Home Health & Hospice

CMS Releases Home Health Final Rule

Homecare Insider, November 7, 2011

The Centers for Medicare and Medicaid Services (CMS) issued its annual Home Health Prospective Payment System (HH PPS) Final Rule last week on October 31, which will update the HH PPS rates for 2012.

According to CMS, payments to home health agencies are estimated to decrease by approximately 2.31%, which includes the net effect of a 1.4% payment update, the wage index update, and the case-mix coding adjustment. This decrease in payment will vary among providers.

According to the official CMS press release, the Patient Protection and Affordable Care Act (ACA) applies a 1-percentage point reduction to the 2012 home health market basket. As the 2012 market basket is equal to 2.4%, the episode payment update for homecare agencies in 2012 will be 1.4%. The rural add-on of 3% will continue. The standardized episode rate for 2012 will be $2,138.52.

CMS also reduced HH PPS rates in 2012 to account for additional growth in aggregate case-mix that is unrelated to changes in patients’ health status. CMS has finalized a 3.79% reduction to the rates for 2012 and an additional 1.32% reduction for 2013. This is a phased-in implementation of the proposed 5.06% reduction. These payment reductions will not be applied to non-routine supplies—only to the standardized episode rates. CMS will conduct further studies regarding payment reductions for non-routine medical supplies.

The final rule also finalizes structural changes to the HH PPS. Changes include:

  • Removing two hypertension codes from the case-mix system.
  • Lowering payments for high therapy episodes and increasing payment for lower therapy episodes.
  • Recalibrating the HH PPS case-mix weights to ensure that these changes result in the same amount of total aggregate payments. 
  • Planned improvements to the home health publicly reported quality measures.

The face-to-face physician encounter also has been changed with this final rule. Under current Medicare policy, a certifying physician or an allowed non-physician practitioner must see a patient prior to certifying a patient as eligible for the home health benefit. The rule also finalizes added flexibility to allow physicians who cared for the patient in an acute or post-acute facility to inform the certifying physician of their encounters with the patient in order to satisfy the requirement.

Click here to access the final rule.