Home Health Value-Based Purchasing Model Lowered Medicare Spending


The decline in Medicare spending was driven by an $807 million reduction in inpatient hospitalization stay expenditures and a $235.8 million decrease in skilled nursing facility spending.
- The Home Health Value-Based Purchasing (HHVBP) Model reduced Medicare spending by $1.38 billion and improved care quality during its first six years, according to a report from CMS.
The CMS Innovation Center implemented the original HHVBP Model in nine states from January 2016 to December 2021: Arizona, Florida, Iowa, Massachusetts, Maryland, Nebraska, North Carolina, Tennessee, and Washington.
The model aimed to improve the quality of home healthcare services for Medicare beneficiaries by providing financial incentives to home health agencies for quality improvements. Home health agencies received performance scores for individual measures of quality of care that were combined into a total performance score to determine their payment adjustment.
In 2018, CMS adjusted Medicare payments by up to 3 percent. Payment adjustments increased yearly and peaked at 7 percent in 2021. The report assesses the model’s impact on quality and spending from 2016 to 2021, the six years of the original model.
Over 1,900 home health agencies across the nine states participated in the HHVBP model in 2021. Total performance scores were 6 percent higher among agencies in HHVBP states than those in non-HHVBP states.
Additionally, HHVBP states saw a 2.2 percent decrease in unplanned hospitalization rates and an 8.2 percent decrease in skilled nursing facility use among home health beneficiaries compared to pre-HHVBP implementation.
The HHVBP model was associated with a 1.5 percent reduction in emergency department use leading to inpatient admission, but this was offset by a 2.1 percent increase in outpatient emergency department visits.
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