November 2, 2020

CMS Finalizes 4.36% Assumption-Based Rate Cut to Home Health in 2021 Despite Lawmaker & Provider Concerns

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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 – today expressed disappointment in the Centers for Medicare & Medicaid Services’ CY 2021 Home Health Prospective Payment System (“HHPPS”) Final Rule, which includes a 4.36 percent payment rate cut to the Medicare home health benefit.

Based on an analysis of 2020 Medicare data, the Partnership indicated that home health providers’ actual behaviors have been inconsistent with the behavioral assumptions described by CMS in the CY 2020 HHPPS final rule and are not justified 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 under the Patient Driven Groupings Model (PDGM).

“Despite data demonstrating that actual provider behaviors under PDGM did not reflect Medicare’s theoretical assumptions, and lawmaker concerns, CMS failed to remove the -4.36 percent behavioral adjustment for CY 2021,” said Joanne Cunningham, Executive Director of the Partnership. “Continuation of the -4.36 percent adjustment is clearly not supported by the data, which shows that payments are not budget neutral as the law requires. We remain concerned that home health spending has been significantly lower than what Congress budgeted, which could impact negatively on the home health system.”

According to the analysis by Dobson | Davanzo Health Economics Consulting, total payments in the Medicare home health program are about 12.5 to 18.3 percent lower than originally projected. 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. Despite projections and actuarial calculations, home healthcare providers did not change the manner in which they bill or code for services, or how they handle low-utilization payment guidelines. The data provided to CMS is based on 4.1 million claims.

“The home health community will continue to provide updated analysis to Congressional advocates, CMS and other officials to continue to press for a swift reconciliation of the rates. This is imperative now that CMS has finalized the payment rule for CY2021, which knowingly includes a rate reduction that doesn’t match provider behavior,” added Cunningham. “As home health providers continue to navigate the financial and operational pressures of the COVID-19 public health emergency, we will continue to work with policymakers to strengthen and improve the Medicare home health program.”