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Takeaway: The lobbying will ramp up to modify the Groupings Model, especially the rather bizarre "behavioral assumptions" but don't hold your breath

Medicare's annual Rule-A-Rama is making its final lap. Last night, CMS finalized the CY 2019 Home Health Payment update which is positive news. Unfortunately, CMS also finalized the Home Health Groupings Models complete with the unusual "behavioral assumptions" payment modifiers that will make predicting annual Medicare payment updates difficult.

Payment Update.

Last night, CMS finalized the CY 2019 payment update for home health. For the first time in years, home health agencies will realize the full value of the market basket adjustment (with a 0.80 percent downward adjustment for productivity). The 60-day standardized payment rate will increase from $3,039.64 to $3.154.27.

AMED, LHCG, EHC, KND | CMS FINALIZED CY 2019 HOME HEALTH PAYMENT UPDATE; GROUPINGS MODEL FOR CY 2020 - Home Health1

Rural Add-on Payment.

The Bi-partisan Budget Act of 2018 redefined the rural add-on payment for home health agencies. Differential payments will now be made for separate categories of home health agencies. The classification of agencies will be available when CMS releases an impact file in the next week or so.

AMED, LHCG, EHC, KND | CMS FINALIZED CY 2019 HOME HEALTH PAYMENT UPDATE; GROUPINGS MODEL FOR CY 2020 - Home Health2

Home Health Groupings Model.

AMED, LHCG, EHC, KND | CMS FINALIZED CY 2019 HOME HEALTH PAYMENT UPDATE; GROUPINGS MODEL FOR CY 2020 - Home Health3

Despite industry objections and with only passing deference to Congress's efforts to intervene, CMS finalized the Patient Driven Groupings Model. The model reduces the home health episode from 60 days to 30 days and eliminates therapy services as a payment factor on a budget neutral basis. Unfortunately, the Groupings Model also appears to undermine budget neutrality, as it is largely understood, by modifying reimbursement using "behavioral assumptions." These assmuptions are:

  • Clinical Grouping Coding - Assumes HHAs will classify the episode using a principal diagnosis that places it in the highest paying clinical group
  • Co-morbidity Coding - Assumes more episodes will be assigned a co-morbidity
  • LUPA Threshold - Assumes HHAs will pay more visits to overcome the LUPA threshold when within one to two visits.

If no behavioral assumptions are made, CMS reports that, using the most recent data, the budget neutral 30-day episode payment amount would be $1,873.91. After accounting for the Clinical and Co-morbidity assumtions, the 30-day episode rate will be $1,786.54. Add in the LUPA threshold assumption and the 30-day episode amount drops to $1,753.68. These amounts will change as more data become available next year when CMS established the payment rates for CY 2020.

CMS released a layman's guide to the model, available here.

It is clear from comments made by Bill Dombi at the National Association for Home Care and Hospice and Keith Myers at the Partnership for Quality Home Care last night, that the industry will take the fight to Congress. Maybe they get lucky but we would not count on it. Congress has already intervened once and history tells us repeats of that sort of thing are rare.

CMS has also released agency level impact analysis which we will dig into in the coming days. Call if you have any specific inquiries.

Emily Evans
Managing Director – Health Policy



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Thomas Tobin
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Andrew Freedman, CFA
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