CMS to Reduce Home Health Payments by $180 Million in 2017

The Centers for Medicare & Medicaid Services (CMS) has proposed reducing Medicare home health payments by 1% in CY2017, or $180 million. The proposed changes to the Medicare home health prospective payment system (HH PPS) follow the federal agency’s proposal to increase hospice payments by 2%, or $330 million for 2017.

In 2015, care for 3.4 million beneficiaries of home health services from approximately 11,400 home health agencies cost Medicare approximately $17.8 billion in 2015. Home health agencies (HHAs) are paid a national, standardized 60-day episode payment for all covered home health services, adjusted for case-mix and area wage differences, according to CMS.

The proposal reflects a combination of adjustments to home health payments, inducing a 2.3% home health payment update or $420 million increase and a $420 million decrease in the rebasing adjustment to the national, standardized 60-day episode payment rate, the national per-visit payment rates and the non-routine medicare supplies conversion factor. The proposal also includes a $160 million decrease reflecting the effects of a 0.97% decrease adjustment to the national, standardized 60-day episode payment rate for a case-mix growth impact of -0.9% and the effects of the $20 million decrease or 0.1% decrease in the proposed increase to the fixed-dollar loss ratio used in determining outlier payments.


CMS is also proposing to adopt four new payment determination measures for 2018 to meet the requirements of Improving Medicare Post-Acute Care Transformation Act (IMPACT) of 2014. These measures include preventable hospital readmission rates, total estimated Medicare spending per beneficiary, discharge to the community and medication reconciliation.

Home health agencies in the nine states where CMS is currently underway with its Home Health Value-Based Purchasing (HHVBP) Model will see their payments adjusted—either upward or downward—based on each HHA’s total performance score on a set of measures. The first payment adjustment of 3% will begin in 2018, followed by a maximum adjustment of 5% in 2019, 6% in 2020, 7% in 2021 and 8% in 2022. The nine-state pilot program is taking place in Maryland, Massachusetts, Florida, Washington, North Carolina, Arizona, Nebraska, Iowa and Tennessee.

The payment proposal is one of several rules for 2017 that reflect the agency’s strategy to create a better health system that values quality over quantity and focuses on specific reforms, including better health outcomes, preventing disease, helping patients return home, care management and greater efficiency and coordination.


CMS reduced home health payments for 2016 by 1.4%, or $260 million.

The federal agency has also put forth several changes and improvements related to the HHVBP model to help HHAs develop their public reporting. CMS proposes calculating benchmarks and achievement thresholds at the state level rather than the level of the size-cohort and change the definition of “benchmark” to refer to the meant of the top decile of Medicare-certified HHA performance on the specified quality measure during the calculated period for each state. The agency also proposed requiring a minimum of eight HHAs to qualify as a size-cohort, as well as remove four measures from the quality reporting and increasing the timeframce for submissting New Measure data from seven calendar days to 15 calendar days at the end of each reporting period to reflect weekends and holidays.

Specifically, CMS could remove four measures including Care Management: Types and Sources of Assistance, Prior Functioning ADL/IADL, Influenza Vaccine Data Collection Period and Reason Pneumococcal Vaccine Not Received. The proposal also includes an adjustment to the reporting period and submission date for the Influenza Vaccination Coverage for Home Health Personnel measure to an annual submission instead of a quarterly submission. Lastly, the agency would like to add an appeals process with the existing recalculation process and a new reconsideration process.

Written by Amy Baxter

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