In the 2016 PPS final rule posted Oct. 29 on the Federal Register, CMS followed through with its proposal to create a value-based purchasing model for home health.
 
But the federal Medicare agency decided to lessen the potential payment reductions it had proposed for agencies to receive based upon their initial successes or failures within the model. And CMS also dropped some of the measures it initially proposed to include in the model.
 
Overall, CMS estimates that the net impact of the PPS rule will result in a 1.4% decrease — $260 million — in Medicare payments for agencies in 2016. Part of this decrease comes from a proposed reduction to the national, standardized 60-day episode payment rate in 2016 — “to account for nominal case-mix growth” — and the third year of the four-year phase-in of the rebasing adjustments as required by the Affordable Care Act.
 
Also, CMS will reissue the PPS payment logic (grouper) to award points for certain initial encounter codes (seventh character “A” codes), effective Jan. 1, 2016, but retroactive to all claims with a M0090 date on or after Oct. 1, 2015.
 
CMS finalizes VBP model details
 
Under CMS’ value-based purchasing model, set to begin Jan. 1, 2016, and run through Dec. 31, 2022, Medicare-certified agencies in Massachusetts, Maryland, North Carolina, Florida, Washington, Arizona, Iowa, Nebraska and Tennessee will be required to participate.
 
The overall economic impact of the model for 2018 through 2022 is an estimated $380 million in total savings, CMS notes. Savings come from a reduction in unnecessary hospitalizations and skilled nursing facility usage due to greater quality improvements in the home health industry. As for payments to agencies, “there are no aggregate increases or decreases to the HHAs competing in the model.”
 
Payments for agencies will be adjusted by a maximum of 3% upward or downward in 2018, 5% in 2019, 6% in 2020, 7% in 2021 and 8% in 2022.
 
In the proposed rule, CMS had recommended payments to be adjusted up to 5% in each of the first two payment adjustment years.
Another major value-based purchasing change between the proposed and final rules: CMS reduced the number of measures involved.
In the proposed rule the federal Medicare agency designated 29 measures, including four measures new to home health, to either increase or decrease payments based on improvement.
 
But in the final rule, CMS agreed with commenters that “more narrowly focusing the starter set of measures being tested” in the model would increase the likelihood of agencies’ successes in quality improvement. “In addition, we were encouraged by commenters to re-evaluate the proposed starter set of measures and specifically include fewer process measures in the final starter set.”
 
CMS has decided not to include the following measures: timely initiation of care; pressure ulcer prevention and care; multifactor fall risk assessment conducted for all patients who can ambulate; depression assessment conducted; and adverse event for improper medication administration and/or side effects.
 
7th character issue resolved
 
In determining which diagnosis codes would be appropriate for home health to indicate that care is for an initial encounter, CMS and the cooperating parties developed a revised translation list that will be posted to CMS’ website — although the federal agency didn’t say when it will be posted.
 
The rule settles an issue that arose after revisions to the FY2016 ICD-10 coding guidelines opened the door for home health to assign seventh characters that correspond to initial encounters.
 
Prior to the guideline revision it was believed that home health services were always considered “subsequent encounters” and therefore initial encounter codes were not assigned case-mix status.
 
Other items of note in the PPS rule
  • Changes to skin integrity. A new quality measure will gather the percent of patients with Stage II through IV pressure ulcers that are new or have worsened since the beginning of the episode of care. The Improving Medicare Post-Acute Care Transformation (IMPACT) Act of 2014 requires the specification of such a measure by Jan. 1, 2017. Adding the measure as part of the PPS rule will meet IMPACT Act requirements for 2018 calendar year payment determination and for subsequent years.
  • Case-mix weights recalibrated. This will be the second year CMS is recalibrating home health case-mix weights. The methodology used to recalibrate the case-mix weights for 2016 is the same as the methodology used in 2015, CMS says.