Proposed Home Health PPS rule calls for $400-million payment increase, details new payment model

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Adjustments to Medicare’s home health payments under the 2019 proposed PPS rule would increase agencies’ total reimbursement by an estimated 2.1%, or $400 million.

By comparison, the 2018 PPS final rule included a 0.4%, or $80 million, payment reduction.

The proposed payment change reflects a 2.1% home health payment update percentage; a 0.1% increase due to decreasing the fixed-dollar-loss ratio in order to pay no more than 2.5% of total payments as outlier payments; and a 0.1% decrease in payments due to the new rural add-on policy mandated by the Bipartisan Budget Act of 2018.

The proposal, posted July 1, also discusses the implementation of temporary transitional payments for home infusion therapy services, beginning Jan. 1, 2019.

In addition, the rule discusses proposals related to full implementation of the new home infusion therapy benefit in 2021.

CMS considers new payment model

Within the proposed rule, CMS also provides details about its plan to revise the prospective payment system for the home health industry. Instead of calling it the Home Health Groupings Model (HHGM), CMS has decided to call the model Patient-Driven Groupings Model (PDGM), which take effect Jan. 1, 2020.

Like HHGM, PDGM will use a 30-day period of care — not a 60-day episode. Dividing a single 60-day episode into two periods allows payments to be more accurately apportioned and would have no impact to the OASIS, according to prior comments from Cambridge, Mass.-based Abt Associates, a contractor that has been working on revisions for CMS.

The model will be budget neutral.

“Also for 2020, Congress mandated that Medicare stop using the number of therapy visits provided to determine payment, because therapy thresholds encourage volume over value and does not acknowledge that all patients aren’t the same, and some patients have complex needs that don’t involve a lot of therapy,” a fact sheet about the rule states.

Instead of the incentive to overprovide therapy, PDGM will reflect CMS’ “focus on relying more heavily on clinical characteristics and other patient information to allow payments to more closely coincide with patients’ needs.”

“The improved structure of this proposed case-mix system would move Medicare towards a more value-based payment system that puts the unique care needs of the patient first while also reducing the administrative burden associated with the HH PPS.”

View more information about PDGM at

Quality changes will create savings

CMS says that the changes it’s making related to OASIS item collection due to PDGM and the changes it’s planning to the quality reporting program discussed in the rule “are estimated to result in a net $60 million in annualized cost savings for home health agencies, or $5,150 in cost savings per HHA per year beginning in CY 2020.”

And CMS also is planning to reduce the burden for physicians.

“In an effort to make improvements to the health care delivery system and to reduce unnecessary burdens for physicians, CMS is proposing to eliminate the requirement that the certifying physician estimate how much longer skilled services are required when recertifying the need for continued home health care,” the fact sheet states.

CMS estimates this would create an annual cost savings for certifying physicians of $14 million beginning in 2019.

Editor’s note: Providers can comment to CMS until Aug. 31. View the proposed rule at

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