CMS adjustments would cut home health pay rates

(Story updated with comment at 11:15 a.m. ET, Friday, June 28.)

A series of rebasing and coding adjustments from the CMS would cause home health agencies to see a 1.5% reduction in their Medicare payments for 2014, which the CMS estimates could lower total payments to these facilities by $290 million next year.

In a proposed rule Thursday, the CMS said the decrease reflects a 2.4% home health payment update amounting to a $460 million increase in overall payments, combined with a host of adjustments that would decrease payments by $750 million.

The National Association for Home Care and Hospice blasted the proposal, saying it’s based on “an unsupportable calculation” of the differential between home care providers’ costs and revenue. The trade group’s president, Val Halamandaris, said in a statement that the proposed cut “places 3.5 million Medicare beneficiaries at risk of losing access to care as nearly half of the providers of this vital service would be paid less than the cost of care.”

Among the adjustments is a proposal to reduce the national standardized 60-day episode rate of 3.5% each year between 2014 and 2017. The Patient Protection and Affordable Care Act requires that starting in 2014, the CMS adjust the national standardized 60-day episode rate for home health agencies to account for, among other things, changes in the number of visits in an episode of care and the average cost of providing care per episode.

In addition, the CMS must phase in any adjustment over a four-year period in equal increments, which can't exceed 3.5% of the amount in any given year. The rule proposes a reduction for this standardized 60-day episode rate from 2014 through 2017 and a 60-day payment rate of $2,860.20 for next year.

The rule would remove two categories from ICD-9 codes from the home health prospective payment system grouper: diagnosis codes that are “too acute,” which means the condition couldn't be cared for appropriately in a home health setting; and the diagnosis codes for conditions that would not affect the home health plan of care or would not result in additional resources when providing home health services to a beneficiary. In October 2014, ICD-10 codes will be included in the home health PPS grouper and will replace the existing ICD-9 codes.

Meanwhile, the rule proposes to add two claim-based quality measures—re-hospitalization during the first 30 days of a home health stay and emergency department use without a hospital re-admission during the first 30 days of home health—to allow home health agencies to further target patients who entered home health after they were hospitalized. And the agency recommends reducing the total number of home health quality measures included on Certification and Survey Provider Enhanced Reports, or CASPER, to 79 from the current level of 97 and lower process measures to 27 from 45.

“This change will enable HHAs to obtain the information they require for quality improvement activities related to the process measures in a less burdensome manner,” officials noted in the rule.

According to the CMS, 3.5 million Medicare beneficiaries received home health services from about 12,000 agencies in 2012, which cost the Medicare program about $18.2 billion. The agency will accept comments on the proposed rule until Aug. 26.

Follow Jessica Zigmond on Twitter: @MHjzigmond