Proposed PPS Rule for Home Care and a Call to Action

In the July 3rd Federal Register, The Centers for Medicare and Medicaid Services (CMS) released the proposed Medicare Home Health Rule for 2014.  A key provision of this rule is the first year of a multi-year planned adjustment of home health prospective payment rates, otherwise known as “rebasing”.

The directive to rebase the home health PPS rates comes from language in the Affordable Care of 2010 that was a reaction to multiple years of MEDPAC Reports to Congress calling for dramatic steps to reform the home health payment system, which they claim have widely exceeded  program costs almost from the 2001 launch of the current PPS system.

Starting with 2014 rule and going forward through 2017, CMS plans to impose a 3.5% rebasing adjustment to the home health base rate.  This 3.5% reduction is based on CMS’ projection of an average home health profit margin of 13.63% in 2013 (calculated from 2011 data trended forward as the difference between the average national episode revenue in home health and the average national episode cost). The 2014 rule does include a 2.4% market basket update as well.

The phase-in of this rebasing cut and the inclusion of a market basket update is in conflict with what MEDPAC had recommended to Congress (no update and deeper and faster rebasing cuts) and is direct result of industry advocacy form these mitigating factors during the ACA debate.

Now, that type of industry advocacy is needed once again.  While eliminating any rebasing cut may well be impossible, it is possible that with strong Congressional support, we can challenge the CMS calculation and achieve some decrease in the 2014 cut.   Particularly subject to challenge is CMS’ calculation of industry profit margins from which the rebasing number are derived.

We also know the following about CMS’ calculations on profit margins:

  • Only freestanding and not hospital base agency cost reports are considered
  • They are at odds with what MEDPAC’s and NAHC’s numbers show
  • They may fail to adequately capture industry costs around mandates such as the Face to Face requirement, the ICD-10 implementation and investments in electronic health records .

The Alliance believes that we can make a strong case to Congress, but we need members to be engaged as advocates and as sources of information for us.

Please use the questions below as a guide to provide information on the anticipated impact of the CMS Proposed Rule by Friday, July 26th at 12pm. Alliance staff is traveling to Washington DC to meet with members of congress and the national associations, so please have information in ASAP:

  • What is the impact on your agency’s bottom line (in dollar amount and percent loss)?
  • What is the impact on staff, including reducing staff time, cutting jobs, or halting new hires?
  • Do you anticipate cutting or reducing service lines, particularly MassHealth/Medicaid?
  • What is the impact on innovative service lines, like hospital readmission, dementia, chronic disease management, falls prevention and etc?
  • How will the proposed rule affect other ways your agency does business?

Answers to the above can be emailed to James Fuccione at the Alliance

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