Home health agencies would see a net $810 million Medicare pay cut next year under a Centers for Medicare and Medicaid Services draft policy announced Friday.
The proposed rule calls for a 4.2% overall reimbursement decrease, which is primarily due to a negative pay adjustments to account for increased expenditures CMS contends resulted from a recently implemented payment system.
CMS imposed a new reimbursement policy for home health agencies in 2020 that pays them based on patient characteristics instead of the number of therapy hours provided. CMS assumed the new model, known as the Patient-Driven Groupings Model or PDGM, would lead home health agencies to bill with the highest-paying codes to maximize reimbursements.
The Patient-Driven Groupings Model isn't allowed to cause higher Medicare spending, so CMS reduced home health agency pay by 4.36% starting in 2020 to account for how it anticipated home health agencies would respond to the model.
Starting next year, CMS proposes a 7.69% cut to maintain budget neutrality. The $1.33 billion cut would be partially mitigated by a 2.9% increase in home health rates, according to CMS.
CMS also proposes a method to calculate what Medicare would have spent were the Patient-Driven Groupings Model not in place. The agency also must retroactively adjust previous spending increases and requests comment on how to devise a solution. CMS didn't propose temporary adjustments in Friday's draft regulation, but estimates those cuts would be a cumulative $2 billion for 2020 and 2021.
"The actions CMS is taking in this proposed rule would help improve patient care and also protect the Medicare program's sustainability for future generations by serving as a responsible steward of public funds," the agency wrote in a fact sheet.
The agency solicited comments on its initial analysis last year without making a proposal. At the time, home health agencies argued CMS didn't conform to Medicare law and claimed the Patient-Driven Groupings Model actually underpaid providers for three years.
CMS's latest proposal also disappointed the home health industry.
"The stability of home healthcare is at risk as a consequence of CMS proposing the application [of] a fatally flawed methodology for assessing whether the PDGM payment model led to budget-neutral spending in 2020," National Association for Home Care and Hospice President Bill Dombi said in a statement. "We will be taking all steps to protect the home health benefit as this proposed rule advances and have fully prepared for congressional action and more."
The proposed home health rule solicits comments on collecting data on telecommunications technology use in Medicare home health claims, including information about access barriers beneficiaries may face. CMS also asks for feedback on developing a health equity measure for home health agencies.
CMS also proposes changes to the baseline years used in the Expanded Home Health Value-Based Purchasing Model.