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Chris Attaya VP of Product Strategy
Home Care Association of New York
Senior Financial Managers Retreat
September 7, 2018
PDGM is Coming
in 2020: How to
Prepare?
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▸ Understand the latest updates for CMS and the components
of the proposed PDGM model
▸ Identify the winners and losers and other insights based on
data from SHP
▸ Share key takeaways to help your agency’s prepare for a
PDGM-like model
Objectives
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Understand the latest updates for CMS and the
components of the proposed PDGM model
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▸ CMS contracted with Abt Associates to reassess the current
HHPPS model and develop an alternative payment model that
better aligns patients needs and payments
▸ Uses 30-day periods rather than 60-day episodes for payment
▸ Eliminates the use of the number of therapy visits in payment
determination
▸ Relies on clinical characteristics and other patient information
in the model
▸ Includes Non-Routine Supplies (NRS) in the base rate
▸ Proposed to begin January 1, 2019 in a non-budget neutral
manner ($950M reduction in payments)
CY 2018 Proposed Rule – July 2017
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▸ HHGM Rescue Proposal - October 26, 2017
▹ Allow 30 day payment period but maintain 60 day certifications
▹ Start January 1, 2020 with rate of $1,772
▹ Extend HH-VBP to all remaining states
▸ Industry Letter to CMS – December 12, 2017
▹ Principles – Budget Neutral; Limit Behavioral change adjustment;
Reasonable Reimbursement; Payment on Patient Characteristics
and Clinical Needs; Operating Consistently with other aspects of
service delivery; Enough Time to implement; and Fully Tested
and Validated.
▸ Almost Family Proposal
▹ Model focuses on patient “goals” rather than “characteristics”
▸ Technical Expert Panel (TEP) – February 1, 2018
Industry CMS Negotiations
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▸ LUPAs one visit under the HHGM thresholds
▹ FY 2001 – 16% of episodes were LUPA
▹ 7% of current 60-day episodes receive a LUPA
▹ 4.9% of 30-day periods of care are just one visit below thresholds
▹ Agencies would provide one additional visit to avoid a LUPA
▸ Highest paying Dx code would be listed as Primary Dx
▹ Compared changes from DRGs to MS-DRGs
▹ IRF PPS first year transition
▹ Experience in HH nominal case mix growth
▹No Explicit comment on increasing number of Periods
Behavioral Adjustments (HHGM)
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▸ Budget Neutral Transition To A 30-Day Unit Of Payment For Home
Health Services
▸ 30-DAY UNIT OF SERVICE.—For purposes of implementing the
prospective payment system with respect to home health units of
service furnished during a year beginning with 2020, the Secretary
shall apply a 30-day unit of service as the unit of service applied
under this paragraph.
▸ TREATMENT OF THERAPY THRESHOLDS.—For 2020 and
subsequent years, the Secretary shall eliminate the use of therapy
thresholds (established by the Secretary) in case mix adjustment
factors established under clause (i) for calculating payments under the
prospective payment system under this subsection
▸ IN GENERAL.—The Secretary shall annually determine the impact of
differences between assumed behavior changes
Bipartisan Budget Act of 2018 (BiBA)
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▸ Model renamed – Patient-Driven Groupings Model (PDGM)
▸ “Warmed-over” version of HHGM
▸ Added additional level for Comorbidity adjustment based on
the presence of secondary diagnoses
▸ Standard Rate and Behavioral assumptions
CY 2019 Proposed Rule – July 2018
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Structure of the PDGM
4
6
3
=
216 Groups
3
x
x
x
Source: CMS CY 2019 HH Proposed Rule
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▸ The first 30 days would be defined as early and all other
subsequent period would be classified as late
▸ A 30-day period could not be considered early unless there
was a gap of more than 60 days between the end of one
period and the start of another
Timing of 30-Day Periods
Source: CMS CY 2019 HH Proposed Rule
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▸ Patients discharged from an institutional setting (acute or
post-acute) in the prior 14 days will be defined as institutional
and all others as community
▸ Second periods with a institutional discharge within 14 days of
the SOC would be considered community
Admission Source
Source: CMS CY 2019 HH Proposed Rule
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▸ Based on the Principle Diagnosis on the Home Health Claim
▸ Would be the primary reason patient is receiving services
under the Medicare home health benefit
Clinical Groups
Source: CMS CY 2018 HH Proposed Rule
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Clinical Groups
▸ Questionable Encounters (QE’s) were not to referred to. CMS
now refers to the list of diagnosis codes that are “acceptable”
in the PDGM Grouping Tool
▸ If a 30-day period of care could not be grouped based on the home
health reported principal diagnosis, it is expected the claim would be
returned to the provider for more accurate or definitive coding
▸ Regarding the MMTA category, CMS noted “We believe MMTA is
not so much an ‘other’ category as much as it appears to represent
the foundation of home health.”
Source: Table 38: Distribution of resource use of MMTA Subgroups -CMS CY 2019 HH Proposed Rule
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▸ Like with the current HHPPS model, PDGM patients would be
classified into 1 of 3 functional level based on the following
OASIS items:
▸ Functional Levels based on Points
▹ Low, Medium, High
Functional Level
M1800 – Grooming M1840 – Toilet Transferring
M1810 – Dress Upper Body M1850 – Transferring
M1820 – Dress Lower Body M1860 - Ambulation
M1830 - Bathing M1033 – Risk of Hospitalization
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▸ CMS designed to have 1/3 as low, medium and high in each
of the Clinical Groups
Functional Level
Source: CMS CY 2019 HH Proposed Rule
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Clinical and Functional Groups
Source: CMS CY 2019 HH Proposed Rule
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▸ CMS analyzed the presence of comorbidities as another
factor that could impact resource utilization and costs
▸ Refined the eleven clinically significant subcategories to
include interactions of 27 comorbidity subgroups
Co-morbidity Adjustment
Source: CMS CY 2019 HH Proposed Rule
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▸ RAPs (Request for Anticipated Payments) and Final Claims
billed the same way, but for 30-day Periods
▹ CMS soliciting comments on reducing the percentage of the upfront
payment incrementally over a period of time
▹ Newly enrolled HHAs as of 1/1/19 to be exempt from receiving RAPs
▸ PEPs (Partial Episode Payments) and Outliers have the same
methodology
▸ LUPAs have variable thresholds based on HIPPS code – Each
HHGM payment group threshold based on 10th percentile of
visits or 2 visits which ever is higher
▹ LUPA visits are one less than the threshold listed
▹ Thresholds ranges from 2 visits – 6 visits
Other Key Elements
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▸ CMS is providing CCN specific revenue changes under PDGM
compared to the current HHPPS on their website
▸ Includes assumption of the $1,873.91 30-day rate due to
expectation that behavioral factors have occurred
Financial Impacts of PDGM
Source: CMS CY 2019 HH Proposed Rule
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▸Nationally the percent of agencies who will see higher
revenue under PDGM vs HHPPS is 55.6% (76.4% in the
state of New York)
▸Estimate Impact by State range from 28.6% in the Virgin
Islands to -11.6% in Idaho (NY is at 6.0%)
▸ Limited Data Set (LDS) is available for agencies who
request to help address and understand which patients
that are impacting the revenue changes
▸Without RAPs, cash flow will be impacted by at least 32
days
Financial Impacts of PDGM
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▸Cost report data for discipline values is suspect
▸Admission source is a poor substitute for patient
characteristics – provides incentive to prioritize these
patients
▸ LUPA thresholds is complicated
▸Behavioral adjustments (BA) should be applied after
impact has been studied with supporting evidence
▸BA should only include changes related to PDGM only
Concerns from NAHC – Proposed Comments
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Identify the winners and losers and other insights based on data from SHP
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▸ SHP National Database
▸ All Medicare Traditional Episodes ending in CY 2017 with a
corresponding Medicare claim (August 8, 2018)
▸ HHGM Grouper model was used with a correction
▸ Total Episode Count – 3,657,930
▹ 624,294 Questionable Diagnoses (17.1%)
▹ 7,199 Unknown Diagnoses (.1%)
▸ HHGM Period #1 – 2,553,662
▸ HHGM Period #2 – 1,895,908
▸ Revenue assumptions based on CY 2017 National Rates for
HHPPS HHRGs (inc. Non-Routine Supplies) compared to the
CY2018 Proposed Rule HHGM Group Model with estimated budget
neutral rate of $1,772 (no Area Wage assumptions)
SHP Data Analysis – CY 2017
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▸ Clinical Group
HHGM Components by CMS region
NY 53.0%
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▸ Functional Level
HHGM Components by CMS region
NY 46.1%
NY 20.9%
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▸ Admission Source (Period 1)
HHGM Components by CMS region
NY 37.7%
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▸ Timing of the Episode
HHGM Components by CMS region
NY 53.4%
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▸ LUPA Percent of Periods highest in the Northeast
LUPA data across CMS Regions
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▸ LUPA averaged 8.2% across all periods
LUPA data across HHGM Clinical Categories
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▸ Reflects the higher resource use in the first Period
▸ Likely to see visits changing due to therapy incentive changes
Visits per Period
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▸ Built into the case mix weight of each PDGM group
▸ CMS has estimated that 60% of the CY 2017 did not contain
Non-routine Supplies (NRS)
▸ Wounds have higher non-routine supply cost per new Clinical
Groupings
Supply Costs
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HHGM Revenue Compared to HHRG
▸ Based on Standard PPS Episodes (excluding LUPA, PEP,
Outliers)
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HHGM Revenue Compared to HHRG
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HHGM Revenue Compared to HHRG
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Top 25 ICD-10 Primary Dx Codes
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Top 25 ICD-10 Primary Dx Codes
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Comparison of Top Diagnosis Codes
▸ Top Diagnosis codes in each HHGM Clinical Group
▸ HHGM Revenue is lower in 3 of the 6 Groups
▸ Variance is significant compared to national PPS rates are
reimbursed today
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▸ SHP National Average was 17.1%
Questionable Encounters (QE)
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▸ Begin to address codes that would be questionable
Top 20 QEs by ICD-10 Code
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▸ Shows Percent of Episodes across 1- 15 days, 27 – 30 days
and at 60 days
Lengths of Stay (LOS) by Region
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Share key takeaways to help your agency’s prepare for a
PDGM-like model
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▸ PDGM has been designed based on National Resource Use
▸ Model the revenue changes between todays HHPPS and
PDGM using the 80/20 rule
▹ Groupings Tool - https://www.cms.gov/Center/Provider-
Type/Home-Health-Agency-HHA-Center.html
▸ Consider the Marketing Impacts
▹ Competition for patients from institutions may increase
▹ LEAN look at your costs/efficiencies
▹ What is your value proposition
▸ Managing LUPAs with the different thresholds
Evaluate your Agency’s PDGM Impact
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▸ Determining correct primary Diagnosis Coding
▸ Determining secondary Dx and impact on the co-morbidity
adjustment
▸ Avoiding Questionable Encounters (QEs)
▸ OASIS Accuracy is crucial for:
▹ Functional Levels that impact resource use
▹ Quality Outcomes
Coding Accuracy
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▸ Use of therapy assistants
▸ Use of rehab aides
▸ Use of tele rehab
▹ Utilize centralized therapist to make recommendations
▹ Observation of functional status via webcam
▹ Therapist can cover many more patients without travel
▸ What is right amount of therapy to produce results?
▸ Efficient and Effective plans of care
Therapy as a Cost vs Revenue Driver
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▸ Are the visits performed in the 2nd 30 days giving you positive
results?
▸ Avoid confusion between Payment Model vs Care Model
▸ Avoid discharging too early
▸ Will need to continue to determine plan of care and
interventions over 60 days
▹ Discharge to Community - PAC
▹ Medicare Spending per Beneficiary (MSPB) - PAC
▹ Potentially Preventable 30-Day Post-Discharge
Readmissions
Evaluate Length of Stay (LOS) Considerations
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Questions?