Centers for Medicare & Medicaid Services Signals Home Health Prospective Payment System Rate Reduction

A May 2011 Office of Inspector General (OIG) report entitled “Review of Physician Therapy Services Provided During the Home Health Episodes in Calendar Year 2008” concludes that Medicare has been paying twice for therapy services provided by physicians to patients receiving home healthcare services. Medicare’s home health prospective payment system (PPS) requires consolidated billing for home health services, including therapy. In establishing the PPS base rate for home health, the Centers for Medicare & Medicaid Services (CMS) included reimbursement for therapy services that previously were separately billable to Part B by physicians, therapists and outside facilities. However, since 2003, CMS has permitted physicians to bill directly under Part B for therapy services furnished during home health episodes and did not reduce the home health PPS base rate accordingly.

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