CMS to Cut Home Health Payments by $200 Million in 2014

The Centers for Medicare & Medicaid Services (CMS) on Friday finalized a rule that will reduce payments to home health agencies by $200 million in 2014—a reduction lower than the agency initially proposed.

The rule for calendar year 2014 cuts Medicare payments under the Home Health Prospective Payment System (HH PPS) by 1.05%, which is slightly lower than the 1.5% outlined when then rule was proposed.

“The benefits of this final rule include paying more accurately for the delivery of home health services,” stated CMS in the final rule published in the Federal Register.


The final rule also reflects the combined effects of 2.3% payment update of $440 million, a reduction of $520 million as a result of rebasing adjustments required under the Affordable Care Act, as well as $120 million decrease due to “refinements” related to the Grouper home health prospective payment system.

Rebasing adjustments of 3.5%, which is the maximum amount, will reduce the national standardized 60-day episode payment amount in each year from 2014 to 2017 by $80.95. In aggregate, the total rebasing cuts would amount to 14% over this time period.

“CMS is confident that Medicare beneficiaries will continue to receive quality home health services across the country under our final policies,” said CMS Principal Deputy Administrator Jonathan Blum. “We will vigilantly monitor payment claims and other metrics to ensure that access remains strong as we phase-in this new payment adjustment.”


The rule also includes two new quality measures, which will require all home health agencies to report unnecessary hospital readmission rates and preventable trips to the emergency room—measures that CMS states support critical reforms laid out in the Affordable Care Act.

Home health industry advocates have long opposed additional payment reductions from CMS, as these new cuts add to the $78 billion the industry has suffered since 2009, according to the National Association for Home Care & Hospice (NAHC).

“The clear conclusion is that saving money is more important to CMS than serving those who are so sick they cannot leave home without assistance,” said NAHC President Val Halamandaris. “It is obvious that they turned a deaf ear to our pleas on behalf of aged, infirm, disabled, and dying Americans.”

View the finalized rule.

Written by Jason Oliva