Questions Arise in Light of New Home Health Payment Policies

Coming changes in how Medicare will pay for therapy are raising questions—and some concerns—in the home health sector.

The therapy policies were included in the Bipartisan Budget Act of 2018, which was signed into law last week. One of the biggest changes relates to Medicare therapy caps, which were repealed in the bill as had been expected. Separately, a sweeping new home health payment model was included in the bill, which would eliminate the use of therapy thresholds in case mix adjustment factors for calculating payments under the prospective payment system (PPS). This could lead to challenges for some providers to staff therapists down the line, according to Kenneth Miller, and independent consultant in the home health care space and a clinical educator with New York-based Catholic Home Care.

Home health care agencies have longed been charged with providing more therapy services than necessary because these services have a high reimbursement rate. For several years, the Medicare Payment Advisory Commission (MedPAC) has advised Congress to eliminate the use of therapy visits as a factor in payment determinations—as is the case in the  framework put forward in the spending bill.


But this could lead to issues if the new incentives aren’t correctly calibrated.

“If you have a service that is not generating income, there’s no incentive to staff it and provide the medically necessary care because it is not changing what you’re getting paid,” Miller told Home Health Care News. “The issue is that there was a problem with [therapy] being connected [to the payment system] the way it was. Now, you’re flipping the pendulum the other direction and moving the payment too much.”

The worry is that smaller, mom-and-pop providers won’t be able to continue staffing physical therapists if the rates change, according to Miller, as these providers already operate on low margins.


However, how the model will ultimately look after it is proposed by CMS is unknown—including what the impact on therapy will be.

“It’s premature to speculate because we don’t know what the model will be,” Bill Dombi, president of the National Association for Home Care & Hospice (NAHC), told HHCN. “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.”

Murky water

Providers and industry advocates are also taking a close look at the behavioral adjustments in the new payment model. The behavior adjustments generally refer to the changes that CMS anticipates home health care agencies will make when dealing with new policies. For example, lower reimbursement rates might incentivize higher volume to make up the payment difference, so CMS may make adjustments with the idea of keeping providers’ incentives in balance.

“There is a multitude of behavioral adjustments in a new model,” Dombi said. “The behavioral adjustments in HHGM were all about changed LUPA standards. If they come up with a model that doesn’t change the LUPA framework, there may not be any behavioral adjustment needed. So many things in play are in the hands of CMS; it’s impossible to measure.”

Episodes of care with four or fewer visits are referred to as LUPA episodes—Low Utilization Payment Adjustments. HHGM—the home health groupings model put forth by CMS last year, which is similar to the payment system proposed in the budget bill—would have varied made changes to LUPA payments based on assumptions about how agencies might have responded to a 30-day, rather than 60-day, care episode.

“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, told HHCN.

The elimination of the therapy caps in reimbursement calculations is also “something hat the industry has been advocating for in certain ways for years,” Varady said.

“The direction CMS is taking in removing therapy visits as a driver of reimbursement is the right one, and one the industry agrees with,” Varady said.

Others agree the waters are still murky on the final outcome.

“We need clarity around the behavioral adjustments, if [policymakers] will include those,” Paul Kusserow, CEO of major provider company Amedisys Inc. (Nasdaq: AMED), told HHCN on February 8. “They do need to provide some clarity around therapy and what that means. … So we will be working through that with them.”

The new model that eventually comes out will also include major input from the industry itself. A technical expert panel (TEP) will include “home health providers, patient representatives and other relevant stakeholders,” and will meet at lease once in 2018 to identify and prioritize recommendations to the PPS for home health care, according to the spending bill. The TEP would examine the previously proposed HHGM and alternative case-mix models to that model.

The TEP, which has already met once, did in fact include three representatives from therapy disciplines, according to Dombi.

Despite the changes coming for home health care agencies, many in the industry are embracing the hand they were dealt in the spending bill, especially when it’s compared to other proposals from 2017.

“On the whole, we view the Bipartisan Budget Act of 2018 as an incrementally positive package of improvements,” reads a statement from LHC Group (Nasdaq: LHCG), one of the nation’s largest home health care providers.

One reason for providers’ relief: the spending bill requires the new model to be budget neutral—something that HHGM was decidedly not.

Written by Amy Baxter

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