Home Health & Hospice Week

Anticipate cash flow problems under looming system.

You need to get on the ball now regarding your outcomes, or you could start paying a big price just over a year from now.

Recap: This summer, the Centers for Med-icare & Medicaid Services revealed plans to implement a “value-based purchasing” program, formerly known as pay for performance, for home health agencies soon. “If implemented, the model would begin at the outset of CY 2016, and include an array of measures that can capture the multiple dimensions of care that [home health agencies] furnish,” CMS said in the 2015 Home Health Prospective Payment System proposed rule published in the July 7 Federal Register.

“As currently envisioned, the HHA VBP model would reduce or increase Medicare payments, in a 5-8 percent range, depending on the degree of quality performance in various measures to be se-lected,” according to the rule. “The model would apply to all HHAs in each of the projected five to eight states selected ... The distribution of payments would be based on quality performance, as measured by both achievement and improvement across multiple quality measures. Some HHAs would receive higher payments than standard fee-for-service payments and some HHAs would receive lower payments, similar to the [hospital] VBP program” (see Eli’s HCW, Vol. XXIII, No. 24).

In the 2015 HH PPS final rule published in the Nov. 6 Federal Register, CMS repeats its brief section on VBP almost verbatim from the proposed rule. That includes the 2016 start date and the 5 to 8 percent potential penalty or bonus.

Don’t Let VBP Sneak Under The Radar And Blow Up In Your Face

The reimbursement ramifications for VBP could be huge, warns financial consultant Pat Laff with Laff Associates in Hilton Head Island, S.C. “This is a major, major move,” Laff stresses.

In fact, the VBP provision is the most significant part of the 2015 PPS rule, Laff judges. Pay-ment rate changes are “insignificant” compared to the impact VBP will have on agencies, he tells Eli. Agencies that see up to 8 percent of their reimbursement taken away due to VBP could face losing their business altogether.

In the beginning, only agencies in the five to eight states selected for initial implementation will see the impact. Tom Boyd with Simione Health-care Consultants in Rohnert Park, Calif., expects CMS “to hammer the states most suspect for fraud,” he says. That would be Florida, California, Penn-sylvania, Illinois, Michigan and perhaps Ohio. “This gives them another tool to reduce the number of providers and weed down and out the suspected fraud and overbilling of services,” Boyd says. “These seven states also have 66.8 percent of the Medicare HHAs.”

Laff expects CMS to use the latest statistics to choose the final pilot states. Average profit margin will most likely be a factor in the decision, he says.

Compulsory: Unlike the P4P demonstration that ran in 2008 and 2009, CMS plans to make participation in the VBP program compulsory in the states it chooses.

Even if you aren’t located in a pilot state, you may not get much of a breather. CMS doesn’t mention how quickly it will expand VBP to more — or even all — states, Laff points out. It could happen the very next year, in 2017.

Delays Unlikely, Experts Say

Don’t expect CMS to back down on the 2016 date. “I think CMS will stick to their schedule,” Boyd tells Eli.

Including an early heads up in the proposed and final 2015 rules is putting the industry on notice, Laff believes. Agencies won’t be able to say they didn’t know it was coming.

Plus: Home Health Compare, which VBP payment likely will be based on, has been around a long time, Laff notes. Agencies won’t be able to say they need more time to get used to the measures that will determine payments. 

Note: For an overview of the PPS final rule, sign up for the Eli-sponsored audioconference, “The 2015 HHA PPS Update: Prepare for More Chal-lenges.” The conference by financial expert Mark Sharp will take place at 1 p.m. ET Tues. Nov. 25. More details are at www.audioeducator.com/home-health/2015-hha-pps-update-11-25-2014.html.