Why Home Health Payment Reform Isn’t A ‘Death Knell’ for Therapy Services

Proposed policy changes related to how home health agencies bill for therapy shouldn’t cause the industry to cut staff or abruptly back away from those services, experts say.

Under the Patient-Driven Groupings Model (PDGM) proposed by the Centers for Medicare & Medicaid Services (CMS) on July 2, home health providers would no longer be able to use therapy volume as a payment rate determinant, a point that has long been a concern for the Medicare Payment Advisory Commission (MedPAC), lawmakers and industry groups alike.

Instead, therapy payment would theoretically be more closely tied to clinical characteristics and patients’ needs.


The basic goal of the modification is to remove incentives for agencies to over-provide therapy, according to CMS. The Bipartisan Budget Act of 2018 mandated home health payment model reform by 2020.

“The redesign of the home health payment system encourages value over volume and removes incentives to provide unnecessary care,” CMS Administration Seema Verma said in an agency announcement.

Concerns over PDGM’s proposed changes to therapy services were highlighted during an open forum session this week at the National Association of Home Care & Hospice’s (NAHC) 2018 Financial Managers Conference in Austin, Texas.


Conference open forum sessions have typically addressed a broad range of issues in the past.

This year’s, however, was almost entirely devoted to PDGM and therapy concerns.

“If this new model works, you should be looking at the therapy patient in terms of clinical need the same way, maybe even expanded by getting rid of that improvement standard that blocks some access to care for therapy patients,” NAHC President Bill Dombi said at the forum. “[But] we have already heard in the two weeks that this has been out there that people are thinking therapy is no longer part of the home health benefit.”

NAHC’s 2018 open forum panelists included Kornetti & Krafft Health Care Solutions CEO Cindy Krafft, Simione Healthcare Consultants Principal William Simione III, Healthcare Provider Solutions Inc. CEO Melinda Gaboury and BKD LLP Partner Mark Sharp.

In addition to his role at BKD, Sharp serves as chairperson of the Home Care & Hospice Financial Managers Association (HHFMA) board of directors. Gaboury and Simione are board members.

Dombi moderated the open forum.

PDGM offers chance for providers to shake ‘villain’ label, but that could backfire

Despite industry concern, changes to therapy volume thresholds may not be inherently bad for business, according to Krafft, whose multi-state firm offers revenue protection strategies for home health agencies through auditing, data analysis, education, mentorship and clinical management strategies.

In fact, if agencies are able to adjust to changes and therapy services aren’t diminished or scaled back, it would help validate that home health providers have been offering necessary services, she said.

“I’ve been a big fan of getting rid of the therapy threshold for a long time,” Krafft said. “I’m kind of tired feeling like we’re being made the villain in the situation.”

But PDGM can also have the opposite effect, especially if agencies overcorrect and shy away from therapy services, thinking the benefit itself is being taken away.

“I’m already hearing the rumble of people planning for their therapy firesale,” Krafft said. “‘That’s it. I’m going to call it the death knell for therapists. We need to consider working in other settings.’”

MedPAC has been recommending in its reports to Congress that Medicare eliminate the use of the number of therapy visits as a payment factor in the home health payment system for at least the past six years.

Between 1997 and 2016, therapy visits increased from 10% of all home health visits to 39%, according to MedPAC. In general, agencies that provide more therapy episodes tend to be more profitable, the commission has found.

For the past seven or so years, accounting and advisory firm BKD has looked at the top performing home health agencies across a variety of measures and analyzed what has made them successful. Many of those agencies have demonstrated a systematic approach to delivering value, including when it comes to therapy, according to Sharp.

“I am all for removing therapy utilization out of the equation,” Sharp said. “That doesn’t mean that therapy is [not] paid for anymore.”

Agencies must plan for change now

During his portion of the open panel, Simione also referenced the need for agencies to continue delivering therapy services under PDGM. More than 1,500 organizations have worked with Simione Healthcare Consults since the firm launched more than 50 years ago.

“Somebody made the comment to me today, ‘We’re going to start hiring a lot more home health aides, and we’re going to start getting rid of a lot of our [occupational therapists],’” Simione said. “I look at that and kind of get a little nervous because there’s been a lot of benefits … of having the OTs.”

Largely, those benefits have centered on teaching home health patients a practical, independent way of accomplishing tasks and routine activities, such as putting on socks, he said.

Besides keeping a consistent approach to offered therapy services, agencies also need to prepare for PDGM by working to create an internal taskforce on what the reform means and how it will affect day-to-day operations.

“All stakeholders really need to be involved in the planning for this,” Simione said. “You really need to have every single department within your organization learning this, understanding it, breathing it.”

That includes staff from billing all the way to clinicians, he said.

Garboury, who co-founded Healthcare Provider Solutions Inc. with Mark Cannon, echoed that idea, emphasizing that agencies need to begin preparing for PDGM now on an operational level, even as they digest CMS payment changes for next year.

Billing, in particular, needs to get up to speed, she said, as PDGM halves the 60-day episode of care unit of payment down to 30 days if implemented in 2020.

CMS’ proposed payment rule is projected to increase Medicare payments to home health agencies by 2.1%, or $400 million, in calendar year 2019.

“You can’t say to yourself, ‘The year 2020 is still a whole 13, 14 months away,’” Garboury said at the event. “You have to start working on those care models now in determining what you’re really going to do when it comes down to it.”

Written by Robert Holly

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