Last week, home health agencies welcomed the Centers for Medicare & Medicaid Services’ (CMS) decision to drop a controversial proposed payment model and leave largely unchanged the current payment system. Responding to concerns presented by commenters, CMS announced in its final 2018 Home Health Prospective Payment System Rate Update (the Final Rule) that it will not finalize the proposed Home Health Groupings Model (HHGM), which would have substantially changed the Home Health Agency Prospective Payment System (HHA-PPS).

What would the Home Health Groupings Model have done?

The HHGM would have shifted away from using therapy services as a proxy for patient acuity and toward reimbursement based on patient information and clinical characteristics. The HHGM would also have halved the HHA-PPS measuring period to 30-days. Because the HHGM will not go into effect, Medicare will continue to pay for home healthcare services on a 60-day episodes rate using therapeutic indicators for payment. The change had been proposed for implementation January 1, 2019, and had the potential to affect more than 3.5 million Medicare patients.

Why was the payment model dropped?

Opponents of the HHGM cited both financial as well as patient care and access concerns in their criticism of the proposal. Senate Finance Committee Chair Orrin Hatch, along with a bipartisan group of 49 colleagues, cautioned the Department of Health and Human Services against finalizing the HHGM in its current state. The senators cited CMS estimates that the proposal could reduce payments by as much as $950 million in 2019 alone.1 From a patient care perspective, commenters to the Proposed Rule feared the HHGM would reduce access to needed services, which could result in the closure of many home health agencies.2

How will home health agencies be affected by the 2018 HHA-PPS Rate Update?

Though the HHGM will no longer be implemented, not all news in the Final Rule is good news for home health agencies. Payments to the home health industry in 2018 will decrease by 0.4%, a net impact resulting from an updated home health rate, downward adjustment to the 60-day episode rate, and the sunset of the rural add-on provision. Furthermore, while the HHGM will not be implemented in its current form, CMS will take the comments submitted on the HHGM into further consideration. Thus, it is possible that a new iteration of the HHGM could appear in the future.

What should providers do now that the HHGM was dropped?

Providers wanting to learn more about the deliberations surrounding the HHGM can review a technical report issued in December 2016. And to understand the potential impact of the HHGM on Medicare reimbursement, CMS continues to make available home health provider data that can be used to model reimbursement under the proposed system.3


If you have questions about this or other healthcare developments, please contact the authors of this alert or the Bass, Berry & Sims attorney with whom you regularly work.

1 Letter to DHHS and CMS available at:

2 82 Fed. Reg. 51,699 (November 7, 2017).

3 Requests can be submitted through the CMS Data Request Center: