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Medicare 2012 Home Health PPS Rates Available by State

Medicare 2012 Home Health PPS Rates Available by StateThe Centers for Medicare & Medicaid Services (CMS) updated the Medicare home health Prospective Payment System (HH PPS) rates effective January 1, 2012. The final rates were published in the Federal Register on November 4, 2011. The updated rate is reduced by 2.39 percent on average per episode.

“Most home health agencies were braced for another 5 percent reduction in payment rates, given the decline in the market basket from the proposed rates in 2010 to the final rates published for 2011. However, the reduction of approximately 2.4 percent was fairly consistent with expectations from the proposed rules issued earlier this year. The case mix creep adjustment was reduced but could be added back next year,” explains Gregg Hathorne, a health care principal with LarsonAllen.

The November 4, 2011, Federal Register also released the rules for the updated market basket and case mix system changes; these will be implemented over different timelines. The average payment rates will be reduced right away. The case mix system is being updated and includes certain reductions in therapy service payments over those episodes.

What the new rates mean for 2012

A break down of the 2.39 percent rate decrease is explained in the tables below.

Final 2012 HH PPS Rates

An estimated 2.31 percent decrease in rates, which equals a reduction of $430 million nationally.

A net effect of 1.4 percent payment update, wage index update, and case mix coding adjustment (shared between 2012 and 2013).

Market Basket Amount

The Patient Protection and Affordable Care Act (PPACA) applies a 1 percent reduction to the calendar year (CY) 2012 home health market basket amount.

The CY 2012 market basket is equal to 2.4 percent.

The payment update is 1.4 percent (2.4 – 1 = 1.4 percent).
If approved by Congress, an additional 3 percent rural add-on will be available for providers that serve certain rural areas.

Case Mix Adjustment

CMS reduced the HH PPS rates for additional growth in the aggregate case mix that is unrelated to changes in a patient’s health status.

The reduction for 2012 is 3.79 percent.

The anticipated additional reduction for 2013 is 1.32 percent.

As a result, the new rate adjustment is a decrease of 2.39 percent (2.4 - 1 - 3.79 = -2.39 percent).

Penalty for not submitting quality reporting data

The final rule states there is an additional 2 percent penalty for home health agencies that don’t submit quality reporting data.

Further rate reduction in the future?

Hathorne says the congressional Joint Select Committee on Deficit Reduction (Supercommittee) failed at its attempt to implement certain deficit-reducing measures, but believes that the home health rates for 2012 will hold. With rebasing of home health rates on the horizon, rates could drop by 2.5 percent for 2013. It is unclear whether the remaining additional case mix adjustment will be applied as well, thus reducing rates even further. Although home health agencies have much to watch over the next year, Hathorne suggests they continue to strengthen capital position, implement innovative revenue-producing and cost-cutting measures, and improve quality of care.

Download the 2012 HH PPS rates by state

Access your rates by state and Core-Based Statistical Area (CBSA) in the drop-down list below.

To view or print the rates, choose your state from the drop-down list below.


Gregg Hathorne, Health Care Principal or 407-802-1297

View our health care principals.

Published: 12/20/2011


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