CMS Refuses to Roll Back PDGM Behavioral Adjustment

WASHINGTON, D.C. (October 30, 2020) — The Centers for Medicare & Medicaid Services (CMS) has released the final Medicare home health rule for fiscal year 2021, which includes details for the Patient Driven Groupings Model (PDGM), without the behavior adjustment rollback requested by home health advocates. The rule was issued on October 29, 2020.

CMS rejected pleas from the National Association for Home Care & Hospice and others to roll back the 4.36% behavioral adjustment based on its position that it does not have the data yet to evaluate whether its budget neutrality obligation has been met in 2020. NAHC and others argued that the data to date clearly shows that the assumptions made by CMS in its establishment of the adjustment have not become reality.

The final rule is very close to the proposed rule; the major change is a reduction of the annual update of payment rates to 2% as a result of applying mor recent data in the Market Basket Index. The proposed rule set the update at 2.7%, using a 3.1 percent inflation update and a .4% productivity adjustment.

As with the proposed rule, the rates represent a simple inflation rate update, a significant change in wage index area designations, no change in the structure of the PDGM payment model, a scheduled phasing-out of the rural add-on and a continuation of outlier payment standards.

“Overall, this rule will bring a rare year of relative stabilization in Medicare payments for most home health agencies,” NAHC wrote in its news alert. “Still, NAHC believes that CMS should have dropped the behavioral adjustment for 2021.”

NAHC had also suggested that CMS consider a mid-year review once full year of 2020 data becomes available. 

The organization also pointed out that the wage index changes will have significant impact on home health agencies (HHAs) that serve certain geographic areas. 

“This reimbursement factor does not get the headlines, but it can be very meaningful for some providers,” NAHC wrote. “CMS did finalize the 5% cap on any negative changes to an area wage index to lessen the impact for affected home health agencies. This is the same policy that CMS is applying in other provider sectors.”

The final rule also includes:  

• Minor adjustments to the HHVBP demonstration program to align with Covid-19 exceptions
• Continuation of CMS standards for the new home infusion therapy benefit and supplier participation standards
• Finalizing on a permanent basis the allowance for telehealth services with a home health plan of care (without reimbursement affect)

The combination of these changes is projected to increase Medicare home health services spending by $390 million in CY 2021.

You can read the full rule here.