The CMS issued a final rule on October 30 that includes changes to the Medicare home health prospective payment system (HH PPS) for 2015, which changes are projected to reduce Medicare payments to home health providers by 0.30 percent, or US$60 million.

The final rule lowers the national, standardized 60-day episode rate by US$80.95 for 2015.

This reduction is part of a four-year phase-in of lower payment rates mandated by the Affordable Care Act, and Calendar Year 2015 will be the second year.

According to a CMS fact sheet, approximately 3.5 million Medicare beneficiaries received home health services from almost 12,000 home health agencies in 2013.

Home health providers and trade associations have warned that these cuts will result in substandard care for patients. For example, the National Association for Homecare & Hospice (NAHH) estimated 14 percent reductions over the four-year period and indicated that 57 percent of existing home health agencies will be paid less than the cost of care by 2017.

In comments to the proposed rule, NAHH predicted that “[r]ebasing as instituted in the 2014 rule and further implemented by this [2015 final rule] will have the national and foreseeable effect of eliminating access to care in much of the country.”

The association further characterized the new rule as “a vast regulatory overreach,” given “the goal … to reset payment rates while maintaining access to essential services.”

But CMS rejected these dire predictions. It pointed to data from the Medicare Payment Advisory Commission (MedPAC) evincing profit margins of 12 percent or higher for homecare providers.

The final rule eliminates the requirement that physicians provide a narrative of the mandatory face-to-face encounter with each beneficiary prior to certifying the beneficiary’s eligibility for home health care beginning in 2015, although physicians still will need to certify that the encounter occurred.

The final rule reflects a broader CMS strategy to deliver better care at a lower cost “by finding better ways to deliver care, pay providers, and use information.” CMS believes the rule will help to transform our health care system to one that “values quality over quantity and focuses on reforms such as measuring for better health outcomes, focusing on disease prevention, helping patients return home, helping manage and improve chronic diseases, and fostering a more-efficient and coordinated health care system.”

It remains to be seen whether changes implemented by the new rule, including cuts in home health care reimbursement rates, will move our health care system in this direction.

The final rule is set for publication in the November 6 Federal Register.

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