Medicare Compliance & Reimbursement

New PPS calendar pushes back updates, may save Medicare $90 million.

Good news for home health agencies: Medicare intends to increase your payments by $270 million in 2005, according to a proposed rule in the June 2 Federal Register.

According to the Centers for Medicare & Medicaid Services, the government expects to save $90 million in 2005 by changing the home health prospective payment system to a calendar-year update cycle instead of a fiscal-year cycle. Therefore, you should see the 2.5 percent pay hike on Jan. 1, 2005 instead of Oct. 1, 2004.

The pay increase is based on the proposed home health market basket, which is expected to increase 3.3 percent in 2005, minus 0.8 percentage point, yielding a national 60-day per-episode payment rate at $2,268.70 for 2005. The calendar year 2004 rate is set at $2,213.37.

Provisions in the Medicare reform bill also update payments for home health services furnished in rural areas. Episodes or visits ending on or after April 1, 2004 and before April 1, 2005 will be increased by 5 percent, according to CMS.

Lesson Learned: HHAs can expect a pay increase that reflects the rising cost of providing services.