CMS has released its proposed rule to update the Medicare home health prospective payment system (HH PPS) for 2017. CMS estimates that the policies in the proposed rule would reduce overall Medicare payments to home health agencies (HHAs) by $180 million (1.0%) in 2017 compared to 2016 payments. This projected decrease reflects a 2.3% home health payment update percentage (derived from a 2.8% market basket update minus a 0.5% multifactor productivity adjustment), that is more than offset by (i) a proposed 0.97% reduction to account for nominal case-mix coding intensity growth, and (ii) a -2.3% rebasing adjustment (the final year of a four-year phase-in). CMS also proposes to changes to its calculation of outlier payments that would decrease payments by an estimated 0.1%. The proposed CY 2017 national, standardized 60-day episode payment rate would be $2,936.68; the rate for an HHA that does not submit the required quality data would be reduced by 2 percentage points to $$2,879.27. The proposed rule also would recalibrate HH PPS case-mix weights and update the home health wage index using more current hospital wage data.

CMS proposes updates to 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 (the IMPACT Act). CMS also proposes to remove 28 Home Health Quality Initiative measures that are “topped out” and/or of limited clinical and quality improvement value. Furthermore, CMS proposes to update the Home Health Value-Based Purchasing (HHVBP) Model, under which HHAs in nine states are required to compete for HH PPS payment adjustments based on quality performance (both achievement and improvement). The Model, which was established in the CY 2016 final rule, is taking place in Arizona, Florida, Iowa, Maryland, Massachusetts, Nebraska, North Carolina, Tennessee, and Washington. The maximum payment adjustment for 2018 is 3%, gradually rising to 8% in 2022. Proposed changes to the Model address calculation of benchmarks and achievement thresholds, data submission and reporting timeframes, minimum cohort size, applicable measures, and a new appeals process.

The proposed rule also would implement 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. This payment amount would equal the amount that would otherwise be made under the Medicare Outpatient Prospective Payment System, as required by statute.

The official version of the proposed rule will be published on July 5, 2016, and comments will be accepted for 60 days after publication.