(November 1, 2018)—For home health agencies, beginning with calendar year (CY) 2020, the Centers for Medicare & Medicaid (CMS) will implement a new case-mix system called the Patient-Driven Groupings Model (PDGM) that puts the focus on patient needs rather than volume of care.

The PDGM relies more heavily on patient characteristics to more accurately pay for home health services, according to CMS. Changes in data collection under the new case-mix system, coupled with the changes below regarding meaningful measures and the Home Health Quality Reporting Program, will reduce burden for HHAs by approximately $60 million annually, beginning in CY 2020, according to CMS as it finalized significant changes to the Home Health Prospective Payment System October 31, 2018.

National Association for Home Care & Hospice (NAHC) President William A. Dombi responded to the final rule saying, "All eyes are on the 2020 changes. The new payment model mirrors much of the proposed reforms and is a modestly adjusted and 'warmed-over' version of the highly criticized 2017 Home Health Groupings Model proposal. The new version is re-labeled as the Patient-Driven Groupings Model. Many of the same weaknesses present in HHGM exist in this new version."

Dombi said NAHC remains very concerned that the new model still includes the risk of a significant “behavioral adjustment” based solely on assumptions of behavioral changes that HHAs might undertake in the future.

"That adjustment was suggested at a 6.42 percent reduction in base payment rates in the proposed rule," Dombi said, via statement from NAHC. "CMS does not offer the 2020 actual rates at this time, but notes it is required to make some adjustment for the first year of PDGM. Rate reductions based on behavioral changes that have not yet occurred create significant dangers for home health patients. We addressed these same concerns with CMS through the rulemaking process only for our concerns to be rejected in toto. We have supported rational payment model reforms for many years." 

While the new model does include some good system refinements, its foundation is severely weakened by an unwarranted and unsupported rate reduction based on nothing but assumptions that home health agencies will abuse the payment process, Dombi said. There is bipartisan, bicameral legislation already pending before Congress that will permit Medicare to adjust rates only after there is actual change in provider behavior, not simply based on conjecture.

"The home health care community is deeply disappointed that CMS chose to move forward with a highly flawed proposed payment model reform," Dombi said. "Fortunately, it is not going into effect until 2020. That gives some time for Congress to intervene and preserve access to vital home health care.  We will be working hard with Congress in the coming weeks to secure sensible payment reforms and to protect the 3.5 million Medicare beneficiaries who receive home health services throughout the country."

CMS is promoting innovation and modernization of home health care by allowing the cost of remote patient monitoring to be reported by home health agencies as allowable costs on the Medicare cost report form. This is expected to help foster the adoption of emerging technologies by home health agencies and result in more effective care planning, as data are shared among patients, their caregivers and their providers. The use of such technology can allow for greater patient independence and empowerment.

Supporting patients in sharing their data will advance the MyHealthEData initiative, led by Jared Kushner and the White House Office of American Innovation.

This final rule implements the temporary transitional payments for home infusion therapy services for CYs 2019 and 2020, as required by the Bipartisan Budget Act of 2018, until the new permanent home infusion therapy services benefit begins on January 1, 2021.

In addition, the final rule establishes the health and safety standards for qualified home infusion therapy suppliers of the new permanent home infusion therapy service benefit. Also accomplished? The establishment of the approval and oversight process for accrediting organizations of these suppliers as required by the 21st Century Cures Act. CMS is finalizing this proposal and is seeking further comments on the interpretation of “infusion drug administration calendar day” and on its potential effects on access to care. To be assured consideration, comments on the definition of "infusion drug administration calendar day" at §486.505 and discussed in section VI.D. of the final rule with comment period must be received no later than 5 p.m., December 31, 2018.

Comb the home health prospective payment system final rule here.

On the HME side, the ERSD/DEMPOS final rule was released late on November 1. The final rule's key provisions appeared to be in line with the proposed rule on initial analysis by AAHomecare.

  • Extends the 50/50 blended reimbursement rates for rural and non-contiguous areas (i.e., Alaska & Hawaii) through December 31, 2020.
  • Establishes a new method for determining SPAs under the bidding program using maximum winning bids.
  • Implements lead item pricing for future competitive bidding rounds.
  • Beginning January 1, 2019 beneficiaries may receive DMEPOS items from any Medicare enrolled DMEPOS supplier until new contracts are awarded under the next round of the bidding program. CMS expects that this gap period will run through December 31, 2020.
  • CBA pricing will be subject to annual CPI adjustments until the next bidding round takes place.
  • CMS will create a new class for portable liquid oxygen equipment by splitting the existing class of portable gaseous and portable liquid oxygen. CMS would increase the payment amount for the new portable liquid oxygen class so that it is the same as the OGPE (oxygen generating portable equipment) rate. 
  • CMS will change the way that it calculates budget neutrality. Under the new methodology, CMS would apply the offset to all oxygen and oxygen equipment classes and HCPCS codes beginning on January 1, 2019. CMS provided an example of the impact of the new budget neutrality method and additional oxygen payment:

The final rule failed to incorporate two crucial elements the HME community hoped for: Extending the 50/50 blended rate to relief for rural and non-contigous areas to all non-bid area and providing more relief for suppliers in CBA areas by retroactively applying CPI adjustments. 

AAHomecare's Tom Ryan said in a statement, "The ESRD/DMEPOS Final Rule delivers much-needed improvements for future rounds of the competitive bidding program and provides welcome relief for suppliers serving Medicare beneficiaries in rural America. I am particularly gratified that leaders at HHS and CMS have taken a comprehensive look at the impacts of the bidding program and have incorporated input from the HME community in developing these regulations. 

"While I believe that CMS is making a smart decision in pausing the bidding program to work on additional fixes, I’m disappointed that the Agency is allowing pricing generated under this flawed program to stay in place until the next bidding round. While many suppliers who did not win bids will take advantage of the chance to serve Medicare beneficiaries again during the gap period, they will be contending with rates that provide razor-thin or even negative profit margins.

"The gains for HME in the Final Rule would not have been possible without exceptional grassroots advocacy efforts from all corners of our industry.  Thanks to the dedicated efforts of suppliers of every size, our state and regional association partners, and other leading HME stakeholders, we’ve strengthened our capacity get Capitol Hill educated and engaged on our policy priorities, which has been critical in convincing regulators to take a close look at the bidding program."

Stay tuned for further analysis on the final rule as it becomes available. Find the full text here and a fact sheet here.