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CMS Announces Delay in Effective Date for New Home Health Agency Conditions of Participation; Congress Questions Impact of Proposed Home Health Agency Reimbursement Changes

Home health agencies ("HHAs") are struggling to deal with changes from the Centers for Medicare and Medicaid Services ("CMS") on two fronts.  On July 10, 2017, CMS released a final rule delaying the effective date of the changes to the Conditions of Participation ("COPs") for HHAs that was published on January 13, 2017.  This delay will give HHAs an additional six months, until January 13, 2018 (instead of July 13, 2017), to comply with the new COPs.  In granting the delay, CMS noted that many commenters had strongly expressed that HHAs needed a longer period of time to comply with the new COPs, which would require adjustments in resource allocation, staffing, and potentially, changes in infrastructure.  In addition, HHAs pointed out that they did not believe they would be able to comply with the COPs until CMS issued revised Interpretative Guidelines further explaining the changes.  Many HHAs were also concerned about needing to convert existing sub-unit locations into branch locations or independent HHAs, which would potentially require corporate restructuring and new enrollment applications and subsequent surveys.

In releasing the January 2017 COP rule, CMS explained it was implementing these changes in the COPs as part of CMS's overall effort to achieve improvements in quality of care for patients, while at the same time eliminating unnecessary "procedural burdens" on HHAs. CMS agreed to implement the six month delay and made two other changes as well.  Regarding quality improvement measures, CMS extended the date for when HHAs would be required to collect data for quality improvement projects to July 13, 2018.  In addition, CMS extended the grandfathering time period for the new personnel requirements for HHA administrators from July 13, 2017 to January 13, 2018.  As a result, those administrators who were employed by an HHA prior to January 13, 2018 (rather than July 13, 2017), would not have to meet the new personnel requirements; those administrators who become employed starting on or after January 13, 2018 will be required to meet the new personnel requirements.  CMS's new personnel requirements for HHA administrators would require an administrator to be a licensed physician or registered nurse, or hold an undergraduate degree, and have had at least one year of administrative experience in home health care or a related health care program.

CMS advised that questions that HHAs have relating to the content and implementation of the new COPs or suggestions for future rulemaking could be submitted to CMS at NewHHACoPs@cms.hhs.gov.  CMS noted that it planned to release a preliminary draft of revised interpretative guidelines sometime this fall, and intended to publish a final version in December 2017.  CMS counseled, however, that if its tentative timeline was delayed, it was not planning to further delay the effective date of the new COPs and that HHAs would be surveyed based on the new COPs whether or not the revised Interpretative Guidelines were available to surveyors at the time of the survey.

Questions have also arisen about CMS's proposed reimbursement changes for HHAs that were published as a proposed rule in July of this year.  In the rule, CMS proposed a significant redesign of the HHA payment system for 2019, which would implement refinements to the HHA case-mix adjustment methodology, including converting to a 30-day episode of care unit instead of the current 60-day unit and basing reimbursement in part on a case-mix methodology that would group patients into payment groups based on six clinical categories and eliminate therapy service use thresholds that are currently used to case-mix adjust HHA payments, as well as create HHA value-based purchasing and quality reporting programs.

CMS Administrator Seema Verma stated in conjunction with the release of the proposed rule "The new payment system aims to encourage innovation and collaboration and to incentivize home health providers to meet or exceed industry quality standards."  In a September 26, 2017 letter to the Department of Health and Human Services, a bipartisan group of 49 Senators expressed concern about the reimbursement impact of the rule.  The Partnership for Quality Home Healthcare, a provider group, has estimated that the new rules would cut home health reimbursement by $950 million in 2019 alone.  Senator Orrin Hatch (R-Utah) likewise expressed concerns in a September 22, 2017 letter to CMS, noting "While I support the agency's long-term objective of more precisely aligning Medicare payments with patient care needs . . . I am concerned that CMS may be rushing to finalize complex policy changes too quickly" and that "[e]xtra time and more robust data analysis is needed" to ensure that the proposed reimbursement methodology would achieve the goals of improved payment accuracy and better patient outcomes.

Kimberly A. Lammers

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