Proposed PPS rule focuses on value-based purchasing

Within the proposed 2016 PPS rule released July 6, CMS detailed its plans to move forward with a home health value-based purchasing model in nine states nationwide starting in 2016.

 

Agencies in the affected states would have payments adjusted depending on the degree of quality performance achieved. Payments would change by 5% in each of the first two payment adjustment years, 6% in the third year and 8% in the final two years, CMS says.

 

Overall, CMS estimates the proposed rule will lead to a $350 million decrease in estimated Medicare payments in 2016. That decrease reflects a 2.3% increase in payments offset by 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.

 

Under its proposed value-based purchasing model, CMS expects that tying quality to payment “will incentivize quality improvement and encourage efficiency leading to a more sustainable payment system.” All agencies in the following states would participate: Massachusetts, Maryland, North Carolina, Florida, Washington, Arizona, Iowa, Nebraska and Tennessee. However, the states selected to participate could change as a result of comments to this proposal, CMS states.

 

The value-based purchasing proposed program would be implemented Jan. 1, 2016 and end Dec. 31, 2022.

 

With the proposal, CMS is seeking to tie 30% of traditional Medicare payments “to quality or value-based payments through alternative payment models by the end of 2016, and to tie 50% of payments to these models by the end of 2018.” CMS also plans to tie 85% of all traditional Medicare payments to value or quality or value by 2016 and 90% by 2018.

 

CMS estimates its savings impacts related to the proposed value-based model at a total projected five-year gross savings of $380 million — assuming a “very conservative savings estimate” of a 6% annual reduction in hospitalizations and a 1% annual reduction in skilled nursing facility admissions.

 

Comments on CMS' proposal are due by Sept. 4, 2015. View more details about the rule here.

 

Proposed new quality measures