[Updated] CMS Moves Forward with New Home Health Payment Model

The Centers for Medicare & Medicaid Services (CMS) has issued its long-awaited proposed prospective payment system (PPS) rate update for 2018, marginally reducing overall spending in the space and introducing the home health groupings model (HHGM) for implementation in 2019.

The new model could result in a $950 million Medicare payment cut for home health providers in calendar year 2019 if it is implemented in a non-budget neutral manner, CMS estimates. It could reduce payments by $480 million if implemented in a partially budget-neutral manner, according to the agency.

The groupings model, which is viewed as a significant threat by home health care agencies, would make major changes to the Medicare payment system, including replacing the current 60-day episode of care unit of payment to a 30-day period. This change would be effective for services beginning on or after Jan. 1, 2019, the proposed rule states.


“CMS is committed to helping patients and their doctors make better decisions about their health care choices,” CMS Administrator Seema Verma said in a statement Tuesday. “We’re redesigning the payment system to be more responsive to patients’ needs and to improve outcomes. The new payment system aims to encourage innovation and collaboration and to incentivize home health providers to meet or exceed industry quality standards.”

The rule also proposes making changes to the Home Health Value Based Purchasing (HHVBP) model and the Home Health Quality Reporting Program.

CMS projects that home health agencies will see 2018 payments reduced by 0.4%, or $80 million, based on the proposals. These include a 1%, or $190 million, home health payment update; a 0.97% decrease to the national, standardized 60-day episode payment rate to account for nominal case-mix growth for an impact of -0.9%, or a $170 million decrease; and the sunset of the rural add-on provision, a $100 million decrease.


The nearly 1% reduction is far less than the 5% rate cut recommended by the Medicare Payment Advisory Committee (MedPAC).

In addition to changing episode timing, the model creates six new clinical groups to categorize patients based on their primary reason for home health care.

CMS released the unpublished proposed rule on Tuesday, which will be published to the Federal Register on Friday, July 28.

Read the unpublished version here.

Written by Amy Baxter

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