CMS to Pay for Hospital, Home Health Teamwork After Joint Replacements

Home health agencies may soon have yet another reason to enter into financial arrangements with hospitals. Under a Medicare model proposed today, hospitals would have more financial incentives to work with HHAs and other post-acute providers for patients who undergo hip and knee replacements. 

Under this five-year bundled payment initiative, all hospitals in 75 geographic areas would be mandated to participate. They would be held accountable for the costs incurred from the time an orthopedic patient receives surgery to 90 days after discharge, according to the proposed rule released by the Centers for Medicare & Medicaid Services (CMS).

During that episode of care, the hospital and post-acute providers would continue to be paid under the standard fee-for-service model. Once the episode is completed, if costs of care exceed a benchmark, the hospital would have to pay a “reconciliation” amount back to Medicare; however, if the costs are below a certain threshold, the hospital would receive an incentive payment.


Home health agencies and other post-acute providers would not be at financial risk and also would not receive the reward payments under the proposed model. But CMS anticipates that hospitals will engage in financial arrangements with these other providers to share the risks and rewards, as a means of promoting greater coordination and keeping overall costs down for an episode.

“Such arrangements would allow the participant hospitals to share all or some of the reconciliation payments they may be eligible to receive from CMS, or the participant hospital’s internal cost savings that result from care for beneficiaries during a CCJR episode,” the proposed rule states. “Likewise, such arrangements could allow the participant hospitals to share the responsibility for the funds needed to repay Medicare with providers and suppliers engaged in caring for CCJR beneficiaries, if those providers and suppliers have a role in the hospital’s episode spending or quality performance.”

These “collaborators” might include HHAs as well as skilled nursing facilities, long-term care hospitals, inpatient rehabilitation facilities, and other provider and supplier types.


The financial arrangements between hospitals and collaborators would need to be hammered out in a written document, under the terms of the proposed rule.

CMS considered waiving the requirement that patients be “homebound” to receive the home health benefit, but determined that the requirement should remain in place for this model. Based on their clinical characteristics, many beneficiaries will meet the homebound requirement after their hospital or SNF discharge, the proposed rule states.

The initiative is just the latest proposal put forward this week by CMS that has a bearing on home health providers.

The agency also released a proposed Medicare payment rule that would slash reimbursements in 2016 by a cumulative $350 million. It also would establish a value-based purchasing model that would tie payments to performance on quality measures in nine states.

While the home health industry responded with dismay to the proposed payment cuts, reactions were more positive about yet another new policy floated by CMS this week: paying doctors to consult with patients about end-of-life care.

While home health agencies would not be an eligible provider for these payments, they still stand to benefit from physicians taking a more active role in helping patients and their families with these types of decisions, according to Visiting Nurse Associations of America Vice President of Policy and Innovation Molly Smith. VNAA represents nonprofit home health providers in 40 states.

“It’s a big move in the right direction,” Smith told HHCN. 

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