Home Health & Hospice Week

Rebasing to cost industry hundreds of millions.

The news on face-to-face may be good, but home health agencies will continue to have to tighten their budget belts under another year of rebasing reimbursement cuts.

In its 2015 home health prospective payment system proposed rule issued July 1, the Cen-ters for Medicare & Medicaid Services proposes to reduce PPS payment rates by 0.3 percent — a $58 million decrease. “The proposed decrease reflects the effects of the 2.2 percent home health payment update percentage ($427 million increase) and the rebasing adjustments to the national, standardized 60-day episode payment rate, the national per-visit payment rates, and the non-routine medical supplies (NRS) conversion factor ($485 million decrease),” CMS notes in a fact sheet about the rule.

The cut will result in a base episode payment rate of $2,865.57, down from $2,869.27 for 2014. The rate includes wage index and case mix weight budget neutrality factors.

Under the Affordable Care Act, rebasing can occur over a four-year period, with the rebasing reduction capped at 3.5 percent per year. Last year, CMS made nearly the full 3.5 percent cut. But this year, CMS proposes a 2.75 percent rebasing reduction for the base rate and 2.82 percent for nonroutine supplies, after wage index and case mix changes.

“A -3.45 percent adjustment for CY 2014 through CY 2017 would result in larger dollar amount reductions than the maximum dollar amount allowed under … the Affordable Care Act of $80.95, [so] we are limited to implementing a reduction of $80.95 (approximately 2.8 percent) … each year for CY 2014 through CY 2017,” CMS explains.

Last year’s PPS rate reduction was 1.05 percent, more than three times this year’s 0.3 percent cut, if the figures stay the same in the final rule.

For agencies struggling under current reimbursement rates, another year of cuts may be the straw that breaks the camel’s back. That’s especially true as other costs, particularly for labor, continue to go up.

More cuts to come: Don’t expect rebasing to stop any time soon. “Our latest analysis of 2012 cost report data suggests that an even larger reduction (4.29 percent) than the reduction described in the CY 2014 final rule (3.45 percent) would be needed in order to align payments to costs,” CMS says in the rule. “We will continue to monitor potential impacts of rebasing.”

LUPAs: As it implemented last year, CMS again proposes to use three different low utilization payment adjustment add-ons depending on whether the first visit was made by a nurse, physical therapist or speech therapist. The proposed LUPA add-on factors are 1.8451 for SN; 1.6700 for PT; and 1.6266 for SLP, the agency details in the rule.

For example: “If the first skilled visit is SN, the payment for that visit will be $235.82 (1.8451 multiplied by $127.81),” CMS explains in the rule.

CMS also proposes to “recalibrate the HH PPS case-mix weights by adjusting the weights relative to one another, using CY 2013 home health claims data,” the agency says in a fact sheet about the rule scheduled for publication in the July 7 Federal Register.

And CMS is proposing changes to the wage index based on the newest CBSA changes and Of-fice of Management and Budget definitions for the CY 2015 HH PPS wage index, the agency says. CMS will use a blended wage index for a one-year transition. “For each county, a blended wage index would be calculated as 50 percent of the CY 2015 wage index using the current OMB delineations and 50 percent of the CY 2015 wage index using the revised OMB delineations,” CMS explains. 

Note: For a free link to and PDF copy of the proposed rule, email editor Rebecca Johnson at rebeccaj@eliresearch.com with “2015 PPS Pro-posed Rule” in the subject line.