Final Rule Gives Home Health Agencies Breathing Room for HHVBP, Medicare Sequestration

Now that the final home health payment rule for 2022 has been floating around for a few days, industry insiders have had time to pick it apart and zero in on key changes, including the nationwide expansion of the Home Health Value-Based Purchasing (HHVBP) Model.

A significant difference between the finalized expansion of HHVBP and the original proposal from the U.S. Centers for Medicare & Medicaid Services (CMS) is that the model will now begin Jan. 1, 2023.

This delay will give home health providers across the U.S. more room to breathe, Valerie Cornett, chief of strategy and innovation at MAC Legacy, told Home Health Care News.

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“This will allow agencies that were not part of the previous demonstration to become more operationally prepared,” she said. “It will allow agencies to do some financial analysis and get more OASIS training for accuracy among their staff. It will also give them time to become more fluent with the quality measures now that there’s more hard lines around it.”

MAC Legacy is a Denton, Texas-based home health and hospice coding and consulting company.

Another advantage for providers is that while HHVBP’s start date has been pushed back, the majority of its provisions remain unchanged from the proposal stage.

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“We’ve had the proposed rule since the summer and had some time to get accustomed to it,” Aaron Little, managing director at BKD, told HHCN. “Knowing that there were no significant changes from what was proposed to us and finalized, in terms of the structure of HHVBP, is good. It just gives even more time to absorb and think about how this is going to potentially impact agencies.”

BKD is a Springfield, Missouri-based accounting services firm that provides billing and revenue cycle outsourcing services. BKD and MAC Legacy announced a strategic collaboration at the end of October to give their clients access to more resources.

Broadly, HHVBP has many supporters among the home health industry due to its ability to boost quality scores and Medicare savings.

HHVBP is a Medicare demonstration that links reimbursement to quality of care. Under the model, home health providers are paid based on how well they keep their patients healthy and out of the hospital. Since 2016, Medicare-certified home health agencies in Massachusetts, Maryland, North Carolina, Florida, Washington, Arizona, Iowa, Nebraska and Tennessee have participated in the demo.

“One of the nice things about HHVBP is that it wasn’t set up to take new performance measures that agencies aren’t familiar with or accustomed to,” Little said. “If you’re striving toward quality, that should also translate well into your financial results. It’s tying in the information from the OASIS, the information from the patient-experience surveys and hospital readmissions, which agencies are already focused on managing.”

Since its 2016 implementation, the model has resulted in an average 4.6% improvement in home health agencies’ quality scores and an average annual savings of $141 million to Medicare, according to CMS.

Still, some home health stakeholders believe there is still room for improvement when it comes to HHVBP.

The National Association for Home Care & Hospice (NAHC) has pushed for CMS to adopt a risk-sharing approach for HHVBP, for example.

“The risk-sharing concept is not foreign to value-based purchasing programs,” Bill Dombi, president of NAHC, said during a Friday webinar. “We thought it fit really well with a refinement and improvement of [HHVBP]. The program in home health has one agency competing against another in order to get either a bonus or penalty, but some of the providers that are below the mean and would be penalized actually bring savings to the Medicare program.”

Dombi noted that these agencies that fall “below average” relative to performance improvement are still expected to contribute nearly $3.4 billion in savings to the Medicare program over five years.

Aside from the expansion of HHVBP, the rule establishes a 3.2% increase to the home health Medicare rate for next year. This shakes out to be a $570 million bump.

The 3.2% bump amends a 1.7% increase that was initially presented in the proposal.

The rate increase, one of the largest for the home health industry in years, could help offset Medicare sequestration which was originally postponed to help providers throughout the COVID-19 emergency.

“We are expecting sequestration to come back into play in January, so it’s good to see that the increase was more than 2%,” Little said.

As the public health emergency continues, an additional financial cushion will be an overall help to providers, according to Cornett.

“More than just the looming return of sequestration, any little bit will help,” she said. “Since the beginning of the public health emergency, agencies have had to be really creative. Keeping patients and staff safe has additional costs associated with it. Providers need relief from that.”

Cornett noted that these costs include supplies, technology, rising salaries and turnover.

Also of note, the rule finalized a recalibration to parts of the Patient-Driven Groupings Model (PDGM), though the rule essentially maintains the structure of the model in terms of case-mix categories and LUPA thresholds.

“[This includes] the recalibration of all 432 case-mix weights and [the finalization] of the transition to the new CBSA wage index that CMS began in this current year, but began with a 5% cap on any negative changes to the wage index,” Dombi said. “And in this case, they have eliminated the cap.”

One thing that hasn’t changed is PDGM’s 4.36% behavioral adjustment.

“CMS’s explanation for not wanting to do anything with it is they still don’t have a full year of clean data from 2020,” Dombi said. “We’ve been advocating for that 4.36% to drop, if not drop out completely, because our observations … indicate CMS’s behavioral changes that were expected did not materialize.”

For example, CMS expected LUPA volume to go down in response to the new payment model; instead, they went up significantly, likely due to the public health emergency.

Additionally, CMS projected the behavior changes would include upcoding of the primary diagnosis, which did not happen, according to Dombi.

Overall, NAHC believes that the final rule will usher in a degree of stabilization in home health

“[There are] no real big architectural changes within the payment model itself, although definitely some which [have] material impact,” Dombi said.

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