CMS releases Home Health Final Rule: Behavioral adjustments cut in half

By Chris Attaya
November 07, 2019 Home Health

The CY 2020 Home Health Payment System Rate final rule was published last week and, as expected, the Patient-Driven Groupings Model (PDGM) will be implemented for 30-day periods of care starting on or after January 1, 2020. The good news is that CMS reduced the behavioral adjustment to 4.36%, which is just over half of the revised 8.39% estimates that were based on three assumed behaviors outlined in the Table 14 in the final rule.

Table 14: Estimated 30-Day Budget-Neutral Payment Amounts

Behavior Assumption 30-day Budget Neutral (BN) Standard Amount Percent Change from No Behavior Assumptions1
No Behavior Assumptions $1,908.18  
LUPA Threshold (1/3 of LUPAs 1-2 visits away from threshold get extra visits and become case-mix adjusted) $1,872.33 -1.88%
Clinical Group Coding2 (among available diagnoses, one leading to highest payment clinical grouping classification designated as principal) $1,786.13 -6.40%
Comorbidity Coding (assigns comorbidity level based on comorbidities appearing on HHA claims and not just OASIS) $1,903.46 -0.25%
Clinical Group Coding + Comorbidity Coding + LUPA Threshold $1,748.11 -8.389%

This silver lining may be overshadowed next year under the CY 2021 rulemaking. CMS commented, “… given the scale of the payment system changes, we agree that it might take HHAs more time before they fully implement the behavior assumed by CMS.” They also noted that the behavioral adjustments when implementing MS-DRGs for Acute Care Hospitals were about half (2.5%) their original estimates of 4.8% in the first year, but increased another 5.4% in the second year, thereby catching up to and exceeding their estimate in a retrospective review.

This suggests we should expect a second installment of the behavioral adjustment next year. Although CMS indicated they will begin to look at CY 2020 claims data to determine if the behaviors are occurring, it seems unlikely they will have enough data to properly evaluate. With the CY 2020 proposed rule, CMS looked at CY 2018 claims data processed as of March 31st, 2019. In the final rule there were changes to some of the PDGM components after including claims processed through July 31st. There will be limited claims processed in the first three months of next year to use for proposing changes for CY 2021.

Another concern about future adjustments was also posted in one of the MedPAC comments. “…agencies could respond to the new 30-day unit of payment by providing additional visits after an initial 30-day period to trigger an additional 30-day payment, which could result in higher aggregate payments….” CMS had estimated that about 25% of all payment episodes would translate to a single 30-day PDGM period, but indicated they would not consider these adjustments at this time.

To be fair, there will be behavior changes. Agencies will do a better job in diagnostic coding, especially when there are two or more codes that equally meet the definition for the primary diagnosis. Where OASIS includes only 5 fields for secondary diagnosis codes, the final claims include up to 24 spots and will be the source of record for the PDGM comorbidity calculation. With that, I expect there to be more opportunity for higher comorbidity adjustments.

In my blog last May, I noted the differences in expected LUPA percentages based on clinical grouping and period sequence. When updating for the CY 2020 Proposed rule, the numbers stayed relatively the same. Complex Nursing and second period cases should be evaluated for preventing avoidable LUPA adjustments.

I checked our recently released PDGM Preview Report to evaluate which clinical groups and periods had the highest LUPA rates for CY 2019 episodes using the SHP National database. The charts below reflect the PDGM 30-day payment periods based on the proposed rule, and include the ten highest LUPA rate percentages for each of the 1st and 2nd period sequences. I expect this type of agency specific data will be very useful in targeting and managing LUPA outliers, leading to some of the behavior changes CMS is expecting.

Top ten highest LUPA rates by HHRG for PDGM 1st periods

HHRG Scores Admit Source Timing Clinical Group Functional Level Comorbidity Adjustment Period Sequence LUPA Rate
2FA3 Institutional Early Behavioral Health Low High 1 30.0%
2DC3 Institutional Early Complex Nursing High High 1 18.9%
2DA3 Institutional Early Complex Nursing Low High 1 16.4%
4AC3 Institutional Late MMTA - Other High High 1 16.1%
2DB3 Institutional Early Complex Nursing Med High 1 15.9%
2AA2 Institutional Early MMTA - Other Low Low 1 15.0%
1DB3 Community Early Complex Nursing Med High 1 14.3%
1LC3 Community Early MMTA - Respiratory High High 1 13.8%
1LB3 Community Early MMTA - Respiratory Med High 1 13.8%
1AA1 Community Early MMTA - Other Low None 1 13.4%

Top ten highest LUPA rates by HHRG for PDGM 2nd periods

HHRG Scores Admit Source Timing Clinical Group Functional Level Comorbidity Adjustment Period Sequence LUPA Rate
4EA1 Institutional Late MS Rehab Low None 2 51.6%
4EB1 Institutional Late MS Rehab Med None 2 46.5%
4EA2 Institutional Late MS Rehab Low Low 2 45.4%
4GA1 Institutional Late MMTA - Surg Aftcr Low None 2 45.0%
4GA2 Institutional Late MMTA - Surg Aftcr Low Low 2 43.4%
4IA1 Institutional Late MMTA - Endocrine Low None 2 42.6%
4FB2 Institutional Late Behavorial Health Med Low 2 42.4%
4AB2 Institutional Late MMTA - Other Med Low 2 40.5%
4FA3 Institutional Late Behavorial Health Low High 2 40.0%
4GB1 Institutional Late MMTA - Surg Aftcr Med None 2 39.9%

Source: SHP National Database using CY 20 proposed rule for claims processed Jan 19 – Oct 19

CMS received 186 comments regarding the behavioral assumptions finalized in the CY 2020 HH PPS final rule with comment period. Clearly this is a controversial issue. The National Association for Home Care and Hospice and other national industry groups are pushing for legislative relief to require that any adjustments be based on real, actual changes in provider behavior. In addition, they would like to see future adjustments limited to no greater than +/-2% in any given year. The fact that CMS cut the adjustment in half may be seen as their compromise to appease the industry. As politics go, we shall see.



About the Author
Chris Attaya
Chris Attaya
Vice President 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.