This article is a part of your HHCN+ Membership
The Home Health Value-Based Purchasing (HHVBP) model continues to save hundreds of millions of dollars each year, mostly because of its ability to reduce inpatient stays for Medicare beneficiaries.
The model, which the U.S. Centers for Medicare & Medicaid Services (CMS) expanded from nine demonstration states to home health agencies across the country on Jan. 1, 2022, in a pre-implementation phase, is displaying other promising results as well. CMS highlighted its success in an annual report on HHVBP published earlier this month.
The first full performance year for the expanded HHVBP model began on Jan. 1, 2023.
“We continued to find an overall reduction in Medicare spending for Part A and Part B services, modest declines in some but not all aspects of utilization, and modest improvements in most quality measures for the sixth and final year of the original HHVBP Model,” CMS noted in the report.
HHVBP has proven to be one of the most successful alternative payment models in CMS Innovation Center history. And the new findings from CMS offer plenty of food for thought when considering the nationwide expansion, I believe, especially around these topics:
– How the nationwide expansion will further impact post-acute care utilization
– The likelihood of CMS adjusting the maximum upward or downward payment adjustments
– Home health provider behavioral changes due to the mandatory model
I explore these and other points as part of this week’s exclusive, members-only HHCN+ update.
Mostly positives
As far as positives, HHVBP – from its 2016 beginnings through 2021 – was found to significantly lower total Medicare spending. Medicare spending on emergency department visits and observation stays actually climbed during that time, but the increase was handily offset by reductions in Medicare spending on skilled nursing facility (SNF) stays and home health utilization.
Over six years of the original demo, CMS estimated a 1.9% decline in average Medicare expenditures per day among fee-for-service (FFS) beneficiaries in HHVBP relative to a control group of non-demo agencies during and within 30 days following home health episodes. The cumulative reduction in total Medicare spending during that period following home health episodes for FFS beneficiaries receiving home health services in the model was $1.38 billion.
That’s good for an average annual reduction of $230 million, according to CMS. Annual savings will likely be much greater under the nationwide expansion, with thousands of additional providers obligated to operate under HHVBP’s complex framework.
“The declines in overall Medicare spending among home health beneficiaries due to HHVBP continue to be largely driven by a reduction in spending for inpatient services, and we continue to find a reduction in spending for SNF services,” CMS explained in its report.
The reduction in SNF utilization is already something operators in that space have been forced to think about.
“[HHVBP] changed their care delivery patterns such that the frequency of patients who were cycling through the system decreased and therefore, there weren’t as many people readmitting back to hospitals, and there weren’t as many patients eligible for a subsequent SNF stay,” Brian Fuller, CEO of Integrated Care Solutions, a care management and care coordination company, previously told Skilled Nursing News.
Additional positives associated with HHVBP included a drop in unplanned hospitalizations and more patients discharged to the community. HHVBP home health agencies also, for the most part, had more improvement in mobility and self-care for their patients, along with greater management of oral medications.
While it’s not necessarily a negative finding because there are too many factors at play to exclusively blame HHVBP, demo agencies did tend to see an increase in outpatient ED visits for patients.
“In contrast to the observed declines in inpatient hospitalizations and SNF visits due to HHVBP, we found a 0.24 percentage point increase in outpatient ED use, which corresponds to a 2.1% increase relative to average measure values prior to HHVBP,” CMS noted.
Broadly, there were no meaningful changes in access to home health services or health equity during the six years of the original HHVBP demo.
An emphasis on quality
CMS’ recent report on HHVBP offers some interesting insights into what the future holds under the expanded model, in my view.
Going into the nationwide HHVBP rollout, there was ample discussion about what agencies needed to change or invest in to perform well compared to their peers. Looking back at the demonstration, it appears providers didn’t make too many active changes.
In fact, according to CMS, which surveyed providers on their HHVBP experience, most agencies simply strengthened programs they already had in place.
“Agencies in both original HHVBP Model and comparison states that we spoke with in 2022 noted an increased emphasis on quality and performance improvement over the past decade, but did not view the original HHVBP Model as a key driving force,” CMS said in its report. “Rather, some agencies in HHVBP states and affiliated with national chains indicated that the original HHVBP Model intensified existing efforts on performance improvement.”
Performance improvement efforts tended to focus on data analytics and monitoring, plus staffing and training. Clinical strategies and approaches did not vary substantially between HHVBP and the comparison states, according to CMS.
“Similarly, the agency survey we fielded in 2022 to explore how agency behavior may have changed subsequent to the original HHVBP Model found few differences between agencies in the model and comparison states in their quality improvement approaches, with most agencies using multiple activities to target quality indicators based on OASIS, HHCAHPS and Medicare claims data,” CMS noted.
Those findings echo the conversations that I’ve had with home health leaders leading up to the national expansion. For the most part, industry executives have maintained an outlook of, “We’re already doing the things needed to perform well under HHVBP.”
LHC Group co-founder Keith Myers, who served as the company’s chairman until its merger with Optum, touched on this topic during HHCN’s 2021 FUTURE conference. LHC Group was previously in seven of the nine HHVBP demo states.
“We get asked a question quite often about [HHVBP], ‘What are you doing in those states differently?’” Myers told me on stage. “But we’re doing nothing different in those seven states that we’re not doing everywhere. We made the decision that quality was important. We probably were nudged to because of all the relationships we have with hospitals and health systems. They’re constantly pushing us to be better and do more.”
Agencies in both original HHVBP Model and comparison states that we spoke with in 2022 noted an increased emphasis on quality and performance improvement over the past decade, but did not view the original HHVBP Model as a key driving force.
– CMS in “Evaluation of the Home Health Value-Based Purchasing Model, Sixth Annual Report” (May 2023)
Skin in the game
Another discussion point going into the expanded HHVBP rollout was how much upside and downside risk providers should be exposed to, with industry executives wanting more skin in the game. Generally, home health operators with HHVBP experience have told HHCN that it’s very difficult to secure the largest payment bonus – or penalty.
“One year, we did get a positive adjustment, about 1%. And we had a really good year,” Dean Lee, the president and CEO of 3HC, told me at HHCN’s 2022 VALUE event. “So those adjustments are minimal in that sense. The only folks that are really going to take real hits, or get real benefits, are those in the 99th percentile, or the 1st percentile. There aren’t meaningful adjustments the way it’s designed today.”
CMS’ annual report on the alternative payment model suggests there’s a case to be made for at least bumping up rewards.
“When comparing the impact of the HHVBP Model between the initial years (2016-2017) with the later years when HHAs received a payment adjustment (2018-2021), we found evidence among some, but not all, measures of successively larger impacts of HHVBP in later years of the model,” CMS explained in its report.
The up-or-down payment adjustments in 2021 reached a maximum of 7%, which was larger than in previous years of the model. However, only 20% of HHVBP agencies received adjustments exceeding 3% in 2021.
Over 1,900 home health agencies participated in HHVBP in 2021. There were more than 2.12 million home health episodes that year that HHVBP agencies handled.
Moving forward, it will also be interesting to see if HHVBP changes how many home health agencies are entering – and exiting – the market. In my analysis of CMS’ new HHVBP report, it does appear that the model impacted provider behavior to a noticeable degree.
Coupled with the already declining rate of home health agencies, this could impact access to home health services.
“In general, prior to the implementation of HHVBP in January 2016, HHVBP states had higher agency entry rates and higher agency exit rates than non-HHVBP states, indicating greater volatility in the supply of HHAs in HHVBP states,” CMS stated in its report.
