Value Based Purchasing Comes to the Home Health Industry

Jan 12, 2016 at 12:42 pm by steve

The Department of Health and Human Services (“HHS”) continues to advance its plan to enforce Value Based Purchasing in an effort to change the methods by which care is delivered and reimbursed in the United States. In a November 4, 2015 presentation to the Georgia Chapter of the Healthcare Financial Management Association, HHS representatives articulated the goal of 85 percent of Medicare fee for service payments tied to quality by 2016 with 30 percent of overall Medicare payments tied to quality or value through alternative payment systems such as the Medicare Advantage program by 2016—50 percent by 2018. These very same statistics were recited in the recent Final Rule updating the Home Health Prospective Payment System that, correspondingly, established a Home Health Value-Based Purchasing (“HHVBP”) model (November 5, 2015 Federal Register, pages 68624-68719). More specifically, HHS “expect[s] payment adjustments that both reward improved quality and penalize poor performance will incentivize quality improvement and encourage efficiency, leading to a more sustainable payment system.”

Although Alabama has temporarily been spared the direct impact of the HHVBP model that will be implemented in eight “randomly” selected states of Massachusetts, Maryland, North Carolina, Florida, Washington, Arizona, Iowa, Nebraska and Tennessee, all provider based and independent home health agencies should review and begin planning for new value based initiatives. Consistent with the aggressive quality payment goals described above, HHS anticipates eight percent of home health fees will be subject to HHVBP modifications by 2022. All of the payment modifications continue to follow the zero sum structure sometimes referred to as the “tournament model.” Essentially, incentive payments for home health agencies with good quality statistics will be sourced from home health agencies without good quality statistics. Good performers will enjoy higher reimbursement rates and low quality performers will be financially penalized.

Quality measures are grounded in Outcome and Assessment Information Set (“OASIS”) measures although not exclusively. The final “starter set” of quality measures includes six process measures, ten outcome measures, five Home Health Care Consumer Assessment of Healthcare Providers and Systems Survey “HHCAHPS” standards and three “New Measures.” Anticipate that these quality measures will expand in the future as HHS proposed and then unilaterally decided not to implement approximately twenty other factors. Among the “starter set” of quality measures are, as anticipated, measures protecting against hospitalizations and emergency department use within 60 days of the commencement of home health services and increased documentation and implementation of vaccinations for influenza and shingles. More troublesome are some of the HHCAHPS standards that are remarkably subjective. HHS anticipates that home health providers will, somehow, be able to measure whether home health agency personnel treat beneficiaries “as gently as possible” and whether representatives “listen carefully to you [the beneficiary].” Perhaps thankfully, the graders for these HHCAHPS standards will be unrelated and independent Medicare beneficiaries as opposed to, for example, the teenagers living at my house.

Provider based home health agencies as well as independent home health agencies in Alabama should circulate the Final Rule to their staffs (review, in particular, pages 68670-68674) in order to ensure that providers are prepared for new performance standards. More importantly, the Final Rule provisions should be shared with HER/billing providers in order to ensure that programming modifications are soon made for documentation purposes and to prompt home health representatives to ask each and every HHCAHPS question. And please remember to be gentle and listen carefully. Eight percent of your home health care revenues will be at risk. 


Philip M. Sprinkle II heads the Health Care Practice Group at Balch & Bingham, LLP. A frequent lecturer and author on health law issues, Sprinkle is licensed in, among other jurisdictions,Virginia, Georgia and Florida where he is one of only approximately 100 attorneys Board Certified in Health Law. 

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