Industry Insights

CMS Issues 2017 Home Health Final Rule

December 2016
Author:  Amber Popek

Amber Popek

Director

Audit

Health Care

910 E. St. Louis Street, Suite 200
P.O. Box 1190
Springfield, MO 65801-1190 (65806)

Springfield
417.865.8701

The Centers for Medicare & Medicaid Services (CMS) issued the 2017 Medicare home health (HH) prospective payment system (PPS) final rule in the November 3, 2016, Federal Register. This final rule provides updates to the HHPPS payment rates, changes calculating outlier payment methodology, implements new Negative Pressure Wound Therapy (NPWT) reimbursement opportunities, finalizes changes to the HH Value-Based Purchasing (HHVBP) Model and provides updates to the HH Quality Reporting Program.

HHPPS Payment Rates

The final rule implements numerous payment rate changes resulting in an estimated 0.7 percent overall payment decrease. This reflects the effects of a 2.5 percent increase in payments, 2.3 percent decrease due to the final four-year phase-in rebasing adjustment required by the Affordable Care Act and 0.9 percent decrease to account for adjustments in what CMS defines as nominal case-mix growth.

While CMS estimated an overall decrease in payments, how these changes may affect individual HH providers could significantly vary due to regional changes in wage index adjustments, changes to case-mix weights and PPS scoring variables as well as any changes providers may experience in therapy utilization or other factors affecting payment. Providers are encouraged to assess how the 2017 changes may affect their individual organizations.

In addition, it’s expected that all 2017 Medicare HH payments will continue to be reduced by 2 percent due to sequestration.

The 2017 payment rates are posted here.

Outlier Payment Methodology

CMS also implemented a new methodology to calculate outlier payments whereby a per-unit cost will be used rather than the current cost-per-visit approach. This per-unit cost method will convert the per-visit rates into 15-minute unit rates to calculate outlier payments. For example, 15 minutes will equal one unit. There also will be a cap on the number of units that can be billed per day for outlier payments such that there can be no more than 32 units (8 hours) per day for outlier calculation purposes.

In addition to the change to a per-unit calculation, CMS changed the fixed-dollar loss ratio used in the outlier calculation from 0.45 to 0.55. CMS recently issued Change Request (CR) 9736, which contains more detail regarding this payment methodology change.

For the typical HH agency, this change likely will be nominal since outlier payments often are paid on less than 1.5 percent1 of all HH episodes.

Negative Pressure Wound Therapy Billing Protocols

The final rule implements a new payment opportunity for NPWT using a disposable device for patients under Medicare HH plans of care. This rule confirms that these services shouldn’t be included on the HHPPS claim, but rather require billing the services on a separate claim to be paid outside the HHPPS episode, according to the Outpatient Prospective Payment System.

HH Value-Based Purchasing Model

In 2016, CMS finalized its plans to implement the HHVBP model in nine states, including Arizona, Florida, Iowa, Maryland, Massachusetts, Nebraska, North Carolina, Tennessee and Washington, which allows for a maximum payment adjustment up or down of 3 percent in 2018, with increasing maximum adjustments continuing through 2022. Such payment adjustments are based on data submitted to CMS via various reporting means.

The 2017 rule finalized these changes to the measures and scoring approach adopted in the HHVBP Model: 

  • Removal of the starter set definition and revised definition for benchmark
  • Calculation of benchmarks and achievement thresholds at the state level
  • Establish a minimum requirement of eight HH agencies in a cohort
  • Increase time frame from seven to 15 calendar days for submitting new measure data
  • Remove four measures from the set of applicable measures, including:
    1. Care Management:  Types and Sources of Assistance
    2. Prior Functioning Activities of Daily Living/Instrumental Activities of Daily Living
    3. Influenza Vaccine Data Collection Period
    4. Reason Pneumococcal Vaccine Not Received
  • Adjust annual reporting period and submission date for one of the new measures
  • Implement appeals process that includes a recalculation and reconsideration process

In addition, CMS explains it’s continuing to develop the public reporting of performance through the HHVBP model. Additional information regarding the model is available here.

HH Quality Reporting Program

Beginning in 2017, four new measures will be added to the HH Quality Reporting Program, which were necessary to meet the requirements of the Improving Medicare Post-Acute Care Transformation Act of 2014. The new measures are:

  • Drug regimen review conducted with follow-up for identified issues
  • Total Medicare spending per beneficiary
  • Discharge to the community
  • Potentially preventable 30-day post-discharge readmission

Of these new measures, data for each will be collected from data already being submitted via claims and the Outcome and Assessment Information Set. 

HH agencies should review the final rule and evaluate the potential effects on their individual organizations. The final rule can be found here. Contact your BKD advisor if you have questions.

1 Per study conducted by BKD of Medicare HH cost report data for fiscal years ended in 2014

BKD LinkedIn BKD Twitter BKD Youtube BKD Google Plus