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In July 2018, the Centers for Medicare & Medicaid Services (CMS) issued the proposed home health rule for 2019. This rule includes the proposal for a new payment model—the Patient-Driven Groupings Model (PDGM), with implementation beginning January 1, 2020. PDGM is the revised version of the previously proposed Home Health Groupings Model (HHGM). HHGM was widely criticized by the industry, primarily because it wasn’t proposed to be budget neutral. Although PDGM is proposed to be budget neutral, some elements of the model continue to raise concern for industry stakeholders.

Currently, a significant portion of the 60-day home health episode payment is based on therapy utilization and various thresholds, but these thresholds would be eliminated under PDGM and replaced with payment categories driven by other patient-specific characteristics. CMS aims for a value-based payment system and to eliminate incentive to provide unnecessary care.

Another proposed change of the PDGM includes moving to 30-day payment periods (still within a 60-day home health episode of care). Each 30-day period would be classified as either “early” or “late,” with only the first 30-day period classified as early, and all subsequent periods considered late. The proposal also indicates each period would be classified into either community or institutional admission categories. In addition, each 30-day period could have a high or low comorbidity payment adjustment, depending on a patient’s reported other diagnoses. These proposed changes result in 216 different possible case-mix payment groups for each 30-day period.

Cost of care necessary to determine case-mix weights under the proposed model includes cost-per-minute of care plus nonroutine supplies, which uses data obtained from Medicare cost reports and submitted home health claims. Also under the proposed PDGM, the Low Utilization Payment Adjustment (LUPA) threshold is proposed to range from two to six visits, depending on the case-mix category assigned for such period of care.

CMS also indicates the new payment model is budget neutral, except for a payment rate decrease of 6.42 percent to account for behavioral adjustments changes anticipated for both visit volume and diagnosis coding. The adjusted payment amount is proposed to be $1,753.68 for a standard 30-day payment period. CMS also has provided an analysis at the provider level to estimate the impacts of PDGM.

Home health agencies should review this information and evaluate the potential financial and operational effects of the proposed payment model. The comment period on the proposed rule ended August 31, 2018, and the final rule is expected to be released at the end of October or the first part of November.

Other matters included in the proposed rule can be found here.

For further information, Contact Amber or your trusted BKD advisor.

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