The Hidden Rate Cut Inside HHGM

Most home health care stakeholders aren’t feeling the proposed home health groupings model (HHGM). 

That’s mainly because providers, associations and others with interests in the industry are vehemently opposed to the payment cuts within the proposal, which aims to make several radical changes to the current home health payment model.

Specifically, HHGM proposes to change the current 60-day episode of care to 30-day periods, which would drastically cut payments to providers. The Centers for Medicare & Medicaid Services (CMS) argues that providers would simply take on more volume to make up for having their reimbursements cut in half by the new model. Though, CMS’s own estimates reveal a potential $950 million reduction in home health care payments if HHGM is implemented in 2019.

However, the new system would also influence behavioral changes and still leave providers with less, according to Bill Dombi, president of the National Association for Home Care & Hospice (NAHC). He explained the rate cut embedded in HHGM to reporters at the NAHC annual conference and expo in Long Beach, California, last week.

While CMS maintains that HHGM could result in a 4.3% revenue reduction, the actual payment cut to providers will be closer to 15%, Dombi said, based on a NAHC analysis.

“The first thing to understand is the 15% is a reference to payment rates, whereas the 4.3% is the reference to Medicare spending on home health care services,” he explained. “It’s not just apples to oranges; it’s vegetables and fruits.”

The rate cut of 15% comes from cutting the episode period in half—from 60 to 30 days—and still making up two-thirds of those losses with additional volume.

Another analysis by association group ElevatingHome found a similar rate cut of 17%, despite CMS’s insistence the cut is around 4%.

“If you don’t fully understand this, I am not surprised,” Dombi said, in part because CMS’ conclusions based on the model were calculated using data not publicly available.

With such deep rate cuts, home health care providers are also likely to adapt the services they provide as they have done in the past, Dombi said. Though, home health care agencies have not seen such significant proposed changes to the payment model since the late 1990’s, according to Dombi.

Namely, providers may be less willing to take on sicker patients under the groupings model, instead opting to take on lower acuity patients who won’t be as costly.

“I believe providers will adapt and survive,” Dombi told reporters. “There will be a stabilization period. …It will redefine the [home health care] benefit.”

Written by Amy Baxter

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Amy Baxter
Assistant Editor at Home Health Care News
When not writing about all things home health, Amy fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."