The Medicare pay cut for home health providers in 2016 won't be as big as the CMS proposed in its draft payment rule, which the industry said would put some home health agencies out of business.
The agency also finalized a small increase for dialysis providers and moved forward with a new value-based payment model for home health agencies.
The CMS said payments to home health providers would be reduced by about 1.4%, or $260 million, compared to the $350 million cut it proposed in June.
Part of the cut is intended to make up for case mix growth on provider claims from 2012 to 2014 that the government concluded was unrelated to actual changes in patient acuity. The agency decided to spread the adjustment over three years instead of two, as proposed in the draft rule.
The regulations also finalize a value-based purchasing program for home health providers. Beginning in January, the CMS will roll out the new model for all home health agencies in Arizona, Florida, Iowa, Maryland, Massachusetts, Nebraska, North Carolina, Tennessee and Washington.
The final rule reduces the maximum penalty under the program to 3% from 5%. The initiative, administered by the CMS Innovation Center, is intended to test whether quality incentives will improve health outcomes for home health patients.
Dialysis providers, meanwhile, will see a 0.2% pay increase in 2016, compared with a proposed 0.3% increase, according to a separate final rule issued Thursday.
The end-stage renal disease payment rule also makes changes to Medicare's Quality Incentive Program for dialysis providers.