FutureFocus November 8, 2017 CMS Paying For Telehealth

Lisa Remington

In this week’s FutureFocus, we discuus the expansion of payment for telehealth under the final 2018 Physician Fee Schedule. In this week’s Washington Report are updates on regulations: PPS, HHGM and reforming regulations.

Lisa Remington, President, Remington Health Strategy Group

CMS is not finalizing its highly controversial Home Health Groupings Model (HHGM). Upon considering strong reactions to the proposed July rule from stakeholders and lawmakers alike, the agency said it “will take additional time to further engage with stakeholders to move towards a system that shifts the focus from volume of services to a more patient-centered model. CMS will take the comments submitted on the proposed rule into further consideration regarding patients’ needs that strikes the right balance in putting patients first.” CMS had proposed to implement the HHGM for home health periods of care beginning on or after January 1, 2019.

As for the PPS update, CMS estimates that the net impact of the policies is approximately $80 million in decreased Medicare payments to HHAs in CY 2018. The final rule for CY 2018 Home Health Prospective Payment System Rate Update is scheduled for the November 7 Federal Register.

Reforming Regulations Drive Affects Rule

CMS recently launched the “Patients Over Paperwork” Initiative, a cross-cutting, collaborative process that evaluates and streamlines regulations with a goal to reduce unnecessary burden, increase efficiencies, and improve the beneficiary experience. CMS bills this Initiative as emphasizing a commitment to removing regulatory obstacles that get in the way of providers spending time with patients. The 2018 HHPPS final rule includes the following as part of this Initiative:

  • CMS removed 33 items from the OASIS assessment instrument collected at various time periods during the HH patient stay because they are no longer required for the calculation of quality measures, prospective payment, provider survey, the HH Value Based Purchasing (VBP) Model, or care planning. Removal of these items will reduce time and paper required to complete HH patient assessments, CMS noted.
  • CMS is finalizing exception and extension requirements, and reconsideration and appeals procedures.
  • The estimated net burden reduction associated with the changes to the Home Health Quality Reporting Program (HH QRP) in this year’s rule, which includes the removal of these OASIS items, “was over $145 million,” according to CMS, corresponding to “an estimated net reduction in HH clinician burden of over 2 million hours annually.”

From a Summary of Costs and Transfers in the rule:

  • The overall economic impact of the HHVBP Model provision for CY 2018 through 2022 is an estimated $378 million in total savings from a reduction in unnecessary hospitalizations and SNF usage as a result of greater quality improvements in the HH industry (none of which is attributable to the changes finalized in this final rule). As for payments to HHAs, there are no aggregate increases or decreases expected to be applied to the HHAs competing in the model.
  • The overall economic impact of the HH PPS payment rate update is an estimated -$80 million (-0.4 percent) in payments to HHAs.

Calculating the $80 million reduction: CMS applied a wage index budget neutrality factor and a case-mix weights budget neutrality factor to the rates as discussed in the rule. Therefore, the estimated impact of the 2018 wage index and the recalibration of the case-mix weights for 2018 is zero. The -$80 million impact reflects the distributional effects of a 0.5 percent reduction in payments due to the sunset of the rural add-on provision ($100 million decrease), a 1 percent home health payment update percentage ($190 million increase), and a -0.97 percent adjustment to the national, standardized 60-day episode payment rate to account for nominal case-mix growth for an impact of -0.9 percent ($170 million decrease).

Controversial, Costly Withdrawn HHGM

The now-withdrawn HHGM proposal used 30-day periods, rather than 60-day episodes. It also relied more heavily on clinical characteristics and other patient information (for example, principal diagnosis, functional level, comorbid conditions, admission source, and timing) to place patients into “meaningful payment categories, rather than the current therapy-driven system, which are the major differences between the current system and the HHGM,” as CMS now justifies the proposal.

The overall economic impact of the HH PPS payment rate update is an estimated -$80 million (-0.4 percent) in payments to HHAs.

While public comments to the proposal “were generally supportive of the concept of revising the HH PPS case-mix methodology to better align payments with the costs of providing care,” CMS added, “technical comments on various aspects of the proposed case-mix adjustment methodology under the HHGM were most concerned about the proposed change in the unit of payment from 60 days to 30 days and such change being proposed for implementation in a non-budget neutral manner. Commenters also stated their desire for greater involvement in the development of the HHGM and the need for access to the necessary data in order to replicate and model the effects on their businesses.”

“According to CMS estimates, the HHGM model and other changes included in the proposed rule are not budget neutral and could reduce Medicare reimbursements for home health services by as much as $950 million in 2019 alone,” stated a letter from 174 House members to Eric Hargan, Acting Department of Health and Human Services Secretary, and CMS Administrator Seema Verma, sent just days before the final rule was issued. HHS/CMS was urged to halt implementation of the proposed HHGM “until affected stakeholders can fully analyze and understand the impact of the proposed changes.” A similar letter was signed by 49 Senators.

Home Health and other providers groups (from therapy organizations to hospitals) also had urged CMS to withdraw the HHGM model, challenging its projected costs and legality.