On July 7, the Centers for Medicare and Medicaid Services (CMS) published a proposed rule updating Medicare’s Home Health Prospective Payment System payment rates for 2015.[1]

The rule implements the second phase of a four-year initiative to rebase Medicare home health payments. Specifically, the national, standardized 60-day episode payment amount, the national per-visit rates and the Non-Routine Medical Supply conversion factor are targeted for adjustments. The adjustments are intended to reflect changes in the cost and utilization of services such as the number of visits and mix of services provided in an episode, the level of intensity of services provided, and the average cost of providing care per episode.

Prior to the four-year rebasing initiative, CMS relied on cost and utilization data from 2000, the year home health agencies first transitioned from a retrospective reimbursement system to a prospective payment system and the prospective payment rates were set.

An additional focus of the proposed rule relates to the face-to-face encounter requirement. Per the ACA, physicians are required to document that a face-to-face encounter with a patient occurred in order to certify the patient’s eligibility for Medicare home health benefits. The certifying physician must provide an explanation of why the clinical findings support eligibility.

The proposed rule would eliminate the narrative requirement in “an effort to simplify the face-to-face encounter regulations, reduce burden for [home health agencies] and physicians, and to mitigate instances where physicians and [home health agencies] unintentionally fail to comply.”

CMS estimates that as a result of the proposed rule, payments to home health agencies will decrease by $58 million, and that costs associated with certifying patient eligibility will decrease by $21.55 million. As for other effects? For one thing, it will be interesting to see whether the removal of the narrative requirement satisfies the home health industry, which has challenged the face-to-face encounter requirements as vague, burdensome and an impediment to care delivery.

[1] The proposed rule is available here.