In brief:

• The proposed 2018 home health prospective payment system (HH PPS) includes an $80 million reduction in payments—a 2% drop from 2017
• CMS will shift to a new payment methodology in 2019 that would establish 30-day episodes of care instead of the 60-day episodes currently used, and eliminate therapy service use thresholds in favor of payments more focused on clinical characteristics and patient information
• 2019 changes could result in an estimated $950 drop in payment
• Additional quality-reporting requirements to be added in 2020: skin integrity, falls, long-term care hospital patient functional assessments/care plans

The Centers for Medicare and Medicaid Services (CMS) has issued a proposed rule for the 2018 Medicare home health prospective payment system (HH PPS) that would continue a planned series of cuts that began in 2014, with an estimated overall 0.4% reduction, or about $80 million, scheduled for next year. The proposal, released on July 25, also includes a plan to adopt a new payment model in 2019 that would shift from 60-day to 30-day payment episodes and lead to a nearly $1 billion reduction in home health reimbursements.

Payment in 2018. The $80 million payment adjustment continues a set of reductions mandated by the Affordable Care Act, which began with a $60 million drop in 2015, a $260 million reduction in 2016, and $130 million for 2017. CMS arrived at the overall estimate by weighing a 2% payment increase against various decreases, mostly related to reductions in the 60-day episode payment rate and cuts to account for nominal growth in case mix.

Episodes of care in 2019. In 2019 CMS would adopt a new payment methodology, known as the Home Health Grouping Model (HHGM), that would change the unit of HH payments from 60-day episodes of care to 30-day episodes of care. According to an article in Modern Healthcare, the change is based on a CMS analysis that concluded that the average length of home health care was 47 days, "but roughly a quarter of all 60-day episodes of care lasted 30 days or less."

Therapy service use thresholds in 2019. Also part of the HHGM: the removal of therapy service use thresholds that CMS uses to make case-mix adjustments to HH payments. Instead, CMS would "rely more heavily on clinical characteristics and other patient information to place 30-day periods of care into meaningful payment categories," according to a CMS fact sheet on the proposed rule. Combined with the switch to 30-day episodes of care, CMS estimates that the adoption of the HHGM would result in a payment reduction of $950 million in 2019.

Quality reporting in 2020. CMS is proposing the addition of 3 assessment-based quality measures beginning in 2020: changes in skin integrity postacute care; percent of residents experiencing 1 or more falls resulting in a major injury; and percentage of long-term care hospital patients who receive functional assessments at admission and discharge, as well as a care plan that addresses function.

General comments on Medicare. As in previous proposed rules, CMS also seeks input on how the overall Medicare system might be improved—an offer APTA took up in its comments to proposed rules earlier this year.

APTA regulatory affairs staff is reviewing the proposed rule and will submit comments on it to CMS by the September 25 deadline.