Among the various payment updates proposed by the Centers for Medicare and Medicaid Services (CMS) this summer, the proposed payment update for the home health agency prospective payment system (HHA-PPS), published in the Federal Register on July 28, 2017 (Proposed Rule), is one of the more eye-catching. The most dramatic change in the Proposed Rule is a shift from using therapy services as a proxy for patient acuity toward reimbursement based on patient information and clinical characteristics. Other changes in the Proposed Rule include: (1) adjusted payment policies aimed at a modest (0.4%) reduction in aggregate HHA-PPS payouts by CMS; and (2) modifications to reporting requirements.

Here are selected highlights of the changes set forth in the Proposed Rule:

For CY 2018 — Tightening Payment Policies 

  • While the standard 1% payment increase will go into effect for calendar year (CY) 2018, payments will be reduced by 2% for HHAs that fail to submit required quality data resulting in a net 1% decrease in payments for HHAs with reporting omissions. As indicated above, CMS expects that, overall, these increases and decreases will net out into a 0.4% reduction in aggregate HHA-PPS payouts. 
  • The third year of a three-year decrease to the standardized 60-day episode payment rate, implemented to rectify what CMS identified as overpayments during 2012-2014, is effective for CY 2018.
  • CY 2018 will also sunset the 3% payment add on for HHS provided in rural areas. Therefore, the additional payments will end on December 31, 2017.

For CY 2019 and Beyond — Changes to HHA-PPS Stemming from Adoption of the New HHGM Payment Model

CMS has proposed a number of changes to the HHA-PPS under a new payment model, namely the Home Health Groupings Model (HHGM). Under the HHGM, CMS aims to create a payment system that better reflects how clinicians differentiate patients’ home healthcare needs. CMS believes that a January 1, 2019 start will give providers the time needed to complete education and training on the HHGM, as well as to update claims processing systems.

  • CMS plans to forgo therapy services-based thresholds in its case-mix adjustment methodology in favor of relying on clinical characteristics and patient information starting CY 2019, with the goal of identifying more meaningful payment categories. This development is not surprising given that overutilization and upcoding of therapy services have been a principal focus of HHA fraud investigations in recent years. 
  • The Proposed Rule would move from the current 60-day episode of care to a 30-day period of care unit of payment. This change, intended to match payments more accurately to resource use, would also go into effect for CY 2019. CMS found excessive variation in resource use during the current 60-day episode model, citing as an example that patients generally have more visits on average during the first 30 days. As a result, CMS believes it is appropriate to shorten the payment period to 30-day periods of care.

Additions, Deletions and Revisions to Reporting Requirements

  • Three new assessment-based measures are proposed for CY 2020 as additions to Home Health Quality Reporting Provisions (HH QRP):
    • Changes in Skin Integrity Post-Acute Care: Pressure Ulcer/Injury1 
    • Application of Percent of Residents Experiencing One or More Falls with Major Injury
    • Application of Percent of Long-Term Care Hospital Patients with an Admission and Discharge Functional Assessment and a Care Plan That Addresses Function
  • The proposed rule would revise the scope of required reporting under the Home Health Value-Based Purchasing (HHVBP Model (Medicare-certified HHAs in nine states, including Tennessee, are currently required to participate in the HHVBP.2):
    • HHAs in the HHVBP would be required to submit a minimum of 40 Home Health Care Consumer Assessment of Healthcare Providers and Systems (HHCAHPS) surveys instead of the current 20; and 
    • One Outcome and Assessment Information Set (OASIS) measure, Drug Education on All Medications Provided to Patient/ Caregiver during All Episodes of Care, would be removed in the measure set for Performance Year 3 (PY3) and each subsequent performance year until such time that another set of applicable measures, or changes to this measure set, are proposed and finalized

CMS is taking comments and questions on the proposed rules and has specifically solicited feedback on how the agency can decrease bureaucratic complexity, alleviate providers’ burdens with respect to Medicare compliance, and generally how the payment system ought to be redesigned to promote simplicity and increase efficiency. Comments and questions will be accepted until September 25, 2017.

If you have questions about this or other healthcare developments, please contact the authors of this alert or the Bass, Berry & Sims attorney with whom you regularly work.

1 This measure is a modified version that replaces the current pressure ulcer measure entitled “Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (Short Stay) (NQF #0678).”

2 The nine states that were randomly selected by CMS for inclusion in the HHVBP are: Arizona, Florida, Iowa, Maryland, Massachusetts, Nebraska, North Carolina, Tennessee, and Washington.