Good Morning MFS Bloggers, On Friday, July 16, 2010, the Centers for Medicare & Medicaid Services (CMS)announced a number of proposed changes to Medicare home health payments for 2011.

The proposed rule, on display in the Federal Register, represents a 4.75 percent decrease in Medicare payments to home health agencies (HHAs) for calendar year (CY) 2011. This is an estimated net decrease of $900 million compared to payments HHA’s received in CY 2010. It includes the combined effects of a market basket update, a wage index update, reductions to the home health prospective payment system (HH PPS) rates to account for increases in aggregate case-mix that are unrelated to underlying changes in patients’ health status, and other provisions mandated by the Affordable Care Act (ACA) of 2010.

The ACA mandates that CMS apply a 1 percentage point reduction to the CY 2011 home health market basket amount, which equates to a proposed 1.4 percent update for HHA’s in CY 2011. CMS also proposes to further reduce HH PPS rates in CY 2011 to account for additional growth in aggregate case-mix that is unrelated to changes in patients’ health status. Based on updated data analysis, instead of the planned 2.71 percent reduction for CY 2011, CMS proposes to reduce HH PPS rates by 3.79 percent in CY 2011 and an additional 3.79 percent in CY 2012.

The ACA also changes the existing home health outlier policy through a 5 percent reduction to HH PPS rates, with total outlier payments not to exceed 2.5 percent of the total payments estimated for a given year. HHAs are also permanently subject to a 10 percent agency-level cap on outlier payments.

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