CMS’s proposed rule updating the Medicare home health PPS (HH PPS) would reduce Medicare home health spending by $100 million compared to CY 2009. The reimbursement cut reflects a 2.2% home health MBI increase ($390 million), offset by the distributional effects of an updated wage index (-$10 million), and a 2.75% decrease resulting from the third year of a 4-year phase-in of adjustments to rates to account for case-mix changes (-$480 million) and other policy changes. Note that the home health MBI update would be reduced by 2 percentage points to 0.2% for CY 2010 for those HHAs that do not submit required quality data. CMS also proposes changes to the outlier payment policy that seek to respond to “overwhelming evidence showing a small, but growing number of home health providers have been abusing the system, especially in certain parts of the country.” Specifically, CMS proposes a 10% per agency cap on outlier payments and a reduction in the target for total aggregate outlier payments (2.5% of total HH PPS payments, compared to the current 5% target), with a corresponding 2.5% increase in HH PPS rates. The rule also would: require the submission of Outcome and Assessment Information Set (OASIS) data as a condition for payment under the HH PPS; make payment and enrollment “safeguards”; clarify coverage of skilled services and routine medical supplies; and update condition of participation. CMS also is soliciting comments on: physician/patient interaction regarding the home health plan of care; expansion of quality reporting to include the Consumer Assessment of Healthcare Providers and Systems (CAHPS) Home Health Care Survey; use of OASIS Version C beginning in 2010; and proposed pay-for-reporting measures for use in CY 2011. Comments on the proposed rule will be accepted until September 28, 2009. The official version of the rule will be published in the Federal Register on August 6, 2009.

Update:  CMS published guidance in December 2009 on Medicare’s new home health outlier policy.