2016 proposed rule and value based on purchasing

The Proposed Rule for 2016 has been released and it is just as many had expected.  Home health continues to be battered by decreasing reimbursement.  Reimbursement for 2016 is expected to get cut $350 million – 1.8% from 2015 levels.

In 2016, the proposed episodic base rate is $2,938.37 which is an increase over 2015’s base rate of $2,869.27.  However, 2016 is also bringing with it case mix weight recalibrations that will effectively strip that increase away and result in the net decrease of 1.8%.

Case mixes continue to be adjusted due to CMS’ perception that agencies are up-coding claims. Up-coding is believed to occur when agencies portray a condition as more significant than it actually is. This creep, according to CMS, results in an automatic adjustment to reimbursement of 1.72% for 2016.

CBSAs (Core-Based Statistical Area – a designated area surrounding an urban center created by the Office of Management and Budget) in 2016 will also continue to be adjusted to meet new population shifts.  This is a continuation of the adjustments that occurred in 2015. These changes are important because the CBSA groupings are used to determine your agency’s wage index value.  A change in wage index value can either increase your average reimbursement or greatly reduce it.

LUPAs (Low-Utilization Payment Adjustment, which occurs when an episode has 4 or less visits) will receive an increase under the proposed rule.  The total amount of the increase for LUPAs will be 5.86%, factoring in a rebasing increase, an inflation update, and a wage index budget neutrality adjustment.

Rural Add-On:  The rural add-on continues in 2016 at 3%.  This is good news for agencies treating patients outside of major metropolitan areas, to cover increased expenses incurred in seeing these patients.

Sequestration:  We are expecting that 2016 will continue with the imposed Sequestration adjustment of 2% on all final claims.  We will keep an eye on this as the overall adjustment, including the rate cut, is closer to 4% with Sequestration.

Agencies who continue to ignore requests to submit OASIS data and HHCAHPS data will also continue to be penalized.  A 2% rate reduction will be imposed for agencies that do not comply.

As expected, value based purchasing (VBP) is arriving.  If an agency does not meet certain criteria in quality performance, the agency can expect to have its reimbursement cut.  However, agencies that do meet the criteria can expect a reimbursement bonus.

Since we are finding out about this in the proposed rule for 2016, the final aspects of the program can change.  The details that have been provided in the proposed rule are pretty clear about the overall purpose and some agencies are not going to like them.

For agencies in these nine (9) states, be ready.  Although the selected states could change, the list at this time is as follows:  Arizona, Florida, Iowa, Maryland, Massachusetts, North Carolina, Nebraska, Tennessee and Washington.  VBP would be mandatory – agencies would not have the option to opt out should they decide their agency couldn’t handle the scrutiny.

The VBP model proposed by CMS is derived from baseline data for this current year, 2015.  2016 would be the first year in which any measurement would occur.  The seven year pilot, which ends in 2022, would not add or reduce the home health reimbursement overall. Instead it would take a Robin Hood approach in reverse – taking from those that do not provide good care and giving to the agencies that do provide good care.

The increase or decrease in reimbursement to agencies could range from 5-8% over the pilot’s trial run.  Early CMS projections suggest that 10% of providers will receive reimbursement reductions of 2.26-3.33%.  As this is a trial and only a proposed pilot program, we can expect further refinement and potentially less drastic cuts to reimbursement.

Criteria used to determine quality measures will be familiar to many agencies.  A combination of criteria from OASIS data, Medicare claims and HHCAHPS will be used to derive the standards.  The criteria includes:  10 Process Measures, 15 Outcome Measures, and 4 new measures, yet to be defined.

Home Health Today will continue to monitor the proposed rule and commenting period closely.  While some of the reimbursement effects are a direct result of the Affordable Care Act – the gift that keeps giving – some effects are the result of certain providers who refuse to believe they must actively follow regulations.