CMS has issued the pre-publication version of: CY 2016 Home Health Prospective Payment System Rate Update; Home Health Value-Based Purchasing Model; and Home Health Quality Reporting Requirements today (10/29/15) at 4:15 pm.  This is available at the Federal Register Public Inspection Desk.

Direct Link to the HH PPS FINAL Rule for 2016

This is the pre-publication version, which is what I have historically called the Ugly version (i.e., not reader-friendly).  It is a PDF document and it is still readable, it’s just not nearly as reader-friendly as the version that is scheduled to be published in the Federal Register on Thursday, Nov 5, 2015.

*  This PDF is 1.8 MB & 297 pages (the FINAL, reader-friendly version will probably be around 100 pages)


Something to keep in mind: your HHA will start admitting patients on Nov 3rd that would be subject to at least most of the changes in this Rule if they remain active for the full 60-day episode; as 59 days after Nov 3rd is Jan 1st  (and the episode revenue will definitely be impacted)!

  • And most changes are based on the End of Episode (EoE) date.
  • Something to consider:
    • What do you do for an episode that could be ended in 2015 or 2016 with no negative impact on quality outcomes if your revenues are going to be reduced for that episode come Jan 1st by 5%?
      • by 10%?
      • by 15%?
      • by 20%?  (we noted 2 service areas in line for reductions at this level per the Proposed Rule)


Initial points after a preliminary and quick review of this FINAL Rule for 2016:

  • The projected reduction to HH expenditures is now $260 million for CY 2016 (as opposed to the $350 million per the Proposed Rule).
  • The $260 million reduction was identified by CMS as a 1.4% reduction to expected expenditures for CY 2015.
    • so this makes 2016 the third year in a row (the rebasing years) that there is an outright reduction to HH reimbursement


  • The Nominal Change in the Case Mix-Weight adjustment (reducing HH payments) has been reduced to -0.97%; but it will be applied to CYs 2016, 2017 & 2018 (as opposed to -1.32% per the Proposed Rule, that was to be applicable to CYs 2016 & 2017 ONLY!) – so in the long run, this is likely going to be worse!
    •  -0.97% each year for 3 years = -2.91% impact
    • -1.32% each year for 2 years = -2.62% impact
    • So CMS has effectively brushed aside the bipartisan concerns from Congress about this cut to reimbursement to keep it for 2016 and beyond!


  • Rebasing accounts for a $440 million decrease in HH reimbursement
    • a -2.4% impact


  • CMS will be recalibrating HH PPS Case-Mix Weights every year now – something to be very worried about!


  • The inflation update is 1.9% increase (+2.3% less the productivity (MFP) reduction factor of 0.4%)
    • Which actually increases HH expenditures by $345 million
      • but the other adjustments wipe this out


  • Home Health Value-Based Purchasing (HHVBP) Model:
    • The same 9 states per the Proposed Rule are in the FINAL Rule (AZ, FL, IA, MA, MD, NC, NE, TN & WA)
    • The MAX Payment Adjustments have changed (originally +/-5% for 2018 & 2019; +/-6% for 2020 and +/-8% for 2021 & 2022); per the FINAL Rule they now are:
      • 2018:  +/- 3%
      • 2019:  +/- 5%
      • 2020:  +/- 6%
      • 2021:  +/- 7% and
      • 2022:  +/- 8%


Every year we help HHAs identify the projected impact to their PPS Revenues based on the information per the Proposed and FINAL Rule.  Some question the value in this until they see it done; but mostly because they have never seen it done in the past.  This is something that I have been doing since 2001; the first 8 years as a proprietary process while I was employed at a HH chain, and I have doing this for HHAs across the country since 2008 when I entered the consulting ranks.  This is a ‘financial fundamental that all HHAs should be performing each and every year, because assuming that your revenue impact is going to be what CMS projects for the industry could be a significant mistake; and historically it has been a catastrophic mistake for many HHAs that have had to close their doors.


BTW: did you know that CY 2014 was the 1st year since 2003 that there was a net decrease in the # of HHA in the Medicare Program?

  • More HHAs closed their doors in 2014 than new HHAs entering the program
  • 2014 was also the 1st year of rebasing in HH
    • Coincidence or Consequence?


We have done a number of these analyses for the Proposed Rule and are now doing many for the FINAL Rule.  We have re-done a few of those CBSA/Service Areas that were noted to have some extremely significant changes per the Proposed Rule and have seen some mollification with the changes per the FINAL Rule.  But we still have seen changes ranging from a:

  • CBSA/Service Area that’s realizing a decrease in all 918 payment rates, ranging from -6.7% to -13.9%, with an average change in all 918 payment rates of -10.6%.  Ouch!
  • to a CBSA that’s realizing an increase in all 918 payment rates, ranging from +3.5% to +13.1%, with an average change in all 918 payment rates of +8.2%


So which CBSA/Service Area would be better to operate in?

  • If no HHAs in either of these CBSA/Service Areas identify what the impact to their revenues is going to be for 2016, in which CBSA/Service Area do you think the HHAs will be operating in that have an easier time dealing with the changes for 2016?
  • How do you think that the HHAs in the CBSA/Service Area with the average reduction of 10.6% are going to fare if they are approaching 2016 with the expectation that the revenue reduction will be 1.4% for them in 2016?
    • They will not do well
    • and it would not be surprising to see a # of these HHAs close up shop over the next 12-14 months.


Don’t leave to chance that which can be easily identified that could have a significant impact on your future ability to continue as a going concern.  Whether you have IFS help you or you do it yourself, do yourself a favor and make this an activity that you are doing every year to protect your HHA from the unexpected, while improving the financial fundamentals at your agency.