In Home Nurse Making a Visit to Patient

The mandatory pilot program will use 24 home health quality measures to determine an agency’s Medicare reimbursement rates.

Impacts of financial decisions

Value Based Purchasing Program Affects Home Health Agency Reimbursement

  • Gary Massey
  • 2/22/2016

Home health agencies (HHA) may soon be financially rewarded or penalized by Medicare based on their quality measures. 

In 2016, the Centers for Medicare and Medicaid Services (CMS) implemented a value based purchasing (VBP) model for all Medicare-certified agencies in nine states: Arizona, Florida, Iowa, Maryland, Massachusetts, North Carolina, Nebraska, Tennessee, and Washington. While the program is technically a pilot, providers in those states must participate and will be scored based on their quality measures. 

What will be measured? 

The VBP program will initially look at 24 home health quality measures that are collected by CMS through claims submissions, the Outcome and Assessment Information Set (OASIS) patient assessment tool, the Home Health Care Consumer Assessment of Healthcare Providers and Systems (HHCAHPs) patient satisfaction tool, and self-reported data. Additional measures may be added in the future.

Current Home Health VBP Quality Measures
OASIS process measures:
  • Care management 
  • Flu vaccine data collection 
  • Flu immunization received 
  • Pneumococcal vaccine received 
  • Reason pneumococcal vaccine was not received 
  • Drug education on all medications 
OASIS outcome measures: 
  • Improvement in ambulation/locomotion 
  • Improvement in bed transferring 
  • Improvement in bathing 
  • Improvement in dyspnea 
  • Discharged to community 
  • Improvement in pain interfering with activity 
  • Improvement in management of oral medications 
  • Prior functioning activities of daily living (ADL) and instrumental ADL
Claims data:
  • Acute care hospitalization within 60 days 
  • Emergency department use without hospitalization 
HHCAHPS satisfaction:
  • Care of patients 
  • Communication between providers and patients 
  • Specific care issues 
  • Overall rating of agency 
  • Willingness to recommend the agency 
New agency-reported data:
  • Flu vaccine coverage for HHA personnel 
  • Shingles vaccine ever received by patient 
  • Advance care planning

How will scoring work? 

Each HHA’s total score will be based on two separate factors: 

  • How its quality measures compare to other agencies within its state 
  • Whether its quality measures have improved over time 

CMS will use each agency’s 2015 quality measures as the base year to compare its initial measures. As the program continues, CMS will determine if the agency’s quality measures have improved from the previous year and how each agency compares with other home health providers in its state. 

Each quality measure will be scored equally to create the agency’s total quality score. Agencies will be notified annually in late summer of their total score, and their “quality-adjusted” payment rate will increase or reduce the Medicare PPS payment amounts they will receive for that year. 

How much will the reimbursement rate change? 

Beginning in 2018, home health agencies’ reimbursement rates will include a payment modification based on their total quality score of up to a 3 percent increase or decrease in their Medicare prospective payment system reimbursement payments. The maximum adjustment will gradually increase or decrease up to 8 percent by 2022. CMS says the program is budget-neutral for home health agencies but estimates that it will save $380 million in unnecessary hospitalizations and skilled nursing facility usage through this model. 

Payment adjustment

Performance Year Year for Payment
Reward or Penalty
Reward or Penalty
2016 2018 3%
2017 2019 5%
2018 2020 6%
2019 2021 7%
2020 2022 8%

What Medicare programs does this apply to? 

The reimbursement adjustments associated with this program will only apply to traditional Medicare patients, not Medicare Advantage patients. However, OASIS data from traditional Medicare, Medicare Advantage, Medicaid, and Medicaid managed care patients will be used in computing the quality scores. The quality measures are risk adjusted to compensate for differences in the patient population served by HHAs. 

What should an agency do? 

As a first step, Medicare certified HHAs with providers in the nine selected states should register now on the CMS Enterprise Portal to obtain an Enterprise Identity Management (EIDM) user ID. The website allows agencies to view their quarterly and annual performance reports and annual payment adjustment reports and submit their new measurement data. In late spring, CMS will provide an individualized report for each agency in the nine states that will identify its scores and the statewide median scores of other home health providers. 

Agencies in states that do not currently participate in the program may also register, but they cannot submit quality data through the CMS Enterprise Portal or receive reports. However, all agencies nationwide should focus on the 24 quality metrics to assess their performance, see how they compare to other agencies, and develop plans to improve their scores. Most of the measures included in the calculation of the VBP score are already available on the CMS Home Health Compare website, and others are available through HHCAHPs. 

How we can help 

CliftonLarsonAllen is available to work with Medicare certified home health providers to better understand the VBP program and to help them receive the appropriate awards under this new system. CLA offers operational assessments to identify and implement opportunities for improvement and provides strategic discussions to align home health programs for changes in reimbursement, referral relationships, and bundled services.