CMS ISSUES PROPOSED RULE: 2017 HOME HEALTH PAYMENT RATES, VALUE-BASED PURCHASING PILOT, AND MORE
June 27, 2016 07:02 PM
The proposed changes to home health prospective payment rates are within NAHC’s expectations given the 4-year phase-in of rate rebasing that started in 2014. CMS is capped at reducing the base episode rate by no more than $80.95 which is equal to 3.5% of the 2010 base rates. The proposal imposes such a cut offset by the annual Market Basket Index (MBI) and the annual Productivity Adjustment which started in 2015. While the proposal does not reference the 2% sequestration, it is definitely expected that such will continue in 2017.
The proposed MBI is 2.8% offset by the Productivity Adjustment (labeled by CMS as “private nonfarm business multifactor productivity” or MFP) required under the Affordable Care Act. In 2017, the adjustment is proposed at 0.50% leaving the update at a net of 2.3%. The case mix creep adjustment of 0.97% factored along with the MBI adjustment. CMS estimates that Medicare spending on home health services in 2017 will be $180 million less than would occur without the adjustments.
The proposed base episode rate for 2017 is set out at $2936.65. In contrast, the 2016 base rate is $2965.12.
CMS proposes to recalibrate the case mix weights again in 2016, leading to a budget neutrality adjustment of 1.0062. As such, an apples to apples comparison between 2016 and 2017 is not easily done. CMS estimates that the net result of all of its rate proposals is a $180 million reduction in Medicare payments to home health agencies in 2017.
The rate rebasing also affects LUPA payment rates. Those rates will rise 3.5% through rebasing and an additional 2.3% through the annual inflation update. Non-routine medical supply rates are also downwardly adjusted through the rebasing by a factor of 2.82 percent offset by a 2.3% MBI. The NRS conversion factor drops from $52.71 in 2016 to $52.40 in 2017.
No further case mix creep adjustment is proposed beyond the current 3-year reduction of 0.97% annually through 2018.
With respect to outlier payments, CMS proposes significant changes. Based on an analysis that shows outlier episodes have more, but shorter visits, CMS proposes to change to a cost per visit approach based on 15 minute service units. This change would mitigate the current disincentive to treat medically complex patients that require extended visits. CMS proposes to keep the same 80% loss ratio, but would increase the Fixed Dollar Loss Ratio from 0.45 to 0.56. This would have the effect of reducing the number of episodes that qualify for outlier payment. CMS indicates that such a change is needed to keep outlier spending within the 2.5% spending limit. The overall changes will have a distributional impact with some HHAs receiving higher outlier payments due to the nature of their patient service time utilization. CMS proposes to cap a day of service unit at 32, the equivalent of 8 hours.
The 3% Rural Add-On continues in 2017 along with the 2% rate reduction for HHAs that fail to comply with the quality data submission requirements that involve OASIS and HHCAHPS.
Detailed rate tables are available in the proposed rule.
CMS offers an analysis on the impact of rate rebasing. Overall, that analysis conveys that the rate cuts have not been deep enough to bring reimbursement in line with costs of care. MedPAC shares that view and has recommended another round of rebasing. To support that contention, CMS explains that since rebasing began in 2014 that the average number of visits per episode is down (lowering the per episode cost). On the other side of the equation is that the number of HHAs is down slightly since and the number of users is also slightly down, which CMS explains is due to the reduction in hospital and SNF discharges.
VALUE BASED PURCHASING
The Home Health Value Based Purchasing (HHVBP) program gets some important updates. Among them are:
Establishing a minimum of 8 HHAs as a cohort for measure application
Removing 4 measures that had not been fully developed that include care management; prior function; influenza vaccine data collection; and reason pneumococcal vaccine not received
The reporting periods are adjusted
Timeframe for submitting New Measure data is increased
A progress report on the HHVBP public reporting development
The institution of a formal appeals process
The HHVBP is estimated to save Medicare $378 million in reduced spending for inpatient hospitalization and SNF stays.
While CMS is moving forward with a proposed VBP pilot, an effort to legislate VBP in all of post-acute care is going on as well. At this point, available information indicates that the two governmental forces are not moving in tandem. That will make for a very interesting health policy dynamic to see what model prevails ultimately. Nevertheless, the signals are very clear that VBP is a contender for serious payment reform in Medicare.
CMS also is including some technical clarifications in a few existing rules along with updates on the quality data measures used to avoid the 2% rate penalty.
One notable miscellaneous item is the proposal relative to payment for disposable negative pressure wound treatment devices (NPWT). This proposal implements a change in the law from earlier this year that permits coverage of disposable negative pressure wound devices similar to coverage of the current DME none disposable version. Under the proposal, the payment for the NPWT would be outside of and separate from the home health payments. If the patient requires skilled nursing care for the “sole purpose” of NPWT, the visits will be reimbursed under Medicare Part B without a home health benefit payment. If the patient requires other Medicare-covered home health nursing services, the time spent on NPWT will be excluded, but will be separately covered under Part B. These services/equipment are subject to a 20% coinsurance.
Overall, the rule is a combination of expected rate proposals and a tweaking of the Value Based Purchasing pilot program. However, HHAs should pay particular attention to the changes in outlier payment and the new NPWT benefit impact on home health services.