Newly Proposed Medicare Rule Would Revise Home Health Payment System: Comments Due By Sept. 25


The Centers for Medicare & Medicaid Services (CMS) is proposing to revise the home health (HH) Part A Prospective Payment System (PPS). The proposal would change the way Medicare determines payment for occupational therapy services and all other services provided by home health agencies (HHAs). This could greatly affect HH patients and occupational therapy practitioners who work in HH agencies by causing reductions in the use of occupational therapy. AOTA urges members to comment on the proposed rule by the September 25 deadline—see below for details.

Changes Could Go Into Effect January 1, 2019

On July 28, 2017, CMS published its CY 2018 HH PPS proposed rule, which includes proposed revisions to the HH PPS payment system (targeted for 2019), as well as proposals for a rate update, the HH Value-Based Purchasing Model, and HH quality reporting requirements. The rate update would be an $80 million planned payment cut for 2018 and between $480 million and $950 million payment cut for 2019. CMS is proposing to adopt the Home Health Groupings Model (HHGM) to revise the current HH PPS payment system for periods of care beginning on or after January 1, 2019.

Why is Medicare Proposing to Change Home Health Payment?

Therapy in HH has come under increased scrutiny. Section 3131(d) of the Affordable Care Act (ACA) required CMS to conduct a study on HHA costs. The resulting Report to Congress was released in December 2014 and raised concerns about therapy costs, particularly for patients with certain clinical characteristics requiring more nursing care than therapy).

In its proposed rule, CMS cited concerns about the use of therapy thresholds in the current payment system, as HHAs receive higher payments for providing more therapy visits after certain thresholds are reached. In addition, the Medicare Payment Advisory Commission (MedPAC) has recommended removing the therapy thresholds for several years due to concerns about HHAs providing unnecessary therapy to meet or exceed thresholds (see MedPAC March 2015 Report Home Health Care Services Chapter). Due to all of these concerns, CMS contractors conducted additional research on ways to improve the current payment system, which resulted in the development of the HHGM. CMS stated that it is proposing to better align payment with actual resource use to reduce HHAs’ financial incentives to select certain patients over others or to provide unnecessary services.

What is the Home Health Groupings Model?

Compared with the current model, the proposed HHGM would remove therapy visits as a determinant of payment and instead rely on clinical characteristics, diagnosis, functional level, comorbid conditions, admission source, and episode timing to place patients into 1 of 144 payment groups. For payment, HHGM would use 30-day periods rather than 60-day episodes, and payment would be higher for the first 30-day period because CMS found that costs are much higher earlier in an episode. Under HHGM, timing requirements for the comprehensive assessment would not change (see 42 CFR § 484.55).

Clinical Groups

HHGM would group 30-day periods into categories based on patient characteristics. Patients would be assigned to 1 of the following 6 clinical groups based on the principal diagnosis (primary reason for receiving HH services) reported on the home health claim:

  • Musculoskeletal Rehabilitation: Primary reason for the HH encounter is to provide therapy (PT, OT, SLP) for a musculoskeletal condition.
  • Neuro/Stroke Rehabilitation: Primary reason for the HH encounter is to provide therapy (PT, OT, SLP) for a neurological condition or stroke.
  • Wounds—Post-Op Wound Aftercare and Skin/Non-Surgical Wound Care: Primary reason for the HH encounter is to provide assessment, treatment, and evaluation of a surgical wound(s); and assessment, treatment, and evaluation of non-surgical wounds, ulcers, burns, and other lesions.
  • Behavioral Health Care: Primary reason for the HH encounter is to provide assessment, treatment, and evaluation of psychiatric conditions.
  • Complex Nursing Interventions: Primary reason for the HH encounter is to provide assessment, treatment, and evaluation of complex medical and surgical conditions, including IV, TPN, enteral nutrition, ventilator, and ostomies.
  • Medication Management, Teaching, and Assessment (MMTA): Primary reason for the HH encounter is to provide assessment, evaluation, teaching, and medication management for a variety of medical and surgical conditions not classified in one of the above listed groups.

Two of the 6 clinical groups, Musculoskeletal Rehab and Neuro/Stroke Rehab, appear to be the only ones that specifically identify therapy services as a component of payment. If the principal diagnosis could not be used to group a 30-day period, then the claim for that 30-day period would be considered a “questionable encounter.” “Questionable encounters” would be returned to the provider for more accurate or definitive coding. Secondary diagnosis codes would not be used to assign the clinical group, but they would be used to case-mix adjust the 30-day period further through additional elements of the HHGM, such as the comorbidity adjustment discussed later.

CMS recognized that different care goals and expected outcomes would affect resource use for both of the rehab groups, so it differentiated between Musculoskeletal and Neuro/Stroke in the HHGM. According to the proposed rule, the Musculoskeletal Rehab group would focus on individuals with impairments or disabilities due to disease, disorders, or trauma to the muscles or bones and is more targeted toward proprioception, strength, imbalances, orthopedic surgeries, and abnormal functional movement patterns, and generally streamlines resources following a surgery or injury. The Neuro/Stroke Rehab group would focus on individuals with disease, trauma, or disorders of the nervous system. The proposed rule sets forth that Neuro/Stroke Rehab resource use can encompass evaluation and treatment of impairments in cognitive and spatial functioning, swallowing, communication, and psychological or emotional deficit.

Functional Level

Similar to the current Home Health Resource Groups, the HHGM classifies patients into functional levels. For each of the six clinical groups, 30-day periods would be classified into one of three functional levels (low, medium, high). The HHGM would use certain OASIS items to indicate whether the 30-day period would have higher or lower service needs/costs and determine the functional payment adjustment. CMS is proposing to use the following OASIS items to determine the functional payment adjustment: grooming, current ability to dress upper/lower body, bathing, toilet transferring, transferring, ambulation/locomotion, and risk of hospitalization. These OASIS items were proposed because they were found to indicate average higher risk of hospitalization or resource use as functional status declines.

AOTA notes that cognition is not included in the list of OASIS items because CMS found decreased resource use associated with worsening cognitive status. We believe that mild cognitive impairment must be identified and adjusted for to ensure proper accounting for resources needed to address mild cognitive impairment in all clinical groups and keep the patient safe at home.

Comorbidity Adjustment and LUPA

Secondary diagnosis codes would not be used to assign the clinical group, but they would be used to adjust payment for the 30-day period further through additional elements of the HHGM, such as the comorbidity adjustment. Thirty-day periods would receive a comorbidity adjustment if any diagnosis codes listed on the HH claim are included on a list of comorbidities that are associated with increased average resource use.

The proposed HHGM would still include Low-Utilization Payment Adjustments (LUPAs) similar to the current system; however, the calculation of LUPA thresholds would change due to the switch to 30-day periods, and thresholds would vary for a 30-day period depending on the HHGM payment group, with a minimum threshold of at least 2 visits for each group.

Admission Source

Each 30-day period would be classified into 1 of 2 admission source categories—community or institutional—depending on what setting was utilized in the 14 days prior to HH. The 30-day period would be categorized as institutional if an acute or post-acute care (skilled nursing facility, inpatient rehabilitation facility, or long-term-care hospital) stay occurred in the prior 14 days to the start of the 30-day period of care. The 30-day period would be categorized as community if there was no acute or post-acute care stay in the 14 days prior to the start of the 30-day period of care. Payment would be higher for patients coming from an institutional setting to reflect higher average costs and different care needs for those patients. To differentiate between an institutional and community admission source, CMS would establish an evaluation process whereby the Medicare claims processing system would check for the presence of an acute/post-acute Medicare claim occurring within 14 days of the HH admission on an ongoing basis. In addition, newly created occurrence codes would be established that would allow HHAs to manually indicate on Medicare HH claims an institutional admission source prior to an acute/post-acute Medicare claim being processed by Medicare systems.

Overview of AOTA Concerns

AOTA has several serious concerns with HHGM and will address these in written comments to CMS. We urge members to highlight these concerns in your own separate comments to CMS. AOTA’s concerns include the following:

  • The HHGM does not include protections that ensure patients receive medically necessary therapy, so rationing of care or failure to provide needed services is a significant concern, especially without linking patient outcomes to payment
  • There are limited clinical groups reflecting therapy services
  • There is nothing to prevent the use of lower cost, unskilled aides to provide services that do not enable patients to achieve optimum independence
  • Authentic, skilled occupational therapy, physical therapy, and speech-language pathology services must be provided and documented
  • The occupational therapy role in addressing behavioral health and medication management is not recognized
  • There is no consideration of cognition, IADLs, and vision in the functional payment adjustment
  • Mild cognitive impairment is not included in the functional payment adjustment
  • It is unclear whether the comorbidity adjustment is adequate
  • The impact of the change from 60-day episode to 30-day period and use of admission source is unclear
  • There is an administrative burden of implementing such significant changes and using 30-day periods
  • Prior to being finalized nationally, the HHGM should be pilot tested in selected regions and data collected to ensure that patients are not denied HH therapy or other services that they require.

Improving the PPS system could have beneficial effects on both patients and practitioners, but AOTA does not believe the proposed system has enough safeguards in place for implementation. The effect of all of these limitations in the proposed system may seriously restrict which patients receive therapy and whether they receive the appropriate amount of therapy.

Call to Action—What Can You Do?

Comments are due online by 11:59 pm ET on September 25, 2017. There is power in numbers, and AOTA encourages practitioners to voice key concerns about the proposed rule related to patient access to occupational therapy services by submitting comments to CMS by the September 25 deadline. We encourage you to develop a letter with your own concerns, using the bulleted list of issues above as a guide. Specific examples of how the proposed rule might affect the types of patients you see would be particularly powerful. We encourage you to draft your letter in Word prior to going to the submission website so that the Word document can be easily attached to the electronic comment form.

Once your comment letter is ready for submission, you may submit electronic comments on this regulation.

  • Within the search bar, enter the Regulation Identifier Number associated with this regulation, 0938–AT01
  • Then click on the ‘‘Comment Now!’’ box next to “Medicare and Medicaid Programs: Home Health Prospective Payment System Rate Update, etc.”
  • Enter your comments into the comment box by copying and pasting from the document you have drafted in Word, OR attach your comment letter by clicking on the “Choose files” button under Upload file(s).

Additional Information

 More CMS resources and tools related to the HH PPS proposed rule

Resources from National Provider Call for HHGM

Abt Technical Report “Medicare Home Health Prospective Payment System: Case-Mix Methodology Refinements”