CMS Stands by Behavioral Adjustment Aspect of PDGM

The U.S. Centers for Medicare & Medicaid Services (CMS) released final language Wednesday for its Patient-Driven Groupings Model (PDGM), the sprawling home health payment overhaul that policy experts see as the biggest industry change in decades.

Likely to the disappointment of many home health agencies, CMS stood by PDGM’s widely opposed behavioral adjustment aspect. If agencies do not make the behavioral adjustments that CMS anticipates they will under the new payment framework, PDGM could potentially present a 6.42% rate cut.

In comments sent to the agency, home health providers and stakeholders argued that PDGM’s behavioral adjustment component needed to be based on actual, observed behavior changes — instead of policymakers’ assumptions of what agencies would theoretically do with the payment overhaul in place.


But a PDGM test or demonstration is simply not feasible, CMS officials stated in its finalized PDGM language, released in tandem with the final home health payment rule for 2019.

“With regards to conducting a demonstration, we note that a demonstration would likely only occur in selected areas with selected participants and therefore would paint a different picture of the effects of the model compared to what would otherwise occur on a national scale,” agency officials stated. “While we are finalizing our proposal to implement the PDGM beginning on Jan. 1, 2020, we are sensitive to the concerns expressed by commenters regarding provider outreach, training, billing changes and systems updates needed to implement the PDGM.”

Specifically, CMS assumes that home health agencies will change documentation and coding practices under PDGM, putting the highest-paying diagnosis code as the principal diagnosis code in order to have a 30-day period be placed into a higher-paying clinical group.


Policymakers also believe home health agencies will take advantages of changes to co-morbidity coding and Low Utilization Payment Adjustment (LUPA) thresholds.

In general, CMS maintains that it has had to move forward the behavioral adjustment aspect and other parts of PDGM because of requirements in the Bipartisan Budget Act of 2018, William A. Dombi, president of Washington, D.C.-based National Association for Home Care & Hospice, told Home Health Care News.

“There are clearly areas that need to be addressed going forward, and we fully intend to do that relative to, particularly, the behavioral adjustment,” Dombi said. “CMS takes the position that they had to do this kind of an adjustment, and we’re going to see what we can do to get Congress to say, ‘You don’t have to do this.'”

Two roads to change

CMS may have finalized PDGM language Wednesday, but that doesn’t mean the behavior adjustment aspect can’t still be tossed or refined, Dombi said.

In reality, the home health industry has two main pathways for securing desired tweaks.

The first main avenue runs through Congress — and the industry has already started down that road with a handful of federal bills introduced in both the U.S. Senate and House.

CMS’ push for assumed behavioral adjustments in PDGM contradicts steps that the agency has taken with skilled nursing facility (SNF) payment reform. That suggests CMS officials may genuinely feel obligated by federal law, experts say.

“The fact that they chose not to do it when they had the option with skilled nursing facilities tells us that, probably, CMS doesn’t necessarily feel real comfortable making the assumption-based adjustment either,” he said. “If CMS’ view was that they had to do it, then let’s remove that power from them and … we’ll make us happy and them more comfortable.”

The second main avenue is going back to CMS and attempting to change the adjustment itself, as the agency did not technically finalize the 6.42% figure.

“They only finalized that there would be an adjustment, and that it would encompass those three categories, that being the diagnosis, the comorbidity and the LUPA issue,” Dombi said. “It could be that in 2019, when they start reviewing it further and updating it with more recent data, that 6.42% number could change. Now, it could change in both directions — up or down.”

Medicare Advantage and PDGM

The final PDGM language also shed some light on how it fits in with Medicare Advantage landscape.

Some Medicare Advantage plans could change their payment models to mirror PDGM, CMS noted in its Wednesday release, while others may not change their payment models in relation to the changes finalized in this rule.

“It should be noted that, as private plans, Medicare Advantage plans do not have to use the [fee-for-service] payment methodology,” CMS officials states. “Medicare Advantage payment models for home health currently take a wide variety of forms and some may already be approximating the structure of PDGM, using patient characteristics rather than service utilization as the basis for payment.”

The implementation of PDGM will have no impact on the Medicare as a secondary payer process, according to CMS.

Written by Robert Holly

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