Update: In November of 2019, the Centers for Medicare & Medicaid Services (CMS) released the 2020 Medicare Final Rule in which the Patient-Driven Groupings Model (PDGM) was finalized. This update solidified changes for PDGM that went 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 CMS release states the following:

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.

Read our blog 2020 Medicare Final Rule Released, PDGM Finalized for more information on PDGM and the 2020 Medicare Final Rule.

After industry-wide scrutiny of the overhaul of the current home health prospective payment system, the proposed home health groupings model (HHGM) has resurfaced in an updated form—the Patient-Driven Groupings Model (PDGM).

No doubt, the proposed PDGM rule by CMS is now the most significant transformation looming over the home health industry since 2000. Not only does it substantially change episode timing, but it also focuses on transitioning to a value-based payment system. As this proposed rule continues to take shape, it is important for home health agencies to understand the shift from volume to value.

What do you need to know about the new payment model? Here are some key elements of the 2020 new payment model:

  • 30-day payment periods
  • No reliance on therapy. Therapy thresholds are removed.
  • Case mix adjustment model with 432 payment adjustment groups using measures such as “early” or “late” time period; institutional or community referrals; comorbidity adjustment
  • Two 30-day periods of care
  • Behavioral adjustment to base rates to account for principal diagnosis coding and visit volume changes (-6.42%)
  • Budget neutral rate setting except for behavioral adjustment (combined the proposed 30-day payment unit increases from the 2017 HHGM proposal at just over $1600)
  • 30-day LUPA ranging from 2-7 visits depending on case mix category

Here’s what our advocating partner organization, National Association for Home Care and Hospice (NAHC), is saying about PDGM:

In the 600-page proposed regulation, it appears that the 2020 model is a modestly adjusted and “warmed-over” version of the highly criticized Home Health Groupings Model re-labeled as the Patient-Driven Groupings Model. Many of the same weaknesses present in HHGM exist in this new version.
NAHC remains very concerned that the new model still includes a significant “behavioral adjustment” based on assumptions that would trigger a 6.42% reduction in base payment rates. Many of these assumptions are driven by CMS’s design with unnecessary changes to the current model. We do not want to prematurely judge the 2020 version of payment reform as it is complex, detailed, and will require deep analysis. However, we are concerned that CMS may have been relegated to using too much from its HHGM design because CMS is pressed by a deadline. We hope that Congress can recognize the value of providing a more flexible timeframe to CMS.

We are thoroughly reviewing the proposed rule and conferring with our industry partners. McBee will continue to advocate for fair home health industry regulations. Stay connected with us to remain up-to-date, so you have the insights needed to understand the proposed PDGM.