Proposed Home Health Payment Changes

September 2017 | Article

On July 28, the Centers for Medicare and Medicaid Services (CMS) issued the CY 2018 Home Health Prospective Payment System (HH PPS) Rate proposed rule (CMS-1672-P).  The rule is available for public review with comments due by September 25, 2017.

Under the current HH PPS, CMS pays for home health services provided during a 60-day episode of care. The combinations of episode timing, clinical and functional levels, and therapy service use categories result in 153 Home Health Resource Groups (HHRGs) into which home health episodes are categorized.

The proposed rule includes a significant change for 2019. CMS proposes to implement an alternative case-mix adjustment methodology, the Home Health Groupings Model (HHGM). The HHGM would use 30-day periods rather than 60-day episodes and rely more heavily on clinical characteristics and other patient information to place patients into more meaningful payment categories.

This change is an outgrowth of a study required by the Affordable Care Act (section 3131(d)), which found that the current home health payment system may result in home health agencies not accepting patients with clinically complex and/or poorly controlled chronic conditions who do not qualify for therapy but require a large number of skilled nursing visits. Under the current payment system, home health agencies receive higher payments for providing more therapy visits, which may incentivize unnecessary utilization.

Under the HHGM, each episode is classified into one of two admission source categories – community or institutional – depending on what healthcare setting was utilized in the 14 days prior to home health admission. 

CMS projects the overall impact of the proposed HH PPS case-mix adjustment methodology refinements is an estimated −$950 million (−4.3 percent) in payments to home health agencies in CY 2019 if the refinements are implemented in a non-budget neutral manner for 30-day periods of care beginning on or after January 1, 2019. The overall impact is an estimated −$480 million (−2.2 percent) in payments to HHAs in CY 2019 if the refinements are implemented in a partially budget-neutral manner.

The full text of this proposed rule is available on the CMS website. CMS posts all comments received before the close of the comment period as soon as possible after they have been received – please refer to: http//

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