Last month, CMS dropped the 2024 PPS Proposed Rule for Home Health. Like all other provider segments, Proposed Rules function to address primarily payment, then other programmatic issues/rules such as quality measures, data reporting, etc.
The proposals generally mirror the final rules, but tweaks do occur. The payment end, however, rarely changes much as often, a current (next year) rule contains elements from prior rules in preceding years.
The rate driver for FY 2024 (begins Jan 1, 2024, for home health) is the changeover for PPS reimbursement to the PDGM model. As is typical in these changeovers, CMS estimates a budgetary impact of neutrality (or reduction), misses the mark, and then, needs to clean-up its mess. Thus, the message for 2024 and frankly, beyond.
The rate driver in this case is the difference between “assumed behavioral changes” among providers under the new system and actual behavioral changes. In other words, did providers figure this out and in so doing, increase utilization and payments (outflow). Important to note is that mathematically, the sample size continues to change as more patient utilization is occurring (moving to) via Medicare Advantage payers than Medicare fee-for-service. Medicare Advantage reimbursement/payments are only loosely tied to fee-for-service payments in so much that the Medicare Advantage provider must cover in benefits and categories, no less than available via fee-for-service.
To the point: The actual increase proposed is a reduction (negative) of 2.2% in payments to agencies. Of course, arriving at this number is a convoluted process. From the proposed rule, the description is:
“The proposed home health payment update percentage is a proposed 2.7 percent increase (approximately $460 million). Accounting for an estimated 5.1 percent decrease[1], as required by statute, that reflects the effects of the proposed prospective, permanent behavior assumption adjustment ($870 million decrease), and an estimated 0.2 percent increase that reflects the effects of a proposed update to the fixed-dollar loss ratio (FDL) used in determining outlier payments ($35 million increase,), CMS estimates that Medicare payments to HHAs in CY 2024 would decrease in the aggregate by 2.2 percent, or $375 million compared to CY 2023, based on the proposed policies”.
In addition to the rate calculation (and net reduction), CMS is proposing to make a number of adjustments to the PDGM program. CMS plans to revise the labor market basket via rebasing the basket itself and the amount of the PDGM rate impacted by labor. Additional adjustments/revisions proposed, include;
- Recalibration of the PDGM case-mix weights
- Update the low utilization payment (LUPA) threshold
- Update the comorbidity adjustment subgroups
- Update the functional impairment levels
- Codify requirements for disposable, negative pressure wound care therapy
- Establish regulations for payment under two new treatment programs: lymphedema compression treatment and, IV (intravenous) immune globulin therapy.
Each of these is prosed for implementation in 2024 and can impact overall payments to providers depending on patient case-mix and utilization characteristics of an agency’s caseload.
Under Home Health Quality Reporting Program (QRP), CMS is proposing the addition of two new measures,
- COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date (Patient/Resident COVID-19 Vaccine) measure beginning in 2025.
- CMS also proposes to adopt the Functional Discharge Score (DC Function) measure to the HH QRP beginning in 2025.
CMS is also proposing removals of two measures.
- With the addition of the Discharge Function measure, CMS proposes to remove the Application of Percent of Long-Term Care Hospital (LTCH) Patients with an Admission and Discharge Functional Assessment and a corresponding Careplan, beginning in 2025.
- CMS is proposing removal of two OASIS items no longer necessary for collection, the M0110 – Episode Timing and M2220- Therapy Needs items.
CMS is proposing public disclosure of the following items/measures.
- Discharge Function
- Transfer of Health Information to the Provider—Post-Acute Care Measure (Impact Act)
- Transfer of Health Information to the Patient—Post-Acute Care (PAC)
- COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date:
For readers not familiar with the Impact Act and Value-Base Purchasing/QRP, a good refresher/simple description is available here https://wp.me/ptUlY-lx
The implications of this proposed rule are many. Home Health is the fastest growing post-acute spend under Medicare and the recent payment system changes to PDGM have not met the target of slowing or leveling, growth in spending. Even with 30-day episodes being the focus for payment, the expansion of payment bands across more clinical categories (less therapy driven) have increased provider opportunities for caseload. My list of implications follows.
- Payment reduction, if it remains as is, will not significantly change spending. Providers will be pickier about patient type and mix and soon find ways to enhance their coding, capturing changes to comorbidity factors, adjusted case-weights, and impairment levels. New program opportunities for IV immune globulin therapy and additional payment for lymphedema therapy provide some additional options to build caseload.
- While fee-for-service payments may reduce, they still beat MA payments for the most part. The opportunity for MA (Medicare Advantage) is to achieve partnerships and to create value-based care programs where risk is shared and revenue improvements, the same. While MA may not be the best payer, it presents opportunities for savvy providers that can create care programs (algorithms, disease management, bundles with SNFs/IRFs, etc.).
- A negative implication will occur via ongoing struggles with attracting and retaining staff. Payment reductions reduce, potentially, revenues available for staff needs. With access issues already significant in some markets, a likely further increase in accessibility problems is worth noting. This could put pressure on hospitals and be a win perhaps, for SNFs. Word of caution for SNFs: the same referral problem post-inpatient stay can occur for the SNF as the hospital. SNFs may find themselves, holding patient longer than desired or warranted and readmission penalties and risks, still apply if discharges are made home without appropriate home services.
TGIF! For anyone interested in a summary of the CMS Proposed Home Health Rule for FY 2024 it is available here: https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2024-home-health-prospective-payment-system-proposed-rule-cms-1780-p
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