MedPAC Recommends Deeper Home Health Payment Cuts

The $180 million reduction in CY2017 Medicare home health payments proposed by the Centers for Medicare & Medicaid Services (CMS) isn’t enough and should go further, the Medicare Payment Advisory Commission (MedPAC) wrote in a letter to CMS.

The proposed changes to the Medicare home health prospective payment system (HH PPS), which were posted on the Federal Register on June 27, represent a 1% cut for the upcoming year and follow a 1.4% reduction in payments for 2016, or $260 million. MedPAC expressed concern that “the reductions are too small” and recommended even deeper home health cuts.

“Medicare has overpaid for home health care since the inception of the PPS in 2000, and more reductions are necessary to stop this pattern from continuing,” MedPAC wrote.


In 2015, care for 2.5 million home health beneficiaries from around 11,400 home health agencies cost Medicare approximately $17.8 billion, according to CMS. This service volume decreased by 4.8% last year, and the decline propels a trend since 2010, when utilization peaked at 6.8 million episodes, according to MedPAC. This prompted the Commission earlier this year to suggest implementing a rebasing reduction over the next tow years to bring payments more in line with costs.

“The Commission recognizes that statute limits CMS’ ability to reduce payments, but we reiterate our recommendation that further reductions would be appropriate and would not negatively affect access to care,” MedPAC wrote.

Value Based Purchasing: Proceed With Caution


In addition to its recommendation for additional home health cuts, MedPAC also urged CMS to proceed with caution when it comes to process measures associated with value based purchasing. CMS proposed removing four measures, a move the Commission supports but believes is only the start.

“CMS should also move quickly to eliminate other process measures in the measure set that weakly correlate with health outcomes, and those that measure basic standards of care on which providers have achieved full performance,” the Commission wrote.

Value based purchasing is currently being piloted in nine states and ties Medicare payments to performance on quality measures. Payment adjustments will be applied only to HH PPS claims for Medicare fee-for-service beneficiaries, and the first adjustment will take place in January 2018 based on 2016 scores.

Specifically, the Commission would like to see the measure regarding hospitalizations within the first 60 days of a home health episode to be extended to include any events that occur while a beneficiary is receiving home health care, since many stays last longer than 60 days.

MedPAC also targeted CMS’ plan to calculate not only achievement ratings in the value based purchasing model, but also improvement scores, suggesting the program limit its reliance on the latter as a basis of administering funds.

“The Commission is concerned that scoring improvement is not sufficiently beneficiary-focused, since what matters most to the beneficiary is an agency’s actual level of performance,” MedPAC wrote. “Further, this methodology could create potential inequities in that agencies with equal or better levels of achievement might receive lower payments than agencies with lower achievement scores but high improvement scores.”

Written by Kourtney Liepelt

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