The Centers for Medicare & Medicaid Services (CMS) issued the CY 2020 Home Health Prospective Payment System Rate Update. This update finalized changes for the Patient-Driven Groupings Model (PDGM) that will go into effect on January 1, 2020. During the time this rule took shape, industry leaders expressed concern over the detrimental impact PDGM would have on the future of home health. Of the many challenges the PDGM final rule brings, one of the most widely opposed and scrutinized was the Behavioral Adjustment. Most recently, the adjustment rate was 8.01%. In the final rule, CMS announced that it has lowered this adjustment to 4.36%.

“The biggest change released in the final rule was the reduction of the behavioral adjustment from 8.01% to 4.36%. This is a big win for home health,” said Mike Dordick, President, McBee. “I want to express my deep gratitude to all industry advocates and organizations who made mitigating the challenges under PDGM their number one daily goal. As you can see, when we band together and work towards a common goal we can be successful. Together, we support a home health industry where providers can achieve financial success and provide quality outcomes for their patients.”

The CMS Release

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 percent behavior change assumptions adjustment in order to calculate the 30-day payment rate in a budget-neutral manner for CY 2020. This adjustment will be made using the three behavior assumptions finalized in the CY 2019 HH PPS final rule with comment period (83 FR 56461).

The finalized 30-day budget-neutral payment amount with the -4.36 percent behavioral assumption adjustment will be $1,824.99 and the CY 2020 30-day payment rate, with the wage- index budget neutrality factor and the home health payment update of 1.5 percent, will be $1,864.03 with a fixed-dollar loss ratio of 0.56. Section III.E. of this final rule with comment period describes the CY 2020 home health payment rate update and section III.F. describes the payments for high-cost outliers and the fixed-dollar loss ratio for the CY 2020 HH PPS.

To clarify, this adjustment is based on assumptions on how providers will adapt to PDGM in 2020. Subsequently, much of the industry has vocally opposed it. However, CMS ultimately finalized these three theoretically-based assumptions and included comorbidities, LUPA avoidance, and diagnosis coding. In addition to the explanations below, McBee recommends substantial PDGM home health training for your entire staff. Importantly, your team members must understand the importance of accurate home health diagnosis codes. For example, host training on the impact that home health changes in 2020 will have on billing and therapy processes and workflows.

Comorbidity Coding

Under PPS, providers can only code five secondary diagnoses. However, under the PDGM payment model, all of the patient’s secondary diagnoses (up to 24) determine the comorbidity adjustments. As a result, CMS assumes that more claims will receive additional reimbursement for comorbidities.

Clinical Group Coding – Diagnosis coding

CMS assumes that providers will adjust coding and clinical documentation processes to code the highest-margin diagnosis codes as the principal diagnosis. Therefore, a provider might do this to place a 30-day period of care into a higher-paying clinical group.
For guidance on PDGM comorbidities and diagnosis coding, visit here.

LUPA Threshold – LUPA avoidance

LUPAs will no longer be based on four or fewer visits. Instead, the new payment model considers anywhere between two to six visits per 30-day period a LUPA. Also, LUPA placement is dependent upon clinical groups, functional levels, admission timing/source (early vs. late, community vs. institutional), and comorbidities. In the same vein, CMS assumes providers will add more visits per billing period to prevent LUPAs.
For creating and optimizing visit plans under PDGM, visit here.

CMS received many comments from providers who disagreed with the proposed behavioral adjustments. As a result, CMS cited the following:

We continue to believe that the behavior assumptions are reasonable given past experience with changes in provider behavior in response to payment system modifications. We refer readers to the CY 2019 HH PPS final rule with comment period (83 FR 56456), in which we provided examples of observed behavior changes resulting from payment system changes.

RAP Phase-Out

Additionally, CY 2020 Final Rule finalized the PDGM RAP Payment reduction to 20% of the estimated final payment amount. Citing an increase in RAP-related fraud, the ultimate goal is to phase out pre-payments for home health services. CMS will eliminate those upfront payments completely in 2021. After that, in 2022, a one-time submission of a Notice of Admission (NOA) will replace the RAP. The NOA will be a required submission within 5 days of the start of care.

Section III.G. of this final rule with comment period, finalized technical regulations correction at § 484.205 regarding split-percentage payments for newly-enrolled HHAs in CY 2020; and finalizes the following additional changes to the split-percentage payment approach:

  • (1) a reduction in the up-front amount paid in response to a Request for Anticipated Payment (RAP) to 20 percent of the estimated final payment amount for both initial and subsequent 30-day periods of care for CY 2020;
  • (2) a reduction to the up-front amount paid in response to a RAP to zero percent of the estimated final payment amount for both initial and subsequent 30-day periods of care with a late submission penalty for failure to submit the RAP within 5 calendar days of the start of care for the first 30-day period within a 60-day certification period and within 5 calendar days of day 31 for the second, subsequent 30-day period in a 60-day certification period for CY 2021;
  • (3) the elimination of the split-percentage payment approach entirely in CY 2022, replacing the RAP with a one-time submission of a Notice of Admission (NOA) with a late submission penalty for failure to submit the NOA within 5 calendar days of the start of care.

McBee Advocacy

“McBee has been working with the industry and our clients to ensure success under the changes PDGM brings. Of course, the behavioral adjustment reduction is a major win. However, there is still work to be done to position providers for guaranteed success in 2020 and beyond. We will continue to listen to our clients about their concerns surrounding the Medicare 2020 Final Rule. As always, we will work with home health leaders to ease additional pain points,” said Dordick.

McBee is continuing to thoroughly review the final rule. Meanwhile, we are conferring with our industry partners regarding PDGM home health coding and the PGDM payment model as a whole. McBee will continue to advocate for fair home health industry regulations. Above all, we are proud to provide support and resources to help our clients and the industry succeed.

Click here to access the Final Rule.

Click here to view the fact sheet on the Final Rule.

PDGM Resources & Insights

BLOG: Three Cash Collection Strategies to Prioritize for PDGM

WEBINAR: Check Your Gauges! Leverage Revenue Cycle KPIs for Operational Success Today and Under PDGM

WEBINAR: Episode Management in a PDGM World

WEBINAR: Diagnosis Coding in a PDGM World — The Clinical Perspective

BLOG: Patient Driven Groupings Model (PDGM) Readiness Series: Clinical Coding Challenges