Health Law Daily CMS proposes home health PPS renovation with $180M cut for 2017
Tuesday, June 28, 2016

CMS proposes home health PPS renovation with $180M cut for 2017

By Anthony H. Nguyen, J.D.

Home health (HH) payments would decrease $180 million, or one percent, for calendar year (CY) 2017 under a Proposed rule updating the HH prospective payment system (PPS). In addition to the overall payment reduction, proposed updates to the HH PPS rates in the advance release include implementing the final year of the four year phase-in of the rebasing adjustments to the national standardized 60 day episode payment rates, the national per-visit rates, and the non-routine medical supplies (NRS) conversion factor.

The Proposed rule would also reduce the national standardized 60-day episode payment rates by 0.97 percent in CY 2017 for home health agencies (HHA) to account for nominal case-mix growth between CY 2012 and CY 2014. This value was not accounted for in the rebasing adjustments finalized in the CY 2014 HH PPS final rule. In addition to providing an update on the progress towards developing public reporting of performance under the HH Value-Based Purchasing (VBP) Model, CMS proposed several changes and improvements. Lastly, CMS also proposed an update to the Home Health Quality Reporting Program.

The Proposed rule officially publishes in the Federal Register on July 5, 2016.

Payment updates. The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) required a four-year phase-in of a rebasing adjustment to the national standardized 60-day episode payment amount, the national per-visit rates and the NRS conversion factor. For CY 2017, the final year of the phase-in, according to CMS, the rebasing will "reduce the national, standardized 60-day episode payment amount by $80.95, increase the national per-visit payment amounts by 3.5 percent of the national per-visit payment amounts in CY 2010 with the increases ranging from $1.79 for home health aide services to $6.34 for medical social services, and reduce the NRS conversion factor by 2.82 percent."

The Proposed rule also continues in CY 2017 an HH payment update of 2.3 percent (2.8 percent market basket update, less 0.5 percentage point multifactor productivity adjustment). CMS would also use inpatient hospital wage data to develop a wage index to be applied to HH payments. CMS noted that in the absence of HH-specific wage data, using inpatient hospital wage data is appropriate and reasonable for the HH PPS.

Outlier payments. CMS proposed to change the methodology used to calculate outlier payments, using a cost-per-unit approach rather than a cost-per-visit approach. CMS would implement a cap, of 8 hours or 32 units per day, on the amount of time per day that would be counted toward the estimation of an episode’s costs for outlier calculation purposes.

The agency is concerned that the current methodology for calculating outlier payments may create a financial disincentive for providers to treat medically complex beneficiaries who require longer visits, especially because the home health environment differs from hospitals and other institutional environments. Using the new methodology, CMS would convert the national per-visit rates into per 15 minute unit rates. The change would remain budget neutral as CMS would still target to pay out 2.5 percent of total payments as outlier payments.

HHVBP. There are no aggregate increases or decreases to HHAs competing in the HHVBP program, which began January 1, 2016. Medicare-certified HHAs were selected for inclusion in the HHVBP model to compete on quality performance measures for payment adjustments to their current PPS reimbursements.

The overall economic impact of the HVBP Model provision for CY 2018 through 2022 is an estimated $378 million in total savings from a reduction in unnecessary hospitalizations and skilled nursing facility (SNF) usage as a result of greater quality improvements in the HH industry.

CMS is also considering various public reporting platforms for the HHVBP Model including the Home Health Compare (HHC) and the Center for Medicare and Medicaid Innovation (CMMI) webpage as the portals for maintaining information in a centralized location and making information available over the Internet.

Quality reporting. CMS proposed that when initially adopting a measure for the HH Quality Reporting Program (QRP) for a payment determination, the measure would automatically be retained for all subsequent payment determinations unless CMS proposed to remove or replace the measure, or unless an exception applies.

Six criteria would be used when considering a quality measure for removal: (1) measure performance among HHAs is so high and unvarying that meaningful distinctions in improvements in performance can no longer be made; (2) performance or improvement on a measure does not result in better patient outcomes; (3) a measure does not align with current clinical guidelines or practice; (4) a more broadly applicable measure (across settings, populations, or conditions) for the particular topic is available; (5) a measure that is more proximal in time to desired patient outcomes for the particular topic is available; and (6) a measure that is more strongly associated with desired patient outcomes for the particular topic is available.

In addition, six process measures would be removed from the HH QRP, beginning with the CY 2018 payment determination, including those related to pain assessments and interventions, pressure ulcers, and heart failure symptoms.

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