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Agencies to Face Reimbursement Changes in 2016

Summary of the CY 2016 Home Health Prospective Payment System Rate Update and the National Response…


The home healthcare world was rocked yet again on July 6, 2015 with the announcement of the 2016 Proposed Rule, “CY 2016 Home Health Prospective Payment System Rate Update; Home Health Value Based Purchasing Model; and Home Health Quality Reporting Requirements” (CMS-1625-P) that would update the Medicare Home Health Prospective Payment System (HH PPS) rates and wage index for calendar year (CY) 2016.

In the 2016 proposed rule, CMS is implementing the third year of the four-year phase-in of the rebasing adjustments to the HH PPS rates as required by the Affordable Care Act. In addition, CMS is proposing to decrease the national, standardized 60-day episode payment amount by 1.72 percent in each year for CY 2016 and CY 2017 to account for nominal case-mix growth between CY 2012 and CY 2014. Additionally, CMS is proposing updates to the Home Health Quality Reporting Program.  Finally, CMS is proposing to implement a Home Health Value-Based Purchasing (HHVBP) model, effective CY 2016.

CMS estimates that the net impact of this proposed rule would result in a decrease in Medicare payments to Home Health Agencies (HHAs) in the amount of 1.8 percent ($350 million decrease) for CY 2016.

Of particular interest, the HHVBP model impacts all home health agencies in nine states, starting in 2016, to include:

  • Massachusetts
  • Maryland
  • North Carolina
  • Florida
  • Washington
  • Arizona
  • Iowa
  • Nebraska
  • Tennessee

Agencies in these states will transition to the new value-based purchasing model January 1, 2016, with 2015 as the base year for quality measurements.

A Coordinated National Response is Needed

As of the date of this report, intense analysis and education are underway by policy experts, national associations, state associations, and many of the larger home health agencies across the country. The severity of the cuts and the short implementation timeframe for the HHVBP model have super-charged industry advocates and is creating welcome collaboration between the National Association for Homecare & Hospice, the Visiting Nurses Association of America, the Partnership for Quality Home Healthcare and the Alliance for Home Health Quality and Innovation. The primary goals of the advocacy effort will be to:

  • Eliminate or reduce the case mix adjustment, and
  • Mitigate the impact of the HHVBP program by adjusting its timing and size of the reimbursement withholding.

In order to gather enough information to impact this proposed rule, the national organizations are partnering together to immediately launch a series of data projects that will analyze the following areas:

  • HHA margins across the country
  • HHA closures across the country
  • Overall impact of the proposed rule
  • Impact of the case mix cut
  • Nature and cost of HHVBP implementation

However, there is little time to collect and compile data, as September 4, 2015, is the deadline for comments to CMS. The national associations, along with the state associations, will implore widespread and coordinated response to the proposed rule. All agencies are encouraged to communicate with their state associations about the potential impact on their agencies and to participate in any related surveys they receive in the coming weeks.

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