CMS Continues Shift toward Value-Based Payments with New Home Health Groupings Model in Proposal

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On July 2, 2018, the Centers for Medicare & Medicaid Services (CMS) released a pre-publication version of its annual proposed rule outlining both payment and policy changes for home health agencies. In a press release announcing the proposed rule, CMS stated that the “three pillars” of empowering patients, increasing competition, and fostering innovation motivated the proposed changes. In response to both industry urgings and Congressional mandates in the Bipartisan Budget Act of 2018, CMS continues to restructure its policies to support the ongoing shift from volume-based to value-based healthcare. With this proposed rule, CMS recommits to modernizing the Medicare program and attempting to align payment methodologies with patient needs, although it remains to be seen which of its proposed changes CMS will finalize.

Patient-Driven Groupings Model

The Bipartisan Budget Act of 2018 required CMS to engage in notice and comment rulemaking to adjust the Home Health Prospective Payment System’s (HH PPS) case-mix system to better align home health payments with patient care needs. To meet this requirement, CMS proposes case-mix methodology refinements through the implementation of a new budget-neutral Patient-Driven Groupings Model (PDGM) that would be applicable to all home health payments under the HH PPS. In the CY 2018 HH PPS proposed rule, CMS proposed an alternative case-mix model called the Home Health Groupings Model (HHGM). The HHGM was not finalized, allowing CMS additional time to consider public comments and potential refinements. The proposed PDGM is based on the HHGM, but represents a more patient-driven approach to payment and relies more heavily on clinical characteristics and other patient information (e.g., diagnosis, functional level, comorbid conditions, admission source) to place patients into 216 meaningful payment categories. According to CMS, the improved structure of the PDGM case-mix system would move the Medicare program towards a more value-based payment system that puts the unique care needs of the patient first and reduces administrative burden.

As specifically required by the Bipartisan Budget Act of 2018, the proposed PDGM does not rely on “therapy thresholds” to determine payment. Under the current payment model, home health agencies are paid based on the number of therapy visits a patient receives, so agencies are potentially incentivized to over-provide therapy services and focus on the volume, rather than the value, of services provided. Under the PDGM, these “therapy thresholds” would be eliminated; instead, the proposed PDGM would base case-mix adjustment for home health payments solely on patient characteristics, which, according to CMS, represents a more patient-focused approach to payment.   

In addition, CMS proposes to pay home health agencies based on 30-day periods of care. The current system pays for 60-day episodes of care. If finalized, the PDGM would be implemented on January 1, 2020. 

Remote Patient Monitoring

The proposed rule also includes provisions regarding remote patient monitoring through which patients share real-time data with their providers. CMS proposes to define “remote patient monitoring” under the Medicare home health benefit as the collection of physiological data by the patient or caregiver to the home health agency. Under the proposed rule, a home health agency will be able to claim the costs of remote patient monitoring on its Medicare cost report as administrative costs. CMS hopes that this will encourage more home health agencies to adopt this emerging technology, which it believes will result in better patient health outcomes.

Payment Rate Changes

CMS estimates that the payment changes in the proposed rule will increase Medicare payments to home health agencies by 2.1 percent, or $400 million, relative to CY 2018. The changes include a 2.8 percent update to current rates, a productivity adjustment of negative 0.7 percent, a 0.1 percent increase related to outlier payments, and a 0.1 percent decrease due to the new rural payment add-on policy mandated by the Bipartisan Budget Act of 2018. The policy requires CMS to classify rural counties into one of three categories based on (1) high home health utilization; (2) low population density; and (3) all others. Unlike previous rural add-ons, which were applied to all rural areas uniformly, the rural add-on payments for 2019 through 2022 will vary based on this classification.

Reduction in Financial and Administrative Burdens

CMS projects that the changes proposed in the rule will result in a net $60 million in annualized cost savings for home health agencies or, to be more specific, $5,150 in cost savings for each home health agency, beginning in 2020.  Furthermore, in an effort to reduce the administrative burden on physicians who provide care to home health patients and respond to industry concerns, CMS proposes to eliminate the requirement that a certifying physician estimate how much longer services are required when recertifying a patient’s need for continued home health care services. According to CMS, certifying physicians could see annualized cost savings of $14 million beginning in 2019 as a result. Finally, the rule proposes to amend current regulations to allow medical record documentation from the home health agency to be used to support the basis for certification of home health eligibility, which would align the regulations with the existing sub-regulatory guidance and the Bipartisan Budget Act of 2018.

Other notable provisions in the proposed rule include:

  • Removal of seven quality measures in the Home Health Quality Reporting Program (HH QRP) and adoption of eight measure removal factors beginning with the CY 2021 HH QRP;
  • Clarification that only a portion of Outcome and Assessment Information Set (OASIS) data is required for determining a home health agency’s satisfaction of the HH QRP reporting requirements;
  • Removal of two OASIS-based measures in the Home Health Value-Based Purchasing (HHVBP) Model (Influenza Immunization Received for Current Flu Season and Pneumococcal Polysaccharide Vaccine Ever Received);
  • Replacement of three OASIS-based measures (Improvement in Ambulation-Locomotion, Improvement in Bed Transferring, and Improvement in Bathing) with two proposed composite measures on total change in self-care and mobility in the HHVBP Model;
  • Recalculation of the Total Performance Scores in the HHVBP Model by changing the weighting methodology for the OASIS-based, claims-based, and HHCAHPS measures; and
  • Reduction of the maximum amount of improvement points in the HHVBP Model from 10 points to 9 points.

The proposed rule also includes a Request for Information (RFI) through which CMS invites continued stakeholder feedback on the Medicare program and interoperability. More specifically, CMS seeks responses from the industry on revising the CMS patient health and safety standards that are required for providers and suppliers participating in the Medicare and Medicaid programs to further advance electronic exchange of information that supports safe, effective transitions of care between hospitals and community providers. 

CMS is accepting comments to the proposed rule until August 31, 2018. 

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