Why Understanding CMS’ Proposed Rule Logic Is Key to Combating It

In order for the home-based care industry to push back against the U.S. Centers for Medicare & Medicaid Services’ (CMS) 2023 proposed payment rule, industry leaders must understand where CMS’ intentions and motivations are coming from.

Industry leaders also need to focus mainly on the behavioral adjustments that CMS is targeting and planning to change.

Those guidances were laid out by Brian Harris, a financial consulting director for SimiTree, in a webinar Thursday.


“If you’ve read through the full proposal, they’re almost preempting what they expect the pushback to be,” he said. “They are leveraging the COVID pandemic years as part of the data that they’re using for the rate setting. You can see CMS is almost getting out ahead of us.”

In the time between now and when the final rule is established, providers will likely argue that the proposal does not take into account factors that are currently hindering operations. Those include raised labor costs, a severely high inflation rate and other ongoing heightened expenses related to COVID-19.

However, that might not be enough. Instead, using the same language as CMS when pushing back against the rate decreases — and aligning with CMS on the need for improved data — will be key in negotiations, Harris said.


“What they’re essentially doing is looking at actual data under the Patient-Driven Grouping Model (PDGM) for 30-day periods, recalibrating them as if they were 60-day episodes under the old PPS system and seeing what spending would look like in each of those scenarios,” Harris said. “That is CMS getting out ahead of what they anticipate pushback to be to this rate cut.”

It is mandated that a budget-neutral system be in place. In order to do that, CMS believes by using the 30-day period and 60-day episode exercise, a behavioral assumption adjustment of -7.69% – a $1.33 billion decrease – would be needed.

CMS also believes there was a little over $2 million in excess spending in 2020 to 2021 because of the rates that were established at that point in time.

“That’s something that we really need to focus on,” Harris said. “[The industry] needs to provide data that counteracts what CMS is saying and addresses the flaws in what they’re looking at.”

In the proposal, CMS did acknowledge that the 7.69% cut is high, but they also said that if they don’t do the full amount, it might compound the temporary adjustment, which would force the industry to have a larger conversation later down the line, Harris said.

A big change that agencies have to be prepared for is not getting benchmarks or thresholds until the summer of 2023. That’s because CMS changed the baseline year from 2019 to 2022.

“The logic behind that is that it believes that 2022 is more likely to be aligned with the performance years under the lot,” Harris said. “The big concern for agencies is if you’re looking to prepare — and you very much should be — you’re now not going to get information on the achievements, benchmarks or thresholds until the summer of 2023. CMS is using the same timeline experienced by providers in the nine-state Home Health Value-Based Purchasing Model pilot. I’m not necessarily sure that’s a good answer for why we’re crunching that time down, but this is a change that seems like CMS is keen on making.”

Another key aspect of the rule that Harris said should be on the minds of agencies that offer telehealth is the data collection procedure from CMS and how it relates to reimbursement.

“[CMS] is going to want to look at claims data before doing any sort of reimbursement setting for telehealth,” Harris said. “If you’re looking at the future of your telehealth communications program, it’s really about balancing the benefits, your visit utilization, supporting the care for the patient, preventing rehospitalizations, but also understanding if you have that in your budget, potential rate cuts are coming.”

CMS is going to start pulling in data as of 2023.

The agency will take its time to analyze the data and based on a “pure crystal ball” assumption, the earliest providers will see any sort of telecommunications reimbursement through Medicare could be 2025, Harris said.

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