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Home Health Proposed Rule: 8 Things to Know


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8 (Quick) Things to Know About
the Proposed Rule for Home Health

On June 28, CMS made available the proposed rule updating the Home Health Prospective Payment System for calendar year 2022.  Here’s a quick rundown from the SimiTree Healthcare Consulting team on what’s in the proposed rule:

1. Value-Based Purchasing going nationwide.

Value-purchasing is a program using quality performance data to incentivize agency behavior by implementing Medicare payment adjustments.

 CMS has been testing the program in nine states since 2016 and now plans to expand it nationwide. Between 2016 and 2018, quality scores for participating agencies improved by an average of 4.6 percent annually. Evaluations also reported an average annual savings of $141 million to Medicare.

“With quality improvement and Medicare cost savings, it was only a matter of time until VBP went nationwide,” said Michael Simione, a SimiTree Financial Consulting Director.

CMS will end the pilot program one year early to ensure 2020 quality performance data that may have been impacted by COVID-19 does not drive the payment adjustments for agencies in the nine participating states.

The national VBP program will have a baseline year of 2019 to avoid using 2020 quality performance data, Simione said. The first performance year for all agencies will be 2022, with 2022 performance data impacting payment adjustments in 2024. The maximum payment adjustment will be +/-5%.

2. Payment rates are increasing.

The rule proposes to give home health agencies a 1.8 percent Medicare payment increase totaling $330 million in 2022. Base rate will increase from $1,901.12 to $2,013.43.

However, a reduction in the rural add-on takes effect in 2022 as CMS continues its rural add-on phaseout. Because of the $20 million rural add-on decrease, the proposed aggregate increase in Medicare payment for 2022 will total 1.7 percent, or $310 million.

Sequestration will resume in 2022 unless there is further action by Congress, according to Brian Harris, a SimiTree Financial Consulting Director. Sequestration is a 2 percent punitive Medicare reimbursement adjustment levied in 2011. Congress has suspended sequestration three times during the public health emergency, and the latest suspension expires at the end of this year.

CMS is also proposing changes to home infusion therapy payment rates, including an update to the geographic factor used for wage adjustment. “But the overall impact of these changes is expected to be minimal,” Harris said.


3. First-year PDGM data is in, and CMS wants input.

The proposed rule provides detailed first-year PDGM data on admission source, timing, clinical grouping, functional impairment level, comorbidity adjustments and therapy visits. When comparing CY 2018 (simulated) data to CY 2020 data, the proposed rule highlights the following trends:

  • Increase in overall case-mix weight
  • Decrease in visit utilization by 1.27 visits with a 0.6 visit decrease in physical therapy visits per 30-day period
  • Increase in high functional impairment levels from 31.2% to 41.7% of 30-day periods
  • Increase in high comorbidity adjustments from 9.2% to 14.0% of 30-day periods
  • Increase in LUPA percentages from 6.7% to 8.6%

The proposed rule also sets out in detail the method CMS used to analyze the difference between assumed and actual behavior change on estimated aggregate expenditures in 2020. CMS said it will not take any actions to alter PDGM’s 4.36% behavioral adjustment, but it is seeking stakeholder input on how it analyzes the data. 

4. Case mix weights and groupings are changing.

There are a few changes to the PDGM model.  The LUPA thresholds will remain the same in 2022 as in 2021.  However, CMS is proposing an annual recalibration of PDGM case mix weights and some significant grouping changes for two important components of the PDGM payment model.

Determinants will change for both co-morbidity adjustments and patient functional impairment levels.  The proposed rule indicates changes to the co-morbidity subgroups that result in low co-morbidity adjustments (both removals and additions), and there have also been modifications to the co-morbidity subgroup pairings that result in high co-morbidity adjustments (the number of pairings will more than double for 2022).

5. COVID-19 changes are becoming permanent.


Some blanket waivers granted by CMS during the COVID-19 public health emergency would be locked into place through changes to Conditions of Participation (CoPs) which are proposed in the new rule.

Under COVID-19 flexibilities, agencies may rely on telecommunications for the required 14-day supervisory assessment of home health aides, but this will be limited to no more than two occurrences during each 60-day episode of care. The proposed rule would rewrite CoPs to allow this to continue beyond the public health emergency.

The rule also proposes to permanently allow occupational therapists (OT) to conduct the initial assessment visit and complete the comprehensive assessment for therapy-only cases that must include OT in the plan of care.

Additional proposed regulatory updates include:

  • Permanently adding the term “allowed practitioner” to sections of Plan of Care
  • Medicare Provider Enrollment Policy Manual updates related to initial enrollment and Changes of Ownership (CHOW) requirements

 6. LUPA changes proposed for OT.

CMS wants to establish a LUPA add-on factor for calculating LUPA add-on payment amounts for occupational therapy visits. However, since OT has only been allowed to conduct the initial and comprehensive visit under COVID-19 waivers, sufficient data is not available to show the average excess of minutes for the first visit in LUPA periods where the initial and comprehensive assessments were conducted by occupational therapists.

To compensate, CMS is proposing to use the physical therapy LUPA add-on factor as a proxy until data from 2022 becomes available and a more accurate OT add-on factor can be established for LUPA add-on payment amounts. The add-on factor will apply to payment for the first skilled OT visit in LUPA periods that occur as the only period of care or the initial 30-day period of care in a sequence of adjacent 30-day periods of care.

7. Quality Reporting Program Changes proposed.

Home Health Quality Reporting (HHQRP) proposed changes include several changes to the OASIS as part of these efforts including, but not limited to:

  • Removing Drug Education on all Medications Provided to Patient/Caregiver measure
  • Replacing  Acute Care Hospitalization during the First 60 Days of Home Health measure
  • Removing Emergency Department Use Without Hospitalization During the First 60 days of Home Health measure
  • Replacing removed measures with a claims-based measure, Home Health Within- Stay Potentially Preventable Hospitalization.
  • Public reporting of Percent of Residents Experiencing One or More Major Falls with Injury measure

In addition, CMS wants to begin collecting additional data at transfer, and implement six new categories of standardized patient assessment data elements (SPADES), effective Jan. 1, 2023. Long-term care hospitals and in-patient rehabilitation would begin these quality reporting measures earlier, in October 2022.

“CMS is stepping up efforts to better monitor and align outcomes across healthcare settings in accordance with the IHI Triple Aim and CMS’s Quality Improvement Strategy,” said Kim Skehan, SimiTree’s Director of Compliance, Regulatory and Quality.   “This is also a response to a January 2021 Presidential Executive Order directing a new focus on addressing inequities within the healthcare system.”

Value Based Purchasing will also directly impact these measures, with the goal of overall improvement of home health agency outcomes, and quality of care.


8. Changes to the Hospice Survey Process

CMS proposes several changes to the regulatory provisions for the hospice survey process to improve consistency and oversight.

CMS requirements for accreditation organizations approved to deem Hospice Programs would tighten, with more stringent training for accrediting organizations. Accreditation organizations would also be required to use the same form as state and CMS surveyors to report hospice survey deficiencies.
Hospice survey certification process changes proposed include:

  • A minimal survey frequency of every 36 months
  • Requiring multidisciplinary survey teams for hospice when there is more than one surveyor
  • Imposing Surveyor Conflict of Interest limitations
  • Establishing a Hospice Program Complaint Hotline
  • Requiring transparency of survey findings

“Most importantly, CMS is expanding enforcement remedies for hospices,” said Kim Skehan, SimiTree’s Compliance, Regulatory and Quality Director. Remedies include the imposition of Civil Monetary Penalties (CMPs), payment suspension, temporary management, and directed in-service and plans of correction. In addition, CMS plans to create a special program for poor-performing hospices with continued survey compliance issues.

Several of the proposed revisions, if finalized, will become effective as early as October 2021, making this a priority area of focus for hospices, Skehan said.

Read the proposed rule in its entirety by downloading a PDF from the Federal Register:


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