Home Health & Hospice Week

Lots of home health agencies in the pay for performance demonstration improved their outcome scores or scored highly, but that wasn't enough to net them a payout from the program's first year.

Under the Centers for Medicare & Medicaid Services' P4P demonstration project that ran in 2007 and 2008 and included 567 HHAs, top performing and top improving agencies receive P4P bonus payments only if Medicare expenditures overall for patients in the intervention group are less than expenditures for a control group. The time period considered included the home health episode plus 30 days.

Upon calculating those payments for the demo's first year, CMS found that only three of the four P4P regions saw such overall savings, CMS's Jim Coan explained in an April 12 session at the National Association for Home Care & Hospice's March on Washington meeting. The biggest savings came in the South (Alabama, Georgia, and Tennessee) with $8.04 million less in overall Medicare spending on the intervention group patients. More savings came in the West (California) at $4.49 million and the Northeast (Connecticut and Massachusetts) at $2.82 million.

In the Midwest region (Illinois), Medicare actually spent $8.7 million more on the intervention group's patients than the control group's, Coan reported at the conference.

That means intervention group HHAs in the six states in the South, West, and Northeast regions are getting to divvy up the $15.4 million in savings for the demo's first year. But Illinois agencies aren't seeing any incentive payments, despite their good performance.

Demo agencies in Illinois were "disappointed" to hear they aren't receiving any incentive payments for their P4P efforts, many of which were significant, says Chicago, Ill.-based regulatory consultant Rebecca Friedman Zuber, who works with the Illinois Homecare Council. They had felt good about the improvements they made and were looking forward to a reward for their hard work, Zuber tells Eli.

Why the Midwest region didn't see a savings is unclear, Coan said. It could be due to hospital costs or some other reason, he suggested. Illinois agencies wonder if it's because they have low average lengths of stay and are already running efficiently, Zuber says.

Or, the demo "may be trying to link things that just aren't link-able," says Zuber, who attended the NAHC meeting. Home care's influence on all the other Medicare spending a patient incurs is limited.

The varying savings figures for the other regions -- from $2 million to $8 million -- demonstrate that the program's effect on overall spending may be small. For example, "extended hospitals stays for just three patients can cost $1 million," Zuber points out.

What's next: HHAs shouldn't assume they will be getting -- or not getting -- P4P payments for the demo's second year, which CMS is calculating now. The Midwest region's loss in 2007 is an "indication that it's not automatic," Coan said.

After finishing the second year's calculations, CMS will issue a report on the demo's results and findings, Coan noted. Then it will be up to Congress what to do about implementing a home health P4P program.

Many industry observers expect Congress to mandate such a program, and the recent health care reform package requires some early steps for a Value-Based Purchasing (VBP) strategy.

The demo's financial allocations may not be that influential on a final P4P program. That's because unlike the demo, regular P4P programs tend to penalize the poor performers to pay the top performers and improvers.