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July 27, 2017

CMS proposes cuts to home health payments

Daily Briefing

CMS on Tuesday released a proposed rule that would make changes to Medicare's Home Health Prospective Payment System for calendar years (CY) 2018 and 2019.

CMS is accepting public comments on the proposed rule through Sept. 25.

Examine CMS’s changes to Hospital Outpatient and Ambulatory Surgical Center Payments in CY 2018

Proposed changes for CY 2018

Under the proposed rule, net home health payments for CY 2018 would decrease by 0.4 percentage points, or about $80 million when compared with CY 2017. The decrease would include a:

  • 1 percent increase called for under MACRA;
  • 0.97 percentage point reduction to account for minimal case-mix growth from CYs 2012 through 2014; and
  • 0.5 percent reduction from the sunset of a rural payment add-on.

This is the fourth consecutive year CMS proposed cuts to home health care payments. Most of the reductions were called for under the Affordable Care Act, which required the cuts to address previous years of overpayments for home health services. CMS cut payments for home health care by a total of:

  • $130 million for 2017;
  • $260 million for 2016;
  • $60 million for 2015; and
  • $200 million for 2014.

In addition, CMS under the proposed rule also would "revise the definition of 'applicable measure'" under the Home Health Value-Based Purchasing (HHVBP) Model and require participating home health agencies to submit a minimum of 40 completed Home Health Care Consumer Assessment of Healthcare Providers and Systems surveys under the program, up from 20 completed surveys.

CMS also proposed adding three new measures to the Home Health Quality Reporting Program (HHQRP):

  • The percentage of home health agency patients who experience one or more falls resulting in major injury;
  • The percentage of long-term care hospital patients who have an admission and discharge functional assessment and care plan that addresses function; and
  • Whether patients develop pressure ulcers or other skin integrity injuries during post-acute care.

Further, CMS proposed removing 247 data elements from 35 Outcome and Assessment Information Set items. The agency in a fact sheet said the items "are not used in the calculation of quality measures already adopted in the HHQRP, nor are they used for previously established purposes unrelated to the HHQRP, including payment, survey, the HHVBP Model or care planning."

The agency also proposed adding standardized patient assessment data to HHQRP.

Proposed changes for CY 2019

CMS also proposed a significant overhaul to the home health payment system that would take effect Jan. 1, 2019.

Under the proposal, CMS would implement a new case-mix methodology called the home health groupings model, which would determine home health care payments based on patient information, such as clinical characteristics, instead of therapy use-service thresholds.

CMS under that model also would change the time period on which home health care payments are based from episodes of care that last up to 60 days to episodes of care lasting up to 30 days. CMS proposed the change in response to data they showed the average length of an episode of care was 47 days, and about 25 percent of the episodes lasted for 30 or fewer days.

In addition, CMS under the rule would:

  • Add an admission source category and a co-morbidity adjustment;
  • Change episode timing categories;
  • Create six clinical groups under which patients would be categorized based on the primary reason for which they need home health care;
  • Revise certain patient assessment items and functional levels; and
  • Revise the low utilization payment adjustment threshold.

CMS Administrator Seema Verma in a release said, "We're redesigning the payment system to be more responsive to patients' needs and to improve outcomes." She continued, "The new payment system aims to encourage innovation and collaboration and to incentivize home health providers to meet or exceed industry quality standards."

The agency estimated that the changes would reduce total home health care payments by 4.3 percent, or about $950 million in CY 2019.

Further, CMS proposed creating an exemption to HHQRP that home health agencies could seek beginning in CY 2019 if they face certain extraordinary circumstances (AHA News, 7/25; CMS release, 7/25; CMS fact sheet, 7/25; Dickson, Modern Healthcare, 7/25; CMS proposed rule, 7/25).

Medicare Payment Update: Proposed Rule for Hospital Outpatient Payments for CY 2018

Kenna Hawes,Senior Analyst

Examine CMS’s proposed changes to Hospital Outpatient and Ambulatory Surgical Center Payments in CY 2018, including potential updates to payment structure, payment rates, quality updates, and the broader implications of these changes.

Register Here

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