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Medicare Eyes $730 Million in Savings Through Home Health Proposal

By Kerry Young, CQ Roll Call

July 7, 2015 -- Medicare officials have estimated saving as much as $730 million by 2022 through a combination of changes in how the program pays agencies and companies that care for the elderly and disabled in their homes.

A recently proposed rule includes changes that would result in a net decrease of $350 million, or 1.8 percent, in payments next year to home health agencies, according to the Centers for Medicare and Medicaid Services (CMS).

Creating what amounts to a competition among home health agencies based on quality of care delivered could produce another $380 million in savings by 2022, CMS said.

In the 2016 payment rule, CMS outlined a Home Health Value-Based Purchasing (HHVBP) Model program that it would test in nine states. Payments to individual home health agencies, or HHAs, within the boundaries of selected states could rise of fall as much as 8 percent depending on their performance relative to peers, CMS said in the proposed rule. There would be no aggregate change in total home health payments.

Expected savings from the program would come from keeping people healthier, CMS said. The agency said a very conservative estimate would yield a 6 percent annual reduction in hospitalizations and a 1 percent annual drop in admissions to skilled-nursing facilities. CMS would take steps to randomize the selection of the states to be chosen, and, at least in the initial outline, would require all home health agencies in the boundaries of selected states to be included in the test.

Such steps are necessary because Medicare-providers are generally reluctant to participate voluntarily in models in which their Medicare payments could be subject to possible reduction, the agency said.

Still, CMS made a point of requesting comment on alternative geographic selection methodologies for participants in the test.

About 3.5 million people enrolled in Medicare received home health services annually, costing the program $17.9 billion. Expansion and improvement of such services has been seen as way that CMS can prepare to handle the demands of aging baby boomers, yet at the same time, agency officials have been challenged to respond to complaints about misuse and fraud in connection with these services.

The proposed 2016 payment rule reflects a broader drive to tie Medicare reimbursement to the quality of care delivered, not just the volume of services. The national per-visit payment for a home health aide for an organization that submits required quality data to CMS, for example, would rise to $61.09 from $57.89 this year, while the payment for the same visit for an organization that doesn't submit this data would be $59.89.

With the proposed value-based purchasing model, CMS officials intend to build off what they have learned from similar programs, including one involving hospital care. People want to be taken care of in their homes and communities whenever possible, and CMS aims to make sure that care in the home is supported by a value-based care delivery model that is consistent with the rest of the system, said Andy Slavitt, the acting administrator of CMS, in a statement. The goal is that no matter where the care is delivered, it is supported by a payment system that rewards providers who deliver the highest quality outcomes.

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