Home Health & Hospice

A Closer Look at the Final Rule: Payment Updates

Homecare Insider, November 14, 2011

For the next few weeks, Homecare Insider will offer a closer look at components of the 2012 Home Health Prospective Payment System (HHPPS) Final Rule.

The payment updates for 2012 include a 1.4 percent update factor to the episode rates, which reflects a 1 percent reduction applied to the 2.4 percent market basket update factor, as mandated by the Patient Protection and Affordable Care Act. Rural agencies will continue to receive the 3 percent rural add-on. The 3.79 percent payment reduction will not be applied to nonroutine medical supplies, nor will the 1.32 percent reduction in 2013. Agencies that meet the quality data reporting requirements will be eligible for the full home health market basket percentage increase, while agencies who do not meet the requirements will be subject to a 2 percent payment reduction. Overall, agencies will suffer an approximate 2.31 percent payment reduction, according to the Centers for Medicare and Medicaid Services.

The 2012 national standardized episode payment will be $2,138.52, prior to case-mix and wage adjustments, as compared to 2011’s $2,192.07.

The table below gives a more detailed comparison:

National standardized episode rate for agencies who submit quality data

2011 national standardized episode payment rate

Multiply by the 2012 payment update percentage of 1.4 percent

Reduce by 3.79 percent for nominal case-mix change

2012 national standardized episode payment rate (urban)

Rural (multiply by 3 percent rural add-on: x 1.03)

$2,192.07

x 1.014

x 0.9621

$2,138.52

$2,202.68

National standardized episode rate for agencies who do not submit quality data

2011 national standardized episode payment rate

Multiply by the 2012 payment update percentage of 1.4 minus 2 percentage points (-0.6 percent)

Reduce by 3.79 percent for nominal case-mix change

2012 national standardized episode payment rate(urban)

Rural (multiply by 3 percent rural add-on: x 1.03)

$2,192.07

x 0.994

x 0.9621

$2,096.34

$2,159.23

Click here to access the final rule.