CMS: Bundled Payments Are Driving More Care to Home Health

As the health care industry braces for more bundled payments, there is good news for home health agencies. As part of initiatives to reduce costs across episodes of care, home health agencies are increasingly being relied on within bundled payment models, a recently released evaluation revealed.

Bundled payments, which were introduced by the Centers for Medicare & Medicaid Services (CMS) Innovation Center and first came into effect in 2013, are intended to create incentives for hospitals and clinicians to work with other health care providers, including home health companies, to deliver better care while reducing the overall cost. Currently, more than 1,400 providers are participating in bundled payment initiatives, including 360 acute care hospitals, 658 skilled nursing facilities (SNFs) and 262 physician groups practices, according to CMS. Home health agencies and inpatient rehabilitation facilities comprise of the rest of the participants.

The evaluation looks at the Bundled Payment Care Initiative (BPCI), which involves four different payment models, some of which include home health agencies, and episodes of care for nearly 50 different conditions. Separately, CMS has begun mandatory bundled payment initiatives, including the Comprehensive Care for Joint Replacement (CJR) program.


Bundled payments are currently aimed at specific patient groups with more likely on the way. So far, 11 of the 15 clinical episode groups show potential savings to Medicare, the second-year evaluation revealed.

The initial results are positive for the home health industry, as more acute care providers look to reduce costs within an entire episode of care and seek out post-acute care partners.

Most notably, health providers appeared to be partnering more with home health agencies during the second year of the initiative among cardiovascular surgery patients. The use of institutional post-acute care (PAC) declined from a share of 55.1% of patients to 44.2%. At the same time, there was a “statistically significant increase in the number of home health visits in BPCI episodes”—1.5 more visits per episode.


Furthermore, the decline in PAC spending was led by a shift toward home health care within the bundled payment Model 2 orthopedic and cardiovascular surgery episodes. These results are right in line with CMS’ aims for the program.

“…We saw a statistically significant shift from more expensive institutional PAC to less expensive home health care among beneficiaries discharged to any PAC setting,” the evaluation reads.

The shift follows results from the first-year evaluation report, which showed an increasing use for home health care among beneficiaries discharged to any post-acute setting. Orthopedic surgery under model showed significant savings of $864 per episode and even improved the quality of care, according to the results. These savings were driven by changes in the PAC setting, and set up home health as a promising cost saver.

While not all the bundled payment models were driving down total episode of care costs, CMS is planning to monitor the rising patient volume within home health as more patients enter this care setting.

“Particularly with the shift of beneficiaries from institutional PAC to home health care, we will continue to examine any changes in functioning in the context of likely changes in patient complexity across PAC settings,” the evaluation reads. “Shifts away from institutional PAC will tend to increase patient complexity in both home and institutional PAC settings.”

While these results are encouraging to CMS and offer more opportunities for home health care agencies, providers can expect more changes to come, as CMS aims to have 50% of traditional Medicare payments tied to alternative payment models by 2018.

Written by Amy Baxter

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