Home Health Payments Would Drop 3.3 Percent Under CMS Proposed Rule

Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.

Medicare payments to home health agencies (HHAs) for calendar year 2012 would decrease by 3.35 percent—roughly $640 million—under a rule proposed July 5 by the Centers for Medicare & Medicaid Services.

According to CMS, the proposal updates policies including the national standardized 60-day episode rates; the national per-visit rates; the low utilization payment amount (LUPA); and outlier payments under the Medicare prospective payment system for home health agencies effective Jan. 1, 2012.

The proposal is set to be published in the July 12 Federal Register. Comments are due Sept. 6.

The proposal would include the combined effects of marketbasket and wage index updates (a $310 million increase) and reductions to the home health prospective payment system (HH PPS) rates to account for increases in aggregate case-mix that are largely related to billing practices and not related to changes in the health status of patients (a $950 million decrease), CMS said.

Provisions of the Patient Protection and Affordable Care Act (PPACA) mandate that CMS apply a 1 percentage point reduction to the CY 2012 home health marketbasket amount; this would equate to a proposed 1.5 percent update for HHAs next year. As part of the HH PPS rate update, CMS said it is also proposing to reduce HH PPS rates by 5.06 percent in CY 2012 to account for the increase in the case-mix that is unrelated to changes in patient acuity.

The proposed rule would also make structural changes to the HH PPS by removing two hypertension codes from the case-mix system, lowering payments for high therapy episodes and recalibrating the HH PPS case-mix weights to ensure that the changes result in the same amount of total aggregate payments, CMS said.

Quality Data

According to CMS, home health payment rates have been updated annually by either the full home health marketbasket percentage increase or by the home health marketbasket percentage increase as adjusted by Congress. CMS uses the home health marketbasket index, which measures inflation in the prices of an appropriate mix of goods and services included in home health services.

The Deficit Reduction Act of 2005 requires an adjustment to the home health marketbasket percentage update depending on HHAs’ submission of quality data. The proposed home health marketbasket increase for CY 2012 is 1.5 percent. HHAs that submit the required quality data would receive payments based on this full marketbasket update. If an HHA does not submit quality data, the marketbasket would be reduced by 2 percentage points to -0.5 percent for CY 2012.

In a separate but related notice, CMS announced it will share nearly $15 million in additional savings with more than 100 home health agencies that participated in the intervention group during the final year of the two-year Medicare Home Health Pay for Performance (HHP4P) demonstration.

A total of 123 HHAs out of 270 participating in the demonstration intervention group will receive incentive payments from savings based on their performance during the second year of the Medicare HHP4P demonstration. The demonstration calculated aggregate savings of $14.95 million for two of the four demonstration regions in year two; the Midwest and the Northeast regions did not achieve any savings and, therefore, were not eligible to receive incentives.

In the first year of the demonstration, 166 intervention group agencies in three regions received payments totaling more than $15 million (87 HCDR, 5/7/10).


Under current Medicare policy, a certifying physician or an allowed nonphysician practitioner must see a patient prior to certifying a patient as eligible for the home health benefit.

In the rule, CMS proposed to add flexibility to allow physicians who attended to a home health patient in an acute or post-acute setting to inform the certifying physician of their encounters with the patient in order to satisfy the requirement.

In a separate proposed rule also filed July 5, CMS said it would require comparable face-to-face (F2F) encounters (including through the use of telehealth) for people receiving Medicaid home health services. The proposal would align the time frames with similar regulatory requirements for Medicare home health services, CMS said.

To qualify for the Medicare home health benefits, a beneficiary must be under the care of a physician and have an intermittent need for skilled nursing care, or need physical or speech therapy, or continue to need occupational therapy. The beneficiary must be homebound and receive home health services from a Medicare-approved home health agency. Beneficiaries receiving Medicaid home health do not need to be homebound or require skilled care. Home health agencies participating in the Medicaid program must also adhere to Medicare conditions of participation, CMS said.

This Medicaid regulation also clarifies long-standing CMS policy on locations and facilities in which home health services may be provided, in order for states to remain in compliance with the U.S. Supreme Court's decision in Olmstead v. L.C..

The Supreme Court ruled in June 1999 that unjustified isolation of mentally disabled patients in institutional settings constitutes discrimination based on disability (120 HCDR, 6/23/99).

Cindy Mann, director of CMS's Center for Medicaid, CHIP and Survey and Certification, said the alignment of F2F encounter requirements between the two CMS programs fulfills Section 6407 of PPACA.

“We established the Medicaid implementation of this requirement to align with Medicare's guidance to better facilitate home health services provided to individuals that are eligible for Medicare and Medicaid and to lessen the administrative burden on providers participating in both programs,” Mann said in a statement.

Comments on the Medicaid proposal are also due Sept. 6.

By Nathaniel Weixel

The Medicare proposed rule is at http://op.bna.com/hl.nsf/r?Open=nwel-8jgtas . The Medicaid proposed rule is at http://op.bna.com/hl.nsf/r?Open=nwel-8jgtu2 . More information on the home health pay for performance demo is at http://www.cms.gov/DemoProjectsEvalRpts/MD/itemdetail.asp?itemID=CMS1189406 .


Request Health Care on Bloomberg Law