Mark Sharp

The Centers for Medicare & Medicaid Services (CMS) published the proposed calendar year 2010 home health prospective payment system rule August 13, 2009.  Comments on the proposed rule are due by September 28, 2009.  The proposed rule estimates a 2.2% inflation factor for 2010.  However, this increase would be more than offset by a 2.75% reduction because of perceived increases in home health case mix in recent years unrelated to the severity of patients’ conditions.  The case-mix creep adjustment represents the third consecutive 2.75% annual reduction CMS has implemented.  They are also proposing one final case-mix creep reduction of 2.71% for calendar year 2011. 

CMS has observed wide fluctuations in the amount of outlier payments paid to agencies in different parts of the country.  The current outlier policy CMS follows is designed to pay approximately 5% of total home health payments as outlier payments.  CMS proposes to impose a 10% cap on outlier payments per agency, as well as changing the outlier payment formula to attempt to reduce outlier payments to 2.5% of total home health payments.  The reduction in the outlier target from 5% to 2.5% of total payments means the base home health payment rate will be increased by 2.5%.  With all factors considered, the base rate is proposed to increase approximately 2% for 2010. 

These changes mean agencies with low outlier payments should experience a net increase in their overall home health payments, while those with high outlier payments will experience a net decrease in overall payments.  Agencies should evaluate their current level of outlier payments —reported on their cost report and available on their PS&R summary report —to determine how this change may affect their reimbursement.

CMS also proposes requiring agencies to implement the Home Health Consumer Assessment of Healthcare Providers and Systems (HH-CAHPS) patient perception of care survey.  This would be a component of the quality reporting system agencies must participate in, or be subject to a 2% reduction in their home health payments.  The HH-CAHPS survey includes 25 questions about patient perceptions of the quality of care they received from an agency, as well as nine demographic questions concerning the patient.  CMS proposes agencies conduct a dry run during the first quarter of calendar year 2010, to be submitted by June 23, 2010.  Continuous collection of this survey data would be required beginning in April 2010, with second quarter data to be submitted by September 22, 2010.

For questions or more information, please contact your BKD advisor.  Calculations of the proposed 2010 home health PPS rates are available upon request.