Home Health Value-Based Purchasing Model Lowered Medicare 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.

In HHVBP states, there was no change in the overall use of home health services and no adverse effects on access to home healthcare.

Between 2016 and 2021, there was a cumulative decrease of $1.38 billion in overall Medicare spending for beneficiaries receiving home health services, translating to a 1.9 percent reduction in average Medicare expenditures per day.

Total spending reductions were mainly driven by an $807 million (3.4 percent) reduction in inpatient hospitalization stay spending and a $235.8 million (3.9 percent) reduction in skilled nursing facility services spending. Home health spending declined by $283 million (1.3 percent).

Meanwhile, outpatient emergency department and observation stay spending increased by $99.6 million (6.1 percent).

The model was associated with slight declines in three patient experience measures that rate professionalism, communication, and discussion of care by agencies. But the model improved home health patients’ mobility, self-care, and other aspects of functional status, the report noted.

There was some growth in disparities among beneficiaries with Medicaid under the model. Racial and ethnic minority beneficiaries were more likely to live in areas with lower-quality home health agencies, with variation observed among individual counties and across subpopulations.