CMS cuts home health Medicare payments by $130 million in final 2017 rule

The Centers for Medicare and Medicaid Services will cut back on $130 million in Medicare payments to home health agencies in 2017, a 0.7 percent reduction, the agency said Monday.

The 2017 adjustment to the national, standardized 60-day payment rate is -$80.95.  The overall impact is an estimated 2.3 percent decrease in home health payments, offset by a payment update increase of 2.5 percent, or $450 million.

Home health agencies that do not submit quality measure data to CMS will see a 2 percent reduction in their annual payment.

Home health agencies are paid a national, standardized 60-day episode payment for most covered home health services, adjusted for case-mix and area wage differences.

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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 cost Medicare about $18.2 billion in 2015.

Approximately 3.4 million beneficiaries received home health services from about 11,400 home health agencies.

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.

The final rule is among several that reflect a broader administration-wide strategy for reimbursing on the quality of care.

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The Affordable Care Act directs CMS to apply an adjustment to the national, standardized 60-day episode rate and other applicable amounts to reflect 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 as of the date of the enactment of the ACA in 2010.

In this final rule, CMS completes the final year of the four-year phase-in of the rebasing adjustments to the home health payment rates.

The Consolidated Appropriations Act, 2016 requires a separate payment to be made to home health agencies for negative pressure wound therapy using a disposable device, when furnished on or after January 1, 2017. The payment will equal the amount that  otherwise would be made under the Medicare Hospital Outpatient Prospective Payment System, CMS said.

CMS finalized the proposal to change the methodology used to calculate outlier payments, moving from a cost per visit approach to a cost per unit approach, in which one unit equals 15 minutes.

This approach more accurately reflects the cost of an outlier episode of care and thus better aligns outlier payments with episode costs than the cost-per-visit approach, CMS said.

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In addition, CMS finalized the proposal to increase the fixed dollar loss ratio from 0.45 to 0.55, to ensure outlier payments do not exceed 2.5 percent of total payments for 2017, as required by the Social Security Act.

The Improving Medicare Post-Acute Care Transformation (IMPACT) Act of 2014 requires the public reporting of data on home health agencies, skilled nursing facilities, inpatient rehabilitation facilities and long-term care hospitals quality measures and data on resource use and other measures.

In this final rule and beginning with the 2018 payment determination, CMS adopted four measures to meet the requirements of the IMPACT Act.

Three of these measures are calculated using Medicare claims.mThe fourth measure is assessment-based and is calculated using outcome and assessment information measuring potentially preventable 30-day post-discharge readmissions; total Medicare spending per beneficiary; discharge to the community; and drug regimen review.

Last year CMS finalized its proposal to require all home health agencies to submit both admission and discharge assessments for a minimum of 90 percent of all patients. CMS is incrementally increasing this compliance threshold from 70 percent to 90 percent over a three-year period that began with the reporting period for 2017 that is July 1, 2015 through June 30, 2016.

As a result of a comprehensive reevaluation, CMS identified 28  measures that were either "topped out" and/or determined to be of limited clinical and quality improvement value. These measures will no longer be included for home health quality improvement.

In addition, CMS removed six process measures from the home health quality reporting program deemed no longer to have value.

In the 2016 Home Health Prospective Payment System final rule, CMS finalized its proposal to implement the home health value-based purchasing model in nine states representing each geographic area in the nation.

For all Medicare-certified home health agencies that provide services in Arizona, Florida, Iowa, Maryland, Massachusetts, Nebraska, North Carolina, Tennessee, and Washington, payment adjustments for each one will be based on the total performance score of a set of measures.

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

CMS is finalizing changes and improvements related to the home health value-based model. These include calculating benchmarks and achievement thresholds at the state level; requiring a minimum of eight home health agencies in any size-cohort; increasing the timeframe for submitting new measure data from seven calendar days to 15; and other adjustments.

Twitter: @SusanJMorse