Key Facets of the 2017 CMS Home Health PPS Final Rule

The Centers for Medicare & Medicaid Services today released the final rule for the home health prospective payment system for calendar year 2017, which, after all policy changes, would reduce HH payments by 0.7%, a $130 million cut, from 2016 payment levels. This net cut includes a 2.8% market-basket update and 0.3 percentage point cut for productivity, as mandated by the Affordable Care Act. HHAs are paid a national, standardized 60-day episode payment for all covered home health services, adjusted for case mix and area wage differences. Under the Affordable Care Act, CMS is required to incrementally rebase home health payment rates by 2018. For CY 2017, the final year of the four-year phase-in of rebasing adjustments, CMS will:

  • Increase the HH PPS payment rate by the home health payment update percentage of 2.5 percent;
  • Reduce the national standard payment amount by 2.3 percent;
  • Decrease the national, standardized 60-day episode payment amount by 0.97 percent to account for coding intensity growth unrelated to changes in patient acuity between 2012 and 2014;
  • Establish a separate payment for disposable negative pressure wound therapy devices that is equivalent to the payment for an applicable disposable device under the Medicare Hospital Outpatient Prospective Payment System;
  • Increase the fixed-dollar loss ratio from 0.45 to 0.55 percent to target up to 2.5 percent of HHA payments as outlier payments; and
  • Calculate outlier payments using a cost per unit methodology, rather than a cost per visit methodology. Under the cost per unit methodology, one unit is equivalent to a 15-minute visit.

For 2018 payment determinations, CMS finalized its proposal to add four standardized cross-setting measures to the HH QRP to satisfy the domain requirements of the IMPACT Act:

  • Potentially preventable 30-day post-discharge readmission rates;
  • Medicare PAC spending per episode;
  • Discharge to the community; and
  • Drug regimen review conducted with follow-up for identified issues.

The proposed rule contains other provisions, including updates to the Home Health Quality Reporting Program (HH QRP), streamlining the HH quality measures, and modifications to the Home Health Value-Based Purchasing Model (HH VBP), which was implemented in nine states pursuant to the CY 2016 HH PPS final rule. CMS is also proposing to adopt four new payment determination measures for 2018 to meet the requirements of the 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.

For a thorough analysis of the 2017 CMS Home Health PPS Final Rule with vital updates on the pre-payment pilot project, join industry veteran Robert W. Markette, Jr., CHC in a Live Conference. During this session, attendees will get the key updates to the home health PPS system that will be finalized for 2017.

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