still higher than projected. This assumption represented the second most significant reduction to HH payments. Given the uncertainty of the impact of COVID-19, even in 2021, LUPA volume will certainly continue to be higher than CMS projected.

As a result, CMS’s own data show that home health spending in the early months of 2020 was significantly lower than projected. With current trends expected to continue, Medicare home health spending will be well short of the required budget neutral level. This reduced reimbursement negatively impacts the Medicare home health program and could potentially threaten access to care for vulnerable populations. That risk is increased with the CMS proposal to extend the erroneous adjustment through 2021.

The Partnership urges CMS to discard any previous CMS assumptions and projections of providers’ behavioral response to PDGM and eliminate the 4.36% behavioral adjustment cut for home health payment rates for the remainder of CY2020 and in the proposed CY 2021 rates.

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

>COMMENT LETTER: Partnership comments to CMS regarding the CY 2021 Home Health Prospective Payment System Proposed Rule

>ONE-PAGER: CMS: Eliminate 4.36% Assumption-Based Cut to Home Health


In October 2019, the Centers for Medicare & Medicaid Services (CMS) announced that the agency would hold the Home Health Review Choice Demonstration (RCD) in the remaining states of Texas, North Carolina, and Florida until home health agencies had the opportunity to transition to the Patient Driven Groupings Model (PDGM). At the time, the Partnership applauded the decision as a wise and prudent move while the home health sector prepared for the largest payment model change in two decades.

The RCD will require home health providers to choose either pre-claim, post-payment review, or a minimal review with a 25 percent payment reduction of their home health Medicare claims.

On August 21, 2020, CMS announced it would delay implementation of the RCD until following the duration of the COVID-19 public health emergency. Click here to learn more.

>HOME HEALTH CARE NEWS: CMS Announces New ‘Phased-In Approach’ to the Review Choice Demonstration

>RELEASE: Implementation of RCD Amidst Public Health Emergency Ill-Advised