Medicare home health prospective payment system (HH PPS) payments will be reduced by 0.7 percent, or $130 million overall, in calendar year 2017 compared to 2016 levels under the final rule to be published by CMS on November 3, 2016. In the final rule, CMS is adopting a 2.5 percent home health payment update percentage (derived from a 2.8 percent market basket update minus a 0.3 percent multifactor productivity adjustment). This increase is more than offset by other negative adjustments, however, including a – 0.97 percent adjustment for nominal case-mix coding intensity growth (the second year of a three-year phase in period), and a -2.3 percent rebasing adjustment (the final year of a four-year phase-in). The final rule also recalibrates HH PPS case-mix weights, updates the home health wage index, and modifies the methodology used to calculate high-cost outlier payments. Under the final rule, the CY 2017 national, standardized 60-day episode payment rate will be $2,989.97; the rate for a home health agency (HHA) that does not submit the required quality data will be reduced by 2 percentage points to $2,931.63.

Additionally, the final rule updates the Home Health Quality Reporting Program (HH QRP), including the addition of four post-acute care measures under the Improving Medicare Post-Acute Care Transformation Act of 2014, effective beginning with the 2018 payment determination. In addition, the rule removes 28 Home Health Quality Initiative measures that are “topped out” and/or of limited clinical and quality improvement value, along with six topped out process measures. The rule also updates the Home Health Value-Based Purchasing (HH VBP) Model, under which HHAs in nine states are required to compete for HH PPS payment adjustments (increasing from 3 percent in 2018 to 8 percent in 2022) based on quality performance. Changes to the Model address calculation of benchmarks and achievement thresholds, data submission and reporting timeframes, minimum cohort size, applicable measures, and recalculation and reconsideration processes.

CMS also implements a statutory provision that requires separate payment to be made to HHAs for disposable Negative Pressure Wound Therapy (NPWT) devices furnished under the Medicare home health benefit, effective January 1, 2017. This payment equals the amount that would otherwise be made under the Medicare Outpatient Prospective Payment System, as required by statute.