The HH PPS Proposed Rule for 2016 was published in the Federal Register on July 10, 2015.


There has been a lot of talk about the changes headed for Home Health; the biggest of which, the Value-Based Purchasing (VBP) demonstration is projected to be applicable to nine-states (AZ, FL, IA, MA, MD, NC, NE, TN & WA).  From an industry stand-point, the 2016 Proposed Rule is not the most significant change to HH PPS since the inception of PPS (that was Rebasing in CY 2014); however, the VBP demonstration WILL BE the most significant change to PPS since the inception of PPS for the HHAs in the states selected in the FINAL Rule. Additionally, the Proposed Rule includes the updates (increases & decreases) to the PPS payment rates, the changes for the third year of rebasing, changes to the Point Scoring Variables, changes in the Case-Mix Weights, changes in the Wage Indices, the re-introduction of the ‘Nominal Change in the Case-Mix Weight’ adjustment, Outliers, the extension of the Rural Add-on and changes to the Home Health Care Quality Reporting Program. The overall economic impact as estimated in the Proposed Rule is that CY 2016 is projected to have a reduction in reimbursement of $350 million (a 1.8% reduction) to HHAs.  This is identified as being made up of the following:

  • $420 million increase for the inflationary update of 2.3%
  • $470 million decrease due to the impacts of YR 3 of Rebasing (-2.5%) and
  • $300 million decrease due to the Nominal Change in the Case-Mix Weight Adjustment (this is proposed for both 2016 & 2017 @ -1.72%)

For whatever reason, CMS does not indicate ANY changes to reimbursement for the following areas noted in the Proposed Rule:

  • the Value-Based Purchasing demonstration (although they do note that it is supposed to redistribute home health expenditures by $380 million over the years 2018 through 2022 amongst the participating HHAs) 
  • the change in the Point Scoring Variables (the clinical and functional domains)
  • the change in the Case-Mix Weights (yet most agencies that looked at this issue in 2015 saw a reduction in their reimbursement for a significant number of patients that they had in both 2014 and 2015.  CMS did this change in 2015 also, and in the 2016 Proposed Rule they are proposing to adjust these every year!  Makes one wonder:
    1. what kind of “gaming” CMS might be doing with reimbursement since they feel the need to change these rates every year;  and
    2. how good a handle can they really have on HH PPS if they must change these every year?)
  • Outliers (but this provision has been gouging reimbursement from home health throughout their existence!)

Please see our other posts about the aforementioned issues; as well as our prior posts about the issues noted with the Outlier Provision and why we feel that more than 98.5% of all HHAs would be better off if this provision did not exist and how in 2011, 2012 and 2013 it robbed home health of approx. $500 million in reimbursement each year! For those that want to review this rule, we are offering a free ‘bookmarked’ PDF copy of this Proposed Rule.  This will make it easier for you to read/review this Proposed Rule and hopefully comment on this Rule; something the home health industry has historically done a poor job of.

  • There were 350 comments submitted by the industry for the 2015 Proposed Rule (and it was this rule that CMS first identified their intention of establishing the VBP model for HH in 2016: 14 comments were N/A)
  • There were ONLY 100 comments submitted for the 2014 Proposed Rule (this was the rule in which they first proposed the concept of rebasing HH reimbursement, and this was unquestionably the most significant change to HH PPS since the inception of PPS back on Oct. 1, 2000)

FYI:  There were over 12,000 Medicare Certified HHAs at those times, and that was all the comments the industry submitted; and a significant # of those comments were not even by HHAs.  This is why CMS has run roughshod over home health for the last 10+ years; because the industry does not organize and unite and participate in the Rule-Making Process.

  • Here at IFS, we are trying to change that.
    • Let’s turn 350 comments for the 2015 rule into 3,500 for the 2016 Proposed Rule.
    • A tall order, yes!  But one that is doable.
  • At IFS, we work in the industry; but we are also advocates for this industry!
    • And we are advocates not just by our words, but by our actions.
    • Ask us how we can help you.