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NAHC President: CMS Was Strategic, Tactical In How Final Rule Was Announced

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By walking back severe cuts initially proposed in the home health payment rule, the US Centers for Medicare & Medicaid Services (CMS) was strategically trying to create positive feelings about the final rule in order to have an upper hand down the line.

That is the assessment made by William A. Dombi, president of the National Association for Home Care & Hospice (NAHC), less than a week removed the final rule’s publishing.

“It’s important to understand some of the politics of what happened in this final rule,” Dombi said during a NAHC webinar Friday. “CMS went with a headline saying they were cutting over $800 million — in one year alone — from home health care spending to a headline that now says they’re increasing spending by $125 billion. That was a strategic, tactical move by CMS to put out a positive headline.”

That messaging, Dombi said, has helped CMS initially convince Congress that lawmakers may not have to make any additional changes.

“That has helped position CMS with Congress in thinking, ‘We may not have to do anything because they’re going to get more money in 2023 than they got in 2022,’” Dombi said. “But we know the reality is a lot different than that. You can’t have a $125 million increase in spending in home health and accommodate all the cost increases that have occurred in 2022. Those cost increases will also likely continue into 2023.”

CMS is still phasing in other cuts and permanent adjustments related to the rebalancing of the Patient-Driven Groupings Model (PDGM).

Already, NAHC and other home health leaders are back at the negotiating table with CMS and the Congressional Budget Office trying to get the best deal possible.

“Just this week already, with our contacts on the congressional side of it, it was made clear that if the rule has any cost at all, home health care is going to have to pay for it,” Dombi said. “Think about that. We’re trying to avoid a rate cut, but we have to avoid the rate cut by paying for the change that avoids the rate cuts.”

Essentially, Dombi said, that’s like avoiding a rate cut coming out of someone’s right pocket by taking money out of the left pocket.

One of Dombi’s sticking points is how CMS came to its budget-neutrality adjustment.

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“CMS stuck to its position with its proposed methodology that we strongly believe is not complying with the law,” Dombi said. “If it is compliant with the law, the law was poorly drafted, because it is not a budget-neutral methodology.”

When PDGM took effect in January of 2020, there was a significant reduction in the volume of therapy services. Therapy volume, as many home health agencies know, was a crucial factor in the amount of payment that was made to agencies.

Under the old payment model, the industry saw the volume of therapy plummet in January of 2020, even before the pandemic started taking hold, Dombi said.

“CMS took all of the PDGM-induced behavior changes including therapy, functional status reporting, primary diagnosis, lupus, comorbidities, all those kinds of things, from 2020 and 2021 and then applied the old payment model to that,” Dombi said. “They didn’t — what we call — control for the change in therapy services, or any other behavioral change, when determining what the budget-neutral estimated expenditures would be.”

That is why NAHC and others in the industry call the final rule a rebasing of the payment model, instead of a budget-neutral analysis.

“The old model, applied to the new models of effective behavior, doesn’t make much sense logically,” he said. “It’s not a true budget-neutrality analysis. That’s why we see the outcome that we have.”

Wage index changes

Another area agencies should evaluate is the new wage index changes. Agencies can do that on the CMS website or the federal registry website.

Even though agencies will not see a reduction to their wage index greater than 5%, the final rule still could pose problems depending on other factors baked into the rule.

“The good thing is nobody’s going to see a reduction of greater than 5%,” Dombi said. “However, there can be some complications, so you better take a look at this. That reduction in the base payment rate—because of the budget neutrality and behavioral adjustment that’s in there—could pale in comparison to the wage index change. Or it could be offset. Our strong word of caution, all the time, is to take a look at the wage index.”

Advocacy moving forward

It has been an arduous road to get to where the home health industry has landed in terms of the final rule, Dombi said.

But things are only going to ratchet up from here. NAHC and other leaders continue to work closely with members of Congress, particularly on the legislation requiring a pause in implementing home health cuts from Sens. Debbie Stabenow and Susan Collins.

The hopes of negotiating a pause have hit a significant roadblock, however.

“The proposed rule itself made very clear that CMS’ feet are grounded in concrete on the methodology they want to employ,” Dombi said. “That tells us that the pause, without any further Congressional action, would not lead to an alternative conclusion for home health agencies. We have been in close contact with our Congressional allies, telling them now the issue shifts to their hands.”

Litigation is always technically on the table and something NAHC has never shied away from. However, it is seen as a last resort.

“Legal actions are absolutely a last resort,” Dombi said. “Those of you who have known NAHC for years know that we do not hesitate to file lawsuits when we think they can help. A legal action of this nature can take up to five years to find ultimate relief if we’re successful. We know relief is needed today. We still believe that the best investment right now is with Congress where we can see, hopefully, some quick action.”

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