Medicare Compliance & Reimbursement

Expect payment to take a hit.

Home health agencies’ worst nightmares seem to be coming true. Pay for performance in the guise of a value-based program could hit come January, and outcomes will dictate future reimbursement. 

Under the Centers for Medicare & Medicaid Services’ (CMS’) proposed VBP program (formerly known as pay for performance [P4P]), all home health agencies in nine pilot states will be subject to the program starting Jan. 1 (see box, p. 110, for states). CMS will “adjust” up to 5 percent of those agencies’ Medicare reimbursement for 2016 and 2017 outcomes; up to 6 percent for 2018; and up to 8 percent for 2019 and 2020. The adjustments based on 2016 outcomes would take effect in 2018 and so forth, CMS explains in the 2016 home health prospective payment system rule released July 6.

Basic framework: “We expect that the risk of having payments adjusted … would provide an incentive among all competing Medicare-certified HHAs delivering care within the boundaries of selected states to provide significantly better quality through improved planning, coordination, and management of care,” CMS says in the rule. “The degree of the payment adjustment would be dependent on the level of quality achieved or improved from the baseline year, with the highest upward performance adjustments going to competing Medicare-certified HHAs with the highest overall level of performance based on either achievement or improvement in quality,” the rule says.

“People want to be taken care of in their homes and communities whenever possible, and CMS aims to make sure that care in the home is supported by a value-based care delivery model that is consistent with the rest of the system,” says CMS Acting Administrator Andy Slavitt in a release. “The goal is that no matter where the care is delivered, it is supported by a payment system that rewards providers who deliver the highest quality outcomes.”

CMS’s proposal to penalize agencies up to 8 percent was roundly criticized in agencies’ comments on the 2015 proposed rule, which contained a rough outline of the currently proposed VBP model.

8 Percent: An Agency-Killer

Industry experts continue to blast that figure as unreasonable. “That’s a really large number,” notes attorney Robert Markette Jr. with Hall Render in Indianapolis. “Your quality scores are going to be huge,” with VBP adjustments potentially closing agencies’ doors, Markette warns.

“There are a lot of agencies that won’t be able to deal with this,” cautions financial consultant Pat Laff with Laff Associates in Hilton Head Island, S.C. Cuts of up to 8 percent “are going to be a killer,” Laff tells Eli.

Don’t forget: The VBP cuts will come on top of the Affordable Care Act-mandated reductions to HHA rates.

“While we support the concept of value-based purchasing in general, it needs to be done in a manner that is fair and rational,” says Val Halamandaris of the National Association for Home Care & Hospice in a message for members. “The CMS model is anything but fair and rational,” he continues. “The level of the take away is punitive, far greater, for example, than the current hospital based value-based purchasing that takes away 1.25 percent (and gradually 2.0 percent) from all providers.”

Bottom line: “Although the proposed rule sounds good in its stated goals of improving quality, the mechanics expose it as nothing more than a veiled effort to cut payments by approximately $300 million to home health patients and providers over the seven year term of the pilot,” Halamandaris concludes.

In the later years of the model, an agency “could do a good job and still get a reduction,” Markette protests. When “grading on a curve,” as CMS proposes by comparing peers’ data to one another, “eventually good providers could go down.”