OVERLAND PARK, Kan.--(BUSINESS WIRE)--WellSky appreciates the opportunity to offer our comments in response to the Calendar Year (CY) 2024 Home Health (HH) Prospective Payment System Rate Update Proposed Rule1 (the “Proposed Rule”). 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 agree with and encourage the Centers for Medicare & Medicaid Services’ approach to stakeholder engagement through the creation of technical expert panels (TEPs) to help inform proposed regulation. We believe the use of such TEPs can continue to help guide principles for selecting and prioritizing the home health Quality Reporting Program Measures. However, we also want to express our sincere concern with CMS’s proposed cuts to the home health program and its providers. The composition of the home health industry includes a wide range of provider sizes and resources. This also represents the vulnerability of many providers of essential healthcare at home, given the proposed payment cuts. The proposed payment adjustments will likely have a devastating impact on Medicare beneficiaries’ access to home health services, a crucial form of healthcare that is proven to deliver higher quality care at lower costs.
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 were finalized. 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 public health emergency (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 have grown as the acuity of patients discharged to the home health setting increased following the onset of the COVID-19 PHE. Our 2021-2022 data suggests the following for patients discharged to the home:
- 15 percent increase in Van Walraven Comorbidity score.
- 37.3 percent increase in dementia.
- 11 percent increase in hospital average length of stay (ALOS) prior to discharge (compared to 2019).
- 12.4 percent increase in respiratory failure.
- 16.4 percent increase in kidney failure.
As discussed further herein, if the Proposed Rule and associated payment cuts are finalized, many of these higher acuity patients will be forced into higher cost settings, consuming what would be potential cost-savings for CMS. Home health has advanced its ability to care for increasingly challenging clinical needs yet requires aligned payment to allow for continued and expanded cost-effective care at home.
This challenge will only increase, given demography-fueled, anticipated growth in the demand for advancing care at home. By 2031, Medicare enrollment is expected to climb to 76.4 million2, and the demands for efficacious home health will increase in a corresponding manner. While the movement toward delivering more healthcare 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 members3. 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 admission4.
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 2024, CMS proposes an overall payment rate decrease of 2.2 percent (or $375 million) as compared to CY 2023. According to CMS, this payment decrease is based on a proposed 2.7 percent home health payment rate update, a 5.653 percent reduction based on a highly contested permanent behavioral adjustment, and an estimated 0.2 percent increase based on the effects of a proposed update to the fixed-dollar loss ratio (FDL). CMS further proposes an additional clawback of an estimated $3.5 billion, as a temporary adjustment for services provided between 2020 and 2023. While this clawback of funds is not yet scheduled, we believe the impact would yield a potentially devastating impact to cost-effective care provision in the home setting.
WellSky joins the national community of home health providers in highlighting the inherent risks to value-based care within the proposed changes, and in seeking further understanding regarding the rationale for the proposed payment reductions. We seek open an 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 the Patient Driven Groupings Model (PDGM). Commutatively, these negative adjustments have the potential to unintentionally drive-up costs to the Medicare program, given suppressed access to effective home health. This would occur at a time when home health providers continue to face significant financial challenges post-pandemic, including rising labor costs within a growth market of demand, and a relative shortage of skilled clinician supply.
To assess the potential impact of the proposed 5.653 percent PDGM base rate cut, the National Association for Home Care & Hospice (NAHC) has analyzed both the foundational cost report data available from CMS, and the manner in which CMS has interpreted the home health behavioral adjustment between PPS and PDGM performance years. WellSky concurs with NAHC in its opinion that the method by which CMS has calculated budget neutrality is flawed. WellSky also concurs with NAHC in asking CMS to withhold proposed cuts, rather than inflict rate cuts that have precipitated services limitations or access to care. In the analysis, NAHC emphasized 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 Veterans Affairs 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, not fully capturing the cost-impact to agencies and thereby inflating the Medicare margin calculation. In fact, we know that the costs of virtual care delivery in response to the PHE and subsequent staffing challenges 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. As variable as the geography of our country, the reach, expenses, and capacity of the home health industry to keep Medicare costs down, overall, is also widely variable. The average is not the norm.
NAHC and other leading industry associations such as the Partnership for Quality Home Healthcare (the “Partnership”) are united in their concern for the stability of the home health benefit and that the evidence demonstrates that continued payment cuts will result in reduced access to care for beneficiaries. Both NAHC and the Partnership estimate cuts to total more than $18 billion over the next decade, imposed at a time when labor costs are rising in the face of growing demand for effective healthcare at home.
The consequences stemming from reimbursements falling below the cost of care are notable. In fact, that consequence is already underway with more than 1,000 fewer HHAs today than in 2015. Data from the Congressional Budget Office (CBO) highlights the concern our industry is now voicing in response to this Proposed Rule. Following payment reform for the home health industry in 2018, the CBO projected Medicare expenditures for Home Health to be $23B in 2023. In May of 2023, the CBO revised this projected spending to now only reach $16B. 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. This market constriction, given the imposition of the proposed cuts to Medicare payment, holds the potential to substantially constrict access to care.
It is imperative to consider the downstream impact of these cuts 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 homes5. Despite the fact that referral volume to home health agencies continues to be higher than pre-pandemic levels, referral rejection rates reached an all-time high of 76% as of December 20226. CMS’s unprecedented proposed cuts, coupled with inflationary pressures and increased labor costs, will only make it harder to place patients in post-acute care and for home healthcare providers to operate.
A recent labor cost survey found that wages and home health industry expenses have increased significantly since 20197. Nursing costs alone are up 9 percent since June 2021 as agencies compete for clinicians in a growth market of need. 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 asks CMS to recognize the disruptive and permanent financial impact of its past forecasting error with respect to the annual Market Basket Index updates from 2021 and 2022 and implement a one-time adjustment to account for the 5.2% forecasting error. CMS should consider the negative and disruptive financial impacts of its proposed wage index changes and case mix weight recalibrations on care access as it finalizes the 2023 payment rates and any systemic reforms.
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 continue providing high quality care at a lower cost, 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 healthcare 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 HHAs have been forced to turn beneficiaries away due to labor costs and staffing shortages8. 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. For patients discharged to home health, hospital average length of stay increased 11% from 2019 to 20229. Should the home health provider market constrict further, Medicare costs are at risk of increasing, an unintended consequence of the Proposed Rule.
Additionally, home healthcare 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. And early trials of the hospital-at-home model at Johns Hopkins found the total cost of at-home care was 32 percent less than traditional hospital care10.
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 PDGM payment rates within the context of a budget neutral shift from PPS to PDGM, taking into account industry behavioral assumptions and actual performance.
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 (5.653 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.11”
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 uses in 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.
- Engage stakeholders by way of a Technical Expert Panel to devise a compliant methodology for determining any budget neutrality adjustments.
- 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.
CMS to Work with Technical Expert Panel (TEP) to Better Inform Special Focus Program (SFP) for Hospice
WellSky appreciates the efforts made by CMS and the TEP in the development of the proposed Hospice Special Focus Program (SFP). We strongly support the SFP’s goal to identify poor performers based on defined quality indicators. We share concern with NAHC that the SFP algorithm identified in the proposed CY 2024 Home Health rule will not accurately identify the poorest performing hospices. Given the heavily impactful consequences of being selected for the SFP, WellSky asks that CMS work with the existing SFP Technical Expert Panel (TEP) to improve the SFP algorithm, pilot the new algorithm prior to its application to hospices, and implement an interim performance report where all providers are given reports of their performance ranking under the algorithm metrics.
Allowing an interim performance period (or preview period) would better help providers understand the algorithm, learn how their performance compares to others nationally, and identify where they need to target improvements to ensure high-quality care.
We believe that as currently constructed, the SFP algorithm may miss the opportunity to improve truly poor-performing hospices, as well as unfairly identifying higher performing hospice programs based on factors that are not as germane to patient and family care quality and satisfaction (such as the size of the hospice).
Examples of specific concerns regarding the proposed algorithm include:
- Condition-level deficiencies (CLDs) and substantiated complaints are not scaled to account for the number of beneficiaries a hospice serves. The SFP TEP was provided with a model SPF algorithm which scaled the CLDs and substantiated complaints per 100 beneficiaries, helping to ensure that larger hospices were not at a disadvantage compared to smaller hospices. We ask that this scaling be included in CMS’s final rule, per the TEPs recommendation.
- Past due surveys are a major concern, given the proposed ramp up in survey activity related to the proposed SFP. As it stands, our clients report that surveyors are behind in completing standard Medicare recertification surveys and complaint surveys. Adding these anecdotal reports appear consistent with the survey data currently available. CMS’s own Quality and Certification Oversight Reports (QCOR) data website indicates that in 2022, 35% of hospices did not have a survey in the prior 36 months. CMS indicates in the proposed rule that only 5.7% of hospices are not represented in the survey data from 2019-2021. This could be because the hospice has not had a survey as part of the 36-month cycle, the completed Statement of Deficiencies is not in the CASPER system, or there was not a recorded substantiated complaint. WellSky believes that CLDs and substantiated complaints are critical factors in identifying poor performers, and CMS should ensure the recertification survey completion rate is at an acceptable level.
- CMS should implement a mechanism that ensures that substantiated complaints for the same incident are only counted once. Some CLDs and complaints may be counted twice given the proposed methodology. Hospices with deemed status through an accrediting organization (AO) may have a complaint survey from both the AO and the state agency (SA) if a complainant lodged a complaint with both entities. This could result in a substantiated complaint being counted twice. Additionally, if the AO and the SA cite the same CLDs related to a complaint, the CLD will also be doubly counted.
- Reconsider alternatives to treatment of the CAHPS within proposed SFP algorithm. While agreeing that the voice of the caregiver should be included in the algorithm for the SFP, there are major limitations with the existing CAHPS survey data that must be addressed. We strongly agree with the members of the TEP regarding their concern about the limited availability of CAHPS data. CMS’s SFP TEP contractor, Abt Associates, gave CAHPS a weight of only 0.25 in the algorithm presented to the TEP “…because approximately two-thirds of hospices do not have a CAHPS score reported.12” Despite this, CMS is proposing to veer substantially from the algorithm presented to the TEP by double weighting the CAHPS scores, effectively giving the input with the greatest data limitations the most influence in determining SFP candidates.
- Transparency and provider preparation. Within the proposed rule, CMS stated, “5,943 hospices would be eligible for participation in the SFP” and “[t]he hospices selected for the SFP from the 10 percent would be determined by CMS.” To ensure transparency, CMS must provide additional information as to how it will decide which of the bottom 10% of hospices will be selected for the SFP. The SFP should not be used as punishment but rather as an educational tool for struggling hospices. We share concerns with national trade associations, that CMS provided no guidance on how it would utilize its discretion in selecting SFP candidates from the bottom 10% of performers. Due to this lack of transparency, hospices are not able to ascertain and provide fully informed comments on the full impact of the SFP. Also preventing fully informed comments is the fact that CMS did not explain why it deviated so significantly in the proposed algorithm from the model algorithm presented to the TEP, particularly as it relates to scaling CLDs and complaints by hospice size, and the weighting of the CAHPS input. The reason(s) for the deviation should be shared. As stated above, the data necessary for a hospice to estimate its overall quality of care performance compared to other hospices across the nation is not publicly available. Hospices should be provided with a preview of their performance on the algorithm data and their standing among other hospices across the country before implementing the SFP. This will allow hospices to identify which indicators need improvement and begin working to address those areas. Given these considerations, WellSky strongly recommends that CMS provide interim performance reports or preview reports to hospices prior to the implementation of the SFP.
We strongly encourage further refinement of the SFP algorithm, developed in continued collaboration with the designated TEP, allowing improvements to best assure compliant care provisions within the hospice benefit. This may require a delay in implementation and that CMS issue a new proposed rule with the modified algorithm to give stakeholders the opportunity to comment.
WellSky appreciates the opportunity to comment on this Proposed Rule. And, again, we urge CMS to work with the home health and hospice industry as the agency finalizes this rule to avoid the unintended consequences of the proposed payment adjustments and regulatory changes. Additionally, we encourage continued support of ongoing innovation within the cost-effective and advancing practice of healthcare at home.
WellSky is one of America’s largest and most innovative healthcare technology companies leading the movement for intelligent, coordinated care. Our proven 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 scale processes, 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, 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 build healthy, thriving communities. For more information, visit wellsky.com.
- 88 Fed. Reg. 43654 (July 10, 2023).
- CMS releases national healthcare expenditure and enrollment projections through 2031, available at: https://www.healthmanagement.com/blog/cms-releases-national-healthcare-expenditure-and-enrollment-projections-through-2031
- 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
- 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/
- Morning Consult, Choose Home Care Act Poll (2021), available at PQHH-Logo_Home-Health_Final_8.19.pdf
- WellSky Evolution of Care report 2023
- 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.
- WellSky Evolution of Care report 2023
- WellSky Evolution of Care report 2023
- Commonwealth Fund, "Hospital at Home" Programs Improve Outcomes, Lower Costs But Face Resistance from Providers and Payers, available at https://www.commonwealthfund.org/publications/newsletter-article/hospital-home-programs-improve-outcomes-lower-costs-face-resistance
- 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
- 2022 Technical Expert Panel and Stakeholder Listening Sessions: Hospice Special Focus Program Summary Report, Abt Associates, April 2023.