Under CMS’s CY 2010 Medicare home health PPS (HH PPS) final rule, published November 10, 2009, Medicare home health spending is expected to be reduced by $140 million (1.03%) in 2010 compared to 2009 levels. The reimbursement reduction reflects a 2.0% home health MBI increase ($350 million), offset by the 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). Note that the home health MBI update is reduced by 2 percentage points (to 0.0%) for CY 2010 for those HHAs that do not submit required quality data. CMS also has adopted provisions designed to “mitigate possible billing vulnerabilities associated with excessive outlier payments.” Specifically, for 2010 CMS will cap per-agency outlier payments at 10%, and reduce the target for total aggregate outlier payments to 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, among other things: requires the submission of Outcome and Assessment Information Set (OASIS) data as a condition for payment under the HH PPS; clarifies coverage of skilled services and routine medical supplies; updates conditions of participation; implements use of OASIS Version C beginning January 1, 2010; updates quality reporting measures; and implements a Consumer Assessment of Healthcare Providers and Systems (CAHPS) Home Health Care Survey beginning in 2012. The final rule also includes various payment safeguards for HHAs, but with a number of modifications from the proposed rule. Notably, CMS did not adopt a provision in its proposed rule that would have prohibited an HHA from sharing its practice location or base of operations with another Medicare-enrolled HHA or supplier, citing its determination that a broad-based prohibition on co-location policy could “negativity impact the health care delivery for some services.” CMS expressed its continuing concerns about these arrangements, however, particularly when an HHA that maintains a practice location in one state and furnishes services to beneficiaries in another state, or when HHAs have merged or consolidated operations into a single practice location, but continue to operate as distinct entities. CMS will consider its administrative remedies to address its concerns in this area.