Press Releases



The Centers for Medicare & Medicaid Services (CMS) today announces a 2.0 percent market basket update to Medicare’s calendar year (CY) 2010 home health prospective payment system (HH PPS) rates and modifications to the home health outlier policy. These improvements are evidence of CMS’ continued efforts to ensure appropriate payments, to prevent fraud and abuse, and to protect beneficiaries in the Medicare home health program. 

Home health agencies (HHAs) receive additional payments (outlier payments) for 60-day home health episodes of care that carry unusually high costs.  For CY 2010, CMS will cap home health outlier payments at 10 percent per HHA and target total aggregate outlier payments at 2.5 percent of all HH PPS payments.   The current (2009) target for aggregate outlier payments is 5 percent of total HH PPS expenditures. By lowering the total outlier payment target to 2.5 percent, this final rule increases home health base rates by 2.5 percent for CY 2010.


“This final regulation builds on Medicare’s efforts to refine its payment systems while working to reduce waste, fraud and abuse,” said Jonathan Blum, director of CMS’s Center for Medicare Management. “Through the use of up-to-date home health data, it also provides a clearer focus for oversight of the program while encouraging better coordination of Medicare’s home health benefits.”


In this final rule, CMS continues its current policy of a 2.75 percent reduction to national standardized 60-day episode payment rates and non-medical supply factors in CY 2010.  Retention of this policy will help offset the increase in the home health case-mix that is not associated with any underlying change in the actual clinical conditions of home health patients.  This CY 2010 reduction is the third year of a four-year phase-in of HH PPS rate adjustments, which were made final in the HH PPS Refinement and Rate Update for the CY 2008 final rule.


Historically, home health payment rates have been updated annually by either the full home health market basket index or by an adjustment to the home health market basket index by Congress.  CMS uses the home health market basket index – an inflation measurement of the costs of the mix of goods and services offered by home health agencies.  The Deficit Reduction Act of 2005 (DRA) provided for an adjustment to the home health market basket percentage update for CY 2007 and subsequent years depending on quality data submissions by HHAs. 


Through implementation of new payment and enrollment safeguards, this final rule will reduce Medicare’s vulnerability to fraud, abuse and improper payments.  HHAs currently submit Outcome and Assessment Information Set (OASIS) data as a condition of participation in Medicare. Beginning Jan. 1, 2010, the final rule will require HHAs to submit OASIS data as a condition of payment under HH PPS.  


CMS is implementing an improved version of OASIS, called OASIS-C, to collect data on all episodes of care beginning Jan. 1, 2010. This data will document important aspects of the patient’s health status including clinical condition, functional abilities, and service needs.  As a result, a clinician will be able to capture a clear and accurate picture of the patient which will assist in development of an appropriate plan of care. Documentation provided through OASIS-C also could be used to signal concerns about patient health, encourage preventive care, identify needs for additional patient treatment, and record patient immunizations and vaccinations. 


In CY 2010, CMS will publicly report 12 nationally accepted and approved quality measures plus 13 new process measures on its CMS Home Health Compare Web site (  HHAs that submit required quality data will receive payments based on the full home health market basket update of 2.0 percent for CY 2010.  The home health market basket index percentage will be reduced by 2 percentage points to 0.0 percent for CY 2010 for those HHAs that do not submit the required quality data.  For CY 2012, CMS will require HHAs to report, as part of the required home health quality measures, the Consumer Assessment of Healthcare Providers and Systems (CAHPS®) Home Health Care Survey for Medicare and/or Medicaid beneficiaries.

To qualify for the Medicare home health benefit, a Medicare beneficiary must be under the care of a physician and: have an intermittent need for skilled nursing care; need physical or speech therapy; or, have a continuing need for occupational therapy. The beneficiary also must be homebound and receive home health services from a Medicare approved HHA.


This final rule went on display at 4:15 pm today (10/30/2009), and will be published in the Federal Register on Nov. 10, 2009.  The effective date is January 1, 2010. 


  The rule can be located at: