CMS is proposing to cut CY 2018 Medicare home health prospective payment system (HH PPS) payments by 0.4% — or $80 million overall — compared to 2017 rates under a proposed rule published on July 28, 2017. Furthermore, the agency plans major revisions to the HH PPS case-mix methodology for 2019 that potentially could cut payments by as much as $950 million (-4.3%) in 2019. CMS will accept comments on the proposed rule until September 25, 2017.

With regard to 2018 payments, CMS is proposing a 1% update percentage as mandated by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) for those home health agencies (HHAs) that report required quality data (otherwise the update is decreased by 2 percentage points). The update percentage is more than offset by other policies in the proposed rule, however, including a 0.5% reduction due to the sunset of the rural add-on provision and a – 0.97% adjustment for nominal case-mix coding intensity growth (the last year of a three-year phase in period). The proposed CY 2018 national, standardized 60-day episode payment rate would be $3,038.43, compared to $2,989.97 for 2017; the rate for an HHA that does not submit required quality data would be $2,978.26. CMS also proposes to, among other things: recalibrate HH PPS case-mix weights; update the home health wage index; update measures included in the Home Health Quality Reporting Program; remove or modify 35 current Outcome and Assessment Information Set (OASIS) items effective January 1, 2019; and refine requirements under the Home Health Value-Based Purchasing Model.

Looking ahead to 2019, CMS is proposing to adopt case-mix methodology refinements through implementation of a Home Health Groupings Model (HHGM), which CMS believes classifies care “in a manner consistent with how clinicians differentiate between patients and the primary reason for needing home health care.” The HHGM uses 30-day periods of care rather than the 60-day episode now used. According to CMS, the HHGM eliminates the use of the number of therapy visits provided to determine payment, relying more heavily on clinical characteristics and other patient information (e.g., diagnosis, functional level, comorbid conditions, admission source) to place patients into one of 144 payment groups. CMS would use a Cost-Per-Minute plus Non-Routine Supplies approach to measure costs, using information from the Medicare cost report (rather than current weighted minutes of care using Bureau of Labor Statistics data). CMS seeks comments on all aspects of the proposed HHGM, including whether CMS should:

  1. implement the HHGM in a fully non-budget neutral manner beginning in CY 2019 – which would result in a $950 million reimbursement cut (-4.3%) in 2019;
  2. apply an “HHGM partial budget neutrality adjustment factor” in CY 2019 to reduce the 2019 impact to an estimated $480 million reduction (-2.2%), with removal of the adjustment factor in 2020; or
  3. apply and phase out an HHGM partial budget neutrality adjustment factor over a longer period of time.

Finally, CMS again includes a request for suggestions on how it can reduce burdens on providers in a way that increases quality of care and decreases costs.