9 Trends Driving Health Care Home & 1 Major Proposed Payment Cut
Health care delivery continues to move to the home. Whether it’s in the form of home health care, home care (daily living supports), telehealth, hospital-at-home and more, there are overarching trends leading care in this direction. CLA’s recent environmental scan highlights nine of those larger trends.
- Demographics
- Shifting sites of care
- Aging in place
- Care management
- Consumer preference
- Valued-based care
- Technology
- Private investment
- COVID-19 experience
READ CLA’s HOME HEALTH ENVIRONMENTAL SCAN
We focus on these trends to show there isn’t just one reason the home is becoming an attractive option for care delivery. Accordingly, there isn’t just one approach, demographic or intervention to consider either.
Regardless, one major consideration will always be how a service is paid for or covered by insurance.
Medicare’s Home Health Reimbursement Faces Major Cut
Since the Centers for Medicare & Medicaid Services (CMS) recently released its proposed 2023 payment rule for Medicare’s home health benefit, we’ll focus on that today.
According to Medicare.gov, “home health care is a wide range of health care services that can be given in your home for an illness or injury. Home health care is usually less expensive, more convenient, and just as effective as care you get in a hospital or skilled nursing facility (SNF).” This could include certain wound care, monitoring serious illness or intravenous injections. There are other requirements as well, such as the individual is homebound and under the care of a doctor or allowed practitioner. If meeting all requirements, reimbursement then falls under Medicare’s Home Health Prospective Payment System (HH PPS).
In 2020, CMS transitioned the HH PPS to the new Patient Driven Groupings Model (PDGM). PDGM is a 432-category case-mix classification system that assigns patients to a home health resource group (HHRG) based on patient characteristics and other clinical information from Medicare claims and the Outcome and Assessment Information Set (OASIS) assessment instrument. Payments are based on 30-day episodes.
WATCH FOR CLA’s FULL REGULATORY ADVISOR ON THE 2023 HOME HEALTH PROPOSED RULE
PDGM payments are now facing a significant payment cut in 2023. CMS is required to make a behavioral adjustment to maintain “budget neutrality” when transitioning from one payment system to another. In its analysis, CMS found that multiple payment adjustments – both prospective-permanent and retrospective-temporary – will be needed for budget neutrality.
In its recent proposed HH PPS rule, CMS indicates it will apply a negative 7.69% permanent prospective adjustment to the CY 2023 base payment rate, and that it also will need to recapture $2 billion in excess payments for CYs 2020 and 2021 via a temporary retrospective adjustment. The agency does not say how it will recapture that $2 billion and seeks comments. When combined with other payment policies in the proposed rule, the result is a negative 4.2% payment update compared to this year’s rates.
Further, Medicare certified home health agencies (HHA) nationally are required to participate in 2023 in the expanded HH Value-Based Purchasing Program (HH VBP) based on their CY 2023 performance. The original HH VBP model was piloted in nine states. The model evaluation found savings of roughly $860 million between 2016-2020 due to decreases in unplanned hospitalizations, ED visits leading to inpatient admission, and skilled nursing facility use.
Based on those savings and that no adverse harm was found, CMS finalized an expansion of the model nationwide starting 2023 (first performance year). HHA performance is calculated on points, Total Performance Score, derived from a 12-measure set (OASIS-based, claims-based, and HHCAHPS survey measures) as compared to peers. Payment adjustments of up to +/-5% are on the horizon in 2025 based on 2023 performance. HHAs are currently in a pre-implementation year to help them prepare for the model launch in 2023.
Next Steps
Care at home offers plenty of opportunity, but if our look at Medicare home health is any indication, there is also plenty to consider as you move forward. A few steps to think about today:
- Review the proposed 2023 home health rule and submit comments to CMS. You have until August 22 to do so.
- If you are an existing HHA, there are six months more to prepare for HH VBP in 2023. Sign up to receive CMS updates and review their webpage regularly.
- If considering how delivering care at home fits into your strategy, review our environmental scan and reach out with questions.
We’re here to help you find the right balance.
Jennifer Boese is the Director of Health Care Policy at CLA. She is a highly successful public policy, legislative, advocacy and political affairs leader, including working in both the state and federal government as well as the private sector. She brings over 20 years of government relations and public policy knowledge with her to CLA. Well over half of her career has been spent dedicated to health care policy and the health care industry, affording her a deep understanding of the health care market and environment, health care organizations and health care stakeholders. Her role at CLA is to provide thought leadership, policy analysis and strategic insights to health care providers across the continuum related to the industry's ongoing transformation towards value. A key focus of that work is on market innovations and emerging payment models. Her goal is to help CLA clients navigate and thrive in an increasingly dynamic health care environment.
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