The US Centers for Medicare and Medicaid Services (CMS) has issued a proposed rule for home health payment that resurrects elements of last year's proposal for an entirely new payment methodology by, among other changes, shifting care from 60-day to 30-day episodes and removing therapy service-use thresholds from case-mix parameters. And while the new proposal doesn't mimic last year's proposal in terms of across-the-board cuts, the practicalities of the payment system could have an impact on providers.

On July 2, CMS unveiled the Patient Driven Groupings Model (PDGM) as part of its proposed 2019 home health prospective payment system (HH PP). If adopted, it would represent 1 of the most significant changes to home health payment in decades by moving to 30-day episodes of care and structuring payment around some 216 case-mix groups that don't include therapy visits as a factor. In a fact sheet on the proposal, CMS asserts that the new system, mandated by the Bipartisan Budget Act of 2018, would "move Medicare toward 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 PP." If adopted as proposed, the PDGM would take effect in 2020.

APTA regulatory affairs staff will analyze the proposal in-depth over the coming weeks, but initial readings seem to indicate that much of the PDGM is a rehash of the Home Health Groupings Model (HHGM) that CMS proposed last year. That proposal met with stiff resistance from many patient and provider organizations including APTA and the association's Home Health Section, with APTA describing the HHGM as a system with "significant flaws" that "will have a harsh and dramatic effect on patient care."

Ultimately, CMS backed off from adopting the system in 2017, promising a retooled proposal in 2018. In the intervening months, the agency convened a technical expert panel to review the issue. That panel included APTA member Bud Langham, PT, MBA, with APTA Director of Regulatory Affairs Kara Gainer attending as an observer.

The proposed PDGM has at least 1 significant change from the HHGM: because it's designed to be implemented in a budget-neutral way, it doesn't include the same $950 million in cuts associated with the 2017 proposal.

But that doesn't mean providers are out of the woods, according to Gainer.

“While the budget neutrality will prevent massive across-the-board cuts, CMS notes that the impact on payments as a result of the proposed PDGM will vary by specific types of providers and location," Gainer said. "Some individual home health agencies may experience different impacts on payments due to a variety of factors, most notably the ratio of overall visits that were provided as therapy versus skilled nursing.”

Essentially, the PDGM classifies 30-day episodes according to a combination of factors related to 5 major buckets. They are:

Timing—"early" vs "late." Only the first 30-day episode would qualify as "early"—all other episodes would be considered "late."

Admission source—"community" vs "institutional." A 30-day period would be classified as "institutional" if the patient had an acute or postacute facility stay within 14 days of the start of the episode—if not, the admission source would be labeled "community."

Clinical group. Based on principal diagnoses, patients would be assigned to 1 of 6 clinical groups: musculoskeletal rehabilitation; neuro/stroke rehabilitation; wounds (both surgical and nonsurgical); behavioral health care (including substance use disorder); complex nursing; and medication management, teaching, and assessment.

Function level—"low impairment," "medium impairment," or "high impairment." CMS would rely on Outcome and Assessment Information Sets (OASIS) codes to designate a patient's level of function.

Comorbidity adjustments—"no adjustment," "low," or "high." A single secondary diagnosis that falls within a list of 11 comorbidity subgroups could qualify the patient for a low-comorbidity adjustment; 2 or more that results in comorbidity subgroups interacting could result in an adjustment for high comorbidity.

The combination of categories are what comprises the 216 PDGM payment groupings. Those groupings would define payment for the 30-day episode and could in turn receive further adjustments if fewer than 2 to 6 visits are furnished during the 30-day episode, depending on the PDGM group.

The proposed rule also includes changes to certifying and recertifying patient eligibility for continued home health care; an allowance for home health agencies to report the cost of remote patient monitoring; and a transition toward payment for home infusion therapy. The changes proposed by CMS would result in an estimated 2.1% increase in payments in 2019, or about $400 million.

APTA staff will continue to review the proposal and develop a fact sheet in the coming weeks. The association will prepare comments on the proposal for submission before the August 31 deadline. APTA also will create a template letter that members can use to provide their own comments to CMS.