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In the various roles he has undertaken through the years, Val J. Halamandaris has been a singular driving force behind the policy and program initiatives resulting in the recognition of home health care as a viable alternative to institutionalization. His dedication to consumer advocacy, which enhances the quality of life and dignity of those receiving home health care, merits VNA HealthCare Group’s highest recognition and deepest respect. 

VNA HealthCare Group

I have the highest respect for them, especially for the nurses, aides and therapists, who devote their lives to caring for people with disabilities, the infirm and dying Americans.  There are few more noble professions.

President Barack Obama

Home health care agencies do such a wonderful job in this country helping people to be able to remain at home and allowing them to receive services

U.S. Senator Debbie Stabenow (D-MI) Chair, Democratic Steering and Outreach Committee

Home care is a combination of compassion and efficiency.  It is less expensive than institutional care...but at the same time it is a more caring, human, intimate experience, and therefore it has a greater human’s a big mistake not to try to maximize it and find ways to give people the home care option over either nursing homes, hospitals or other institutions

Former Speaker of the U.S. House of Representatives Newt Gingrich (R-GA)

Medicaid covers long-term care, but only for low-income families.  And Medicare only pays for care that is connected to a hospital discharge....our health care system must cover these vital services...[and] we should promote home-based care, which most people prefer, instead of the institutional care that we emphasize now.

Former U.S. Senator Majority Leader Tom Daschle (D-CD)

We need incentives to...keep people in home health care settings...It’s dramatically less expensive than long term care.

U.S. Senator John McCain (R-AZ)


Home care is clearly the wave of the future. It’s clearly where patients want to be cared for. I come from an ethnic family and when a member of our family is severely ill, we would never consider taking them to get institutional care. That’s true of many families for both cultural and financial reasons. If patients have a choice of where they want to be cared for, where it’s done the right way, they choose home.

Donna Shalala, former Secretary of Health and Human Services

A couple of years ago, I spent a little bit of time with the National Association for Home Care & Hospice and its president, Val J. Halamandaris, and I was just blown away. What impressed me so much was that they talked about what they do as opposed to just the strategies of how to deal with Washington or Sacramento or Albany or whatever the case may be. Val is a fanatic about care, and it comes through in every way known to mankind. It comes through in the speakers he invites to their events; it comes through in all the stuff he shares.

Tom Peters, author of In Search of Excellence

Val’s home care organization brings thousands of caregivers together into a dynamic organization that provides them with valuable resources and tools to be even better in their important work. He helps them build self-esteem, which leads to self-motivation.

Mike Vance, former Dean of Disney and author of Think Out of the Box

Val is one of the greatest advocates for seniors in America. He goes beyond the call of duty every time.

Arthur S. Flemming, former Secretary of Health, Education, and Welfare

Val has brought the problems, the challenges, and the opportunities out in the open for everyone to look at. He is a visionary pointing the direction for us. 

Margaret (Peg) Cushman, Professor of Nursing and former President of the Visiting Nurses Association

Although Val has chosen to stay in the background, he deserves much of the credit for what was accomplished both at the U.S. Senate Special Committee on Aging, where he was closely associated with me and at the House Select Committee on Aging, where he was Congressman Claude Pepper’s senior counsel and closest advisor. He put together more hearings on the subject of aging, wrote more reports, drafted more bills, and had more influence on the direction of events than anyone before him or since.

Frank E. Moss, former U.S. Senator

Val’s most important contribution is pulling together all elements of home health care and being able to organize and energize the people involved in the industry.

Frank E. Moss, former U.S. Senator

Anyone working on health care issues in Congress knows the name Val J. Halamandaris.

Kathleen Gardner Cravedi, former Staff Director of the House Select Committee on Aging

Without your untiring support and active participation, the voices of people advocating meaningful and compassionate health care reform may not have been heard by national leaders.

Michael Sullivan, Former Executive Director, Indiana Association for Home Care

All of us have been members of many organizations and NAHC is simply the best there is. NAHC aspires to excellence in every respect; its staff has been repeatedly honored as the best in Washington; the organization lives by the highest values and has demonstrated a passionate interest in the well-being of patients and providers.

Elaine Stephens, Director of Home Care of Steward Home Care/Steward Health Systems and former NAHC C

Home care increasingly is one of the basic building blocks in the developing system of long-term care.  On both economic and recuperative bases, home health care will continue to grow as an essential service for individuals, for families and for the community as a whole.

Former U.S. Senator Olympia Snowe (R-ME)

NCOA is excited to be part of this great event and honored to have such influential award winners in the field of aging.

National Council of Aging

Health care at home…is something we need more of, not less of.  Let us make a commitment to preventive and long-term care.  Let us encourage home care as an alternative to nursing homes and give folks a little help to have their parents there.

Former President Bill Clinton

2015 HHPPS Payment Rates Include Complex Modifications

November 7, 2014 12:35 PM

The Centers for Medicare and Medicaid Services (CMS) issued a Final Rule on October 30, 2014 that sets out the panoply of payment rate changes in home health services for CY 2015. This article provides an in-depth explanation and analysis of the CY 2015 HHPPS rates and payment model.

The Final Rule, Medicare and Medicaid Programs; CY 2015 Home Health Prospective Payment System Rate Update; Home Health Quality Reporting Requirements; and Survey and Enforcement Requirements for Home Health Agencies, along with the 2015 case mix weights and wage index can be accessed here.

The Final Rule does not simply set out Year two of the four years of rate rebasing. Instead, it also includes significant changes in the case mix weights and the wage index. It is the combination of the base rate, case mix weight, and wage index that tells the real bottom-line result for home health agencies (HHA). Consequently, HHAs need to recognize that the 2015 changes are not equivalent for all HHAs with case mix variation and geographic location of the services crucial elements in determining the amount those individual HHAs will be paid. Some HHAs will experience aggregate payment reductions greater than would otherwise occur through the rate rebasing, while other HHAs may receive aggregate payments greater than expected. HHAs are strongly advised to undertake an agency-specific evaluation of the impact of the new rate and rate adjustment model as an HHA’s case mix and location may have greater impact than the rate rebasing.

Below are the basics of the new modifications.

CY 2015 60-day National, Standardized 60-Day Episode Payment Amount

CY 2014 National, Standardized 60- Day Episode Payment

Wage Index Budget Neutrality Factor

Case-Mix Weights Budget Neutrality Factor

CY 2015 Rebasing Adjustment

CY 2015 HH Payment Update Percentage

CY 2015 National, Standardized 60- Day Episode Payment


X 1.0024

X 1.0366


X 1.021



CY 2015 NationalPer-VisitPaymentAmounts forHHAs

HH Discipline Type

CY 2014 Per- Visit Payment

Wage Index Budget Neutrality Factor

CY 2015 Rebasing Adjustment

CY 2015 HH  Payment Update Percentage

CY 2015 Per-Visit Payment

HomeHealth Aide


X 1.0012

+ $1.79

X 1.021


MedicalSocial Services


X 1.0012

+ $6.34

X 1.021


Occupational Therapy


X 1.0012

+ $4.35

X 1.021


Physical Therapy


X 1.0012

+ $4.32

X 1.021


Skilled Nursing


X 1.0012

+ $3.96

X 1.021


Speech- Language Pathology


X 1.0012

+ 4.70

X 1.021



CY 2015 NRS PaymentAmounts

Severity Level

Points (Scoring)

Relative Weight

CY 2015 NRS Payment Amounts




​ $ 14.36


1to 14


$ 51.86


15 to 27


$ 142.19


28 to 48


$ 211.25


49 to 98


$ 325.76




$ 560.27


These amounts are increased by 3% for episodes ending before January 1, 2016 for all patients served at a residence located in a rural area.

These amounts are reduced by 2% for any HHAs that failed to comply with the quality data submission requirements. The number of such HHAs is extremely small as the data requirements are minimal at this point. It should be noted that the Final Rule adds new OASIS data submission requirements that will be phased-in over a three-year period. While the current OASIS submission requirement to maintain the full payment rate is minimal, the new requirements will begin with a 70 percent timely submission responsibility, ultimately rising to 90%.

Explanation of the Rate Calculations

Payment update

The CY 2015 payment update is 2.1%. That amount is derived through a combination of two elements. The final Market Basket Index is 2.6% for HHAs in 2015. That index is reduced in 2015 by the Productivity Adjustment, a creature of the Affordable Care Act, which is applied for the first time in 2015. Other providers such as hospitals have had the Productivity Adjustment applied since 2014. The adjustment for 2015 is 0.5% thereby netting a 2.1% update (2.6-0.5=2.1).

Wage Index Budget Neutrality Adjustment

The base episode rates are also adjusted by a Wage Index Budget Neutrality Adjustment of 1.0024. This adjustment is used to account for the estimated change in overall Medicare home health spending on episodes of care triggered by the application of a new wage index n 2015. As usually occurs when a new wage index is employed, the distribution of spending changes throughout the country. Higher and lower payments are made in some geographic areas than would have occurred under the2014 wage index with variations in total spending in those areas due to the variation in home health services utilization.

When CMS moves to a new wage index, it attempts to do so in a budget neutral manner. As such, it calculates an adjustment factor applied in the rate setting to achieve that neutrality.

A separate budget neutrality factor is applied to the LUPA per visit rates because there is a geographic variation in LUPA volume distinct from the variation occurring with full episodes of care. The adjustment calculated for LUPAs is 1.0012.

Rebasing Adjustment

As noted earlier, the rebasing adjustment is the same in CY 2015 as it was in 2014 because the law requires that rebasing be phased-in over four years (2014-2017) with equal adjustments. Under the rebasing requirements, the adjustments are limited to 3.5% of the 2010 payment rates. That restriction applies to decreases and increases in payment rates. For the base episode payment rate, the adjustment is limited to $80.95 in each of the four years. In 2014, CMS calculated that rebasing the episode payment to average cost would result in an adjustment greater than $80.95 but it had to apply the restriction in the law.

For the per visit LUPA rates, the 3.5% restriction worked to the disadvantage of HHAs. CMS calculated that average per visit costs by discipline were much greater than the 2010 LUPA rates. However, CMS was obligated to apply the 3.5% adjustment cap to limit the amount of increase in each per visit rate to 3.5% of the 2010 LUPA rates. As such, the CY 2015 LUPA rebasing adjustments are the same amounts as in 2014 and will be the same in 2016 and 2017.

The same holds true for Non-Routine Supplies. The rebasing adjustment is the same in CY 2015 as in 2015 at -2.82%. That adjustment is expressed in percentage terms because of its application in the NRS Conversion factor rather than the Severity Level payment amounts.


As CMS had proposed, it has totally recalibrated the case mix adjustment weights. All 153 case mix categories have new case mix weights compared to those now applied in 2014. The new weights are also different than the proposed weights that were made public as part of the Notice of Proposed Rulemaking in July. With the changes in the weights, it would be necessary for any HHA wishing to evaluate the impact of the new payment rates to conduct that evaluation using the final case mix weights. The new weights are available he​re.

For comparison purposes, NAHC calculated the category-to-category crosswalk of the 2014 rates and weights with the 2015 rates and weights. This comparison does not include the impact of the area wage index. That comparison is available here.

The comparison below highlights the significant differences between payment rates in 2014 and those that will be in effect in 2015.


These examples appropriately portray the impact of the widely-revised case mix adjuster. In 2015, some case mix categories will be paid more in 2015 in spite of the rate reductions triggered by rebasing. The examples highlight the need for HHAs to analyze their specific case mix in relation to the new payment rates and case mix weights to understand the likely provider-specific impact.

The wholesale recalibration of the case mix weights is the first time that CMS has done such since the initiation of HHPPS. Previously, it revised the rates with a series of adjustments such as the elimination of certain diagnoses from the calculation of the HHRG score and the 2012 modification based on changes to the impact values assigned to the therapy utilization domain.

In the recalibration, CMS relied on 2013 claims data for evaluating resource use in each HHRG. CMS took the number of discipline specific visits in an episode; assigned a value the time spent by each discipline and applied a cost factor for each discipline’s time during the episode using metrics from the Bureau of Labor Statistics. With average weight set at 1.000, CMS used the resulting data to provide a relative value weight to each of the 153 HHRGs. The use of the new resource data permitted CMS to establish HHRG weights that are more consistent with current resource utilization patterns. The dramatic changes in weights reflect the fact that the weights from 2014 and prior had become outmoded as care levels changed since the original HHPPS in 2000. CMS found that the “changes in case mix weights can be mostly attributed to shifts in utilization patterns between 2005/2007 and 2013.” CMS noted a shift across all therapy groups away from home health aide utilization and a shift to more nursing or therapy care. With the higher cost for nursing and therapy, the therapy oriented HHRG weights increased.

CMS evaluated every one of the 164 variables that make up the current case mix weights to determine whether each was still appropriate. As a result, CMS created a 124 point giving variable model. There were 21 variables that were added with 63 dropped based on the impact on resource use.

The final case mix weights also vary from the proposed 2015 weights. The difference is due to the use of a larger universe of 2013 claims in the evaluation. The proposed weights used only the data available through December 31, 2013 while the final relied upon data available through June 30, 2014.

The accuracy of case mix adjusters is measured by an R-squared value that focuses on the degree to which the weights reflect the average cost of a particular episode of care within the HHRG model. In the Final Rule, CMs indicates that the 2015 model has an R-squared of 0.4680, an increase from the 0.3769 for the CY 2012 recalibration that was not a wholesale recalibration.


Following through on its proposal, CMS finalized the use of a new wage index model that incorporates the revised Core Based Statistical Areas (CBSAs) designated by the Office of Management in Budget (OMB) after the 2010 US Census. CMS has the discretion when to begin utilizing the new CBSAs. In 2006, it shifted to CBSA from MSAs after the OMB established new area designations following the 2000 US census.

In line with its proposal, CMS has finalized a transition approach to the new CBSAs in order to limit provider impact. The transition approach blends the 2015 new CBSA wage index values with the 2015 former CBSA values (2014 designations) on a 50/50 basis. The result of the blend is that some CBSAs are not subject to significant reductions in the wage index value while others do not get a significant increase. The “smoothing” approach is comparable to what CMS did in home health services in 2006 and in other health care sectors as well over the years. In CY 2016, the new CBSAs will be in full use as it is only a one-year transition in play for 2015.

The CY 2015 wage index is available here.

For 2015, CMS will use a labor/non-labor split of the payment rates that is identical to 2014. The wage index adjustment will apply to 78.535 percent of the payment rate and the non-labor share will continue at 21.465 percent.

NAHC continues to advocate for replacement of the wage index model used for home health services. CMS continues to employ the inpatient hospital wage index model that does not include the multitude of adjustments applied to hospitals include area reclassification and rural floor. With HHAs competing with hospitals for staff, comparable indexes should be used. However, CMS appears intransigent on the matter. Congress authorized CMS to make changes in wages indexes in all provider sectors and MedPAC has strongly recommended that CMS do so. Still, nothing has changed and wage indexes become less and less reliable every year.  

In the Final Rule, CMS cleared up an outstanding question related to the rural add-on. The 3% rural add-on continues to apply in 2015 through episodes ending December 31 or earlier. However, the new CBSA designations affected the rural status of a large number of geographic areas. There are 105 counties that change from rural to urban status along with 37 counties that change from urban to rural. CMS determined that the new 2015 CBSA will be used to determine whether the rural add-on applies. NAHC advocated for all counties that were designated as rural in 2015 or 2014 to qualify for the add-on. That effort was rejected with CMS stating that it would apply the add-on consistent with the manner used in the 2006 CBSA transition when only locations under the new CBSA designations so qualified.


The outlier payment formula in CY 2015 will be the same as applied in 2014. The Fixed Dollar Loss ratio (FDL) will remain at 0.45 and the loss-sharing ratio will stay at 80 percent. CMS indicates that with this formula, it estimates that outlier payments will comprise 2.25 percent of total home health payments in 2015. That falls significantly short of the2.5 percent budgeted for outliers.

CMS further estimates that in 2016 and later years, an additional 0.25 percent of spending will occur with the recalibrated HHRG weights.  

CMS notes in another part of the Final Rule that patients receiving insulin injections continue to predominately reside in limited metropolitan areas of Florida, Texas, and California. These states have 27, 24, and 15 percent of outlier payments respectively. Past analyses of insulin injection utilization showed that the majority of patients resided in Miami-Dade County in Florida. Insulin injection patients tend to be outlier payment cases.

NAHC expressed a need to revise the outlier eligibility standards to reflect the fact that CMS expects to toughen its standards for insulin injections thereby reducing outlier payments. Also, NAHC explained that the current outlier eligibility formula effectively wastes financial resources that should go to home health agencies as the monies disappear if not spent on outliers. Since the NAHC-created concept of an outlier cap was instituted as a program integrity measure by CMS, outlier spending has dropped below the 2.5 budget, yet CMS has made only a minor adjustment in the eligibility standards.

CMS does indicate in the Final Rule that it is examining the options of eliminating outlier payment all together or establishing a new system that is more cost based. Stay tuned!


The changes that CMS makes in the HHPPS rates and payment model for 2015 are complex and interrelated. While the changes related to the second year of the four year phase-in of rebasing are as expected, CMS complicates everything by instituting a new case mix weight recalibration and new wage index geographic area designations at the same time. As a result, the 2015 payment rates may look higher on the surface, but are actually lower when applied using the case mix adjustment and wage index. HHAs are advised to evaluate this change carefully.

NAHC continues to advocate for rebasing repeal or reform with legislation pending that will achieve that goal. While limited action is expected by Congress in the upcoming lame-duck session, particularly with the shift of the Senate to Republican control, the early part of 2015 promises to provide opportunities to move the legislative remedies forward.




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