[Updated] CMS Lowers PDGM’s Behavioral Adjustment, Finalizes RAP Elimination Plan

The Centers for Medicare & Medicaid Services (CMS) on Thursday finalized the Patient-Driven Groupings Model (PDGM) for 2020, in addition to its plan to phase out home health pre-payments and introduce a new home infusion therapy benefit.

But perhaps the biggest news for U.S. home health providers is a major update to PDGM’s widely opposed and controversial behavioral adjustment.

Broadly, the assumption-based behavioral adjustment is built on CMS’s belief that agencies will automatically change their coding and visit behavior in order to maximize reimbursement under the looming payment overhaul.


In its proposed payment rule dropped in July, the PDGM behavioral adjustment stood at 8.01%. In Thursday’s final rule for calendar year 2020, that adjustment decreased to 4.36%, a figure that’s likely still higher than the industry would like — but a significant drop nonetheless.

“Based on the comments received and reconsideration as to frequency of the assumed behaviors during the first year of the transition to a new unit of payment and case-mix adjustment methodology, we are finalizing a -4.36% behavior change assumptions adjustment in order to calculate the 30-day payment rate in a budget-neutral manner for CY 2020,” CMS wrote in its final rule.

National Association for Home Care & Hospice (NAHC) President William A. Dombi said his organization was “greatly heartened” by the move and that it represents a “much more realistic view” of the PDGM-transition process.


NAHC didn’t back off its opposition to assumption-based behavioral adjustments all together, though.

“The Bipartisan Budget Act of 2018 requires that the home health payment model reform be budget neutral,” Dombi said in a statement to Home Health Care News. “While it permits behavioral adjustment to payment rates, NAHC believes that assumption-based rate calculation should not occur because of the high risks of error and the creation of an incentive to change behavior solely to maintain Medicare revenues. Instead, NAHC supports adjustments only after actual behavioral changes have occurred.”

CMS’s move to somewhat lessen its assumption-based adjustment isn’t just in response to industry feedback: It’s also due to Congressional attention. Dozens of U.S. senators and more than 100 House lawmakers have signed on to legislation targeting PDGM’s behavioral adjustment.

“While the PDGM payment model reforms include sensible changes, the behavioral adjustment remains a concern, albeit to a reduced level,” Dombi said. “There is bipartisan, bicameral legislation pending, S. 433 and H.R. 2573, that can help resolve these concerns fully.”

Overall, CMS’s final rule for 2020 increases Medicare payments by an estimated 1.3% — or about $250 million. The increase reflects a 1.5% update required by the Bipartisan Budget Act of 2018, plus a mandated 0.2% decrease to rural add-on payments.

While the behavioral adjustment has risen to priority No. 1 for home health providers, CMS’s proposed plan to phase out pre-payments — or Requests for Anticipated Payments (RAPs) — had also been a point of focus.

CMS is officially moving forward with its plan, which some industry experts say will create insurmountable cash-flow problems for small and mid-sized providers. Currently, RAPs provide up to 60% of an episode’s anticipated payment at the beginning of care.

CMS will begin phasing out pre-payment for home health services over the next year and eliminate them entirely in 2021.

The agency is killing the RAP, it says, largely due to ongoing fraud concerns.

“CMS has seen a marked increase in … fraud schemes perpetrated by existing [agencies] that receive significant upfront payments, then never submit final claims and close for business, making Medicare recoupment efforts impossible,” agency officials wrote. “CMS believes that eliminating RAP payments over the next two years would serve to mitigate potential fraud schemes while minimally impacting [home health agencies] due to implementation of the PDGM, which increases the frequency of payments for services to [agencies].”

Instead of a RAP, CMS is finalizing a requirement for a one-time submission of a Notice of Admission (NOA) beginning in 2022. Home health agencies will be required to submit an NOA within give calendar days of the home health start of care — or be subject to a financial penalty for each late day.

In addition to all those changes, CMS is also finalizing its plan allowing therapist assistants — rather than only therapists — to perform maintenance therapy under the Medicare home health benefit, in accordance with individual state practice requirements.

Broadly, the change allows therapist assistants to use all of the skills under their license and gives home health agencies more flexibility when it comes to maintenance therapy, which some see as under-utilized, according to CMS.

While CMS is bullish on the change, some industry leaders see it as too little too late.

“The potential issue is that maintenance therapy visits tend to occur at a lower frequency,” Anthony D’Alonzo, director of clinical strategy and innovation for Bayada Home Health Care, told HHCN in July. “And CMS isn’t easing up on the [therapy] reassessment rule, which requires PTs, OTs or speech therapists to reassess the patient every 30 days.”

Despite the change, therapist assistants still won’t be able to make changes to a patient’s plan of care.

Home infusion therapy hasn’t been an area of focus for many home health providers, but that may change moving forward thanks to CMS’s final payment rule for 2020.

Specifically, Thursday’s final rule provides a permanent home infusion therapy benefit to be implemented beginning in 2021, as required by the 21st Century Cures Act. Home infusion therapy is the administration of certain types of medication, through durable medical equipment (DME) pumps, in the patient’s home.

Apart from advocacy organizations, home health technology partners have also started to weigh in on Thursday’s final rule. The list includes Texas-based software and technology company Axxess.

“After a year-long industry-advocacy drumbeat, we are encouraged that CMS listened … and reduced the onerous behavioral adjustment,” Deborah Hoyt, senior vice president of public policy for Axxess, told HHCN in an email. “While this impact was tempered, several of the other elements in the rule remain quite concerning to home health providers.”

Axxess will continue to work with home health stakeholders and members of Congress in the coming months to further refine PDGM, Hoyt said.

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