CMS Cancels Home Health Groupings Model, $950M Reimbursement Cut

November 07, 2017 - CMS recently scrapped the proposed Home Health Groupings Model. The model would have used clinical and patient characteristics rather than the current therapy service use thresholds to determine Medicare reimbursement for home health agencies.

The Home Health Groupings Model, which was proposed in July 2017, would have also cut home health care episodes by half starting in 2019. Other proposed changes included the addition of an admission source category, development of six clinical groups used to categorize patients based on their primary reasons for home health care, modified functional levels and patient assessment items, the establishment of a comorbidity adjustment, and changes to low utilization payment adjustments.

CMS projected the proposed Home Health Groupings Model to reduce home health payments by up to $950 million, or 4.3 percent, if the federal agency implemented the model in 2019.

The Home Health Groups Model faced substantial criticism from healthcare stakeholders. Critics argued that the new Medicare reimbursement structure would result in patient access issues because home health providers would be incentivized to treat patients who require more expensive therapy, such as joint replacements.

Patients who are less medically complex may face access issues since their health conditions and characteristics would not link to higher Medicare reimbursement rates.

Other stakeholders feared that the $950 million Medicare reimbursement cut would also result in care access issues because the reductions would lead to home health agency closures.

Forty-nine Senators led by Marco Rubio (R-FL) and Bill Nelson (D-FL) also called on CMS to abandon the Home Health Groupings Model in September 2017.

“We have heard from a number of stakeholders who are concerned that the proposed rule lacks sufficient information and data points to allow home health agencies to accurately estimate the impact of the proposed HHGM [Home Health Groupings Model],” the Senators wrote. “It is important that those most affected by the proposed rule have the opportunity, as well as the necessary information, to evaluate any consequences prior to the Centers for Medicare and Medicaid Services' (CMS) finalizing the proposed reforms.”

CMS acknowledged stakeholder concerns with the Home Health Groupings Model by postponing the model’s implementation.

“CMS is not finalizing the Home Health Groupings Model and 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,” the federal agency wrote. “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.”

Home health agencies will now face a 0.4 percent, or $80 million, Medicare reimbursement cut in 2018. The rate update stemmed from a 1 percent home health payment update percentage less a 0.97 percent adjustment to the national, standardized 60-day episode payment rate.

Industry groups applauded CMS for not finalizing the Home Health Groupings Model. The Partnership for Quality Home Healthcare, Association for Home Care & Hospice, and ElevatingHOME released a joint statement commending the federal agency.

The Chairman of the Partnership for Quality Home Healthcare Keith Myers wrote:

“The Partnership thanks leaders at CMS and in the Administration for not finalizing HHGM. By listening to the concerns of their colleagues in Congress and stakeholders throughout the community, CMS has ensured the valuable time we need to come together to create a structure based more on a value-based, patient-centered care approach. We look forward to engaging closely with the Administration, as requested in the final rule, to address our concerns and work collaboratively with CMS, the Administration, Congress and the beneficiary community to develop policies that support the delivery of quality care in the most cost-effective setting – the home.”

The groups also thanked policymakers for reaching out to CMS officials.