CMS Finalizes $130 Million Medicare Payment Cut in 2017

Home health agencies can expect Medicare payments in 2017 to be reduced by $130 million, according to the Centers for Medicare & Medicaid Services (CMS), which announced the finalized policies to the prospective payment system today.

The final numbers represent fewer payment cuts than the proposed changes announced earlier this year by CMS. The agency previously proposed reducing home health care payments by $180 million in 2017, or 1%.

Since the proposed payment changes were announced in June, the Medicare agency upped the home health payment update from a 2.3% ($420 million) increase to a 2.5% ($450 million) increase.


Overall, the estimated decrease reflects the effect of a 2.5% home health payment update, or $450 million increase; the rebasing adjustments to the 60-day episode payment rate, per-visit payment rates and non-routine medical supplies conversion factor, which is an impact of -2.3% or a $420 million desire; and a -0.97% adjustment to the 60-day episode payment rate to account for nominal case-mix growth, for an expected impact of -0.9% or a $160 million decrease.

There were approximately 3.4 million beneficiaries who received home health services from roughly 11,400 home health care agencies as of 2015, costing Medicare $18.2 billion. Medicare pays home health agencies on a national, standardized 60-day episode for all covered services.

Along with the finalized payment changes, CMS also reiterated its other changes and improvements to meet measures of the IMPACT Act, including quality reporting measures. The agency also finalized previously proposed changes to its mandatory home health value-based purchasing model, which is underway in nine states.


The final rule will be published on the Federal Register Nov. 3, 2016.

Written by Amy Baxter

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