Home Healthcare Agencies to Realize $130M in Medicare Reimbursement Cuts in 2017

Home healthcare agencies can expect to see a 0.7 percent drop in Medicare reimbursements next year, according to the Centers for Medicare & Medicaid Services. CMS announced the final changes to the Medicare home health prospective payment system (HH PPS) on Oct. 31. The new rule, which takes effect on Jan. 1, 2017, means Medicare will pay home health agencies $130 million less than in 2016.

The cuts, which are the final phase of a four-year phase in, are not as much as initially anticipated. This summer, CMS projected the cuts would reduce Medicare spending by $180 million, a 1 percent drop in reimbursements. The cuts are needed to make up for overpayments for home health services dating back to 2000, according to CMS.

The rule is an outgrowth of the Affordable Care Act, which directs CMS to apply an adjustment to the national standardized 60-day episode rate and other applicable amounts to reflect factors such as changes in the number of visits in an episode, the mix of services in an episode, the level of intensity of services in an episode, the average cost of providing care per episode, and other relevant reasons.

The final rule is one of several for calendar year 2017 that CMS hopes will create a healthcare system that focuses on quality of care, instead of the quantity of services provided.

Approximately 3.4 million beneficiaries received home health services from approximately 11,400 home health agencies, costing Medicare approximately $18.2 billion in 2015.

Also in 2017, home healthcare agencies will receive a separate payment for the use of a disposable negative pressure wound therapy device that is equal to the amount that would be paid under the Medicare Hospital Outpatient Prospective Payment System (OPPS).

The rule also finalizes changes to the Home Health Value-Based Purchasing Model (HHVBP), in which Medicare-certified HHAs in nine states, including Florida, will have their payment adjustments based on their performance scored relative to the performance of other agencies in their state. The first payment adjustments under that model will be implemented in 2018.

Other highlights:

Rebasing the 60-day Episode Rate

As finalized in the CY 2014 final rule, the rebasing adjustments for CY 2017 will reduce the national, standardized 60-day episode payment amount by $80.95.

Change in Methodology and the Fixed-Dollar Loss (FDL) Ratio Used to Calculate Outlier Payments

CMS finalized the proposal to change how outlier payments are calculated, moving from a cost-per-visit approach to a cost-per-unit approach (1 unit = 15 minutes). CMS also finalized the proposal to increase the Fixed Dollar Loss (FDL) ratio from 0.45 to 0.55 to ensure outlier payments do not exceed 2.5 percent of total payments for CY 2017, as required by the Social Security Act.

This final rule also includes updates to the Home Health Quality Reporting Program including removing six quality measures, adopting four new quality measures, mentioning future measures under consideration, following a calendar year schedule for measure and data submission requirements, and aligning quarterly reporting timeframes and quarterly review and correction periods.

The final rule is more than 300 pages and can get complicated. If you have any questions or concerns, feel free to contact The Health Law Offices of Anthony C. Vitale at 305-358-4500 or email us at info@vitalehealthlaw.com.