August 29, 2023
Electronic Submission via Regulations.gov
The Honorable Chiquita Brooks-LaSure, Administrator
Centers for Medicare and Medicaid Services
Department of Health and Human Services
Re: CMS-1780-P, CY2024 Home Health Prospective Payment System (PPS) Proposed Rule
Dear Administrator Brooks-LaSure,
Well Care Health (“Well Care”) respectfully submits the following comments regarding the impact of the CY 2024 Home Health PPS Proposed Rule (“Proposed Rule”). Well Care supports the concerns raised in the comments submitted by the National Association of Home and Hospice Care (NAHC) and Home Care Home Base (HCHB), as well as express our significant concerns about the Proposed Rule from our real-world perspective delivering home health services to patients across the Carolinas.
Specifically, we seek to emphasize the following points for your consideration:
- The Proposed Rule’s substantial reimbursement cuts are disconnected from the reality of delivering home health services in the current operating environment;
- The Proposed Rule risks even greater-than-projected impacts on provider payment;
- The Proposed Rule threatens to reduce much-needed access to home health services, especially for rural communities and higher-acuity patients;
- The Proposed Rule’s payment cuts would foreseeably have the counter-productive and negative impact of increasing overall Medicare program expenditures;
- The Proposed Rule suffers from several notable flaws in its methodology; and
- Well Care has multiple areas of feedback in relation to the Proposed Rule’s updates to the HHVBP and HHQRP.
In summary, Well Care is deeply concerned about the negative foreseeable impacts of the Proposed Rule’s payment cuts on Well Care’s continued ability to serve home health patients across communities in the Carolinas, as well as the cascading impact on home health providers across the country. Additional details on the above points follow below.
As background, Well Care is a family-owned and operated Home Health, Hospice Home Care, and Home Care provider that currently serves a Home Health patient census of more than 4,000 patients across 40+ counties in North Carolina and South Carolina. Well Care has been repeatedly recognized as a national leader in quality of care with a Five-Star rating in Quality of Patient Care by CMS, a designation that corresponds to the top 4-5% of home health providers nationwide. Our comprehensive service offerings provide critical support for patients in their path to independence and self-care in the comfort of their own homes, and our top priority is placing the needs of our patients first. With 35+ years of experience in home- based care, including 23+ years as a Medicare-participating provider, we are well-positioned to share valuable insights with CMS in relation to the foreseeable negative repercussions of the Proposed Rule on our organization, as well as the patients and communities we serve across North Carolina and South Carolina. Well Care is a proud member of the National Association for Home Care and Hospice (NAHC) and the Association for Home and Hospice Care of North Carolina (AHHC).
More broadly, the home health benefit is a vital component of the healthcare continuum, not only in directly addressing patient care needs through services like nursing and therapy, but also as a value-based investment that avoids unnecessary utilization of costly institutional care settings such as skilled nursing facilities (SNFs), and hospital readmissions. Without adequate access to home health services, patients would alternatively experience longer hospital length of stays, elevated hospital readmission rates, increased SNF utilization, and foregone needed care. For this reason, home health is uniquely positioned to serve as an instrumental value-based care driver for not only the Medicare program, but also other payers.
1. The Proposed Rule’s substantial reimbursement cuts are disconnected from the reality of delivering home health services in the current operating environment
The Proposed Rule’s payment cuts are strikingly disconnected with the real-world operating environment currently faced by home health providers like Well Care across the country. Reflecting the broader healthcare industry, Well Care has experienced substantial cost inflation in recent years across a wide range of expense categories:
a. Clinical workforce: stemming from challenging and worsening clinical workforce shortages, the home health industry has experienced significant wage increases for its clinical workforce in recent years, far beyond historical inflation trends.
i. Well Care has seen our labor costs rise at a level that is unprecedented. Wages for nurses have increased more than 5% year over year since 2020. Though wage increases have slowed slightly in 2023, it has done so in the context of the past increases staying in place, while reimbursement has decreased.
ii. Exacerbating the overall shortage of healthcare workers entering the profession is that we compete with hospitals, long term care settings, and health insurers for the same clinical professional pool. Facility-based healthcare organizations and health insurers can generally offer higher wages and benefits compared to home health providers due to their revenue and profit profiles. Nurses looking for additional flexibility, pay and benefits are also joining contract agencies who offer more competitive pay in addition to travel and housing reimbursements. These agency staff cost home health providers as much as 30% more than our employed nurses.
iii. More than 300,000 healthcare workers nationally left the profession in 2021 due to COVID 19 related burnout, further taxing the limited supply of available workers in the markets we serve.
iv. In Well Care’s markets, sign-on bonuses for nurses in North Carolina have risen to all- time highs, often as much as $25,000 one-time payments to RNs and $15,000 to LPN new hires. Employers are offering to relieve student debt, full relocation reimbursement, and other perks.
v. Well Care has also experienced new or inexperienced nurses demanding starting salaries normally offered only to clinicians with more than 5 years’ experience in the field. This dynamic adds ongoing pressure to keep tenured staff market competitive as new hire wages increase, meaning constantly monitoring market wages and wage ranges for adjustments, with our most expensive resource yielding the most variable costs. In addition, providing a higher wage to inexperienced staff who also require extensive onboarding and supervision also acts to inflate the overall wage impact.
b. Administrative workforce: administrative personnel within home health agencies have also experienced wage inflation in line with broader market trends of an average of 4% per
c. Operating expenses: inflationary cost pressures have also extended to wide-ranging operating expenses.
- Nationally, non-labor costs have also increased nearly 6% over the past twelve months.
- Medical supplies home health agencies are responsible for providing have increased in line with inflation.
- Employee health insurance premiums rose 6% while general and professional liability insurance has increased by an average of 12% over the last year.
- Home health agencies are required to cover the expenses related to compensating clinicians for travel between patients’ homes on a daily basis. There is a notable 23% rise in fuel expenses compared to the average industry fuel costs between 2018 and 2021. This increase signifies a collective industry expenditure growth of over $38 million during that period.
d. Regulatory compliance: In order to maintain compliance in an increasing complex and robust regulatory environment, Well Care, like many home health providers, has recently made numerous material investments in infrastructure and resources. For example, the Review Choice Demonstration has increased administrative burden on agencies to submit documentation to Medicare Administrative Contractors in order to ensure payment. For Well Care, the administrative burden for 6,731 submissions and subsequent approvals for pre-claim review since the beginning of 2021 equates to 1,120+ administrative hours (140+ work days) solely focused on submission of claims, requiring numerous dedicated staff resources. 1
1 Conservatively assuming 10 minutes for each submission, which does not count website/technical issues from the MAC, denial determinations in error, etc.)
Given the escalating expenses outlined above, one would anticipate a corresponding adjustment in reimbursement rates, similar to the adjustments CMS has made for Hospice, to account for the increasing costs associated with providers delivering home health services. Moreover, this financial strain is exacerbated by the economic reality that Well Care, along with many other home health providers, regularly accept Medicare Advantage and Medicaid patients at reimbursement that falls short of the costs of delivering such care.
Well Care’s experience aligns with these national trends. In order to respond to this apparent disconnect between Medicare payment trends and cost inflation, like many providers nation-wide, Well Care has had to implement wide-ranging measures to control and reduce costs to include:
- Delaying and limiting admissions of patients into care;
- Scaling back certain geographic areas we serve.
- Discontinuing specialized clinical programs (e.g. cardiac-focused remote patient monitoring and telehealth program)
- Becoming increasingly selective on the types of referrals we accept into our care.
- Halting or reducing acceptance of certain Medicare Advantage or Medicaid patients.
- Reducing volume of patients that require elevated utilization of nursing capacity (e.g., wound patients)
- Limiting acceptance of patients in rural areas that require extended clinician drive times.
Consistent with the experience of home health providers nationally, we see greater demand for home health services than we have the clinical capacity to serve, meaning we must decline some of the referrals we receive. Not only are the proposed payment cuts directionally inconsistent with the reality faced by home health providers who deliver needed care, but represent a missed opportunity to support providers in a rapidly evolving and challenging operating environment.
2. The Proposed Rule risks even greater than projected impacts on provider payment
CMS proposed reimbursement estimates the 2024 cut to be 2.2% based on CY 2022 claims data. As noted in Home Care Home Base’s (HCHB) Proposed Rule Comments, its model shows a substantially greater estimated impact for agencies nation-wide stemming from the Proposed Rule (2.66% revenue cut) than that projected by CMS (2.2% cut). As a leading electronic medical record (EMR) provider nationally, HCHB presents an important and valuable data set and model for assessing impact to home health providers. The proposed additional home health rate cuts from CMS in 2024, if finalized, are almost certain to worsen the access to care challenges detailed above, just as prior CMS rate adjustments have impacted the past several years.
There are additional important observations that flow from HCHB’s modeling – notably, that a 2.66% payment cut would have even stronger impacts on patient access and patient care than those being modeled by industry advocates for an estimated 2.2% cut. The cuts also will have an inconsistent impact across geographies and agencies. HCHB’s model shows that 49 out of 50 states will see a cut in reimbursement, with some states impacted as high as -5.5%. Furthermore, individual agencies are projecting cuts based on HCHB’s model as high as 7.7%, with other agencies seeing an increase in revenue of 7.0%. The inconsistency of these impacts from the Proposed Rule are likely to further destabilize the home health industry during a time when almost half of all home health patients are already being turned away from service.
Reinforcing this troubling insight, Well Care projects a substantially higher negative revenue adjustment than the national estimate by CMS. Using HCHB’s CMS Rule Impact Modeling, Well Care as an enterprise would have an estimated -3.96% revenue adjustment, as compared to the -2.2% CMS estimates. The model reflects our 2023 patient periods and models them as if they occurred under the conditions of the 2024 proposed rule contrary to CMS calculation which forecasts 2024 payments predicated on the Medicare claims data for home health periods from 2022. This logic does not account for any future changes in number of visits or case mix, HCHB’s model looks at all patients, visits, diagnosis codes, and claims to date and shows actual reimbursement in 2023 versus what the reimbursement on those exact same patients and activities would be in 2024 if the Proposed Rule is finalized.
These changes will inescapably have significant impact on Well Care’s ability to continue delivering the high quality of care we are committed to providing. Of note, our South Carolina agency based in Horry County, which serves a high volume of rural patients, has an estimated -5.82% impact under the HCHB model. Serving Horry and Marion Counties, clinicians regularly travel 30-40 minutes between patients, which in turn reduces staff productivity and ultimately increases the cost of care. If the payment cuts in the Proposed Rule are finalized, factors like these will force Well Care and other home health providers to closely scrutinize the types of complex and rural patients we are able to serve.
3. The Proposed Rule threatens to diminish much-needed patient access to home health services, especially in rural communities and higher-acuity patients.
Access to care is already a critical issue nationally across the home health industry, with nearly half of all patients referred to home health are being turned away from service. National data estimates that 6.2 million beneficiaries are denied access to home health services every year.2 This reality can be profoundly frustrating for patients who are denied care as it can lead to potentially worse health outcomes, extended acute stays or admissions to skilled nursing or long-term care facilities rather than remaining at home. The more expensive alternatives not only raise Medicare expenses, but strain limited clinical resources and available beds in those facilities. Meanwhile, many patients return home without receiving needed care. Patients who return home without necessary care often experience poorer outcomes and a higher likelihood of readmission to acute care facilities. This, in turn, contributes to an overall increase in Medicare spending, alongside the human impact to patients and families. This worsening reality runs contrary to the very reason that home health providers exist – to help and care for the patients and communities we serve.
2 See Comments submitted by HCHB.
Patient access challenges have worsened as CMS has made recent annual payment rate cuts. As of July 2023, patient referral conversions nationally have decreased significantly – resulting in 45% of patients seeking home health being turned away from service. The timing of the access to care trend correlates with CMS payment rate adjustments. The cause of this correlation is a shortage of home health clinicians, creating a situation where home health agencies such as Well Care Health do not have the clinical capacity to admit all the patients needing home health services.
Over the last decade, there has been a consistent decline in referral conversions, and following the implementation of PDGM, these conversions plummeted significantly in under four years. These concerns are echoed by industry data on rejection rates among home health providers. Hospital discharge data show that hospitals are experiencing increasing referral rejection rates for prospective home health patients since 2021.
Source: July 25, 2023, WellSky Evolution of Care report, available at: https://careporthealth.com/about/results/the- evolution-of-care-2023/
Well Care’s experience is consistent with this national industry data. Since 2020, Well Care has experienced a reduction in our capacity to serve home health patients. While several factors have contributed to this decline, declining reimbursements under PDGM are a primary factor. In 2021, Well Care had a patient/referral acceptance rate of 69%. In 2023, that rate has dropped to 59%. Staff shortages have been a significant factor in that decline, with challenges competing for staff with other healthcare sectors greatly affected by reduced Medicare reimbursements.
These patient access issues are felt especially by higher-acuity patients and rural populations. Since its inception, PDGM has targeted payment based on the acuity of the patient. The 2024 recalibration of PDGM seeks to reduce payment for the same acuity that currently is recognized as a “high” or “medium” adjustments for Functional Impairments and reallocates them to “low”. Highly-acute patients require increased home health utilization to address patient needs to ensure patients can remain in their home safely. This means that while acuity continues to climb, reimbursement would decrease forcing home health providers to make difficult decisions about the types of patients they can adequately care for, therefore putting the most vulnerable populations at risk to either not receive care at all or seek use of higher-level, more costly care settings to meet their needs.
Likewise, the CBSAs in our markets that are proposed to have significant reductions to the wage index include many of the same areas that experience the greatest staffing shortages and patient access challenges today. For Well Care, these include the Durham-Chapel Hill, Greensboro-High Point, Jacksonville, Wilmington and Myrtle Beach-Conway areas. Our agencies in these markets face fierce competition with hospital systems, rural populations, and exacerbated by limited clinicians living in these rural areas. In addition to PDGM recalibration, the Proposed Rule’s wage index decreases will have particularly damaging consequences for agencies serving rural areas. With lower ratios of staff living in rural areas, undesirable schedules related to travel, and decreased ability to pay higher wages to compensate for long travel distances, agencies will have to consider scaling back.
Well Care isn’t the sole home health agency grappling with the financial pressures that are diminishing access to care. We are aware that other agencies have either ceased operations or curtailed services in our service area and in various regions across the Carolinas. In some instances, there this creates a material gap in in access to care. If the proposed rate reductions are implemented for 2024, Well Care will forced to make exceedingly difficult decisions to remain operational in its current service areas, especially given that our projected payment cut impact is substantially greater than national averages.
These very real financial stresses will be greatly exacerbated by the proposed rate cuts. The proposed reductions in home health rates by CMS for 2024, if finalized, are almost certainly going to exacerbate the challenges related to accessing care.
4. The Proposed Rule’s payment cuts would foreseeably have the counter-productive and negativeimpact of increasing overall Medicare program expenditures;
Given the instrumental role that home health plays both in directly caring for patient needs and as a value-based care investment, the Proposed Rule’s continued home health payment cuts and the resulting negative impact to patient access to care risks the counter-productive effect of higher overall Medicare program expenditures due to off-setting consequences on cost-drivers such as hospital length of stay, skilled nursing facility utilization, chronic disease management, and hospital admissions/readmissions.
5. The Proposed Rule suffers from several notable flaws in its methodology;
Well Care is deeply concerned about numerous meaningful flaws in the methodology of the Proposed Rule, including:
a. The Proposed Rule relies on estimated “Medicare Margin” data in its supporting analysis, a siloed, incomplete analysis that does not reflect the reality of home health providers’ financial condition. Medicare typically represents only one of the prominent payers of home health services, alongside Medicare Advantage, the VA, Medicaid and Tricare. As home health providers, we do not operate in payer-specific siloes, thus it’s unclear why CMS would limit its analysis of access impact to solely an incomplete Medicare Margin estimate. Moreover, it is unclear why MedPAC would evaluate the full financial outcome for inpatient hospital services and SNF services in its analysis of Medicare payment rates on access to care, while not adopting this approach for home health. Perhaps most concerning, when industry data shows that most home health agencies nationwide are in jeopardy of bankruptcy or closure with implementation of the proposed payment cuts3, the significant risks of destabilizing the home health benefit based on incomplete margin assumptions are alarming.
b. The Proposed Rule is based on forecasting errors in 2021 and 2022 related to the Market Basket Index, which are expected to produce significant underpayments to providers. Without taking corrective and remedial action such an enactment of a one-time forecast error correction, it’s difficult to understand how the Proposed Rule be fairly and properly finalized, especially given the readily-foreseeable impacts to patient access to care.
c. The Proposed Rule includes flawed and unfair behavioral assumptions. When CMS changed to the PDGM payment model in 2020, CMS assumed several behavior changes that agencies would undertake in this new model. These assumptions were fundamental to CMS argument that the shift to PDGM would be budget neutral, as required by the Bipartisan Budget Act of 2018. These behavioral changes are fundamental to CMS annual updates. HCHB’s modeling shows a large gap between how providers have actually behaved versus CMS’s behavioral assumptions. Well Care requests that CMS provide clear and transparent methodology and supporting data describing how CMS calculates behavioral assumptions.4 These discrepancies are key ongoing reason why reimbursement has not kept pace with recent cost inflation.
The presence of these fundamental flaws in the Proposed Rule’s methodology, in combination with the likelihood of significant harm to patient access and devastating financial blows to home health agencies across the country, justifies a CMS decision to not finalize the payment reductions in the Proposed Rule, and engage collaboratively with home health providers like Well Care to enhance the PDGM payment model in ways that avoid destabilizing the home health benefit and striking damaging blows to the home health providers who deliver needed care under it.
3 See Comments submitted by NAHC.
4 See Comments submitted by Home Care Home Base.
6. Well Care has multiple areas of feedback in relation to the Proposed Rule’s updates to the HHVBP and HHQRP
With respect to the proposed changes to the Home Health Quality Reporting Program (HHQRP) and the Home Health Value Based Purchasing (HHVBP) Program, Well Care expresses the following:
- Well Care supports the proposed change of the baseline year to 2023, and the proposed exception to the ‘Discharge to Community – Post Acute Care (DTC-PAC)’ measure. Adjusting the baseline year to a more current timeframe is appropriate based on the proposed inclusion of new measures and allowing Home Health agencies more time to prepare for this program.
- Well Care supports the replacement of the Oasis-based ‘Discharge to Community’ Measure with the new claims-based ‘DTC-PAC’ measure. The former Oasis-based measure unfairly penalizes agencies for keeping patients in the home if they transition to home-based Hospice care or if they have a substantial census receiving care in assisted living facilities. Conversely, the DTC-PAC measure both: (1) aligns with home health providers’ role in keeping patients in the home care setting whenever possible; and (2) supports efforts to ensure that patients are in the correct care setting by ensuring agencies are coordinating and transitioning patients to Hospice earlier when that is the most appropriate clinical setting for patients.
- Well Care supports the change to the claims-based home health ‘Within-Stay Potentially Preventable Hospitalization (Preventable Hospitalizations)’ rather than the claims-based ‘Acute Care Hospitalization During the First 60 days of Home Health Use’ measure. In our view, the Preventable Hospitalizations measure more accurately reflects the efforts that Home Health organizations undertake to prevent hospitalizations without penalizing agencies for taking on more acutely ill patients. While we support the inclusion of this metric, the disproportionately heavy weighting assigned to the Preventable Hospitalization Metric devalues the patient’s functional improvement and ability to remain in the home long term. The proposed ‘Preventable Hospitalization’ metric is weighted at 26%, significantly higher than other important measures. The next-highest measure weighting is the new ‘Discharge Function’ metric (20%), which encompasses a composite of the overall functional improvement. While the Preventable Hospitalizations metric looks at a single outcome, the Discharge Function measure (when viewed in combination with the DTC-PAC measure) shows a more balanced reflection of a patient’s return to function in the home setting and successful care transitions from Post Acute Services to independence in the home environment. Accordingly, we recommend that CMS change the weighting of the claims-based Potentially Preventable Hospitalizations measure to 20% and the weighting of the DTC-PAC measure to 15%.
- Well Care opposes the inclusion of the ‘COVID-19 Vaccine: Percent of Patients/Residents Who Are Up to Date’ measure as a QRP. This position is in agreement with the MAP Coordinating Committee’s assessment that this measure is not appropriate for inclusion in the Quality Reporting Program and is not appropriate for inclusion in publicly-reported quality measures. We echo and reiterate the points made in the MAP Coordinating Committee’s recommendations as a part of 2022-2023 MAP Final Recommendations and the MAP Final Report, and note that information regarding vaccination adoption in a geographic area is available from sources such as the CDC, State Departments of Health, and local authorities. Accordingly, a Medicare Beneficiary has numerous tools to obtain information or data regarding the adoption rate of the COVID-19 vaccine, and including it in the QRP only adds administrative burden to agencies with minimal perceptible benefit to patients. While we understand the importance of COVID–19 vaccinations in preventing the spread of COVID–19, Well Care has experienced considerable hesitancy within the communities we serve to obtain vaccination, despite our efforts to educate and encourage vaccination. This reality is outside of our control as a home health provider, as it is ultimately a personal decision on the part of patients and should not be considered when determining an agency’s overall quality of patient care.
- Finally, Well Care requests that CMS explore ways to align the measures and data points used in the Quality Reporting and HHVBP programs, thus ensuring that prospective home health beneficiaries are provided with the same data points and quality metrics in the star ratings as are included in the VBP program.
In summary, Well Care reiterates the comprehensive concerns expressed in the comments submitted by the National Association of Home and Hospice Care (NAHC) and Home Care Home Base, and offers the above perspective of an independent, family-owned and operated home health provider delivering direct patient care. We hope this perspective is informative and useful – and that it helps avert a dangerous and damaging payment direction in the Final Rule.
Home based care offers high quality and essential health care services to millions of Medicare beneficiaries as well as great value to the Medicare program through health care costs savings far in excess of any other Medicare benefit. Implementation of the Proposed Rule threatens the financial sustainability of home health providers like Well Care across the country, and endangers patient access to vital home health services. CMS has the authority and the responsibility to prevent such a devastating outcome. As home health providers, our priority is delivering the best possible quality of care and access to care to the patients and communities we serve. Well Care’s Mission Statement is keeping our communities healthy, happy, and at home. In consideration of the insights and concerns contained in these comments, we invite CMS to join us in advancing this mission and avoid negatively impacting the home health benefit and home health providers like Well Care across the country.
Well Care joins the National Association for Home Care (NAHC) and the Association for Home Care & Hospice (AHHC), along with our partners in the home health provider community, to request that CMS withhold finalization of the payment reductions in the Proposed Rule, and work with the broader home health community to implement the PDGM payment model in a manner that aligns with the program’s goal of increasing access to care for those patients that need home health services.
To summarize, Well Care strongly recommends that CMS:
- CMS should not finalize the proposed payment reductions in the CY 2024 Proposed Rule; including postponement of the application of any permanent adjustments related to PDGM budget neutrality in order to preserve current access to home health services and the scope of care available.
- CMS should maintain its position to withhold any part of the PDGM budget neutrality temporary adjustments in 2024.
- CMS should recognize the disruptive and permanent financial impact of its 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.
- CMS should provide enhanced transparency on the calculation methodology so that service providers and key partners like Well Care can assist with the analysis of the data and ensure unintended consequences are avoided.
- CMS should engage with the home health provider community and other stakeholders to implement a PDGM budget-neutral payment methodology that is consistent with the Bipartisan Budget Act of 2018 and ensures greater access to high quality home health services for Medicare beneficiaries; and
Zac Long, JD, MHA
Well Care Health