CMS Proposed Payment Changes for Medicare Home Health Services
The Centers for Medicare & Medicaid Services (CMS) today proposed a rule designed to ensure more appropriate payment for services provided by Medicare home health agencies, while establishing incentives for more efficient care for Medicare beneficiaries. This proposed rule contains the first refinements to the Medicare home health prospective payment system (HH PPS) since 2000 and also contains the annual update to the Medicare HH PPS payment rates.
The net impact of all of the proposed refinements and updates in the HH PPS proposed rule is an estimated additional $140 million in payments to home health agencies in CY 2008.
“The proposed home health prospective payment system for calendar year 2008 furthers Medicare’s commitment toward making accurate payments in all of its payment systems. For home health agencies, the proposed rule seeks to improve the appropriateness and performance of care for Medicare beneficiaries,” said CMS Acting Administrator Leslie V. Norwalk.
Medicare pays home health agencies through a PPS, which provides for higher payment rates for care to those beneficiaries with greater needs. HH PPS payment rates are based on relevant clinical data from patient assessments required of all Medicare-participating home health agencies (HHAs).
Home health payment rates have been updated annually by either the full home health market basket, or by the home health market basket as adjusted by Congress. The home health market basket index measures inflation in the prices of an appropriate mix of goods and services included in home health services. Section 5201(c) of the Deficit Reduction Act (DRA) of 2005 provides for an adjustment to the home health market basket percentage update for CY 2007 and subsequent years depending on the submission of quality data by HHAs. The proposed home health market basket increase for CY 2008 is 2.9%.
HHAs collect and report Outcome and Assessment Information Set (OASIS) data. For CY 2008, CMS proposes to evaluate home health care quality by continuing to rely on the submission of OASIS assessments. Continuing to use the current OASIS instrument ensures that providers would avoid any additional burden of reporting through a separate mechanism and any related costs associated with the development and testing of a new reporting mechanism.
The proposed rule includes a provision to continue to adjust payment for reporting of quality data. HHAs that submit the required quality data would receive payments based on the proposed full home health market basket update of 2.9 percent for CY 2008. If a HHA does not submit quality data, the home health market basket percentage increase would be reduced by 2 percentage points to 0.9 percent for CY 2008. CMS publicly reports the nationally accepted and approved quality measures through the Medicare Home Health Compare Web site located at www.medicare.gov. The proposed rule adds two National Quality Forum-endorsed measures to the 10 that are currently reported: emergent care for wound infections - deteriorating wound status; and improvement in status of surgical wound.
“The continued improvement in the quality of and access to home health services will be enhanced through this additional public reporting of quality information,” said Norwalk. “These changes are significant steps toward Medicare becoming an active purchaser of high quality, efficient care.”
CMS analysis of the latest available home health claims data indicates a significant increase in the observed case-mix since 2000 and that the case-mix increase is due to changes in coding practices and documentation rather than to treatment of more resource-intensive patients. To account for the changes in case-mix that are not related to a home health patient’s actual clinical condition, this rule proposes to reduce the national standardized 60-day episode payment rate by 2.75 percent per year for three years beginning in CY 2008.
Under HH PPS, HHAs are paid prospectively for 60-day episodes of care. Based on an assessment from the patient’s OASIS data, HHAs are paid at different rates for different patients, depending on their care needs, and based upon their clinical severity, their level of function, and their usage of HHA services. This rule proposes ways to improve the comprehensiveness of the case-mix model and thus improve the accuracy of Medicare’s payments. The proposed case-mix model includes a proposal to replace the current therapy threshold at 10 visits per episode with three new therapy thresholds at six, 14, and 20 therapy visits. The new levels would have graduated payment levels between the proposed therapy thresholds to reduce incentives to inappropriately target higher thresholds. These proposed changes would significantly increase the case-mix model’s ability to more appropriately reflect HHA costs and consequently provide more accurate payments to HHAs.
This rule also proposes to modify the low utilization payment adjustment (LUPA) and to eliminate the significant change in condition payment adjustment. The rule proposes to increase payment for LUPA episodes that occur as the only episode or the first episode during a series of home health episodes to account for the initial greater costs in such episodes.
CMS is also proposing to revise the way to account for non-routine medical supplies (NRS) in the standardized 60-day episode payment rate. This rule proposes to pay for NRS based on 5 severity groups, similar to the proposed clinical case-mix model, to more accurately reflect home health agency costs for NRS.
“These proposals represent the first major payment changes for home health agencies since 2000,” said Norwalk. “Taken together, these proposed changes would more accurately match HHA costs with payments received while maintaining the fiscal integrity of the Medicare system and encouraging more effective and higher quality care for beneficiaries.”
The proposed rule is available on the CMS website at http://www.cms.hhs.gov/HomeHealthPPS/downloads/CMS-1541-P.pdf and background information on the differences between the current HH PPS and the proposed refinements and updates of this rule can be found at http://www.cms.hhs.gov/apps/media/fact_sheets.asp.
The comment period closes on Tuesday, June 26