Payment changes proposed for 2011

Payment changes proposed by the Centers for Medicare & Medicaid Services (CMS) represent a 4.75% decrease in Medicare payments to home health agencies (HHAs) for calendar year (CY) 2011. This is an estimated net decrease of $900 million compared to payments HHAs received in CY 2010. It includes the combined effects of a market basket update, a wage index update, reductions to the home health prospective payment system (HH PPS) rates to account for increases in aggregate case-mix that are unrelated to underlying changes in patients' health status, and other provisions mandated by the Affordable Care Act (ACA) of 2010.

The ACA mandates that CMS apply a 1% point reduction to the CY 2011 home health market basket amount, which equates to a proposed 1.4% update for HHAs in CY 2011. CMS also proposes to further reduce HH PPS rates in CY 2011 to account for additional growth in aggregate case-mix that is unrelated to changes in patients' health status. Based on updated data analysis, instead of the planned 2.71% reduction for CY 2011, CMS proposes to reduce HH PPS rates by 3.79% in CY 2011 and an additional 3.79% in CY 2012.

The ACA also changes the existing home health outlier policy through a 5% reduction to HH PPS rates, with total outlier payments not to exceed 2.5% of the total payments estimated for a given year. HHAs are also permanently subject to a 10% agency-level cap on outlier payments.

The proposed rule also offers an approach to implement an ACA provision, which mandates that, prior to certifying a patient's eligibility for the Medicare home health benefit, the physician must document that the physician or a non-physician practitioner has had a face-to-face encounter with the patient.