Leading healthcare technology company has joined with other stakeholders in urging CMS to delay proposed cuts to Medicare home health services
OVERLAND PARK, Kan., August 17, 2022--(BUSINESS WIRE)--WellSky, a leading health and community care technology company, has submitted the following comment letter to the Centers for Medicare & Medicaid Services to express its sincere concern with CMS’s proposed cuts to the home health program and its providers.
WellSky appreciates the opportunity to offer our comments in response to the Medicare Program; CY 2023 Home Health Prospective Payment System Rate Update; Home Health Quality Reporting Program Requirements; Home Health Value- Based Purchasing Expanded Model Requirements; and Home Infusion Therapy Services Requirements Proposed Rule (the "Proposed Rule").1 Founded over 40 years ago, WellSky is a healthcare solutions company that serves one in three home-based care providers, and powers a network of 12,000+ home- and community-based providers employing 1,000,000+ nurses, physical and occupational therapists, social workers, home health aides, and caregivers. WellSky’s national network paired with real-time analytics enables a care coordination platform that can deploy both skilled and non-skilled home-based care interventions to individuals across the country.
As the leading solution provider supporting an expansive national network of home-based care professionals and services, we want to express our sincere concern with the Centers for Medicare & Medicaid Services’ (CMS) proposed cuts to the home health program and its providers. The proposed payment adjustments will likely have a devastating impact on Medicare beneficiaries’ access to home health services, which have proven to be critically needed during the COVID-19 pandemic and will continue to be needed as we slowly emerge from this public health emergency (PHE).
WellSky believes now is the time to strengthen and build upon the Medicare home health benefit and support our home health providers. Our comments, therefore, focus on the value of home-based care and the serious consequences that will result if CMS’s proposed payment adjustments become effective. We strongly encourage CMS to reconsider these adjustments in the Proposed Rule and work with the home health industry to find a better solution that protects Medicare beneficiaries and the Medicare program.
The Value of Home Health Services
Long before the COVID-19 PHE, home health providers began developing innovative ways to enable individuals with advancing need for healthcare services to receive care in their homes and age in place. Medicare certified home health clinicians provide skilled monitoring and skilled intervention to the most frail and vulnerable members of our communities. Of note, the needs of this population appear to have grown as the acuity of patients discharged to the home health setting increased following the onset of the COVID-19 PHE. Our 2019-2020 data suggests the following for patients discharged to the home:
7 percent increase in Van Walraven Comorbidity score (i.e., 2019 average was 9.8 and the 2020 average increased to 10.6)
8 percent increase in dementia
9 percent increase in hospital average length of stay (ALOS) prior to discharge
21 percent increase in respiratory failure
17 percent increase in kidney failure
4 percent increase in stroke
If the proposed rule becomes effective, the cuts will force many of these higher acuity patients into higher cost settings, which will lead to higher costs for CMS. On the other hand, if cuts are not made, more care and higher acuity care will continue to be provided in the home, which is the most cost-effective and desired setting for care advancement.
This challenge will only increase, given demography-fueled, anticipated growth in the demand for advancing care at home. Over the next 10 years, the number of Medicaid eligible individuals will increase by 36 million people, and the demands for efficacious home health will increase in a corresponding manner. While the movement toward delivering more health care in the home began long before COVID-19, the pandemic’s lockdowns, shelter-in-place instructions, and quarantines only accelerated this shift. Today, 73 percent of consumers prefer recovering at home instead of a medical facility following a major medical event and 97 percent of health plan executives agree more care at home is better for members2. As a result, payers and providers are increasingly investing in health-at-home models of care, including hospital-at-home, skilled nursing facility (SNF)-at-home, and home-based primary care services. These programs are already proving to be instrumental in helping payers and providers lower costs and improve outcomes, particularly for individuals living with chronic conditions. In one study of more than 17 million Medicare hospitalizations between 2010 and 2016, beneficiaries discharged to home healthcare found that home healthcare was associated with an average savings of $4,514 in total Medicare payments in the 60 days after the first hospital admission3.
CMS’s Proposed Payment Adjustments Threaten Beneficiary Access to Home Health Services
In the Proposed Rule, CMS proposes a series of payment adjustments that would likely threaten Medicare beneficiary access to care. For CY 2023, CMS proposes an overall payment rate decrease of 4.2 percent (or $810 million) as compared to CY 2022. According to CMS, this payment decrease is based on a proposed 2.9 percent home health payment update, a 7.69 percent reduction based on the permanent behavioral adjustment, and an estimated 0.2 percent reduction based on the effects of a proposed update to the fixed-dollar loss ratio (FDL). CMS further proposes additional cuts of $2 billion in 2024 for services provided in 2020 and 2021, $1 billion for services provided in 2022, and a 4.36 percent decrease based on a behavioral change adjustment that has reduced rates since 2020.
WellSky joins the national community of home health providers in seeking further understanding regarding the inherent risks to value-based care within the proposed changes, and the aligned logic of these proposed payment reductions. We seek open discussion with CMS regarding the nature of appropriate and compliant methodologies for assessing the mandated budget neutral transition from the HHRG-HHPPS payment model to PDGM. We believe the future of essential home health services is at stake, as commutatively, these negative adjustments have the potential to remove $18 billion from the home health program over 10 years. This would occur at a time when home health providers continue to face significant financial challenges, including those attributed to the ongoing COVID-19 pandemic.
To assess the potential impact of the proposed 7.69 percent base rate cut in PDGM, the National Association for Home Care & Hospice (NAHC) analyzed the Fiscal Year End (FYE) 2020 cost reports available from CMS, and WellSky concurs with NAHC’s findings. In the analysis, NAHC emphasizes the importance of not only the Medicare financial margin for home health, but also the overall margin for providers of Medicare certified home health, and the impact such a large cut to Medicare reimbursement will have on provider stability. NAHC’s findings on overall margins are consistent with past analyses relative to overall financial margins, in that most of any Medicare margin is used to subsidize other government payers, particularly Medicare Advantage and Medicaid. Further, the margins vary widely between providers and provider types. This is an important aspect to note when considering access to care for Medicare beneficiaries throughout the country.
It is important to note that home health providers are far different than many other healthcare providers in terms of revenue sources. By and large, home health agency (HHA) revenue comes from Medicare and Medicaid with a small addition from the VA health program and commercial insurance. In contrast, hospitals receive a significant portion of their revenues from commercial insurance that offsets any shortfalls from government payers.
In addition, the Medicare margin for home health services, as presented by MedPAC, does not fully indicate the costs incurred by home health agencies, today. First, there are common business costs that are excluded from the calculation such as marketing and taxes. Second, cost reporting requirements allow an HHA to report telehealth-related costs, but only in a non-reimbursable cost center, thereby inflating the Medicare margin calculation. In fact, we know that the costs of virtual care delivery in response to the PHE has not been fully captured. Third, relying on average margins fails to indicate that there is a wide range in Medicare margins across the diverse universe of HHAs. The average is not the norm.
As CMS considers the impact to Medicare enrollees, WellSky is gravely concerned with respect to the degree to which home health providers are threatened with closure due to overall costs exceeding overall revenue. Based on a NAHC analysis of the FYE 2020 cost reports available from CMS, the impact of further payment cuts will likely be substantial. In summary, the potential impact of the proposed cuts on HHAs is the following:
For freestanding HHAs, the incidence of providers estimated to experience overall negative margins nationwide is 51.5 percent.
26 states and territories are projected to have more than half of their HHAs with overall margins below zero with the proposed cut.
In contrast, only 7 states and territories show 50 percent or more HHAs with net overall negative margins without the proposed cut.
Note that this analysis does not include "institution-based" HHAs as their cost reports do not allow for an overall margin calculation. However, for these HHAs, the Medicare margin itself is negative at (22.67 percent). We believe the overall margins are even worse, given the general agency acceptance of a system’s payer mix and reimbursement often falling below today’s elevated labor and transportation costs.
As previously noted, the home health provider network is diverse, with a broad range of provider financial performance. The following is a state-by-state analysis of the percentage of HHAs that currently have net margins below zero percent (full list provided below).
State-by-State Analysis of HHA Margins
% Of HHAs With
District of Columbia
The consequences stemming from reimbursements falling below the cost of care can threaten many providers’ ability to remain in business. Notably, that consequence is already underway with 1,140 fewer HHAs today than in 2015. We find this a paradox, given the growth demographic of need and efficacy found in reducing acute care hospitalization (and Medicare costs) through the integration of skilled home health into a beneficiary’s advancing care delivery.
Most importantly, the impact of these cuts would be devasting to homebound Medicare beneficiaries and their access to highly skilled care within the desired setting of their home. Overwhelmingly, Medicare beneficiaries are seeking care in the home; 94 percent of Medicare beneficiaries would prefer to receive post-acute care in their homes.4 However, CMS’s unprecedented proposed cuts, coupled with inflationary pressures and increased labor costs, will make it increasingly difficult for home health providers.
A recent labor cost survey found that wages and home health industry expenses have increased significantly since 2019.5 Nursing costs alone are up 9 percent since June 2021 and gas costs are trending 40 percent higher. Based on 7.8 billion miles of travel to and from patients’ homes at 24 miles per gallon, gas prices alone have in the aggregate cost agencies an extra $384 million per year.6 Proposed payment cuts to home health providers are contrary to increased demand, higher levels of acuity in patients served, and substantial cost increases across the industry.
WellSky strongly suggests these, and other cost increases, must be addressed in the annual market basket index, along with other measures that account for real-time changes in costs. The proposed inflation update does not align with cost increases, rendering our strong concern about the ability of many providers to keep their businesses open, given proposed cuts and inadequate inflation updates. As a result, Medicare beneficiaries will likely have access to fewer home health options and services.
These impacts will be particularly harmful for beneficiaries living in rural and already medically underserved areas and will further drive inequities in health care access and outcomes. In short, while Congress intended the updated Home Health Prospective Payment System (HH PPS) to better align home health payments with beneficiary care needs and to ensure greater access to home care for clinically complex and ill beneficiaries, the proposals will instead have the opposite effect and significantly limit access to critical, home-based services.
Reduced Access to Home Health Services Will Increase the Medicare Program’s Total Cost of Care
In addition to the impact of the Proposed Rule on home health providers and, therefore, Medicare beneficiaries, it is important to note the downstream consequences for overall Medicare spending. While there is an increasing demand for home health – a 33 percent increase in referrals sent to home health – home health acceptance rates have decreased by 15 percent as home health agencies have been forced to turn beneficiaries away due to labor costs and staffing shortages.7 Additional reductions in reimbursement to home health providers will further exacerbate these pressures and result in fewer home health options, as demand for skilled healthcare in the home grows.
Fewer home health options translate into an increase in unnecessary hospitalizations and referrals to higher cost care settings. We already saw these trends prior to the COVID-19 pandemic when Medicare beneficiaries were often more likely to be referred to other post-acute care settings. In addition, hospital discharge planners are having difficulty finding home health providers for beneficiaries, which is leading to increases in average inpatient hospital lengths of stay. Since the pandemic began in the U.S. in March 2020, hospital ALOS has increased 8 percent for patients discharged to home health.8 Should the home health provider market constrict further, Medicare costs are at risk of increasing, an unintended consequence of the proposed rule.
Additionally, home health care is less expensive than other forms of post-acute care. Studies demonstrate that SNF-at-home saves $2,000 per episode vs. traditional skilled nursing. In fact, one hospital-at-home provider, Des Moines-based UnityPoint Health, realized an estimated savings of $6,000 per patient in 20209.
CMS Should Delay Any Permanent or Temporary Payment Reductions to Home Health Providers
Beginning in 2020, CMS’s statutory authority to update the HH PPS required that the agency do so in a budget neutral manner to offset any underpayments and overpayments to home health providers. We strongly believe the manner by which the behavioral adjustment was calculated, and the level of payment adjustments set forth in the Proposed Rule fail to meet that statutory intent.
We understand CMS is required to evaluate whether actual provider behavior changes under PDGM lead to a determination that the PDGM payment rate is based on assumed behavioral changes that led to an overpayment or underpayment to providers of home health. This is predicated on an estimate of aggregate expenditures under the HHRG-HHPPS payment model for a budget neutral comparison.
CMS states that the reduction in therapy visits was a behavior change, a change that would not have occurred under HHRG-HHPPS. Under PDGM, the volume of therapy is not a measure within the payment model that affects the level of payment. As such, it is not a behavior change that matters within CMS’s responsibility to compare assumed and actual behavior changes on PDGM estimated aggregate expenditures. The apparent conclusion made by CMS is the decline in therapy visits led to a decline in aggregate agency expenditures, despite CMS expenditure rise. In essence, CMS recalculated what the CY 2020 30-day base payment rate should have been to equate the aggregate expenditures calculated using a simulated CY 2020 60-day episode, derived a percentage change between the two rates – creating the CMS recommended permanent adjustment of (7.69 percent). It is critical to recognize that this visit reduction under PDGM met the very intent of MedPAC in recommending the removal of incentives for higher therapy utilization prior to the transition from PPS to PDGM.
From CMS’s national training on transition from PPS to PDGM (2019):
"MedPAC has criticized the Medicare Home Health benefits for being ill defined, in that it is not abundantly clear the type and nature of services being provided, and that therapy thresholds have created a financial incentive to provide more therapy services whether or not patient needs dictate those services. Over the past several years, MedPAC has recommended that Home Health payments should be determined by patient characteristics and not through the use of therapy thresholds."10
We believe providers will suffer substantial penalty within the proposed payment cuts for having met the intent of PDGM design, as well as the methodology by which CMS rulemaking occurred within the proposed rule. Given the potentially devastating impact on providers of home health, the details used within this methodology matter. To that end, we earnestly seek CMS’s consideration of the following recommendations, in support of our communities and rational advancement of healthcare at home:
Delay any proposed permanent or temporary payment adjustments to the HH PPS payment rates prior to 2026, giving CMS more time to refine its proposed approach for determining budget neutrality under the new HH PPS.
Evaluate actual PDGM behavior changes by distinguishing between behavior changes and "real" changes in case mix.
Publicly disclose all data and analytical methodologies regarding the budget neutrality adjustment (BNA).
Engage stakeholders by way of Technical Expert Panel to devise a compliant methodology for determining any BNA.
Implement any temporary or permanent budget neutrality adjustments at a time and in a manner that is least disruptive and minimizes risks to access to care.
Ensure that any adjustments that CMS determines to be necessary to offset any increases or decreases in estimated aggregate expenditures are made by 2032 to prevent any cuts being delayed beyond the end of the 10-year budget window.
By doing so, CMS can continue to implement the updated HH PPS in a manner that ensures a stable transition for home health providers without harming Medicare beneficiaries’ access to critical home health services as intended by Congress.
Comment Solicitation on the Collection of Data on the Use of Telecommunications Technology Under the Medicare Home Health Benefit
As a provider of innovative technology, WellSky supports the necessary understanding and evolution of virtual care delivery mechanisms as a means by which innovation can mitigate the supply and demand challenge faced by post-acute providers. We strongly support the gathering of virtual care data to assist in evolving post-acute healthcare delivery and analysis.
CMS proposes to develop three new G-codes to identify when home health services are furnished using telecommunications rendered via a real-time, two-way audio-video telecommunications system; audio only technology such as telephone or other real-time interactive audio-only telecommunications; and the collection of remote patient monitoring. Voluntary reporting for the G-codes on claims would begin January 1, 2023, with mandatory reporting beginning July 1, 2023.
CMS is also soliciting comments on future refinement of these G-codes. Specifically whether the codes should differentiate the type of clinician performing the service via telecommunications technology, such as a therapist versus therapist assistant; and whether new G-codes should differentiate the type of service being performed through the use of telecommunications technology, such as: skilled nursing services performed for care plan oversight (for example, management and evaluation or observation and assessment) versus teaching; or physical therapy services performed for the establishment or performance of a maintenance program versus other restorative physical therapy services.
WellSky supports collecting telecommunication services on home health claims and supports developing a mechanism to refine collecting visit details for the type of clinician and service provided. Capturing telecommunication visits on home health claims will greatly assist with accurate cost reporting for the use of telecommunication technologies. However, there are concerns with future refinements of the G-codes that specify the type of clinician and service provided as proposed. The creation of multiple G-codes may lead to confusion and result in inappropriate assignment of the G-codes on claims. Simplifying this initial approach to discovery is recommended to yield initial clarity in the use of virtual care methodologies.
WellSky believes CMS could use a similar approach to identify telecommunication visits on home health claims as was done for physician services during the COVID-19 PHE. Appending a modifier to existing G-codes on claims would be a less cumbersome approach to reporting detailed information around telecommunication visits.
We recommend CMS consider using modifiers to identify the specific telecommunications technology that can be appended to existing G-codes to identify each type of telecommunications technology, by clinician and service provided.
This initial data would allow for clear and future analysis of specific relationships between the cause and effect on outcomes generated. WellSky firmly believes innovation will be needed to solve the challenge of demography. Our objective is to help providers achieve the top outcome (lowest hospitalization rate) within the most efficient, effective, and compliant use of visits and technology. Given future projections of increased demand within a relative, shrinking supply of professional clinicians and caregivers, we believe CMS would be well served by embracing models of care delivery within the home health benefit, as advances in machine learning enable deeper analysis of cause and effect.
WellSky would be pleased to offer expert guidance within CMS’s downstream analysis of virtual care delivery integration, as we work collaboratively to support providers and the patients they serve with innovative approaches to the evolution of healthcare at home.
WellSky appreciates the opportunity to comment on this Proposed Rule. And, again, we urge CMS to work with the home health industry as the agency finalizes this rule to avoid the unintended consequences of the proposed payment adjustments. Additionally, we encourage continued support of ongoing innovation within the cost-effective and advancing practice of healthcare at home.
WellSky is a technology company leading the movement for intelligent, coordinated care. Our next-generation software, analytics, and services power better outcomes and lower costs for stakeholders across the health and community care continuum. In today’s value-based care environment, WellSky helps providers, payers, health systems, and community organizations solve tough challenges, improve collaboration for growth, harness the power of data analytics, and achieve better outcomes by further connecting clinical and social care. WellSky serves more than 20,000 client sites — including the largest hospital systems, blood banks, cell therapy labs, blood centers, home health and hospice franchises, post-acute providers, government agencies, and human services organizations. Informed by more than 40 years of providing software and expertise, WellSky anticipates clients’ needs and innovates relentlessly to ultimately help more people thrive. For more information, visit wellsky.com.
1 87 Fed. Reg. 37600 (June 23, 2022).
2 CareCentrix, Health at Home 2020: The new standard of care delivery, available at https://www.carecentrix.com/wp-content/uploads/CareCentrix-Health-at-Home-Report.pdf
3 Patient Outcomes After Hospital Discharge to Home with Home Health Care vs to a Skilled Nursing Facility, JAMA Intern Medicine, available at https://ldi.upenn.edu/our-work/research-updates/patient-outcomes-after-hospital-discharge-to-home-with-home-health-care-vs-to-a-skilled-nursing-facility/
4 Morning Consult, Choose Home Care Act Poll (2021), available at PQHH-Logo_Home-Health_Final_8.19.pdf
5 Dobson DaVanzo & Associates, Home Health Labor Cost Survey: Understanding the impact of the COVID-19 Public Health Emergency (PHE) on home health agency labor costs (2021), available at http://pqhh.org/wp-content/uploads/2021/10/PQHH_Labor-Cost-Survey-Report_20210826_Final.pdf.
9 Becker’s Hospital Review, Hospital at Home ‘cheat sheet’: 6 Qs on the care model, answered, available at https://www.beckershospitalreview.com/patient-safety-outcomes/hospital-at-home-cheat-sheet-7-qs-on-the-care-model-answered.html
10 Medicare Learning Network, Home Health Patient-Driven Groupings Model Call, February 2019, available at: https://www.cms.gov/Outreach-and-Education/Outreach/NPC/Downloads/2019-02-12-PDGM-Transcript.pdf
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