CMS issues proposed home health payment rule

The Centers for Medicare & Medicaid Services on July 30 proposed a net decrease of -0.86% in Medicare payments for home health agencies in calendar year 2010. This includes a 2.2% market basket update, which would be decreased by 2.75% as part of a four-year series of cuts that adjust for coding changes between 1999 and 2005. In addition, the rule states that CMS is considering additional coding reductions, based on further analysis of case mix change, that could lower 2010 payments by -4.90.

The proposed rule would also cap outlier payments at 10% per agency and limit total outlier payments to 2.5% of total HH PPS payments. The rule will be published in the Aug. 6 Federal Register with comments accepted through Sept. 28.

Home health agencies (HHAs) receive additional payments (outlier payments) for 60-day home health episodes of care that carry unusually high costs. CMS proposes to cap outlier payments at 10 percent per agency and target total aggregate outlier payments at 2.5 percent of total HH PPS payments. Currently, the target for outlier payment targets is 5 percent of total HH PPS payments. As such, CMS reduces home health rates by 5 percent to fund outlier payments. By lowering the total outlier payment target to 2.5 percent of total HH PPS payments, CMS would increase home health rates by 2.5 percent.

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