CMS Finalizes Payment Changes for Medicare Home Health Agencies

The Centers for Medicare & Medicaid Services (CMS) announced a final rule Thursday that will enact changes to the Medicare home health prospective payment system (HH PPS) for calendar year 2015, which the agency projects would reduce Medicare payments to home health agencies by .30%, or $60 million.

“[The rule] will foster greater efficiency, flexibility, payment accuracy, and improved quality,” CMS says in a written statement.

About 3.5 million beneficiaries received home health services from nearly 12,000 home health agencies, costing Medicare approximately $18 billion in 2013.


This decrease reflects the effects of the 2.1% home health payment update percentage ($390 million increase) and the second year of the four-year phase-in of 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 (2.4% or $450 million decrease).

The rule implements increases to the national per-visit payment rates, a 2.82% reduction to the NRS conversion factor, and a reduction to the national, standardized 60-day episode rate of $80.95 for calendar year 2015.

The national, standardized 60-day episode payment for calendar year 2015 is $2,961.38.


The HH PPS final rule is one of several rules for calendar year 2015 that reflect a broader Administration-wide strategy to deliver better care at lower cost by finding better ways to deliver care, pay providers, and use information.

“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 measuring for better health outcomes, focusing on disease prevention, helping patients return home, helping manage and improve chronic diseases, and fostering a more-efficient and coordinated health care system,” CMS says, noting that the Home Health Agency (HHA) Value-based Purchasing (VBP) model that is introduced in this rule would be an opportunity to test whether carefully designed payment incentives would lead to higher quality of care for beneficiaries.

The HHA VBP model being considered would include a 5 to 8% adjustment in payment made after each planned performance period in the projected five to eight states selected to participate in the model.

In addition, CMS also finalized three changes to the face-to-face encounter requirements for episodes beginning on or after Jan. 1, 2015. CMS is eliminating the narrative requirement currently in regulation; finalizing that if  HHA claim is denied, the corresponding physician claim for certifying/re-certifying patient eligibility for Medicare-covered home health services is considered non-covered as well because there is no longer a corresponding claim for Medicare-covered home health services; and clarifying that a face-to-face encounter is required for certifications, rather than initial episodes.

“We are delighted that CMS has heard and acted upon our recommendations to eliminate the daunting physician narrative requirement in the face-to-face encounter rule,” says National Association for Home Care & Hospice (NAHC) President Val J. Halamandaris. “NAHC will continue fighting for the industry to get relief for past claims denied since this change only applies starting January 1.”

Read the final rule here.

Written by Cassandra Dowell