WASHINGTON, D.C. (June 29, 2016)—CMS announced Monday proposed changes to the Medicare home health prospective payment system (HH PPS) for calendar year (CY) 2017 that would foster greater efficiency, flexibility, payment accuracy and improved quality. Approximately 3.4 million beneficiaries received home health services from approximately 11,400 home health agencies, costing Medicare approximately $17.8 billion in 2015.

In the rule, CMS projects that Medicare payments to home health agencies in CY 2017 would be reduced by 1 percent, or $180 million based on the proposed policies. The proposed decrease reflects the effects of the 2.3 percent home health payment update percentage ($420 million increase); the rebasing adjustments to the national, standardized 60-day episode payment rate, the national per-visit payment rates, and the non-routine medical supplies (NRS) conversion factor ($420 million decrease); the effects of the -0.97 percent adjustment to the national, standardized 60-day episode payment rate to account for nominal case-mix growth for an impact of -0.9 percent ($160 million decrease); and the effects of the proposed increase to the fixed-dollar loss (FDL) ratio used in determining outlier payments from 0.45 to 0.56 for an estimate impact of -0.1 percent ($20 million decrease).

To be eligible for the home health benefit, beneficiaries must need intermittent skilled nursing or therapy services and must be homebound and under the care of a physician. Covered home health services include skilled nursing, home health aide, physical therapy, speech-language pathology, occupational therapy, medical social services, and medical supplies. Home Health Agencies (HHAs) are paid a national, standardized 60-day episode payment for all covered home health services, adjusted for case-mix and area wage differences.

The HH PPS proposed rule is one of several rules for calendar year 2017 that reflect a broader Administration-wide strategy to create a health care system that results in better care, smarter spending, and healthier people. Provisions in these rules are helping to move our health-care system to one that values quality over quantity and focuses on reforms such as achieving better health outcomes, preventing disease, helping patients return home, helping manage and improve chronic diseases, and fostering a more-efficient and coordinated health care system.

Payment Policy Provisions
Rebasing the 60-day Episode Rate
The Affordable Care Act directs CMS to apply an adjustment to the national, standardized 60-day episode rate and other applicable amounts to reflect factors such as changes in the number of visits in an episode, the mix of services in an episode, the level of intensity of services in an episode, the average cost of providing care per episode, and other relevant factors. CMS must phase-in any adjustment over a four-year period, in equal increments, not to exceed 3.5 percent of the amount (or amounts) as of the date of the enactment of the Affordable Care Act (CY 2010).

In this proposed rule, CMS would complete the final year of the four-year phase-in of the rebasing adjustments to the HH PPS payment rates. As finalized in the CY 2014 final rule, the CY 2017 rebasing adjustment to the national, standardized 60-day payment rate is -$80.95. The overall impact due to the rebasing adjustments is estimated to be a -2.3 percent decrease in HH PPS payments for CY 2017. As noted above and further below, this is offset by the home health payment update percentage, which would increase overall HH PPS payments in CY 2017 by 2.3 percent. 

Updates to Reflect Case-Mix Growth
CMS will implement a 0.97 percent reduction to the national, standardized 60-day episode rate in CY 2017 to account for nominal case-mix growth from 2012 to 2014 (prior to rebasing). CY 2017 will be the second year of the three-year phase-in of the reduction to account for nominal case-mix growth. The -0.97 percent adjustment to the national, standardized 60-day episode payment rate to account for nominal case-mix growth results in an estimated decrease in HH PPS payments for CY 2017 of -0.9 percent.

Negative Pressure Wound Therapy (NPWT)
The Consolidated Appropriations Act of 2016 requires a separate payment to be made to HHAs for disposable NPWT devices when furnished on or after January 1, 2017 to an individual who receives home health services for which payment is made under the Medicare home health benefit. As described in the Consolidated Appropriations Act of 2016, the separate payment amount for an applicable disposable device will be set equal to the amount of the payment that would otherwise be made under the Medicare Hospital Outpatient Prospective Payment System (OPPS).

Change in Methodology and the Fixed-Dollar Loss (FDL) Ratio Used to Calculate Outlier Payments
CMS is proposing to change the methodology used to calculate outlier payments, moving from a cost per visit approach to a cost per unit approach (1 unit=15 minutes). This approach would more accurately calculate the cost of an outlier episode of care and thus would better align outlier payments with episode cost than the cost per visit approach. In addition, CMS is proposing to increase the FDL ratio from 0.45 to 0.56 in order to ensure outlier payments do not exceed 2.5 percent of total payments for CY 2017, as required by the Social Security Act (for an estimated -0.1 percent decrease in HH PPS payments for CY 2017).

Other Updates
CMS is also proposing to update the HH PPS payment rates by the home health payment update percentage of 2.3 percent, as required by the Social Security Act.

Home Health Quality Reporting Program (HH QRP) Update
Section 2(a) of the Improving Medicare Post-Acute Care Transformation Act of 2014 (the IMPACT Act) requires HHAs, Skilled Nursing Facilities (SNFs), Inpatient Rehabilitation Facilities (IRFs), and Long-Term Care Hospitals (LTCHs) to: submit standardized patient assessment data, data on quality measures and data on resource use and other measures. The data must be standardized and interoperable so as to allow for the exchange of such data among PAC providers. It also modifies PAC assessment instruments to provide for the submission and comparison of such standardized patient assessment data. These requirements are intended to enable interoperability as well as improve quality and discharge planning, among other purposes.

CMS is proposing to adopt for the CY 2018 payment determination four measures to meet the requirements of the IMPACT Act. Three of these measures are resource-based and calculated using Medicare claims.  The fourth measure is assessment-based and is calculated using Outcome and Assessment Information Set (OASIS) data. The proposed measures are as follows:

  • All-condition risk-adjusted potentially preventable hospital readmission rates,
  • Total estimated Medicare spending per beneficiary,
  • Discharge to the community, and
  • Medication reconciliation.

The Home Health Conditions of Participations (CoPs) require HHAs to submit OASIS assessments as a condition of payment and also for quality measurement purposes. HHAs that do not submit quality measure data to CMS will see a two percent reduction in their annual payment update (APU). Last year CMS finalized its proposal to require all HHAs to submit both admission and discharge OASIS assessments for a minimum of 90 percent of all patients with episodes of care occurring during the reporting period. CMS is incrementally increasing this compliance threshold over a three-year period beginning with the reporting period for CY 2017.

In 2015, CMS undertook a comprehensive reevaluation of all 81 HH quality measures, some of which are used only in the Home Health Quality Initiative (HHQI), and others which are also used in the HH QRP. The goal of this reevaluation was to streamline the measure set, consistent with MMS guidance and in response to stakeholder feedback. This reevaluation included a review of the current scientific basis for each measure, clinical relevance, usability for quality improvement, and evaluation of measure properties, including reportability and variability.

CMS’s measure development and maintenance contractor convened a Technical Expert Panel (TEP) on August 21, 2015, to review and advise on the reevaluation results. Information regarding the TEP’s feedback is available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/Downloads/Health-Quality-Reporting-Program-HHQRP-TEP-.zip (copy and paste link for best results). As a result of the comprehensive reevaluation, CMS identified 28 HHQI measures that were either “topped out” and/or determined to be of limited clinical and quality improvement value by TEP members. Therefore, these measures will no longer be included in the HHQI. A list of these measures, along with our reasons for no longer including them in the HHQI, can be found here.

Home Health Value-Based Purchasing Model
In the final CY 2016 Home Health Prospective Payment System final rule, CMS finalized its proposal to implement the Home Health Value-Based Purchasing (HHVBP) Model in nine states representing each geographic area in the nation. All Medicare-certified home health agencies (HHAs) that provide services in Arizona, Florida, Iowa, Maryland, Massachusetts, Nebraska, North Carolina, Tennessee and Washington are competing on value in the HHVBP Model, where payment adjustments will be based on each HHA’s total performance score on a set of measures already reported via OASIS and HHCAHPS for all patients serviced by the HHA, or determined by claims data, plus three new measures where points are achieved for reporting data.

The HHAs in these nine states will have their payments adjusted (upward or downward) in the following manner: a maximum payment adjustment of three percent in CY 2018; a maximum payment adjustment of five percent in CY 2019; a maximum payment adjustment of six percent in CY 2020; a maximum payment adjustment of seven percent in CY 2021; and, a maximum payment adjustment of eight percent in CY 2022.

Under the CY 2017 Home Health Prospective Payment System proposed rule, in addition to providing an update on the progress towards developing public reporting of performance under the HHVBP Model, CMS proposes the following changes and improvements related to the HHVBP Model:

  • Calculate benchmarks and achievement thresholds at the state level rather than the level of the size-cohort and revise the definition for “benchmark” to state that benchmark refers to the mean of the top decile of Medicare-certified HHA performance on the specified quality measure during the baseline period calculated for each state;
  • A minimum requirement of eight HHAs in a size-cohort;
  • Increase the timeframe for submitting New Measure data from seven calendar days to fifteen calendar days following the end of each reporting period to account for weekends and holidays;
  • Remove four measures (Care Management: Types and Sources of Assistance, Prior Functioning ADL/IADL, Influenza Vaccine Data Collection Period and Reason Pneumococcal Vaccine Not Received) from the set of applicable measures;
  • Adjust the reporting period and submission date for the Influenza Vaccination Coverage for Home Health Personnel measure from a quarterly submission to an annual submission; and
  • Add an appeals process that includes the existing recalculation process and adds a reconsideration process.

For more information on the Home Health Prospective Payment System, click here. For more information on Home Health Vaue-Based Purchasing Model, click here.

Visit cms.gov for more information.