Relief for Home Health Agencies: CMS Nixes Proposal to Overhaul Pay Model

Home Health Coding Guideline

The Centers for Medicare & Medicaid Services canceled its plans to shift to the Home Health Groupings Model (HHGM). The proposal, announced on July 25, sent shock waves through the healthcare industry. If implemented on Jan. 1, 2019, as proposed, its impact likely would have shut down numerous home health agencies, as well as denied coverage to countless persons.

The HHGM represented a complete, if not drastic, redesign to home health care reimbursement. By drastic, we’re talking about a projected reduction of $950 million in home health pay.

The CMS proposed the overhaul due to concerns that the current reimbursement system discourages agencies from serving patients with clinically complex or chronic conditions. Critics have said that the current system incentivizes the selection of patients based on potential healthcare costs—preferring those in need of higher-paying therapy services versus those with poorly controlled chronic conditions. The CMS has maintained its belief that the current system exploits, or rather encourages, offering therapy when it otherwise would not be prescribed.

The proposed HHGM eliminated the use of therapy service thresholds to case-mix adjust payments. Instead of calculating payment based on the number of therapy visits performed, it would have weighed clinical characteristics and patient information.

As stated in the rule proposal, “In the HHGM, the HHRG and payment would be determined based on the patient’s admission source (community or institutional), clinical grouping (medication management teaching and assessment/MMTA, neuro/rehab, wounds, complex nursing intervention, MS rehab, behavioral health), functional level (from OASIS) and a comorbidity adjustment (from the patient’s secondary diagnosis).”

You can see, according to this proposal, that the HHGM would have “scored” episodes in a significantly different manner than the current PPS system. In addition, the HHGM would have reduced the length of an episode from 60 days to 30 days.

CMS proposed utilizing 30-day episodes to better align payment with resource utilization. Its rationale was that the first 30 days of an episode are more resource intensive. Episodes would still be designated as early or late under the HHGM, but only the first 30-day episode would have been considered an early episode. Even patients readmitted to home health within 60 days of a previous episode would fall under the late episode category.

In short, the shift to 30-day episodes would have created less early episodes and more late episodes, thereby resulting in less reimbursement.

A further reprieve in debunking the proposed rule concerns using the patient’s principal diagnosis to place the patient into one of the six clinical categories. In the 2018 PPS rule, CMS notes that 19% of episodes they reviewed in preparing this model couldn’t be assigned to a clinical group based on the principal diagnosis. This raises the odds that a significant portion of claims would have been denied, or at least delayed. To avoid the questionable encounters—not to mention the interruption in cash flow—providers would have been constricted to identify principal diagnoses utilizing only codes that map to clinical categories.

Back to the Drawing Board

If you look to the horizon, you will probably see changes to PPS system in the not so distant future. For now, though, providers and agencies made their voices heard, saying the proposed HHGM would shrink beneficiary access to services and result in the closing of countless home health agencies.

While the CMS agreed to shelve its planes to move forward with the HHGM, it will return to the drawing board to devise a model that will transfer the focus from volume of services to quality of patient care.

Learn More

Stay abreast of recent home health coding updates and guideline changes to keep your agency running smoothly. Get exclusive access to cutting-edge coding solutions for faster home health diagnosis codes lookup, reference articles written by in-house industry experts, access to latest documentation updates, and leverage real-world how-to home health and hospice coding advice at TCI’s Home Health Resources.


Deborah Marsh, JD, MA, CPC, CHONC, is a senior content specialist for TCI SuperCoder, working on everything from online tool enhancements and data updates to social media and blog posts. Deborah joined TCI in 2004 as a member of TCI’s respected Coding Alert editorial team.

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