As expected, the home health payment system is a focus of both the House and Senate's version of the Medicare portion of the latest Continuing Resolution designed to keep the government running until late March. Not to hang on the rim or anything, but we advised you in early November that the proposed but not finalized Home Health Groupings Model would make a comeback – most likely in spending package. Indeed, the CR basically codifies implementation of the HHGM or something like it:
- Requires CMS to pursue no later than Dec. 31, 2019, changes to the home health payment system with the following parameters:
- The unit of service will be reduced from 60 days to 30 days beginning with 2020
- No later than Dec. 31, 2019, CMS will pursue notice and comment rulemaking on a new case-mix system for the Home Health PPS
- The 30 day episode under the new case-mix system will be budget neutral
- Therapy thresholds will be eliminated as a payment factor
- In developing the new case-mix system, CMS is to convene a Technical Expert Panel that can make recommendations on the Home Health Groupings Model. The TEP is also to consider alternative models that were submitted as comments to the HHGM proposal. We highlighted one from AFAM on a call in December. Replay here.
Coupled with a change in the market basket override as an offset (more on that below), some modest relief from the face to face requirement and a five year extension of the rural-add-on payment, albeit with reforms, the long ramp to HHGM provides clarity we rarely see in the home health sector.
However, there are a couple of provisions that raise some concerns for us. The CR requires the HHS Secretary to annually determine the impact of differences between assumed and actual behavioral changes on estimated aggregate expenditures for years 2020 through 2026. The Secretary can then establish permanent increases or decreases to the payment system to offset the changes in aggregate expenditures. These permanent increases or decreases can only be made through the rulemaking process.
The CR also allows for temporary adjustments to offset the changes in aggregate expenditures that result in behavioral changes. Like permanent changes to the payment system, these temporary ones will be subject to rulemaking and comment.
You may recall that assumptions about behavioral changes were included in the HHGM rule as a footnote to a table. CMS never quite fully explained these assumptions but anecdotally we understand that CMS believes the industry, known for its nimble adjustment to payment changes, would change admissions and practice trends to protect margin.
These two provisions appear to be designed permit a vehicle by which CMS could respond to unexpected practice patterns. To us, it sounds like an aggressive form of coding adjustment.
Our concerns are not likely to be realized in the near term. Although CMS would be able to implement these permanent and temporary changes in 2020, they are not likely to have good data on which to justify rulemaking until 2022 or 2023 (i.e. summer of 2021 or 2022). Trouble for another day, but a measure of uncertainty that could cloud the horizon long term
With regard to the rural add-on, Congress is extending the 3 percent rural add-on without conditions for 2018 only. Beginning in 2019, the following schedule will apply:
The rural add-on is off-set by an override of the market basket adjustment. The House version calls for 1.4 percent in CY2019. The Senate version calls for 1.5 percent in CY2020. A market basket override at the same time CMS might be implementing a new payment system and measuring behavioral changes attendant thereto seems like a really dumb idea to us but that is what the Senate text says. We will see how they reconcile the differences tomorrow.
While we think the Medicare extenders are not controversial as measured by the uniformity of the provisions, the debt ceiling and busted budget caps in the Senate version are causing significant consternation on the House side.
Going to be a long 24 hours. Call with questions.
Emily Evans
Managing Director
Health Policy
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