CMS HH Proposed Rule Punts PDGM Behavioral Change Adjustments Again

By Chris Attaya
August 11, 2021 Home Health

The Center for Medicare and Medicaid Services (CMS) issued the CY 2022 Home Health (HH) Prospective Payment Rate proposed rule in the Federal Register last month and all eyes were focused on whether they would propose any rate adjustments based on changes in coding or other behaviors due to the implementation of the Patient-Driven Groupings Model (PDGM). In the CY 2021 Final Rule, CMS deferred any actions on adjustments due to the limitation of claims data on the impacts of PDGM behavioral changes. Although CMS suggests that they have overpaid HH up to 6% compared to the prior PPS model, CMS kicked the can ahead again in the 2022 proposed rule.

Although CMS suggests that they have overpaid HH up to 6% compared to the prior PPS model, CMS kicked the can ahead again in the 2022 proposed rule.

Annually, CMS is required to make assumptions about PDGM behavior changes that could occur as a result of the implementation of the 30-day unit of payment and the case-mix weight (CMW) adjustment factors that eliminated the use of therapy thresholds. During CY 2020, CMS adjusted the 30-day period base payment rates by 4.36% assuming there would be behavioral changes in three areas:

  1. Clinical Group Coding: assumes that HHAs will change their documentation and coding practices and put the highest paying diagnosis code as the principal diagnosis code in order to have a 30-day period be placed into a higher-paying clinical group
  2. Comorbidity Coding: assumes that by taking into account additional ICD-10-CM diagnosis codes listed on the home health claim (beyond the 6 allowed on the OASIS), more 30-day periods of care will receive a comorbidity adjustment
  3. LUPA Thresholds: assumes that for one-third of LUPAs that are 1 to 2 visits away from the LUPA threshold HHAs will provide 1 to 2 extra visits to receive a full 30-day payment

Using data from the CY 2020 SHP National Client Database, we have not seen the behavioral changes to the level promoted by CMS. While there has been some increase in clinical groupings that favor higher paying groups, our data suggests it is about half the increase in case-mix weights CMS suggested (1.7% vs 3.2%). We are seeing higher levels of case-mix weights due to comorbidity adjustments than CMS suggested (1.21% vs 0.12%) but the LUPA rates actually went up from 7.1% to 8.9% in CY 2020 versus CMS original projections of a decrease to 6.2%. The reimbursement impact is significant.

Although CMS did not propose any behavioral payment adjustments, they did recalibrate the CMWs for each of 432 Home Health Resource Groups (HHRGs). This was based on an updated regression analysis that used claims from CY 2020. In order to get the proportion of the Functional Impairment classifications of low, medium and high to an even split of 1/3rd each, the CMW is projected to decrease next year by 2.8% based on data from SHP’s clients. However, in order to make the overall payments budget neutral, CMS did proposed a 3.9% increase in the base rate due to this change.

Keep in mind that the projected 2.8% decrease is based on an overall average, so comparing the breakdown of CMW changes by clinical group helps provide additional insights. Agencies with a higher share of Complex Nursing patients will be disproportionately impacted by the recalibration compared to last year (See table below).

Clinical Group CMW Weighted % Change
Behavioral Health -5.9%
Complex -15.4%
MMTA - Cardiac -4.3%
MMTA - Endocrine 2.2%
MMTA - GI/GU -3.5%
MMTA - Infectious -3.9%
MMTA - Other -4.6%
MMTA - Respiratory -2.4%
MMTA - Surgical Aftercare 1.7%
MS Rehab -3.3%
Neuro -4.5%
Wound 2.1%
Overall -2.8%

To be fair, COVID-19 impacted how care was delivered in CY 2020. Volume was down in many agencies due to the impact of reduced hospital elective surgery admissions. There were higher patient refusals and fewer visits per period, likely due to concern with the spread of the virus. Trying to determine how much of the direct care in CY 2020 relates to PDGM behavioral changes vs the COVID-19 impacts will be difficult to answer.

CMS provided some data comparing the reimbursement under PDGM as compared to if the 153-group 60-day programs was in effect, but their analysis is flawed. Although the reduction in nursing and therapy visits was about the same, the impacts to the prior PPS model is more significantly influenced by therapy visits and the therapy thresholds on reimbursement. There was no evidence that CMS took that into account.

Within the public health emergency authorizations, CMS “excepted” two quarters (Q1 and Q2 of 2020) from the Home Health Quality Reporting Program. CMS should consider an “Excepted” year, where no behavioral adjustments or CMW recalibrations are made using claims data from this unprecedented year.

About the Author
Chris Attaya
Chris Attaya
VP of Product Strategy
With more than 30 years of experience in the home health and hospice industry, Chris is responsible for product development and helping clients achieve increased operational and financial performance.