Home healthcare agencies will see a 0.7% drop in Medicare reimbursement in 2017, the final year of cuts meant to recoup previous overpayments.
The finalized rates means Medicare would pay home health agencies $130 million less next year than in 2016. The cut is smaller than the proposed 1%, or $180 million, suggested by the CMS earlier this year.
The Affordable Care Act mandated the reduction to address Medicare overpayments for home health services dating back to 2000.
The CMS cut payments by $260 million for 2016, $60 million for 2015 and $200 million for 2014.
Margins for home health agencies—the difference between providers' costs for providing care and Medicare's payments to providers— averaged 17.2% for free-standing home health agencies.
Since 2002, about 500 home health agencies a year have signed up for Medicare, according to a December 2014 Medicare Payment Advisory Commission report.
But the cuts appear to have weeded out some providers. In 2014, the CMS estimated there were 11,781 home health agencies caring for Medicare beneficiaries. That figure dropped to 11,400 in the estimate issued Monday. The difference may also reflect moratoriums Medicare placed on new providers in several areas identified as hot spots for fraud.
Monday's rule also finalized details on a mandatory value-based purchasing pilot designed to encourage greater quality in home health services.
The CMS said Monday that all Medicare-certified home health agencies in Arizona, Florida, Iowa, Maryland, Massachusetts, Nebraska, North Carolina, Tennessee and Washington will participate in the model.
Home health agencies in these states will see their rates adjusted annually up or down depending on whether they meet certain performance metrics.
The CMS would apply a 3% annual payment reduction or increase to home health agencies in the nine states starting in 2018. The payment adjustment would increase to 8% in 2022.
