CMS’s Proposal to Eliminate RAPs, Increase PDGM’s Behavioral Adjustment ‘Death by 1,000 Cuts’

Home health operators and industry advocates are voicing their concerns following a proposal from the Centers for Medicare & Medicaid Services (CMS) to eliminate home health pre-payments and move forward with behavioral assumptions under the Patient-Driven Groupings Model (PDGM).

Specifically, many worry the proposed changes will create cash flow problems for home health agencies, which often have slim profit margins to begin with and are already facing a slew of regulatory changes in a short time.

“I think it’s going to be detrimental in terms of funding the care for the patients because you’re also going into PDGM, which is going to mess the revenue cycle up even more,” Peter Miska — owner of Burr Ridge, Illinois-based Phoenix Home Care, which has a census of about 50 patients — told Home Health Care News. “Plus, you also have the Review Choice Demonstration (RCD) going on. It’s like death by 1,000 cuts.”

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RCD started for Illinois home health agencies in June and is set to launch in Ohio, Texas, North Carolina and Florida next. It requires agencies to show compliance with Medicare rules through either pre-claim or post-payment review processes, in addition to other select options.

Meanwhile, PDGM is set take effect nationwide Jan. 1. The new model has been called the most revolutionary change to home health reimbursement in the past 20 years.

The overhaul cuts home health payment periods in half, while also requiring agencies to submit more detailed claims, just to name a few big-picture changes. Not to mention, PDGM makes behavioral assumptions about how providers will behave, which many worry will lead to detrimental payment cuts.

“Basically, they’ve rewritten all the rules of home health at the same time, and this is all happening within 24 months,” Miska said. “So eliminating [Request for Anticipated Payments] (RAPs)? It’s like pick a straw for which [factor] might put you out of business.”

Aaron Tripp, vice president of reimbursement and financing policy at LeadingAge, agrees the onslaught of regulatory changes will be difficult for providers to navigate simultaneously.

“The combined negative financial impact due to an increased reliance on unobserved, prospective behavior assumptions, the proposal to eliminate RAP payments and the ongoing phase-out of the rural add-on payments will trouble many of our members,” Tripp told HHCN in a statement. “Cash flow can be an issue.”

The Washington, D.C.-based nonprofit advocacy organization represents a wide variety of aging services providers, with a total of more than 6,000 members and partners nationwide.

“Because of the current trend of shifting beneficiaries out of institutional settings for acute and post-acute care, we would like to see CMS supporting home health agencies through this transition to the PDGM, as opposed to punishing the entire field due to practices of bad actors in the past,” Tripp said.

Tripp’s comments come after CMS announced their motive to eliminate RAPs, or pre-payments home health providers receive at the beginning of a patient’s episode of care: a spike in RAP fraud.

Currently, providers can get about 60% of the anticipated payment at the beginning of a care episode through a RAP. But in 2020, CMS wants to cut that to 20% and eliminate the practice altogether in 2021.

“CMS believes that phasing out RAP would help mitigate cash flow concerns by phasing out RAP payments over one year,” CMS Administrator Seema Verma said in a press release.

However, like Tripp and Miska, J’non Griffin, president and owner of Carbon Hill, Alabama-based consulting company Home Health Solutions LLC, is worried the opposite will happen.

“I think the financial impact as far as cash flow will be huge for some, especially with the short time frame, if they implement the 20% next year,” Griffin told HHCN.

On top of that, CMS is leaning even further into PDGM’s widely opposed behavioral assumptions, industry leaders say, despite their advocacy efforts.

“The proposed rule continues the harmful application of a ‘behavioral adjustment’ that CMS established during the 2019 rulemaking, actually increasing the resulting rate reduction to 8.01% from 6.42% last year,” National Association for Home Care & Hospice (NAHC) President William A. Dombi previously told HHCN in an email.

NAHC will continue to urge Congress to squelch PDGM’s behavioral assumptions ahead of the new model’s Jan. 1 implementation date, Dombi said.

Baton Rouge, Louisiana-based Amedisys Inc. (Nasdaq: AMED) expressed similar objectives, voicing their disappointment of CMS’s failure to respond to industry concerns regarding behavioral assumptions in an email to HHCN.

“We disagree with CMS on the scope of the assumed behavior changes and the lack of evidence shared with the industry to support the behavioral assumptions,” a company spokesperson wrote. “We will again use the comment period to further address and reiterate our concerns on this issue. We will also continue to work with members of Congress and staff throughout the remainder of the year to pass legislation prohibiting the use of behavioral assumptions.”

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