Home health agencies threaten lawsuits if CMS tries to claw back money

Home health agencies are unhappy with CMS’ proposed changes to their 2022 pay, warning that they may sue the federal agency if it attempts to claw back overpayments with future changes.

CMS switched up its case-mix system in the the Patient-Driven Groupings Model last year, basing pay rates on patient characteristics like clinical conditions and functional impairment rather than therapy hours. While the agency had preemptively cut payments by 4.36% to encourage providers to reduce their use of unnecessary therapy under the new approach, CMS’ analysis found that Medicare ended up overpaying for home health services in 2020 anyway.

In its proposed 2022 home health prospective payment system rule, CMS said it wouldn’t claw back overpayments in 2022, citing the COVID-19 pandemic. But it left the door open to recouping funds in future years because the law requires CMS to ensure that the new payment approach doesn’t increase or decrease Medicare spending compared to the old way of calculating payments.

Providers aren’t happy with how the agency evaluated the payments’ budgetary impact and the potential future impact to their reimbursement. Home health agencies hinted they could sue the Biden administration if regulators don’t revisit how CMS evaluates budget neutrality.

“To comply with Medicare law, CMS must apply a PDGM-related budget neutrality adjustment methodology that exclusively is focused on PDGM-triggered behavioral changes. The change assessment methodology proposed by CMS encompasses changes unrelated to HHA behavioral changes under PDGM,” the National Association for Home Care & Hospice wrote in a letter.

But independent experts argue that CMS used a reasonable approach to evaluate the effects of the Patient-Driven Groupings Model on spending.

“A 6% reduction to the base payment should not raise payment adequacy concerns for HHAs; even with this reduction, payments for 2022 would still be slightly higher than the level recommended by the commission,” the Medicare Payment Advisory Commission said in a letter. “In making our recommendation for the 2022 payment update, we concluded that a 5% reduction would not compromise beneficiary access to care or the quality of home health care they receive. Therefore, a smaller decrease of 4.3% should be sustainable.”

Providers argue that CMS can’t fairly compare the new payment system to the previous one because the new case-mix approach and 30-day claims period slashed providers’ therapy visits by almost 30% and shifted provider behavior in other ways. The American Hospital Association, citing an industry-funded study, also said that the agency’s predictions about how the Patient-Driven Groupings Model would affect providers were off-base.

“These concerns raise serious doubt about the accuracy of both the initial 4.36% PDGM behavioral adjustment and the modified 6% overpayment now estimated by CMS. In order to reliably compare CMS projections versus actual behavior for the first year under PDGM, additional work is warranted,” the AHA wrote in a letter.

Home health providers also think it’s a mistake to reweight their 2022 case mixes using 2020 claims data because of the pandemic’s effect on their patient populations.

“It is highly unlikely that home healthcare delivery in 2022 will be anything comparable to care delivery in 2020,” NAHC wrote.

Home health agencies claim that their patients were sicker in 2020 than they are likely to be in 2022 because of the pandemic.

“All HHAs have provided services to the patient population that is considered at highest risk of serious complications, including death, from Covid-19,” NAHC wrote.

While that’s undoubtedly true, top experts don’t think the pandemic explains all the coding differences among home health providers. They’re worried those providers are upcoding to make their patients look sicker than they are in an attempt to boost their payments.

“The increase in 2020 may reflect some impacts from COVID-19, but it is notable that many other measures of case-mix in the payment system were unchanged,” MedPAC wrote. “The commission has been concerned that assessment of functional severity may be susceptible to provider coding practices and thus may be a less reliable indicator of case-mix severity.”