Press Releases

CMS ANNOUNCES 2.3 PERCENT INCREASE IN MEDICARE HOME HEALTH PAYMENT RATES

The Centers for Medicare & Medicaid Services (CMS) today announced a 2.3 percent increase in Medicare payment rates to home health agencies for calendar year 2005.  The increase would bring an extra $250 million in payments to home health agencies next year.

“The additional money will mean that beneficiaries will continue to receive quality care from home health agencies,” said Mark B. McClellan, M.D., Ph.D., Administrator of the Centers for Medicare & Medicaid Services, which oversees the payment system.

Medicare pays home health agencies under a prospective payment system.  Under the payment system, Medicare pays higher rates to home health agencies to care for those beneficiaries with greater needs.  Payment rates are based on relevant data from patient assessments conducted by clinicians that all Medicare-participating home health agencies are required to submit.

Home health payment rates are updated annually by either the full home health market basket percentage, or by the home health market basket, adjusted by Congress.  CMS establishes the home health market basket index, which measures inflation in the prices of an appropriate mix of goods and services included in home health services.

This year, CMS is rebasing and revising the home health market basket to ensure it continues to adequately reflect the changes in the costs of efficiently providing home health services.  This means that CMS is revising the home health market basket to reflect changing data sources, cost categories, and/or price proxies to allow the home health market basket to better track price changes experienced by home health agencies, and rebasing the home health market basket using Fiscal Year 2000 Medicare cost report data so the cost category weights reflect changes in the mix of goods and services that home health agencies purchase in furnishing home health care.

CMS is also updating the fixed dollar loss ratio, which affects the percentage of payments made for outlier episodes under the home health payment system. By reducing the fixed dollar loss ratio, more home health episodes will qualify for outlier payments under the home health prospective payment system.

To qualify for Medicare home health visits, people with Medicare must be under the care of a physician, have an intermittent need for skilled nursing care, or physical therapy, or speech therapy, or continue to need occupational therapy.  The beneficiary must be homebound and receive home health services from a Medicare approved home health agency.

Information regarding CMS’s Calendar Year 2005 update to the home health prospective payment system rates is available at Medicare’s consumer web site, http://www.medicare.gov and through Medicare’s help line, 1-800-MEDICARE (1-800-633-4227).