Understanding the Financial Impact of Home Health Value-Based Purchasing

When the Home Health Value-Based Purchasing (HHVBP) model expanded nationwide, many agencies focused on quality scores, survey results, and patient outcomes. But there’s another layer that demands just as much attention:

👉 The direct financial impact of performance.

Under HHVBP, your agency’s Medicare payments are no longer fixed—they’re adjusted based on how you perform compared to your peers. This means your quality scores don’t just affect your star rating—they affect your bottom line.

So how much is at stake, and how can your agency avoid financial penalties while maximizing potential gains? Let’s break it down.

💰 How HHVBP Adjusts Your Medicare Payments

Starting in 2023 and scaling annually, HHVBP applies a payment adjustment of up to 5% (positive or negative) to an agency’s Medicare Fee-for-Service (FFS) claims.

That adjustment is based on your agency’s Total Performance Score (TPS), which reflects:

📊 Clinical outcomes (OASIS-based measures)

📈 Claims-based events (e.g., hospitalizations, ED visits)

📢 Patient satisfaction (HHCAHPS surveys)

Each year, agencies are grouped into cohorts based on size and geography, and your TPS is compared to others in your group. The better you perform relative to peers, the higher your Adjusted Payment Percentage (APP)—and the more Medicare will reimburse you.

📉 What Poor Performance Can Cost You

Let’s say your agency bills $2.5 million per year in Medicare FFS revenue. A 5% reduction means:

🔻 $125,000 lost in annual revenue.

That’s revenue you could have reinvested in staff, operations, or patient care. And the loss compounds year after year if your performance doesn’t improve.

Even a 1%–2% penalty can outweigh the cost of a consulting engagement, technology upgrade, or training program that would help you improve.

📈 What High Performance Can Earn You

On the flip side, a high TPS can boost your APP and bring in additional revenue for the same volume of care.

If your agency lands in the top performance percentile, your 5% positive adjustment could mean:✅ $125,000 in additional Medicare revenue annually (based on $2.5M claims).

That’s revenue without new admissions, no extra visits, and no added billing effort—just better outcomes and documentation.

📊 Beyond Revenue: How HHVBP Affects Your Business Value

The financial impact of HHVBP isn’t just about reimbursement. It also influences: 🏥 Referral relationships – High-scoring agencies become preferred partners for hospitals and ACOs

💼 Market competitiveness – Publicly reported data will help families and physicians choose top-performing providers

📈 Agency valuation – Whether you’re growing, merging, or planning an eventual sale, your quality performance is now a key financial indicator

Simply put: HHVBP has raised the bar—and investors, payers, and partners are watching.

💡 How to Improve Your Financial Outcomes Under HHVBP

You don’t need to overhaul your agency overnight. But a proactive plan and small, consistent improvements can protect and even increase your Medicare revenue.

Here’s where consulting makes a real difference:

🛠 Audit your Annual Performance Report (APR)

📌 Identify high-impact measures for improvement

📋 Align QAPI with HHVBP scoring

📢 Improve HHCAHPS through patient-centered workflows

💬 Coach staff on documentation accuracy and clinical engagement

Even moving from the bottom to the middle tier can be the difference between a revenue loss and a break-even year.

Conclusion

In a value-based world, your outcomes are your income. The Home Health Value-Based Purchasing model has connected care quality directly to reimbursement—and smart agencies are responding with data-driven strategy.

By understanding your agency’s financial risk (and opportunity), you can make smarter investments, align your team, and turn HHVBP from a challenge into a revenue-growth strategy.

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💡 Need help understanding your HHVBP financial exposure? Our Home Health Consulting team can help you forecast adjustments, improve your TPS, and build a financial strategy that protects your revenue.