What you need to know about the forces reshaping our industry.


November 1, 2019

CMS finalizes Medicare payment updates for home health and kidney care

Daily Briefing

    CMS on Thursday finalized two separate rules that will increase Medicare payments for home health agencies (HHAs) and end-stage renal disease care.

    Cheat sheets: Medicare payment programs

    CMS finalizes home health payment rule

    CMS finalized its rule to update certain payment regulations under the Home Health Prospective Payment System, which the agency in a fact sheet said includes "routine updates to the home health payment rates for calendar year (CY) 2020" and proposals intended to reduce fraud, increase home-based care, and prioritize patients' unique needs.

    Overall, CMS estimated that Medicare will increase total HHA payments in aggregate by 1.3%, or $250 million, in CY 2020. CMS said the CY 2020 rate update includes a 0.2 percent decrease in aggregate payments under a new rural add-on policy that was mandated under the Bipartisan Budget Act of 2018.

    CMS under the final rule also will implement a case-mix payment methodology, called the Patient-Driven Groupings Model (PDGM), intended to improve the accuracy of payments for home health services. According to CMS, Medicare currently pays home health agencies for 60-day episodes of care, and payments are based on the number of services provided to beneficiaries.

    Under the new PDGM model, CMS will base home health reimbursements on 30-day episodes of care and on patient characteristics. CMS under the new model no longer will determine home health reimbursements based on the number of services provided to beneficiaries.

    CMS under the final rule also will phase out Requests for Anticipated Payment (RAPs), which allow HHAs to request and receive large upfront payments at the beginning of episodes of care based on the total estimated cost of services. CMS in a release said it has seen an increase in the number of health care fraud schemes involving HHAs that submit RAPs and receive large upfront Medicare payments, but never submit final claims data, and soon after close for business.

    CMS in the fact sheet said it will reduce the RAP split-percentage payment "to 20% for existing HHAs beginning in CY 2020 with elimination of split-percentage payments for all HHAs in CY 2021." HHAs beginning in CY 2021 will begin to file a one-time notice of admission to alert the claims processing system when a beneficiary is under a home health episode of care.

    In addition, CMS under the final rule will implement a permanent home infusion therapy benefit beginning in CY 2021. CMS will group infusion drugs into three payment categories, and each category will have an associated single unit of payment in accordance with their infusion codes and units under the Physician Fee Schedule (PFS). CMS will adjust each unit of payment by the agency's Geographic Adjustment Factor, which is a weighted composite of the three geographic practice cost indices used for the PFS. CMS will set higher payment amounts for a beneficiary's first home infusion therapy visit, and lower payment amounts for each subsequent visit. Medicare will pay for home infusion only if a skilled professional is present at a patient's home during the therapy.

    CMS under the final rule also will amend current regulations to permit therapist assistants to perform maintenance therapy under the Medicare home health benefit. CMS in the fact sheet said the change "will allow therapist assistants to practice at the top of their state licensure; and will provide HHAs the flexibility to use either therapists or therapist assistants to meet the maintenance therapy needs of their patients."

    CMS under the final rule also will:

    • Adopt two new quality measures under the Home Health Quality Reporting Program (HHQRP) to address the transfer of health information;
    • Adopt standardized patient assessment data elements that aim to "assess cognitive function and mental status, special services, treatments and interventions, medical conditions and comorbidities, impairments, and social determinants of health";
    • Eliminate the Improvement in Pain Interfering with Activity Measure from HHQRP; and
    • Update the specifications for the Discharge to Community HHQRP measure to exclude baseline nursing home residents.

    In addition, CMS under the Home Health Value-Based Purchasing Model will begin publicly reporting "the Total Performance Scores (TPS) and TPS Percentile Ranking from the Performance Year 5 (CY 2020) Annual TPS and Payment Adjustment Report (Annual Report) for each [HHA] in the nine model states that qualified for a payment adjustment for CY 2020."

    CMS finalizes kidney care payment rule

    CMS also finalized a separate rule that includes updates to Medicare policies for Durable Medical Equipment Prosthetics, Orthotics, and Supplies (DMEPOS); the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS); and the ESRD Quality Incentive Program (QIP).

    The agency said the updates "support the development and use of innovative technologies, provide greater access to new treatments in kidney care, and modernize [CMS'] program integrity methods to better combat waste, fraud, and abuse in the Medicare program." According to CMS, the updates also align with the goals set out in President' Trump's recent executive orders on bolstering kidney care and Medicare.

    CMS in a fact sheet said, under the final rule, the ESRD PPS base rate for CY 2020 will be $239.33, up from $235.27 in CY 2019. According to CMS, that base rate "reflects a [required] reduced market basket increase" of 1.7%, as well as "application of the wage index budget-neutrality adjustment factor." Overall, CMS estimated that it will pay about $10.3 billion in CY 2020 to roughly 7,000 ESRD facilities for costs associated with providing renal dialysis services. The agency predicted that all the changes included in the final rule will increase total payments to all ESRD facilities by 1.6% in CY 2020 when compared with CY 2019. According to CMS, hospital-based ESRD facilities will see projected total payment increases of 2.1%, while freestanding ESRD facilities will see projected total payment increases of 1.6%.

    CMS under the final rule also will update outlier services fixed-dollar loss (FDL) amounts and Medicare Allowable Payment (MAP) amounts for adult and pediatric patients for CY 2020. CMS said the FDL amount for pediatric beneficiaries will decrease from $57.14 in 2019 to $41.04 in 2020, and the MAP amount will decrease from $35.18 in 2019 to $32.32 in 2020. The FDL for adult beneficiaries will decrease from $65.11 in 2019 to $48.33 in 2020, and the MAP amount will decrease from $38.51 in 2019 to $35.78 in 2020.

    Further, CMS under the final rule will establish a new transitional add-on payment adjustment intended to promote the use of certain novel and innovative renal dialysis equipment or supplies at ESRD facilities. In order to qualify for the Transitional Add-on Payment Adjustment for New and Innovative Equipment and Supplies, the equipment or supplies "must represent an advance that substantially improves, relative to renal dialysis services previously available, the diagnosis or treatment of Medicare beneficiaries," CMS said in the fact sheet.

    In addition, CMS said the agency under final rule will:

    • Change Medicare's basis of payment for the Transitional Drug Add-on Payment Adjustment (TDAPA) from the average sales price (ASP) plus 6% to 100% of ASP;
    • No longer apply the TDAPA for a new renal dialysis drug or biological product if the agency does not receive certain ASP data by specific deadline;
    • No longer apply the erythropoiesis-stimulating agent monitoring policy under the ESRD PPS; and
    • Revise "the drug designation process regulation for new renal dialysis drugs and biological products that fall within an existing ESRD PPS functional category by focusing eligibility on" innovative drugs.

    CMS under the final rule also will update the ESRD QIP by:

    • Allowing facilities under specific circumstances to reject extraordinary circumstances exceptions granted by CMS;
    • Converting the Standardized Transfusion Ratio clinical measure to a reporting measure starting in payment year 2022;
    • Updating performance baseline periods for payment years 2023 and 2024; and
    • Updating the scoring methodology for the National Healthcare Safety Network Dialysis Event reporting measure starting in payment year 2022.

    CMS said the final rule also "finalizes a methodology for determining the fee schedule amounts for new DMEPOS items and services." Under that methodology, Medicare will base payments for new items that are comparable to older, existing items on the fee schedule amounts for those older, existing items. If a new item has no comparable existing items, Medicare will base payments for the new item "on other sources of commercial pricing data such as retail prices or information from supplier invoices."

    CMS under the final rule also will:

    • No longer require contract suppliers under the DMEPOS Competitive Bidding Program to notify CMS 60 days in advance of a change of ownership, and instead require notification no later than 10 days after the change takes effect; and
    • Streamline payment requirements for items that are "subject to face-to-face encounter and written order prior to delivery requirements" (Livingston, Modern Healthcare, 10/31; Baxter, HealthExec, 10/31; CMS home health release, 10/31; CMS home health fact sheet; CMS kidney care release, 10/31; CMS kidney care fact sheet, 10/31).

    Have a Question?


    Ask our experts a question on any topic in health care by visiting our member portal, AskAdvisory.