Medicare Cuts Home Health Agency Pay Rates

A proposed rule that went on display in the Federal Register July 16 indicates home health agencies (HHAs) can expect a 4.75 percent decrease in 2011 Medicare payments. Compared to 2010 payments, this amounts to about a $900 million pay cut for HHAs across the nation.

HHAs that submit the required quality data would receive payments based on the home health market basket update of 1.4 percent for 2011. If an HHA does not submit quality data, the home health market basket percentage increase would be reduced by 2 percentage points to -0.6 percent for 2011.

The Patient Protection and Affordable Care Act, commonly referred to as the Affordable Care Act, mandates that the Centers for Medicare & Medicaid Services (CMS) apply a 1 percentage point reduction to the 2011 home health market basket amount, which equates to the proposed 1.4 percent update for HHAs. Based on updated data analysis, however, instead of the planned 2.71 percent reduction for 2011, CMS proposes to reduce Home Health Prospective Payment System (HH PPS) rates by 3.79 percent in 2011 and an additional 3.79 percent in 2012.

The Affordable Care Act also changes the existing home health outlier policy through a 5 percent reduction to HH PPS rates, with total outlier payments not to exceed 2.5 percent of the total payments estimated for a given year. HHAs are also permanently subject to a 10 percent agency-level cap on outlier payments.

The proposed rule offers an approach to implement an Affordable Care Act provision, which mandates that prior to certifying a patient’s eligibility for the Medicare home health benefit, the physician must document that the physician or a non-physician practitioner (NPP) has had a face-to-face encounter with the patient.

The proposed rule also provides:

  • Exceptions to the 36-month provision for certain types of ownership transactions
  • Changes to the 36-month provision and clarification on its capitalization provisions
  • Clarification of policies regarding the coverage of therapy services in the home health setting
  • Clarification regarding quality reporting requirements for the 2012 update
  • An approach to implement an Affordable Care Act hospice provision, which requires a hospice physician or nurse practitioner (NP) to see a patient prior to re-certifying the patient’s eligibility for hospice services.

The proposed rule is available in the Federal Register.

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