The Centers for Medicare & Medicaid Services (CMS) published the annual final rule on the Medicare home health prospective payment system (HH PPS) rates for calendar year (CY) 2015 in the November 6, 2014, Federal Register (Final Rule). As noted in our commentary on the proposed rule, CMS published this rulemaking to update the 2015 payment rates and face-to-face requirements, but also make changes to the home health quality reporting program and therapy reassessment requirements. According to CMS, the Final Rule is one of several reflecting an “Administration-wide strategy to deliver better care at lower cost.”

HH PPS Payment Rates

In the final rule, CMS projects a $60 million net decrease in payments to home health agencies (HHAs) in 2015. This figure includes CMS’ implementation of rebasing adjustments to the national, standardized 60-day episode payment rate, the national per-visit payment rate and the non-routine medical supply conversion factor for a collective 2.4 percent (or $450 million) decrease. It also encompasses a 2.1 percent increase to the payment rates by the home health payment update percentage (in the amount of $390 million). CY 2015 will be the second year of a four-year phase-in for rebasing adjustments to the HH PPS rates, as required by the Affordable Care Act. In response to comments expressing concern about the financial impact of these adjustments, CMS referenced the comments submitted by the Medicare Payment Advisory Commission (MedPAC), which articulated that this concern is likely unfounded given the 12 percent or higher margin for both for-profit and non-profit HHAs in 2012.

Face-to-Face Encounter Requirement

The final rule significantly revised the physician face-to-face encounter requirement, a condition of payment under the HH PPS. The current regulations, promulgated as required by the ACA, require that a physician or allowed non-physician provider (NPP) narratively document that he or she had a face-to-face encounter with a beneficiary prior to certifying a beneficiary’s need for home health services. This face-to-face encounter must occur within 90 days before the care begins or within 30 days of the start of the home health care.

In response to industry concerns, CMS proposed first to eliminate the narrative requirement as a condition of payment, though the certifying physician or NPP would still be required to certify a face-to-face encounter occurred within the appropriate time period. Second, CMS proposed to limit review to a beneficiary’s medical records from their certifying physician or the acute/post-acute care facility (if the beneficiary was directly admitted to home health) in order to determine initial eligibility for home health services. Finally, CMS proposed not to reimburse physician claims for their professional services related to the certification or recertification of eligibility if the HHA claim itself was non-covered because the certification/recertification of eligibility was incomplete, or there was insufficient documentation in the medical record.

Virtually all commenters were supportive of CMS’s proposal to remove the requirement for the face-to-face narrative, though MedPAC voiced its recommendation to retain the requirement. CMS explained that commenters raised a significant number of concerns related to the narratives, ranging from challenges in obtaining certifications to unintentional failures by physicians and HHAs to meet certification requirements. As a result, CMS finalized its proposal to remove the narrative requirement, and also separately clarified that the face-to-face encounter must take place only for purposes of certifications (not re-certifications).

With respect to its second proposal, CMS noted that most commenters opposed using only the beneficiary’s medical records from their certifying physician or the acute/post-acute care facility, but ultimately finalized this proposal. CMS agreed with commenters that the physician and/or facility should provide this information to the HHA upon request, and also supported comments that would permit the HHA to contact the physician and/or facility to describe how the patient meets the criteria for home health care, though the information provided by the HHA must corroborate the physician’s or the facility’s own documentation.

Ultimately, CMS finalized its proposal not to reimburse physician claims for certification/recertification of patient eligibility for Medicare-covered home health services when the HHA claim itself was non-covered as a result of an incomplete certification/recertification of eligibility or because of insufficient documentation to support eligibility for the benefit. While some commenters supported efforts to increase physician accountability for the certification requirements, most opposed this decision, which will apply to physician services billed under two G codes, G0180 and G0179.

Quality Reporting

In its proposed rule, CMS announced plans to initiate a pay-for-reporting requirement for episodes of care beginning on or after July 1, 2015. This requirement would set threshold compliance scores for HHAs on quality assessments only (QAO) metrics: if the HHA does not meet or exceed the threshold score, the market basket percentage increase applicable to the HHA would be reduced by 2 percentage points. CMS proposed a threshold score of 70 percent on the QAO metric for episodes beginning on or after July 1, 2015, and before June 30, 2016, with a reduction of 2 percentage points to the market basket update for CY 2017 if the 70 percent threshold was not met. The QAO metric would then increase by 10 percent intervals in subsequent years, ending with a score of 90 percent on the QAO metric that would apply for episodes beginning on or after July 1, 2017, and before June 30, 2018, and each year thereafter.

After receiving persuasive comments on the proposed rule, including the potentially enormous financial impact this pay-for-performance requirement would have, CMS only finalized the establishment of the 70 percent reporting requirement for July 1, 2015, to June 30, 2016. CMS explained it would monitor provider performance during the time period of July 1, 2014, through June 30, 2015, to help evaluate what the pay-for-reporting performance requirement will be set at in the second and subsequent years.

Therapy Reassessment Requirements

CMS proposed to reduce the requirements for therapy reassessment by allowing a qualified therapist to provide the therapy and reassess the patient at least once every 14 calendar days. The current regulation requires the reassessments to be performed on or “close” to the 13th and 19th therapy visit, and at least once every 30 days.

In the Final Rule, CMS eased the requirement even further, concluding that a reassessment only needs to be performed at least once every 30 days. CMS clarified that the reassessment does not have to be conducted on exactly the 30th day, but when the therapist deems it necessary or clinically appropriate.

Preview of Potential HHA Value-Based Purchasing Model for CY 2016

In its proposed CY 2015 rule, CMS invited comments on an HHA Value-Based Purchasing (VBP) model that would reduce or increase Medicare payments, in a 5 percent to 8 percent range, depending on the degree of quality performance in various measures to be selected. CMS has already implemented a hospital VBP program where 1.5 percent of hospital payments in fiscal year 2015 are tied to the quality of care that the hospitals provide. Under the Affordable Care Act, the Secretary of the U.S. Department of Health and Human Services (Secretary) was directed to develop a plan to implement a VBP program for HHAs and to issue a Report to Congress. The Secretary’s Report to Congress (“Plan to Implement a Medicare Home Health Agency Value-Based Purchasing Program”) included a roadmap for HHA VBP implementation, and outlined the need to develop a HHA VBP program that aligns with other Medicare programs and coordinates incentives to improve quality. 

The HHA VBP model under consideration by CMS would include a 5 to 8 percent adjustment in payment made after each planned performance period in the five to eight states CMS projects it will select to participate in the model. CMS received a number of comments on the HHA VBP model, including concern about the magnitude of a 5 to 8 percent payment adjustment on HHA margins compared to the payment adjustment provided in the hospital VBP model. If CMS decides to move forward with the implementation of an HHA VBP model in CY 2016, it intends to invite additional comments on a more detailed HHA VBP model, including the selection of states and the criteria used for selection. In view of the QAO metric being implemented under the Final Rule, stakeholders should stay attuned to the potential impact of an HHA VBP model developed by CMS.

Chelsea Rutherford, an associate in the Washington, D.C., office, also contributed to this article.