Medicare Compliance & Reimbursement

HHAs warn rebasing cuts are killing the home care industry.

Home health agencies (HHAs) have little reason to celebrate when comparing the proposed and final PPS rules for 2015. However, the episode base rate of $2,961.38 in the Final Rule is higher than the proposed rate of $2,865.57.

In its proposed rule for 2015 prospective payment system rates, the Centers for Medicare & Medicaid Services (CMS) floated a reduction in home health spending of $58 million — 0.3 percent. In the final rule CMS issued Oct. 30, it’s upped that figure slightly to a $60 million cut.

“This decrease reflects the effects of the 2.1 percent home health payment update percentage ($390 million increase) and the second year of the four-year phase-in of the rebasing adjustments to the national, standardized 60-day episode payment rate, the national per-visit payment rates, and the nonroutine medical supplies (NRS) conversion factor (2.4 percent or $450 million decrease),” CMS explains in a release about the final rule.

Explanation: “The rule implements increases to the national per-visit payment rates, a 2.82 percent reduction to the NRS conversion factor, and a reduction to the national, standardized 60-day episode rate of $80.95 for CY 2015,” CMS continues.

The reason for the slight bottom line change from the proposal is that “the productivity adjustment is 0.1 percent greater than proposed, leading to a slightly lower inflation update — 2.1 vs. 2.2 proposed,” notes the National Association for Home Care & Hospice (NAHC) in its rule analysis.

That will result in an episode base rate of $2,961.38 next year, CMS notes. That compares to a proposed rate of $2,865.57 from the proposed rule, and the $2,869.27 rate for 2014.

Don’t get excited that the base rate has gone up, cautions financial consulting firm Dixon Healthcare Solutions on its blog. “Do not be fooled by the phantom rate increase,” Dixon says. “CMS has reduced the average case mix rate by 3.66 percent. This means you are actually receiving a reduction in average payments of 0.45 percent or $12.91.” As urged by numerous commenters, CMS has “reweighted some of the impact of therapy” in its case mix change, Dixon notes.

CMS does at least provide a clear explanation of the case mix weight changes in the final rule, NAHC notes.

Do this: “We encourage you to review all of the new case mix weights to determine the potential impact on your individual home health agency,” says Palm Bay, Fla.-based Dixon.

Rebasing continues: CMS didn’t bother to respond to most commenters’ criticisms of the rebasing reduction of 2.75 percent and 2.82 percent for nonroutine supplies. 

“We did not propose changes to the rebasing adjustments for CY 2014 through CY 2017 finalized in the CY 2014 HH PPS final rule,” CMS says in the final rule published in the Nov. 6 Federal Register. “The comments received regarding the rebasing adjustments were nearly identical to the comments submitted during the comment period for the CY 2014 HH PPS proposed rule. Therefore, we encourage commenters to review our responses to the comments we received on the rebasing adjustments in the CY 2014 HH PPS final rule.”

Many HHAs and their representatives told CMS that the rebasing cuts are killing the home care industry.

“With the cost of living continuing to climb upwards, I don’t know how agencies will be able to continue to operate with cuts in reimbursement for home health services,” one North Carolina commenter told CMS. 

Note: The HH PPS final rule is online at https://federalregister.gov/a/2014-26057.