SUMMARY OF PROPOSED HH PPS REFINEMENTS COMPARED TO CURRENT HH PPS PAYMENT SYSTEM

Existing HH PPS

Proposed Rule

Home health disciplines included in the National 60-Day Episode rate:

• Skilled nursing, home health aide, physical therapy, speech-language pathology, occupational therapy, and medical social services

Home health disciplines included in the National 60-Day Episode rate:

• Unchanged

For eligible beneficiaries under a home health plan of care:

• National 60-day episode prospective payment for covered home health services, adjusted for case mix and wage index 
• LUPA, SCIC, PEP, and outlier

            adjustments allowed

For eligible beneficiaries under a home health plan of care:

• Unchanged

• LUPA, PEP, and outlier adjustments allowed; SCIC adjustment eliminated

Average case-mix weights per episode:

• Per design of a case-mix adjusted system, case-mix weights were designed to average 1.0.
• Using the most recent available data from 2003, a total increase in the average case-mix of 23.3% (from 1.0 to 1.233) has occurred since the implementation of the HH PPS.

Average case-mix weights per episode:

• Trend toward coding that increased average case-mix weights

• Of the total 23.3% change in the average case-mix, 8.7% of increase is believed to be due to coding behavior (i.e., a nominal change) rather than a real change in the underlying condition of home health patients

National 60 Day Episode rate =

$2,339.00 for CY 2007

• Includes home health market basket increase (3.3% for CY 2007)

• No adjustment for aggregate changes in case mix that are not related to home health patient’s actual clinical condition case-mix changes

• Adjusted for case-mix and wage-index

National 60 Day Episode rate = 

Episodes beginning in CY 2007 and ending in CY 2008 =$2,355.96 Episodes beginning and ending in CY 2008 = $2,300.60 for hospitals that report quality data

For HHAs that do not report quality data:

Episodes beginning in CY 2007 and ending in CY 2008 = $2,310.17

For HHAs that do not report quality data:

Episodes beginning in CY 2008 and ending in CY 2008 = $2,255.88

• Includes home health market basket increase (2.9% for CY 2008) for hospitals that report quality data. Two Percent Reduction for hospitals that do not report quality data (0.09%)
• Adjusted for aggregate changes in case mix that are not related to home health patient’s actual clinical condition (-2.75% per year for 3 years)

• Unchanged

Home health market basket:

• Labor portion = 76.775%
• Non-labor portion = 23.225%

Home health market basket:

• Labor portion = 77.082%
• Non-labor portion = 22.918%

Case-mix regression model:

• Single therapy threshold at 10 therapy visits
• No accounting for timing of episodes

• Single equation model for weight calculation, with single therapy threshold

• Model r-squared = 0.34
• Increase in payment (approximately double) for delivering at least 10 therapy visits in a 60-day episode
• 80 case-mix groups

Case-mix regression model:

• Therapy thresholds at 6, 14, and 20 visits

• Accounts for early episodes (the first or second episode in a sequence of adjacent episodes) and later episodes (3^rd or subsequent episodes in a sequence of adjacent episodes), regardless of whether the same home health agency provided care for the entire series of episodes.

• Four-equation model for weight calculation:          

      1) < 14 therapy visits occurring in

          early episode;

            2) ≥ 14 therapy visits occurring in

                early episode;

      3) < 14 therapy visits occurring in

          later episode;

      4) ≥ 14 therapy visits occurring in

          later episode

• Model r-squared = 0.44

• Gradual increase in payment between first and third therapy thresholds

• 153 case-mix groups

Case-mix model variables:

• M0175 & M0610 included
• M0470, M0520, & M0800 not included
• Scores not given for infected surgical wounds, abscesses, chronic ulcers, and gangrene
• No gastrointestinal, pulmonary, cardiac, cancer, blood disorders, or affective and other psychoses  diagnosis groups included
• Points not given for secondary diagnoses
• Points not given for combinations of conditions in the same episode

Case-mix model variables:

• Excluded M0175 & M0610
• M0470, M0520, & M0800 are added

• Included scores for infected surgical wounds, abscesses, chronic ulcers, and gangrene
• Added gastrointestinal, pulmonary, cardiac, cancer, blood disorders, and affective and other psychoses diagnosis groups
• Points assigned for some secondary diagnoses
• Points assigned for some combinations of conditions in the same episode

Wage Index:

• Routine update based on most recently available pre-floor/pre-reclassified hospital wage index

Wage Index:

• Unchanged

Non-routine supplies (NRS):

• Included in national episode rate as a fixed amount of $49.62, updated annually as part of the national episode rate.

• Case-mix adjusted as part of the national 60-day episode rate

• Updated annually, as part of the national episode rate, by the home health market basket factor

Non-routine supplies (NRS):

• Based on a NRS conversion factor of $52.30. (The original $49.62 from the July 3, 2000 final rule, updated to 2008, adjusted to account for the outlier target of 5%, and adjusted for the nominal change in case-mix).

• Case-mix adjusted separately based on 5 NRS severity groups.  The case-mix weights associated with these 5 NRS severity groups are to be recalibrated annually.
• Unchanged

LUPA Adjustment:

• Calculated if episode has 4 or fewer visits
• No additional payment for LUPA episodes that occur as the first or only episode during a period of home health benefit use

LUPA Adjustment :

• Unchanged

• Additional $92.63 for LUPA episodes that occur as the only episode or the first episode during a period of home health benefit use (sequence of adjacent episodes); to be updated annually by the home health market basket

PEP adjustment calculation:

• Allowed for partial episodes

PEP adjustment calculation:

• Unchanged

Outlier adjustment:

• Fixed dollar loss ratio = 0.67
• Loss-sharing ratio = 0.80
• Outlier expenditure target = 5% of total home health PPS payments

Outlier adjustment:

• Unchanged (Fixed dollar loss ratio =  0.67)
• Unchanged
• Unchanged

Quality Data Reporting:

• Report data on 10 measures of quality
• HHAs that do not submit quality data subject to 2% reduction in home health market basket percentage increase

Quality Data Reporting:

• Report data on 12 measures of quality
• Unchanged

Average case-mix under the current case-mix system, based on 10% sample of 2003 data:

• Proprietary agencies: 1.2601

• Voluntary non-profit agencies: 1.1404
• Rural agencies: 1.1583
• Urban agencies: 1.2032

Average case-mix under the proposed case-mix system, based on a 10% sample of 2003 data:

• Proprietary agencies: 1.2227
• Voluntary non-profit agencies:  1.1716

• Rural agencies: 1.1417
• Urban agencies: 1.2074