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Payment Reform Update

Posted on Monday, March 26, 2018 9:05 PM

Provisions in the Bipartisan Budget Act of 2018 includes major reforms for home health care including changes to how agencies get paid.

Home Health Payment
Similar to the HHGM model, proposed in 2017, the law changes how Medicare will pay for home health services beginning January 1, 2020. The home health payment episode will change from the 60-day episode to a “30-day period”.

However, unlike the original HHGM model proposal, this payment system has an important caveat - budget neutrality. According to Home Health News, the HHGM model would have potentially cut approximately $950 million in payments if implemented in a non-budget neutral manner.

“As it relates to the 30-day episodes, there is still a lot of conversation going on in Washington as to whether or not that’s a 30-day episode or a 30-day payment period,” April Anthony, CEO of Encompass Home Health and Hospice, said during the company’s 2017 end-of-year earnings call. “Our conversations with CMS through our work at the Partnership for Quality Home Health Care as well as our conversations on the Hill would suggest that there is perhaps an unintended consequence that there was never really an intention to move to 30-day episodes, but rather 30-day payment periods.”

The National Association for Home Care & Hospice (NACH) intends to offer amendment language to congress to change the start date of the new 30-day payment model to “no earlier than 2020” to ensure adequate time for agencies to prepare.

Case Mix Reform
The new home health payment model will also eliminate the use of therapy thresholds in case mix adjustment factors for calculating payments.  Payment under the new system will be determined by patient characteristics and clinical groupings.

TEP Meeting Highlights
Since the bill was passed, a technical expert panel (TEP) met last month to help Centers for Medicare & Medicaid Services (CMS) shape the new prospective payment system (PPS). Inclusion of a TEP was mandated in the Budget Act of 2018, however the legislation only mandated that the group meet at least once. It is unclear at this time if the TEP will convene a second time.

Panel experts reviewed a comprehensive analysis of the HHGM presented by Abt Associates including:

  • A comparison of 30-day periods versus 60-day episodes
  • Case-mix comparisons between HHGM and Current Payment System
  • Public comments on the Home Health Grouping Model’s case-mix adjustment methodology
  • Ideas for alternative case-mix systems

TEP members included NAHC President Bill Dombi and LeadingAge Director of HCBS Peter Notarstefano.

 “Some of our concerns include the significant reduction in case mix weights that is applied to therapy episodes in the HHGM,” Notarstefano wrote in a follow-up post to the LeadingAge website. “We did not agree with the use of a therapy threshold for payment because it invites fraudulent behavior; but the HHGM as proposed negates the importance of therapy to reduce the incidence of falls, improve ambulation and promote independence for older adults in their own homes.”

What’s Next?

  • By April 1, 2019, a report with recommendations from the TEP is to be sent to House Ways and Means Committee, Energy and Commerce Committee and the Senate Finance Committee.
  • By December 31, 2019, HHS will have completed rate and rulemaking for the new revised payment method.

“It’s premature to speculate because we don’t know what the model will be,” Dombi told Home Health Care News. “We could end up with a completely different model than the case-mix model and certainly a different payment rate, and it may or may not bring enough resources to continue to bring the therapists to keep them on board.”

 “The big caveat here is that there is a lot for CMS and the industry to work through,” Des Varady, CEO of industry consulting firm The Corridor Group.


About Corridor

Corridor is a trusted home health and hospice consulting partner to agencies both large and small. We provide the most up-to-date comprehensive homecare industry educational resources and consulting available.

We specialize in delivering better revenue cycle management solutions, coding and documentation review services, regulatory compliance, and healthcare consulting.

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