What the Home Health Proposed Rule Suggests for the Future

Regulation | August 07, 2018 | by Aaron Tripp

The Centers for Medicare and Medicaid Services (CMS) posted the calendar year (CY) 2019 Home Health Prospective Payment System (HH PPS) Rate Update and CY 2020 Case-Mix Adjustment Methodology Refinements proposed rule on July 12, 2018.

This rule contains proposals on several areas pertaining to home health services both for the year beginning January 1, 2019 and beyond with the proposal of the patient-driven groupings model (PDGM) and the introduction of a new Medicare benefit for home infusion therapy. The areas that are covered include:

  • CY 2019 Payment Update
  • Rural Add-On
  • Home Health Value-Based Purchasing (HH VBP) Model
  • Home Health Quality Reporting Program (HH QRP)
  • PDGM
  • Home Infusion Therapy
  • Remote Monitoring

We encourage members to review the below summary and contact Aaron Tripp by email or phone at (202) 509-9433 with comments, concerns, or questions to be incorporated into LeadingAge’s comments. Public comments are due by 5 p.m. on August 31, 2018.

CY 2019 Payment Update

The proposal includes a 2.1% payment update for home health agencies in 2019, with an overall economic impact estimated at $400 million.

Rural Add-On

The Bipartisan Budget Act of 2018 made some important changes to the rural add-on for CYs 2019 through 2022. It mandates implementation of a new methodology for applying the add-on payments. Unlike previous rural add-ons, which were applied to all rural areas uniformly, the extension provides varying add-on amounts depending on the rural county (or equivalent area) classification by classifying each rural county (or equivalent area) into one of three distinct categories.

  1. High Utilization: Rural counties and equivalent areas in the highest quartile of all counties and equivalent areas based on the number of Medicare home health episodes furnished per 100 individuals who are entitled to, or enrolled for, benefits under part A of Medicare or enrolled for benefits under part B of Medicare only, but not enrolled in a Medicare Advantage plan under part C of Medicare,
  2. Low Population Density: Rural counties and equivalent areas with a population density of 6 individuals or fewer per square mile of land area, and
  3. All Other: Rural counties and equivalent areas not in categories 1 or 2.

CMS proposes that the proposed classifications of rural counties and equivalent areas in the ‘‘High utilization’’, ‘‘Low population density’’, and ‘‘All other’’ categories would be applicable throughout the period of rural add-on payments and there would be no changes in classifications. This would mean that a rural county or equivalent area classified into the ‘‘High utilization’’ category would remain in that category through CY 2022 even after rural add-on payments for that category ends after CY 2020.

Below is the proposed add-on payments by category. LeadingAge has previously noted the extra transportation costs for home health agency staff in serving rural and frontier areas.


CY 2019

CY 2020

CY 2021

CY 2022

High Utilization





Low Population Density





All other






HH VBP Model

CMS notes that there are no aggregate increases or decreases expected to be applied to home health agencies competing in the model. They estimate the overall economic impact of the HH VBP Model for CY 2018 through 2022 is $378 million in total savings from a reduction in unnecessary hospitalizations and skilled nursing facility usage as a result of greater quality improvements by home health agencies.

For CY 2019, CMS proposes to remove 5 measures and add 2 new proposed composite measures to the applicable measure set for the HHVBP model, revise the weighting methodology for the measures, and rescore the maximum number of improvement points.

The two OASIS-based process measures that are proposed to be removed are Influenza Immunization Received for Current Flu Season and Pneumococcal Polysaccharide Vaccine Ever Received. These proposed removal are based on a failure to capture home health performance and clinical guidelines.

The other proposal is to replace three individual OASIS measures (Improvement in Bathing, Improvement in Bed Transferring, and Improvement in Ambulation-Locomotion) with two composite measures: Total Normalized Composite Change in Self-Care and Total Normalized Composite Change in Mobility.

The proposed Total Normalized Composite Change in Self-Care measure calculates the size of change in self-care based on the normalized amount of possible change on each of six OASIS-based quality outcomes. These six outcomes are as follows:

  • Improvement in Grooming (M1800)
  • Improvement in Upper Body Dressing (M1810)
  • Improvement in Lower Body Dressing (M1820)
  • Improvement in Bathing (M1830)
  • Improvement in Toileting Hygiene (M1845)
  • Improvement in Eating (M1870)

The proposed Total Normalized Composite Change in Mobility measure calculates the size of change in mobility based on the normalized amount of possible change on each of three OASIS-based quality outcomes. These three outcomes are as follows:

  • Improvement in Toilet Transferring (M1840)
  • Improvement in Bed Transferring (M1850)
  • Improvement in Ambulation/Locomotion (M1860)

Due to the proposal to replace the 3 individual measures with 2 composite measures, CMS proposes that each of the composite measures would have a maximum score of 15 points, to ensure that the relative weighting of ADL-based measures would stay the same if adopted.

The proposed composite measures would represent a new direction in how quality of patient care is measured in home health. Both of the proposed composite measures combine several existing and endorsed Home Health Quality Reporting Program (HH QRP) outcome measures into focused composite measures to enhance quality reporting.

In addition to changes to the measure, CMS proposes to revise the weighting of individual measures so that the OASIS-based measure category and the claims-based measure category would each count for 35 percent and the HHCAHPS measure category would count for 30 percent of the total performance score.  This grants more weight for the claims-based measures, which would better support improvement in those measures. Steady improvement has been observed improvement in OASIS-based measures, while improvement in claims-based measures has been relatively flat.

The last QRP change is a proposal to reduce the maximum amount of improvement points, from 10 to 9 points, for 2019 and subsequent performance years for all measures except for the Total Normalized Composite Change in Self-Care and Total Normalized Composite Change in Mobility measures, for which   the maximum improvement points would be 13.5. The maximum score of 13.5 represents 90% of the maximum 15 points that could be earned for each of the two proposed composite measures. CMS believes that awarding more points for achievement rather than for improvement supports this goal.


As CMS has done in other recent payment rules, they propose to adopt an additional factor to consider when evaluating potential measures for removal from the HH QRP measure set: The costs associated with a measure outweigh the benefit of its continued use in the program. This factor was proposed and finalized for skilled nursing facilities in that final rule.

For the 2020 program year, the HH QRP has 31 measures. CMS proposed to remove 7 measures from the HH QRP beginning with the CY 2021 HH QRP.  They are:

  1. Depression Assessment Conducted Measure
  2. Diabetic Foot Care and Patient/Caregiver Education Implemented   During All Episodes of Care Measure
  3. Multifactor Fall Risk Assessment Conducted for All Patients Who Can Ambulate (NQF #0537) Measure
  4. Pneumococcal Polysaccharide Vaccine Ever Received Measure
  5. Improvement in the Status of Surgical Wounds Measure
  6. Emergency Department Use Without Hospital Readmission During the First 30 Days of HH (NQF #2505) Measure
  7. Rehospitalization During the First 30 Days of HH (NQF #2380) Measure

CMS is seeking comments on the removal of those 7 measures.


To better align payment with individual care needs and ensure clinically complex and ill Medicare beneficiaries have adequate access to home health care, CMS proposes case-mix methodology refinements through the implementation of the PDGM, which responds to many of the critiques of last year’s home health groupings model. Included in the proposed ruled is discussion of feedback received during a February 2018 technical expert panel (TEP) in which LeadingAge participated. They propose to implement the PDGM for home health periods of care beginning on or after January 1, 2020.

As required by the Bipartisan Budget Act of 2018, the PDGM will institute a 30-day unit of service in a budget neutral manner. The proposed PDGM does not use the number of therapy visits in determining payment. The change from the current case-mix adjustment methodology for the HH PPS, which relies heavily on therapy thresholds as a major determinant for payment, removes the financial incentive to overprovide therapy in order to receive a higher payment. The PDGM bases case mix adjustment for home health payment solely on patient characteristics, a more patient-focused approach to payment. Finally, the PDGM relies more heavily on clinical characteristics and other patient information (for example, diagnosis, functional level, comorbid conditions, admission source) to place patients into clinically meaningful payment categories. In total, there are 216 different payment groups in the PDGM.

The proposal includes 2 30-day periods within a 60-day episode but the 60-day certification period remains unchanged, as do OASIS time points as per the conditions of participation. The plan of care corresponds with the 60-day certification.

A number of steps are proposed to determine which of the 216 payment groups an individual is assigned to:

  1. Admission source and timing
  2. Clinical grouping
  3. Functional level
  4. Comorbidity adjustment

The steps are available graphically at this link.

Admission Source and Timing

CMS proposes that each period would be classified into one of two admission source categories —community or institutional— depending on what healthcare setting was utilized in the 14 days prior to home health. The 30-day period would be categorized as institutional if an acute or post-acute care stay occurred in the 14 days prior to the start of the 30-day period of care. The 30-day period would be categorized as community if there were no acute or post-acute care stay in the 14 days prior to the start of the 30-day period of care.

Clinical Grouping

The PDGM groups 30-day periods into categories based on a variety of patient characteristics. There are 6 clinical groups based on the principal diagnosis. The principal diagnosis provides information to describe the primary reason for which the individual is receiving home health services. The proposed six clinical groups are as follows:

  1. Musculoskeletal Rehabilitation: Therapy (PT/OT/SLP) for a musculoskeletal condition
  2. Neuro/Stroke Rehabilitation: Therapy (PT/OT/SLP) for a neurological condition or stroke
  3. Wounds—Post-Op Wound Aftercare and Skin/Non-Surgical Wound Care: Assessment, treatment and evaluation of a surgical wound(s); assessment, treatment and evaluation of non‐surgical wounds, ulcers, burns and other lesions
  4. Complex Nursing Interventions: Assessment, treatment and evaluation of complex medical and surgical conditions including IV, TPN, enteral nutrition, ventilator, and ostomies
  5. Behavioral Health Care (including Substance Use Disorders): Assessment, treatment and evaluation of psychiatric and substance abuse conditions
  6. Medication Management, Teaching and Assessment (MMTA): Assessment, evaluation, teaching, and medication management for a variety of medical and surgical conditions not classified in one of the above listed groups

Functional Level

Under the PDGM, CMS proposes that each 30-day period would be placed into 1 of 3 functional levels. The level would indicate if, on average, given its responses on certain functional OASIS items, a 30-day period is predicted to have higher costs or lower costs. They proposing 3 functional levels of low impairment, medium impairment, and high impairment with approximately one third of home health periods from each of the clinical groups within each functional impairment level.

CMS believes that the 3 PDGM functional impairment levels in each of the 6 clinical groups capture the more granular nature of the levels of functional impairment by clinical group and they would encourage therapists to determine the appropriate services for their patients in accordance with identified needs rather than an arbitrary threshold of visits.

They proposed OASIS items that would be included as part of the functional impairment level payment adjustment as:

  • M1800: Grooming.
  • M1810: Current Ability to Dress Upper Body.
  • M1820: Current Ability to Dress Lower Body.
  • M1830: Bathing.
  • M1840: Toilet Transferring.
  • M1850: Transferring.
  • M1860: Ambulation/Locomotion.
  • M1033: Risk of Hospitalization.

A home health period of care receives points based on each of the responses associated with the proposed functional OASIS items which are then converted into a table of points corresponding to increased resource use. The sum of all of these points results in a functional score, which is used to group home health periods into a functional level with similar resource use.

Comorbidity Adjustment

Home health 30-day periods of care can receive a comorbidity payment adjustment under the following circumstances:

  • Low comorbidity adjustment: There is a reported secondary diagnosis that falls within one of the home-health specific individual comorbidity subgroups associated with higher resource use, or;
  • High comorbidity adjustment: There are 2 or more secondary diagnoses reported that fall within the same comorbidity subgroup interaction that are associated with higher resource use.

Changing to three comorbidity levels results in 216 possible case-mix groups for the purposes of adjusting payment in the PDGM. While this is more case-mix groups than the 144 case-mix groups proposed in the CY 2018 HH PPS proposed rule, CMS indicated this change responds to the comments received regarding refinements to the comorbidity adjustment without being unduly complex. They believe this method for adjusting payment for the presence of comorbidities is more robust, reflective of patient characteristics, better aligns payment with actual resource use, and addresses comments received from the CY 2018 HH PPS proposed rule and recommendations from TEP members.

Other PDGM Topics

For the PDGM, CMS proposes shifting to a Cost-Per-Minute plus Non-Routine Supplies (CPM + NRS) approach, which uses information from the Medicare Cost Report. The CPM + NRS approach   incorporates a wider variety of costs (such as transportation) compared to the Bureau of Labor Statistics (BLS) estimates and the costs are available for individual home health providers while the BLS costs are aggregated for the home health industry. This would move away from the Wage Weighted Minutes of Care (WWMC).

The distributions and magnitude of the estimates of costs for the CPM + NRS method versus the WWMC method are very different. The differences arise because the CPM + NRS method incorporates home health agency specific costs that represent the total costs incurred during a 30-day period (including overhead costs), while the WWMC method provides an estimate of only the labor costs (wage + fringe) related to direct patient care from patient visits that are incurred during a 30-day period. Those costs are not agency specific and do not account for any non-labor costs (such as transportation costs) or the non-direct patient care labor costs (such as, administration and general labor costs).

The below table displays the relative values in cost per hour per discipline, with skilled nursing as the base.

Estimated Cost Per Hour

Skilled Nursing

Physical Therapy

Occupational Therapy

Speech-Language Pathology

Medical Social Service

Home Health Aide
















We are interested in member feedback on this shift in the relative values across home health discipline.

The Bipartisan Budget Act, while indicating the proposal to refine case-mix and move to a 30-day unit of service has to be budget neutral, allows for behavioral assumptions to be calculated into the proposed rates. CMS has included 3 behavioral assumptions into the PDGM proposal:

  1. Clinical Group Coding: A key component of determining payment under the PDGM is the 30-day   period’s clinical group assignment, which is based on the principal diagnosis code for the patient as reported by the home health agency on the claim. Therefore, CMS assumes that home health agencies will change their documentation and coding practices and would put the highest paying diagnosis code as the principal diagnosis code in order to have a 30-day period be placed into a higher-paying clinical group. While they do not support or condone coding practices or the provision of services solely to maximize payment, they often take into account expected behavioral effects of policy changes related to the implementation of the proposed rule.
  2. Comorbidity Coding: The PDGM further adjusts payments based on patients’ secondary diagnoses as reported by home health agencies on claims. While the OASIS only allows home health agencies to designate 1 primary diagnosis and 5 secondary diagnoses, the home health claim allows them to designate 1 principal diagnosis and 24 secondary diagnoses. Therefore, CMS assumes that by taking into account additional ICD–10–CM diagnosis codes listed on the home health claim (beyond the 6 allowed on the OASIS), more 30-day periods of care will receive a comorbidity adjustment than periods otherwise would have received if they only used the OASIS diagnosis codes for payment. The comorbidity adjustment in the PDGM can increase payment by up to 20 percent.
  3. LUPA Threshold: Rather than being paid the per-visit amounts for a 30-day period of care subject to the low utilization payment adjustment (LUPA) under the proposed PDGM, CMS assumes that for one-third of LUPAs that are 1 to 2 visits away from the LUPA threshold home health agencies will provide 1 to 2 extra visits to receive a full 30-day payment. LUPAs are paid when there are a low number of visits furnished in a 30-day period of care. Under the PDGM, the LUPA threshold ranges from 2–6 visits depending on the case-mix group assignment for a particular period of care.

If no behavioral assumptions were made, CMS estimates that the 30-day payment amount needed to achieve budget neutrality would be $1,873.91. The clinical group and comorbidity coding assumptions would result in the need to decrease the budget-neutral 30-day payment amount to $1,786.54 (a 4.66% decrease from $1,873.91). Adding the LUPA assumption would require CMS to further decrease that amount to $1,753.68 (a 6.42% decrease from $1,873.91).

LeadingAge seeks member input on CMS’ behavioral assumptions.

To assist stakeholders in commenting on this proposed payment change CMS has shared several resources. A provider-level impact file estimated for CY 2019 can be downloaded. Also a grouper tool that can be used to understand how the proposed payment grouping parameters would be used to determine case-mix assignments that are part of the payment calculation is available for download.

Home Infusion Therapy

The 21st Century Cures Act established a new Medicare home infusion therapy benefit. The Medicare home infusion therapy benefit covers the professional services including nursing services furnished in accordance with the plan of care, patient training and education (not otherwise covered under the durable medical equipment benefit), remote monitoring, and monitoring services for the provision of home infusion therapy and home infusion drugs furnished by a qualified home infusion therapy supplier.

Home infusion therapy is a treatment option for patients with a wide range of acute and chronic conditions, ranging from bacterial infections to more complex conditions such as late-stage heart failure and immune deficiencies. Home infusion therapy affords a patient independence and better quality of life, because it is provided in the comfort of the patient’s home at a time that best fits his or her needs. The Bipartisan Budget Act of 2018 establishes a home infusion therapy services temporary transitional payment for eligible home infusion suppliers for certain items and services furnished in coordination with the furnishing of transitional home infusion drugs beginning January 1, 2019.

Upon the expiration of the home infusion therapy services temporary transitional payment, CMS would be fully implementing the home infusion therapy services payment system. In anticipation of future rulemaking, CMS is soliciting comments regarding the payment system for home infusion therapy services beginning in CY 2021.

Remote Monitoring

CMS proposes to define remote patient monitoring under the Medicare home health benefit as ‘‘the collection of physiologic data (for example, ECG, blood pressure, glucose monitoring) digitally stored and/or transmitted by the patient and/or caregiver to the home health agency.’’ Although the cost of remote patient monitoring is not separately billable under the HH PPS and may not be used as a substitute for in-person home health services, there is nothing to preclude HHAs from using remote patient monitoring to augment the care planning process as appropriate.

They propose to amend the regulations at 42 CFR 409.46 to include the costs of remote patient monitoring as an allowable administrative cost (that is, operating expense), if remote patient monitoring is used by the home health agency to augment the care planning process. This would allow home health agencies to report the costs of remote patient monitoring on the cost report as part of their operating expenses. These costs could then be factored into the costs per visit.

CMS is soliciting comments on the proposed definition of remote patient monitoring under the HH PPS to describe telecommunication services used to augment the plan of care during a home health episode. Additionally, they welcome comments regarding additional utilization of telecommunications technologies for consideration in future rulemaking. Also, they are soliciting comments on the proposed changes to the regulations at 42 CFR 409.46, to include the costs of remote patient monitoring as allowable administrative costs, that is operating expenses.