CMS Issues Final Rule on Medicare Home Health Prospective Payment System for 2020

By | Published On: November 18, 2019

The Centers for Medicare & Medicaid (CMS) made two major announcements relating to payment to home health agencies under Medicare in late October.  On November 8, 2019, CMS published in the Federal Register its Final Rule relating to the Medicare home health prospective payment system (PPS) for calendar year (CY) 2020. On October 21, 2019, CMS announced a delay in its home health Review Choice Demonstration.


On November 8, 2019, CMS published in the Federal Register its Calendar Year (CY) 2020 Home Health Prospective Payment System Final Rule. The rule includes several important changes to home health program Medicare payment, such as implementation of the new Patient-Driven Groupings Model (PDGM) payment system, a gradual phase-out of pre-payments for home health service periods beginning in 2020, and a new permanent home infusion therapy benefit beginning in 2021.

PDGM and 30-Day Periods of Care, and Behavioral Adjustment

The final rule implements CMS’s new PDGM payment model beginning January 1, 2020 and changes the unit of home health payment from 60-day episodes of care to 30-day periods of care, as required by the Bipartisan Budget Act of 2018. On this topic, the final rule did not differ significantly from the July 2019 Proposed Rule.

One significant difference between the Proposed and Final Rules relates to the PDGM behavioral adjustment. As we described in our blog post of last July concerning the Proposed Rule, the law authorizes CMS to make temporary adjustments to PPS payments, on a year-by-year basis, to the HHS PPS rate to account for anticipated behavior changes.[1] Moreover, Congress required CMS, in implementing the PDGM and transition to the 30-day payment unit, to “make assumptions about behavior changes [on the part of HHAs] that could occur” as a result of these changes to the PPS methodology.[2] Notably, while the PDGM was required to be implemented in a budget-neutral manner (i.e., the estimated aggregate amount of expenditures under the PPS was required to be equal to the amount that would have applied had the case-mix methodology and unit of payment not changed), CMS was required to apply the behavioral adjustment for purposes of the CY2020 PPS after development of the budget-neutral PPS amount. In the Proposed Rule, CMS had proposed to adjust the PPS rate downward by 8% to account for anticipated behavior changes by providers. In the Final Rule, after considering comments and reevaluating its logic, CMS reduced that downward adjustment to 4.36%. Notably, CMS is also required by the law to analyze data for CYs 2020-2026 retrospectively to determine the impact of the difference between assumed and actual behavior changes and to make any such payment changes as are necessary to offset or supplement the adjustments based on anticipated behavior.

CMS projects that the implementation of the PDGM will result in an increase in Medicare payments to home health agencies by 1.3%, or $250 million, in CY 2020 as compared to CY2019.[3] Detailed information on the PDGM and the behavioral adjustment may be found here.

Split-Percentage Payment Phase-Out/ Notice of Admission Requirement

In 2020, CMS will reduce split-percentage payment, also known as Request for Anticipated Payment (RAP), for existing home health agencies as part of its plan to reduce fraud and waste in home health. This means that existing home health agencies will be able to bill up-front for only 20% of the estimated final payment associated with a period of care. The change applies to both initial and subsequent 30-day periods of care. Home health agencies certified on or after January 1, 2020 will not be able to bill for RAP payment. Complete elimination of RAP payment for all home health agencies will occur in CY2021. Currently, by contrast, payment under RAPs currently provides up to 60% of the total anticipated payment for a home health episode at the beginning of care.

In 2021, home health agencies will continue to be required to submit RAPs within the first five days of each beneficiary’s 30-day period of care or be subject to a late penalty in 2021; however, they will not receive any payment associated with the request. The purpose of these submissions will be to alert the claims processing system that a beneficiary is under a home health period of care. In CY2022, CMS hopes to finalize a requirement for home health agencies to submit a one-time Notice of Admission (NOA) to replace the 30-day zero-pay RAP requirement. CMS will require that the NOA be reported within the first five days of initiation of the home health care or be subject to a penalty for each late day.

Home Infusion Therapy Benefit

CMS has finalized 2020 payment policies in preparation for implementation of a new home infusion therapy benefit in 2021. Home infusion drugs will be groups into three payment categories. Each payment category will have a single unit of payment which will be adjusted by a Geographic Adjustment Factor. Initial home infusion therapy visits will be paid at a higher amount to cover initiation costs. CMS is soliciting comments on ways to enhance coverage of eligible drugs under the home infusion benefit.

Other Changes under the CY2020 rule:

  • Therapist assistants are now allowed to furnish maintenance therapy under the home health benefit.
  • CMS is finalizing certain home health value-based purchasing (HHVBP) provisions to require public reporting of the total performance score (TPS) and TPS Percentile Ranking from the Performance Year 5 (CY 2020) Annual TPS and Payment Adjustment Report for each home health agency in nine model states that qualified for a payment adjustment for CY 2020.
  • Two new quality measures regarding the transfer of health information under the Home Health Quality Reporting Program (HHQRP) have been implemented.
  • The Improvement in Pain Interfering with Activity Measure has been removed from the HHQRP provisions.
  • The Discharge to Community HHQRP measure has been updated to exclude baseline nursing home residents.

RCD Delay

On October 21, 2019, CMS announced that it will reschedule the next phase of its Home Health Review Choice Demonstration (RCD) to allow Home Health agencies time to transition to the new Patient-Driven-Groupings Model (PDGM) within the Medicare PPS methodology, which becomes effective on January 1, 2020.[4]

RCD implementation will resume on March 2, 2020 in Texas, followed by demonstrations in North Carolina and Florida on May 4, 2020.[5] However, CMS officials have indicated that these dates are subject to change, as potential “speedbumps” arising out of the PDGM transition may lead to further delays to RCD implementation.[6]

Earlier this year, CMS released its Home Health RCD, a revamped version of its former pre-claim review demonstration (PCR), which will be implemented in Illinois, Ohio, North Carolina, Florida, and Texas for a period of five years.[7] The purpose of RCD is to protect taxpayer dollars designated for home health services from fraud by reviewing home health payments on a routine basis.[8] Under the RCD, providers can choose between three initial review options: a pre-claim review, a post-payment review, or a minimal post-payment review of a smaller portion of the provider’s claims with a 25% reduction of payment on all claims. [9] Under the pre-claim review and post-payment review options, provider claims are reviewed for every episode of care until the appropriate claim approval rate (90% based on a minimum of 10 pre-claim requests or claims submitted) is reached.[10] Further, once the appropriate claim approval rate is reached, a provider can elect to opt-out of claim reviews except for a spot check of 5% of its claims to ensure continued compliance[11].

The delay in implementation will afford home health agencies more time to adjust to the new regulatory burdens.[12] Home health agencies have historically struggled to embrace regulatory changes due to the limitations of training a decentralized workforce that travels to visit patients.[13] With the implementation of both the PDGM and RCD within just a few months, the home health industry faces two major changes to its payment system, requiring providers to prepare carefully to adopt the changes and ensure a smooth transition.

If you have any questions regarding changes to the home health payment system, please contact Susannah Gopalan at or Noori Ali at

[1] SSA § 1895(b)(3)(D) (as amended by BBA 2018 §51001(a)).

[2] Id. § 1895(b)(3)(A)(iv).



[5] Id.

[6] Id.

[7] Id.


[9] Id.

[10] Id.

[11] Id.


[13] Id.

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