The Centers for Medicare & Medicaid Services (CMS) has proposed a rule designed to ensure more appropriate payment for services provided by Medicare home health agencies, while establishing incentives for more efficient care for Medicare beneficiaries. This proposed rule contains the first refinements to the Medicare home health prospective payment system (HH PPS) since 2000 and also contains the annual update to the Medicare HH PPS payment rates.

The net impact of all of the proposed refinements and updates in the HH PPS proposed rule is an estimated additional $140 million in payments to home health agencies in CY 2008.

"The proposed home health prospective payment system for calendar year 2008 furthers Medicare's commitment toward making accurate payments in all of its payment systems. For home health agencies, the proposed rule seeks to improve the appropriateness and performance of care for Medicare beneficiaries," said CMS Acting Administrator Leslie V. Norwalk.
Medicare pays home health agencies through a PPS, which provides for higher payment rates for care to those beneficiaries with greater needs. HH PPS payment rates are based on relevant clinical data from patient assessments required of all Medicare-participating home health agencies (HHAs).

Home health payment rates have been updated annually by either the full home health market basket, or by the home health market basket as adjusted by Congress. The home health market basket index measures inflation in the prices of an appropriate mix of goods and services included in home health services. Section 5201(c) of the Deficit Reduction Act (DRA) of 2005 provides for an adjustment to the home health market basket percentage update for CY 2007 and subsequent years depending on the submission of quality data by HHAs. The proposed home health market basket increase for CY 2008 is 2.9%.

HHAs collect and report Outcome and Assessment Information Set (OASIS) data. For CY 2008, CMS proposes to evaluate home health care quality by continuing to rely on the submission of OASIS assessments. Continuing to use the current OASIS instrument ensures that providers would avoid any additional burden of reporting through a separate mechanism and any related costs associated with the development and testing of a new reporting mechanism.

The proposed rule includes a provision to continue to adjust payment for reporting of quality data. HHAs that submit the required quality data would receive payments based on the proposed full home health market basket update of 2.9 percent for CY 2008. If a HHA does not submit quality data, the home health market basket percentage increase would be reduced by 2 percentage points to 0.9 percent for CY 2008. CMS publicly reports the nationally accepted and approved quality measures through the Medicare Home Health Compare Web site located at www.medicare.gov. The proposed rule adds two National Quality Forum-endorsed measures to the 10 that are currently reported: emergent care for wound infections - deteriorating wound status; and improvement in status of surgical wound.

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