NAHC Calls on CMS to Roll Back 2020 Rate Adjustment

NAHC to CMS: Roll Back 2020 Rate Adjustment Based on Faulty Prediction of HHA Behavior

WASHINGTON, D.C. (August 26, 2020)—The National Association for Home Care & Hospice (NAHC) urged the Centers for Medicare & Medicaid Services (CMS) to roll back the 2020 rate adjustment CMS instituted based on a prediction of how home health agencies (HHA) would behave that has not materialized. That recommendation, and several more, are part of NAHC’s formal comments to CMS on the proposed 2021 home health Medicare rule.

NAHC has asked CMS to roll back the 2020 rate adjustment, but if CMS refuses to do so, NAHC is asking CMS not to continue the rate adjustment in 2021, as the existing data demonstrates that behavior changes are not likely to start in 2021.

CMS assumed that HHAs would modify their diagnosis coding and service utilization behavior in the aggregate by 8.01% in the first year of the new Patient Driven Groupings Model, PDGM. Of that amount, 5.91% was assumed to be change in diagnosis coding alone. The remainder of the adjustment was due to assumed reductions in the proportion of low utilization payment adjustments (LUPAs) along with consideration of comorbidity reporting. At this point of 2020, it is clear that none of the assumed changes have occurred and that 2020 spending on home health services will not be budget neutral to the level that would occur without a change to PDGM.
The existing data shows a massive increase in LUPA episodes, in clear contrast to the decline assumed by CMS. NAHC understands that CMS has significant data availability through June 2020 as of this comment date and that several months more should be available prior to the issuance of the Final Rule in late October or early November. With the known level of increase in LUPAs to date, the only way CMS’s assumed changes could occur would be for the remainder of 2020 to show less than zero LUPAs.  

NAHC recommends that CMS should:

1. take immediate steps to access and utilize 2020 PDGM claim data for purposes of assessing whether PDGM is and has been budget neutral in 2020 and whether adjustments are need to achieve such for 2021
2. make the 2020 data available to the home health community for purposes of its analysis relative to 2021 rates of payment related to the budget neutrality requirements
3. convene a Technical Expert Panel on an expedited basis to evaluate the impact of COVID-19 on the 2020 budget neutrality adjustment in 2020 and its continued application in 2021
4. based on the findings of steps 1-3, undertake one of the options set out above to achieve budget neutrality under PDGM in 2021 and to expedite any reconciliation required relative to 2020 payment rates

Budget Neutrality Recommendation
Starting in 2021, CMS needs to take into account the impact of its 2020 rule and PDGM to determine what actions are needed to achieve budget neutrality. In doing so, CMS must establish standards for determining nominal versus real change in case mix as well as changes that affect other aspects of Medicare home health spending such as Medicare enrollment, increased/decreased utilization of home health services, modification/improvement of enforcement of coverage standards (e.g., maintenance therapy; home infusion therapy), behavior changes in other PAC services that affect home health utilization, technological advances, and other factors that may contribute to Medicare spending changes not specifically related to PDGM. 

This is especially crucial given the impacts of COVID-19 on the patient population served in home health services and the manner in which those patients have been served with the effects of patient isolation for infection control along with the virtual shutdown of health care sectors that affect the case mix in home health services. 

CMS should convene a Technical Expert Panel (TEP) on an expedited basis to develop the necessary standards and processes. The resulting standards and process should be presented through a formal rulemaking, including public notice and opportunity to comment, by mid 2021. NAHC recognizes that the matter involved is very complex. Such necessitates the input of a broad spectrum of stakeholders with the expertise to ensure that all relevant factors are properly considered.

Overall, the standards and process should recognize that many factors beyond PDGM can contribute to changes in Medicare spending. CMS must take all reasonable steps to ensure that it does not modify payment rates under its ongoing behavior adjustment and reconciliation authority based on any factor other than those directly triggered by the transition from HHPPS-HHRG to PDGM. 

CMS Rate-setting should Account for Costs Related to the Public Health Emergency That Can Be Expected to Continue in 2021
CMS has proposed a 2.7% rate adjustment for 2021 based on 3.1% Market Basket Index (MBI) and a 0.4% Productivity Adjustment (PA). 

NAHC believes that personal protective equipment (PPE) costs alone have increased per visit costs by approximately $11.50 or nearly 5% of the current base episodic rate. The MBI reflects increase in the cost of goods and labor, but it does not address new costs or volume increases in the use of such items as PPE. 

While the end point of the COVID-19 pandemic is not known, it is reasonable and fair to conclude that the use of PPE will be maintained at levels comparable to 2020 throughout CY2021. As such, the increased cost of care, as experienced in 2020, as it relates to PPE will continue in 2021. 

RECOMMENDATION: CMS should include a PPE cost add-on to the 2020 payment episodic and per visit payment rates. Conceptually, an add-on has been used in Medicare home health services previously to reflect the administrative costs of OASIS and other administrative activities for LUPA-only patient care. HHAs are prepared to support the add-on costs of PPE to the point of reliable data.

CMS Should Evaluate and Explain Alternatives to the Proposed Area Wage Index Transition
CMS proposes to institute an updated area wage index for 2021. This proposal is mirrored by action taken in other health sectors that takes effect on Oct. 1, 2020. The proposal is different than the methodology used by CMS in previous wage index transitions. Previously, CMS applied a 50/50 blend of old and new wage area classifications in setting out a first-year transition to updated wage area designation in order to avoid abrupt and significant changes in area-specific reimbursement rates. 

Find the full list of recommendations at nahc.org.