[Federal Register Volume 76, Number 133 (Tuesday, July 12, 2011)]
[Proposed Rules]
[Pages 40988-41031]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-16938]
[[Page 40987]]
Vol. 76
Tuesday,
No. 133
July 12, 2011
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 409, 424, 440, et al.
Medicare Program; Home Health Prospective Payment System Rate Update
for Calendar Year 2012; Face-to-Face Requirements for Home Health
Services; Policy Changes and Clarifications Related to Home Health;
Proposed Rules
Federal Register / Vol. 76 , No. 133 / Tuesday, July 12, 2011 /
Proposed Rules
[[Page 40988]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 409, 424, and 484
[CMS-1353-P]
RIN 0938-AQ30
Medicare Program; Home Health Prospective Payment System Rate
Update for Calendar Year 2012
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would update the Home Health Prospective
Payment System (HH PPS) rates, including: The national standardized 60-
day episode rates, the national per-visit rates, the low utilization
payment amount (LUPA), and outlier payments under the Medicare
prospective payment system for home health agencies effective January
1, 2012.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on September 6,
2011.
ADDRESSES: In commenting, please refer to file code CMS-1353-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the instructions under
the ``More Search Options'' tab.
2. By regular mail. You may mail written comments to the following
address only: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1353-P, P.O. Box 8016,
Baltimore, MD 21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address only: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1353-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments before the close of the comment period
to either of the following addresses:
a. For delivery in Washington, DC--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC
20201.
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.).
b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call (410) 786-7195 in advance to schedule your arrival with one
of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Elizabeth Goldstein, (410) 786-6665, for CAHPS issues.
Mary Pratt, (410) 786-6867, for quality issues.
Randy Throndset, (410)786-0131 (overall HH PPS).
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to
view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. EST. To schedule an appointment to view public comments,
phone 1-800-743-3951.
Table of Contents
I. Background
A. Statutory Background
B. System for Payment of Home Health Services
C. Updates to the HH PPS
II. Provisions of the Proposed Rule
A. Case-Mix Measurement
1. Independent Review of the Models To Assess Nominal Case-Mix
Growth
2. Revised Version of Our Models To Assess Nominal Case-Mix
Growth
B. Case-Mix Revision to the Case-Mix Weights
1. Hypertension Diagnosis Coding Under the HH PPS
2. Proposal for Revision of Case-Mix Weights
C. Outlier Policy
1. Background
2. Regulatory Update
3. Statutory Update
4. Loss-Sharing Ratio and Fixed Dollar Loss (FDL) Ratio
5. Outlier Relationship to the HH Payment Study
D. CY 2012 Rate Update
1. Home Health Market Basket Update
2. Home Health Care Quality Improvement
a. Background and Quality Reporting Requirements
b. OASIS Data
c. Claims Data, Proposed Requirements and Outcome Measure Change
d. Home Health Care CAHPS Survey (HHCAHPS)
3. Home Health Wage Index
4. Proposed CY 2012 Annual Payment Update
a. National Standardized 60-Day Episode Rate
b. Proposed Updated CY 2012 National Standardized 60-Day Episode
Payment Rate
c. National Per-Visit Rates Used To Pay LUPAs and Compute
Imputed Costs Used in Outlier Calculations
d. LUPA Add-on Payment Amount Update
e. Nonroutine Medical Supply Conversion Factor Update
5. Rural Add-On
E. Therapy Corrections and Clarification
F. Home Health Face-to-Face Encounter
G. Payment Reform: Home Health Study and Report
H. International Classification of Diseases 10th Edition (ICD-
10) Coding
I. Clarification to Benefit Policy Manual Language on ``Confined
to the Home'' Definition
III. Collection of Information Requirements
IV. Response to Comments
V. Regulatory Impact Analysis
VI. Federalism Analysis
Regulations Text
Acronyms
In addition, because of the many terms to which we refer by
abbreviation in this proposed rule, we are listing these abbreviations
and their
[[Page 40989]]
corresponding terms in alphabetical order below:
ACH LOS Acute Care Hospital Length of Stay
ADL Activities of Daily Living
APU Annual Payment Update
BBA Balanced Budget Act of 1997, Public Law 105-33
BBRA Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of
1999, Public Law 106-113
CAD Coronary Artery Disease
CAH Critical Access Hospital
CBSA Core-Based Statistical Area
CHF Congestive Heart Failure
CMI Case-Mix Index
CMS Centers for Medicare and Medicaid Services
CoPs Conditions of Participation
COPD Chronic Obstructive Pulmonary Disease
CVD Cardiovascular Disease
DM Diabetes Mellitus
DRA Deficit Reduction Act of 2005, Public Law 109-171, enacted
February 8, 2006
FDL Fixed Dollar Loss
FI Fiscal Intermediaries
FR Federal Register
FY Fiscal Year
HCC Hierarchical Condition Categories
HCIS Health Care Information System
HHCAHPS Home Health Care Consumer Assessment of Healthcare Providers
and Systems Survey
HH PPS Home Health Prospective Payment System
HHAs Home Health Agencies
HHRG Home Health Resource Group
HIPPS Health Insurance Prospective Payment System
IH Inpatient Hospitalization
IRF Inpatient Rehabilitation Facility
LTCH Long-Term Care Hospital
LUPA Low Utilization Payment Amount
MEPS Medical Expenditures Panel Survey
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003, Public Law 108-173, enacted December 8, 2003
MSA Metropolitan Statistical Areas
MSS Medical Social Services
NRS Non-Routine Supplies
OBRA Omnibus Reconciliation Act of 1981, Public Law 97-35, enacted
August 13, 1981
OCESAA Omnibus Consolidated and Emergency Supplemental
Appropriations Act, Public Law 105-277, enacted October 21, 1998
OES Occupational Employment Statistics
OIG Office of Inspector General
OT Occupational Therapy
OMB Office of Management and Budget
PAC-PRD Post-Acute Care Payment Reform Demonstration
PEP Partial Episode Payment Adjustment
PT Physical Therapy
QAP Quality Assurance Plan
PRRB Provider Reimbursement Review Board
RAP Request for Anticipated Payment
RF Renal Failure
RFA Regulatory Flexibility Act, Public Law 96-354
RHHIs Regional Home Health Intermediaries
RIA Regulatory Impact Analysis
SLP Speech Language Pathology Therapy
SNF Skilled Nursing Facility
UMRA Unfunded Mandates Reform Act of 1995
I. Background
A. Statutory Background
The Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33, enacted
August 5, 1997), significantly changed the way Medicare pays for
Medicare home health (HH) services. Section 4603 of the BBA mandated
the development of the home health prospective payment system (HH PPS).
Until the implementation of a HH PPS on October 1, 2000, home health
agencies (HHAs) received payment under a retrospective reimbursement
system.
Section 4603(a) of the BBA mandated the development of a HH PPS for
all Medicare-covered HH services provided under a plan of care (POC)
that were paid on a reasonable cost basis by adding section 1895 of the
Social Security Act (the Act), entitled ``Prospective Payment For Home
Health Services''. Section 1895(b)(1) of the Act requires the Secretary
to establish a HH PPS for all costs of HH services paid under Medicare.
Section 1895(b)(3)(A) of the Act requires the following: (1) The
computation of a standard prospective payment amount include all costs
for HH services covered and paid for on a reasonable cost basis and
that such amounts be initially based on the most recent audited cost
report data available to the Secretary; and (2) the standardized
prospective payment amount be adjusted to account for the effects of
case-mix and wage levels among HHAs.
Section 1895(b)(3)(B) of the Act addresses the annual update to the
standard prospective payment amounts by the HH applicable percentage
increase. Section 1895(b)(4) of the Act governs the payment
computation. Sections 1895(b)(4)(A)(i) and (b)(4)(A)(ii) of the Act
require the standard prospective payment amount to be adjusted for
case-mix and geographic differences in wage levels. Section
1895(b)(4)(B) of the Act requires the establishment of an appropriate
case-mix change adjustment factor for significant variation in costs
among different units of services.
Similarly, section 1895(b)(4)(C) of the Act requires the
establishment of wage adjustment factors that reflect the relative
level of wages, and wage-related costs applicable to HH services
furnished in a geographic area compared to the applicable national
average level. Under section 1895(b)(4)(c) of the Act, the wage-
adjustment factors used by the Secretary may be the factors used under
section 1886(d)(3)(E) of the Act.
Section 1895(b)(5) of the Act gives the Secretary the option to
make additions or adjustments to the payment amount otherwise paid in
the case of outliers because of unusual variations in the type or
amount of medically necessary care. Section 3131(b) of the Patient
Protection and Affordable Care Act of 2010 (the Affordable Care Act)
(Pub. L. 111-148, enacted March 23, 2010) revised section 1895(b)(5) of
the Act so that total outlier payments in a given fiscal year (FY) or
year may not exceed 2.5 percent of total payments projected or
estimated. The provision also makes permanent a 10 percent agency level
outlier payment cap.
In accordance with the statute, as amended by the BBA, we published
a final rule in the July 3, 2000 Federal Register (65 FR 41128) to
implement the HH PPS legislation. The July 2000 final rule established
requirements for the new HH PPS for HH services as required by section
4603 of the BBA, as subsequently amended by section 5101 of the Omnibus
Consolidated and Emergency Supplemental Appropriations Act (OCESAA) for
Fiscal Year 1999, (Pub. L. 105-277, enacted October 21, 1998); and by
sections 302, 305, and 306 of the Medicare, Medicaid, and SCHIP
Balanced Budget Refinement Act (BBRA) of 1999, (Pub. L. 106-113,
enacted November 29, 1999). The requirements include the implementation
of a HH PPS for HH services, consolidated billing requirements, and a
number of other related changes. The HH PPS described in that rule
replaced the retrospective reasonable cost-based system that was used
by Medicare for the payment of HH services under Part A and Part B. For
a complete and full description of the HH PPS as required by the BBA,
see the July 2000 HH PPS final rule (65 FR 41128 through 41214).
Section 5201(c) of the Deficit Reduction Act of 2005 (DRA) (Pub. L.
109-171, enacted February 8, 2006) added new section 1895(b)(3)(B)(v)
to the Act, requiring HHAs to submit data for purposes of measuring
health care quality, and links the quality data submission to the
annual applicable percentage increase. This data submission requirement
is applicable for CY 2007 and each subsequent year. If an HHA does not
submit quality data, the HH market basket percentage increase is
reduced 2 percentage points. In the November 9, 2006 Federal Register
(71 FR 65884, 65935), we published a final rule to implement the
[[Page 40990]]
pay-for-reporting requirement of the DRA, which was codified at Sec.
484.225(h) and (i) in accordance with the statute.
Section 421(a) of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA) (Pub. L. 108-173, enacted December 8,
2003) provides an increase of 3 percent of the payment amount otherwise
made under section 1886(d)(2)(D) of the Act for HH services furnished
in a rural area with respect to episodes and visits ending on or after
April 1, 2010, and before January 1, 2016.
B. System for Payment of Home Health Services
Generally, Medicare makes payment under the HH PPS on the basis of
a national standardized 60-day episode payment rate that is adjusted
for the applicable case-mix and wage index. The national standardized
60-day episode rate includes the six HH disciplines (skilled nursing,
HH aide, physical therapy, speech-language pathology, occupational
therapy, and medical social services). Payment for non-routine medical
supplies (NRS), is no longer part of the national standardized 60-day
episode rate and is computed by multiplying the relative weight for a
particular NRS severity level by the NRS conversion factor (See section
II.D.4.e). Payment for durable medical equipment covered under the HH
benefit is made outside the HH PPS payment system. To adjust for case-
mix, the HH PPS uses a 153-category case-mix classification to assign
patients to a home health resource group (HHRG). The clinical severity
level, functional severity level, and service utilization are computed
from responses to selected data elements in the OASIS assessment
instrument and are used to place the patient in a particular HHRG. Each
HHRG has an associated case-mix weight which is used in calculating the
payment for an episode.
For episodes with four or fewer visits, Medicare pays based on a
national per-visit rate, adjusted by the discipline(s) providing the
services; an episode consisting of four or fewer visits within a 60-day
period receives what is referred to as a low utilization payment
adjustment (LUPA). Medicare also adjusts the national standardized 60-
day episode payment rate for certain intervening events that are
subject to a partial episode payment adjustment (PEP adjustment). For
certain cases that exceed a specific cost threshold, an outlier
adjustment may also be available.
C. Updates to the HH PPS
As required by section 1895(b)(3)(B) of the Act, we have
historically updated the HH PPS rates annually in the Federal Register.
The August 29, 2007 final rule with comment period set forth an update
to the 60-day national episode rates and the national per-visit rates
under the Medicare prospective payment system for HHAs for CY 2008. The
CY 2008 rule included an analysis performed on CY 2005 HH claims data,
which indicated a 12.78 percent increase in the observed case-mix since
2000. The case-mix represented the variations in conditions of the
patient population served by the HHAs. Subsequently, a more detailed
analysis was performed on the 12.78 percent increase in case-mix to
evaluate if any portion of the increase was associated with a change in
the actual clinical condition of HH patients. We examined data on
demographics, family severity, and non-HH Part A Medicare expenditures
to predict the average case-mix weight for 2005. We identified 8.03
percent of the total case-mix change as real and decreased the 12.78
percent of total case-mix change by 8.03 percent to get a final nominal
case-mix increase measure of 11.75 percent (0.1278 * (1-0.0803) =
0.1175).
To account for the changes in case-mix that were not related to an
underlying change in patient health status, we implemented a reduction
over 4 years in the national standardized 60-day episode payment rates
and the NRS conversion factor. That reduction was to be 2.75 percent
per year for 3 years beginning in CY 2008 and 2.71 percent for the
fourth year in CY 2011.
For CY 2011, we published the November 17, 2010 final rule (75 FR
70372) (hereinafter referred to as the CY 2011 HH PPS final rule) that
set forth the update to the 60-day national episode rates and the
national per-visit rates under the Medicare prospective payment system
for HH services.
As discussed in the CY 2011 rule, our analysis indicated that there
was a 19.40 percent increase in overall case-mix from 2000 to 2008 and
that only 10.07 percent of that overall observed case-mix percentage
increase was due to real case-mix change. As a result of our analysis,
we identified a 17.45 percent nominal increase in case-mix. To fully
account for the 17.45 percent nominal case-mix growth which was
identified from 2000 to 2008, we proposed 3.79 percent payment
reductions in both CY 2011 and CY 2012. However, we deferred finalizing
a payment reduction for CY 2012 until a further study of the case-mix
data was completed. Independent review of the case-mix model has been
conducted and the results are discussed in section II.A. of this
proposed rule.
II. Provisions of the Proposed Rule
A. Case-Mix Measurement
Every year, since the HH PPS CY 2008 proposed rule, we have stated
in HH PPS rulemaking that we would continue to monitor case-mix changes
in the HH PPS and to update our analysis to measure change in case-mix,
both real changes in case-mix and changes which are unrelated to
changes in patient acuity (nominal). We have continued to monitor case-
mix changes, and our latest analysis continues to support the need to
make payment adjustments to account for nominal case-mix growth.
Before measuring nominal case-mix growth, we examined the total
case-mix growth every year from 2000 to 2009. Our latest analysis
indicates that there was a large 1-year increase, 2.6 percent, in the
average case-mix weight from 2008 to 2009. Specifically, the 2008
average case-mix was 1.3095 and the 2009 average case-mix was 1.3435.
It should be noted that the average case-mix for 2008 is slightly
different than the average case-mix for 2008 that was reported in the
CY 2011 HH PPS final rule. The difference in case-mix is due to the
increased availability of data and inclusion of more episodes in the
2008 sample. As we did last year, we sought to describe how much of the
1-year change was due to a change in the distribution of episodes
according to the number of therapy visits and how much was due to a
change in the average case-mix weight at each level of therapy visits.
The method we used first holds the average case-mix weight constant
(at the 2008 values) at each level of therapy visits, and measures the
effect of the shift to the new distribution of therapy visits. The
method then holds the distribution of therapy visits constant (at the
2008 distribution) and measures the effect of the change in average
case-mix weight at each level of therapy visits. The results were that
0.0254 or about 75 percent (0.0254/0.0340 = 0.75) of the total change
in average case-mix weights from 2008 to 2009 was due to the shift in
the distribution of therapy visits per episode. The remaining 0.0086 or
about 25 percent (0.0086/0.0340 = 0.25) in overall average case-mix
weight from 2008 to 2009 was due to an increase in the average case-mix
weight at each level of therapy visits per episode.
[[Page 40991]]
The decomposition suggests that agencies in 2009 were still
responding to the 2008 refinements in terms of both coding practices
and the definition of therapy treatment plans for patients. This
analysis by itself, however, does not isolate real case-mix change
within total case-mix change. We discuss our latest analysis of real
and nominal case-mix change in the remainder of this section.
Section 1895(b)(3)(B)(iv) of the Act gives CMS the authority to
implement payment reductions for nominal case-mix growth, changes in
case-mix that are not related to actual changes in patient
characteristics over time. Nominal case-mix growth was assessed and
reported in CY 2008 and CY 2011 rulemaking, and payment reductions to
the base rate were implemented to account for the nominal case-mix
growth observed.
In CY 2008 rulemaking, to assess nominal case-mix growth, we first
estimated real case-mix growth, changes in case-mix which are related
to changes in patient characteristics, using a regression-based,
predictive model of individual case-mix weights. The predictive model
contained measures of patients' demographic characteristics, clinical
status, inpatient history, and Part A Medicare costs in the time period
leading up to their home health episodes. The regression coefficients
for the predictive model were developed using 2000 as a base year and
were applied to episodes from 2005, allowing estimation of the change
in real case-mix. We then determined the nominal case-mix growth from
2000 to 2005 using the regression model-predicted real case-mix change
and the total case-mix change for the time period of interest.
In 2000, the average case-mix was 1.0960 and in 2005, the average
case-mix was 1.2361. As such, the total measure of case-mix change from
2000 to 2005 was 12.78 percent ((1.2361 - 1.0960)/1.0960 = 0.1278).
Using the regression-based predictive model, we identified 8.03 percent
of the total case-mix change as real case-mix change from 2000 to 2005,
and we adjusted the 12.78 percent of total change in case-mix,
downward, by 8.03 percent to get a final nominal case-mix change
measure of 11.75 percent (0.1278 * (1 - 0.0803) = 0.1175). To account
for the 11.75 percent increase in nominal case-mix, we implemented a
payment reduction of 2.75 percent each year for 3 years, beginning in
2008, and we planned to implement a payment reduction of 2.71 in CY
2011.
Since the HH PPS CY 2008 proposed rule, we have continued to
monitor case-mix changes in the HH PPS, and in CY 2011 rulemaking we
updated our analysis to measure change in real and nominal case-mix. In
CY 2011 rulemaking, we developed two regression-based models to assess
nominal case-mix growth from 2000 to 2008. One model was developed
using 2000 as a base year and the 80 grouper case-mix system. The
regression coefficients in the model were applied to 2007 data to
determine the change in real case-mix from 2000 to 2007. The second
model was developed using 2008 as a base year and the 153 grouper case-
mix system. The regression coefficients in the model were applied to
2007 data to determine the change in real case-mix from 2007 to 2008.
The data from both of the models were then used to calculate the
overall real and nominal case-mix change from 2000 to 2008. Our
analysis indicated that there was a 19.40 percent increase in overall
case-mix from 2000 to 2008 and 10.07 percent of that overall observed
case-mix change was identified as real case-mix change. Consequently,
as a result of our analysis, we identified a 17.45 percent nominal
increase in case-mix (0.1940 * (1 - 0.1007) = 0.1745) from 2000 to
2008. In other words, there was a growth in case-mix of 17.45 percent
that was unrelated to differences in patient characteristics and
reflects changes in coding procedures and documentation rather than the
treatment of more resource-intensive patients. This 17.45 percent
increase was larger than expected. Previously, there was about 1
percent annual case-mix growth from 2000 to 2007. Between 2007 and
2008, we observed a 4 percent overall case-mix growth. As a result of
our analysis, in CY 2011, we proposed an increase to the planned 2.71
percent payment reduction in 2011 to a 3.79 percent payment reduction
and we proposed another 3.79 percent payment reduction in 2012 to fully
account for the 17.45 percent nominal case-mix growth which was
identified from 2000 to 2008.
We received many comments on our CY 2011 HH PPS proposed rule that
criticized our methodology for assessing real case-mix change. The
criticisms from commenters centered on the idea that we underestimated
the percentage of case-mix growth that was real. Multiple commenters
stated that our model for assessing real case-mix change relies too
heavily on hospital discharge data. Commenters stated that we should
include more variables which capture the severity of patients entering
home health from the community since more than half of Medicare home
health patients are admitted to home health from a setting other than a
hospital. Also, commenters suggested that the acute care hospital APR-
DRG and other prior use variables in our models may not be relevant for
patients with more than one home health episode. Another criticism was
that our model should consider that there are shorter hospital stays,
and therefore, the patients who are discharged from the hospital into
home health may have a higher level of severity of illness than the
model recognizes. Moreover, commenters stated that all of the HHAs were
being penalized for the actions of a few HHAs and that the nominal
case-mix change reductions should be limited to certain types of
agencies (such as by region or for-profit/non-profit status or by case-
mix index [CMI]). Furthermore, one commenter stated that a recent study
by Dr. Partha Deb of Hunter College used data from a nationally
representative survey (the Medical Expenditures Panel Survey--MEPS) and
found that the health status of Medicare beneficiaries worsened,
suggesting a possible increase in real case-mix in the Medicare
population from 2000 through 2007 (the study by Partha Deb can be found
at http://www.aha.org/aha/content/2010/pdf/100715-CMItrends.pdf).
Commenters inferred that the change in real case-mix was larger than
the change we measured for the home health population, and therefore,
commenters doubted whether our model accounted for the entire real
case-mix change in the home health population. The study by Dr. Deb
constructed a case-mix measure from medical expenditures and diagnosis-
related data and compared results for 2000 and 2007.
In the CY 2011 HH PPS final rule, we implemented the proposed
payment reduction of 3.79 percent to the national standardized episode
rate in CY 2011. However, due to the extensive comments we received, we
deferred finalizing a payment reduction for CY 2012 until further study
of the case-mix data and methodology was completed.
1. Independent Review of the Models To Assess Nominal Case-Mix Growth
To assess the validity of the criticisms we received about our
models to measure real and nominal case-mix change, we procured an
independent review of our methodology by a team at Harvard University
led by Dr. David Grabowski. The review included an examination of the
predictive regression models and data used in CY 2011 rulemaking, and
further analysis consisting of extensions of the model to allow a
closer look at nominal case-mix
[[Page 40992]]
growth by categorizing the growth according to provider types and
subgroups of patients. The extensions showed a similar rate of nominal
case-mix growth from 2000 to 2008 (Table 1A) for the various categories
and subgroups. Below, we discuss these results in terms of the
criticisms we received.
Table 1A--Models for Assessing Real Case-Mix Change
------------------------------------------------------------------------
Nominal case-mix
Model percent increase
from 2000 to 2008
------------------------------------------------------------------------
(ALL) Total Nominal growth using Full Data Set 17.45
(Replication).....................................
(ALL) Full Data Set using MEDIAN ACH LOS 17.38
(Replication).....................................
(ALL) Full Data Set using Q3 ACH LOS (Replication). 17.47
(1a) Pre-HHA: With IH in prior 14 days............. 21.16
(1b) Pre-HHA: With IH in prior 15-120 days......... 16.81
(2a) Pre-HHA: Without IH in prior 14 days.......... 15.85
(2b) Pre-HHA: Without IH in prior 15-120 days...... 18.19
(3a) Pre-HHA: With IRF/SNF/LTCH in prior 14 days... 13.90
(3b) Pre-HHA: With IRF/SNF/LTCH in prior 15-120 14.11
days..............................................
(4a) Pre-HHA: Without IRF/SNF/LTCH in prior 14 days 18.51
(4b) Pre-HHA: Without IRF/SNF/LTCH in prior 15-120 18.33
days..............................................
(5a) Pre-HHA: With IH/IRF/SNF/LTCH in prior 14 days 18.97
(5b) Pre-HHA: With IH/IRF/SNF/LTCH in prior 15-120 16.74
days..............................................
(6a) Pre-HHA: Without IH/IRF/SNF/LTCH in prior 14 16.95
days..............................................
(6b) Pre-HHA: Without IH/IRF/SNF/LTCH in prior 15- 18.29
120 days..........................................
(7a) AGENCY-LEVEL: Owner: Non-Profit............... 14.49
(7b) AGENCY-LEVEL: Owner: For-Profit............... 18.63
(7c) AGENCY-LEVEL: Owner: Government............... 15.22
(8a) AGENCY-LEVEL: Facility-Based HHA.............. 14.17
(8b) AGENCY-LEVEL: Free-Standing HHA............... 17.86
(9a) AGENCY-LEVEL: West Region..................... 17.51
(9b) AGENCY-LEVEL: Midwest Region.................. 16.76
(9c) AGENCY-LEVEL: South Region.................... 18.01
(9d) AGENCY-LEVEL: Northeast Region................ 14.81
(10a) AGENCY-LEVEL: Large Agency................... 17.21
(10b) AGENCY-LEVEL: Small Agency................... 17.53
(11a) AGENCY-LEVEL: Urban HHA...................... 17.75
(11b) AGENCY-LEVEL: Rural HHA...................... 15.36
(12a) AGENCY-LEVEL: Treats predominantly post-acute 16.67
patients..........................................
(12b) AGENCY-LEVEL: Treats predominantly community 18.87
patients..........................................
(13) First Episode Only............................ 19.06
------------------------------------------------------------------------
HHA = home health agency; IH = Inpatient hospitalization; IRF =
inpatient rehabilitation facility; SNF = skilled nursing facility;
LTCH = long-term care hospital, ACH LOS = acute care hospital length
of stay.
To address the concern about our current models' robustness when
there is no prior inpatient or post-acute care setting (when patients
are admitted from the community), the Harvard team re-ran our models
for separate subgroups; in most cases, subgroups were defined by the
prior hospital and post-acute care use measures present on the data
file. Specifically, they defined prior inpatient/post-acute care use in
six different ways (shown in lines 1a through 6b of Table 1A): Any
hospital use over the past 14 days (yes/no); any post-acute use over
the prior 14 days (yes/no); any hospital use over the past 15-120 days
(yes/no); any post-acute care use over the past 15-120 days (yes/no);
any hospital or post-acute care use in the preceding 14 days (yes/no);
and any hospital or post-acute care use in the preceding 15-120 days
(yes/no). As another test, the team separated agencies according to
whether they treated predominantly post-acute patients or not. To
calculate this measure, the Harvard team split agencies above/below the
median based on their percentage of home health episodes in 2007 with
an inpatient hospital stay in the preceding 14 days.
Across all models, there was evidence of significant and similar
nominal case-mix growth, suggesting that high rates of nominal case-mix
growth exist regardless of whether there was a preceding inpatient or
post-acute stay. Agencies classified as serving predominantly community
patients had a slightly higher nominal case-mix percentage increase
compared to agencies classified as serving predominately post-acute
patients (as shown in lines 12a and 12b in Table 1A). (For a full
description of the Harvard team's analysis and results, please see the
L&M final report located at http://www.cms.gov/center/hha.asp).
Also, to evaluate the validity of the comment that the acute care
hospital APR-DRG and other prior use variables in our model may not be
relevant for patients with more than one home health episode, the
Harvard team re-ran our current predictive models using only the first
home health episode for each patient (shown in line 13 of Table 1A).
Once again, results based on this first episode were similar to the
overall results of our current model, suggesting that the model is
relatively stable across home health episodes. The results show that
the inclusion of the later episodes does not dramatically alter the
primary finding of significant nominal case-mix growth.
To evaluate the comment that our models should take into account
the fact that there are shorter hospital stays and therefore, the
patients who are discharged from the hospital into home health may have
a higher level of severity of illness than the model recognizes, our
predictions were calculated assuming there was a different average
length of stay than the actual average length of stay found for the LOS
predictor variables in the 2007 and 2008 follow-up years. Harvard
developed predictions of real and nominal case-mix growth using the
[[Page 40993]]
median acute care hospitalization length of stay, instead of the mean
length of stay which is used in our current model. The median is lower
than the mean acute care hospitalization length of stay. Harvard also
developed predictions of real and nominal case-mix growth using the
third quartile acute care hospitalization length of stay, which is
longer than the mean. The results were very similar to the overall
nominal case-mix percentage increase and therefore, the analysis
suggests that our methodology is not particularly limited in capturing
length of stay effects, because acute care hospitalization length of
stay does not play a big role in determining average patient severity.
To evaluate the suggestion that we should limit nominal case-mix
change reductions to certain types of agencies (such as by region or
for-profit/non-profit status or by CMI), the Harvard team re-ran our
model based on ownership type (non-profit, government, for-profit),
agency type (facility-based, freestanding), region of the country
(Northeast, South, Midwest, West), urban vs. rural status, and agency
size (large vs. small; based on the number of initial episodes), shown
in lines 7a through 11b in Table 1A. As noted earlier, the team also
examined case-mix growth by whether the agency had a particular focus
on post-acute vs. community patients. Across all these different
categories (ownership, agency type, region, urban vs. rural status,
agency size, agency focus), nominal case-mix growth was present. As
expected, nominal case-mix growth was larger for some sub-groups. For
example, nominal case-mix growth was higher for for-profit agencies
(18.63 percent) than non-profit (14.49 percent) and government agencies
(15.22 percent); however, these latter ownership types still exhibited
high rates of nominal case-mix growth. As such, the Harvard team
asserted that similar high rates of nominal case-mix growth exist for
all types of HHAs.
To address the comment that a study which used MEPS data showed a
higher rate of real case-mix growth in the entire Medicare population
than our model estimated for Medicare home health patients, a more
detailed analysis of the MEPS data was performed. The trends in health
status of four different populations from 2000 to 2008 were analyzed.
The data for the analysis were obtained from the MEPS 2000 and 2008
Full Year Consolidated Data files. The four populations that were
analyzed were: (1) The full MEPS sample; (2) all Medicare
beneficiaries, defined as all respondents ever having Medicare in a
given year; (3) all home health patients, defined as having at least
one home health provider day in a given year; and (4) all home health
Medicare beneficiaries, defined as all respondents with any Medicare
home health charges. Two measures of self-reported health status and
one measure derived from patient information that screened for
activities of daily living (ADL) limitations were used to determine the
trends in health status. These types of measures have been shown to be
highly correlated with actual health (Ware and Sherbourne, 1992;
McHorney, Ware, and Raczek, 1993). The three measures which were
analyzed for each of the populations were: (1) Whether the respondent
indicated perceived health status of ``poor'' or ``fair'' as opposed to
those indicating health status as ``good'', ``very good'', or
``excellent''; (2) whether the respondent indicated if pain limited
normal work (including work in the home) in the past 4 weeks
``extremely'' or ``quite a bit'' as opposed to those indicating pain
limited work ``moderately'', ``a little bit'', or ``not at all''; and
(3) whether respondents had a positive screen for needing assistance
with ADL. In all cases, responses such as ``refused'', ``don't know'',
or ``not ascertained'' were omitted from the analysis. The Medicare
analysis samples consisted of 3,371 and 4,144 beneficiaries in 2000 and
2008, respectively. The Medicare home health subsamples consisted of
174 and 289 beneficiaries in 2000 and 2008, respectively. The survey
responses were then weighted using pre-constructed MEPS survey weights
to estimate nationally representative changes in the three health
status variables.
All three measures indicated a slight increase in the overall
health status of the Medicare home health population. Two of these
results were not statistically significant, but the percent of home
health Medicare beneficiaries experiencing ``extreme'' or ``quite a
bit'' of work-limiting pain decreased substantially, from 56.6 percent
in 2000 to 45.4 percent in 2008 (p = 0.039). Unlike Dr. Deb's original
study, the new MEPS analysis focuses specifically on Medicare home
health users (as opposed to the entire Medicare population), and it is
not reliant on expenditure data. A limitation of the Debs case-mix
measure, which relies on expenditure data, is that it could reflect
large increases in expenditures, such as drug expenditures, but any
relationship to actual increases in impairments and other reasons for
using home health resources is unclear. A possible limitation of the
new MEPS analysis is that the sample of Medicare home health
respondents is relatively small, notwithstanding that the result of one
of the three measures was statistically significant. Also, the ADL
screening item may not capture a change in the frequency of very severe
ADL limitations since the measure may be insensitive to changes at high
levels of disability. However, the Harvard team asserted that the
methods of the new MEPS analysis are more appropriate for assessing
whether there are increases in the severity of illness burden that
would specifically indicate a need for more resources in the Medicare
home health population. Based on the two kinds of evidence, and a
recognition of the limitations of both, we conclude that the MEPS data
provide no evidence of an increase in patient severity from 2000 to
2008.
Based on the findings from the extensions of the current model that
were tested, including the finding that the two nominal case-mix
percentage increases for the post-acute and community patients are
similar (Table 1A), and the results of the MEPS analysis which do not
provide evidence to suggest that the Medicare home health population
has experienced a decrease in their health status over time, the
Harvard team concluded that the current model adequately measures real
case-mix growth for home health patients, including patients admitted
to home health from the community.
When reviewing the model, the Harvard team found that overall, our
models are robust. However, one area of potential refinement to our
models that the Harvard team suggested was to incorporate variables
derived from Hierarchical Condition Categories (HCC) data, which is
used by CMS to risk-adjust payments to managed care organizations in
the Medicare program. Currently, the HCC model includes 70 HCCs, each
of which is defined based on the presence of particular ICD-9-CM codes
identified from Medicare claims data (inpatient and outpatient hospital
claims and Part B Physician Claims). Some of the HCCs reflect
hierarchies among related conditions, but, for unrelated diseases, each
HCC is separately defined. The HCC model also includes demographic
items related to gender, age, Medicaid enrollment, and whether Medicare
eligibility was originally based on disabled status. We have augmented
our modeling data with HCC information, as described in the next
section.
2. Revised Version of Our Models To Assess Nominal Case-Mix Growth
In the past, we have considered using HCC data to assess real and
nominal
[[Page 40994]]
case-mix change; however, we have yet to implement a change to our
models which would incorporate the HCC data. Based on Dr. Grabowski and
his team's recommendation and our previous consideration to incorporate
HCC data in our models to assess real case-mix change, we explored the
effects of adding the managed care data to our models. To incorporate
HCC data into our models, we augmented our analytic files used to
measure real case-mix change. We obtained HCC data on all home health
users for 2004-2009. There were several different types of HCC
variables that could be added to our models to assess real case-mix.
Some of the variables we considered are the HCC risk score, binary
variables for each of the HCCs, demographic variables, and disease
indicators.
In the HCC model used for managed care risk adjustment, each HCC
has an associated regression coefficient. Regression coefficients for
each beneficiary's HCCs, along with the regression coefficients for
their demographic and enrollment characteristics, are summed to
calculate predicted expenditures. A risk score for each record can then
be calculated based on expected expenditures for the patient divided by
the mean expenditures for all patients. The HCC data include several
risk score measures, including the HCC community risk score, the
institutional risk score, and the risk score for new Medicare
enrollees. Because home health patients live in the community, the
community risk score seemed more appropriate than the institutional
risk score. An alternative to using the HCC risk score was to include
binary variables for each of the 70 HCCs, which may better capture a
patient's severity. Along with the HCC risk score and the individual
HCCs, we considered other elements of the HCC data such as the
demographic variables, whether disability was the original reason for
Medicare entitlement, and an indicator for whether the individual is a
Medicaid beneficiary. Furthermore, we examined interactions involving a
number of disease conditions that are included with the HCC data, such
as congestive heart failure (CHF), diabetes mellitus (DM), chronic
obstructive pulmonary disease (COPD), cardiovascular disease (CVD),
renal failure (RF), and coronary artery disease (CAD).
To test the usefulness of these different HCC variables, we
developed several models to examine real case-mix and which contained
different types of HCC data. We examined models in which we added the
HCC community score to our CY 2005 data so that the HCC score was
included with the APR-DRG variables in an equation explaining 2005
case-mix weights. We also examined models which incorporated individual
HCCs, instead of the HCC risk score. Furthermore, we examined models in
which either the HCC risk score or individual HCCs were added to our
model along with demographic and disease indicator variables. Moreover,
we examined models which did not include APR-DRGs, but rather the HCC
risk score or individual HCCs replaced the APR-DRGs in the model. When
we replaced the APR-DRGs in the models with the HCC risk score, there
was a low R-squared value, lower than any of the other models we
examined. When we replaced the APR-DRG variables in our models with the
individual HCC indicators, we observed a negative change in real case-
mix. This negative change in real case-mix would indicate that the
health status of the Medicare home health population has improved over
time and that all of the change in case-mix from 2000-2009 would be
nominal case-mix change. As a result of the findings from the various
models, we decided to augment our current model with the HCC variables
rather than replace our APR-DRG variables with HCC variables.
It should be noted that in addition to examining which HCC
variables we should include in our models, we also examined which year
of HCC data we should use in our models. There is a 1 year look-back
period with HCC data in that the HCC data are based on the previous
calendar year's claims history for an individual. Therefore, when
developing our models, we assessed whether we should use HCC data from
the previous year or HCC data in the same year as when the home health
episode occurred (the home health episode is the unit of observation in
our models). Our concern was that if we used HCC data in the same year
as the episode, the HCC data may partially reflect diseases and
conditions identified after a home health episode. However, we decided
to use HCC data in the same year as the episode since we thought it
best reflected the health status of the patients in that year.
For this year's analysis, we used a similar approach to our
previous methods. The basic method is to estimate a prediction model
and use coefficients from that model along with predictor variables
from a different year to predict the average case-mix for that year. It
should be noted that we chose to enhance our models with HCC data
starting in 2005 due to the availability of HCC data in our analytic
files. Therefore, we analyzed real case-mix change for three different
periods, from 2000 to 2005, from 2005 to 2007, and from 2007 to 2009.
The real case-mix change in the period from 2005 to 2007 and the period
from 2007 to 2009 were assessed using enhanced models, which included
HCC data. The real case-mix change from 2000 to 2005 was assessed using
the same variables used in the model described in last year's
regulation (75 FR 43238), a variable list consisting of measures of
patients' demographic characteristics, clinical status, inpatient
history, and Part A Medicare costs in the time period leading up to
their home health episodes. The regression coefficients from the model
without HCC variables were applied to episodes from 2005, allowing us
to estimate how much of the change in observed case-mix was
attributable to changes in patient characteristics between the IPS
period and 2005.
We added HCC variables for the 2005 to 2007 period, estimating the
model using data from 2005. The enhanced model includes HCC community
scores, HCC demographic variables, and disease indicator variables for
2005 and later. We chose this version of the HCC-enhanced case-mix
change model largely based on its ability to predict higher real case-
mix change relative to the other HCC enhanced models. We applied the
regression coefficients to means from 2007, allowing estimation of real
case-mix change between 2005 and 2007.
For the 2007 to 2009 period, we used the 153 HHRG case-mix weights
and data from 2009 to estimate the same set of models as we did for
2005. Using the backwards prediction method that we used in CY 2011
rulemaking, the coefficients from this model were developed using 2009
data and were applied to episodes from 2007. This procedure allows us
to estimate how much of the 2007 through 2009 change (based on the
HHRG153 case-mix for both periods) was associated with changes in
patient characteristics between 2007 and 2009.
From 2000 to 2009, we identified a total change in case-mix of
0.2476 (1.3435-1.0959 = 0.2476), which results in a case-mix growth of
22.59 percent ((1.3435-1.0959)/1.0959 = 0.2259). We then estimated the
real and nominal change in case-mix for each of the three periods. The
change in real case-mix from 2000 to 2005 was 0.0207 case-mix units.
The change in real case-mix from 2005 to 2007 was 0.0061 case-mix
units. The change in real case-mix from 2007 to 2009 was 0.0122 case-
mix units. After adding together the estimated real case-mix change in
case-mix units for the three periods, the total
[[Page 40995]]
estimated change in real case-mix from 2000 to 2009 was 0.0390 (0.0207
+ 0.0061 + 0.0122 = 0.0390). Therefore, we estimate that 15.76 percent
of the total percentage change in the national average case-mix weight
since the IPS baseline through 2009 is due to change in real case-mix
(0.0390/0.2476 = ~0.1576). It should be noted that due to rounding,
there is a 0.01 percentage point difference between the calculated and
actual value. When taking into account the total measure of case-mix
change (22.59 percent) and the 15.76 percent of total case-mix change
estimated as real from 2000 to 2009, we obtained a final nominal case-
mix change measure of 19.03 percent from 2000 to 2009 (0.2259 * (1-
0.1576) = 0.1903). Please see Table 1B for additional information about
the calculations used to make the real and nominal case-mix change
estimates from 2000 to 2009.
Our estimates of real and nominal case-mix change are consistent
with past results. Most of the case-mix change has been due to improved
coding, coding practice changes, and other behavioral responses to the
prospective payment system, such as increased use of high therapy
treatment plans.
Table 1B--Summary of Real and Nominal Case-Mix Change Estimates: 2000-
2009
------------------------------------------------------------------------
Measure Model
------------------------------------------------------------------------
Actual case-mix: 2000........................................ 1.0959
Actual case-mix: 2009........................................ 1.3435
Total change in case-mix..................................... 0.2476
Total percentage change...................................... 22.59%
Estimated real change in case-mix............................ 0.0390
Percent of total change estimated as real.................... 15.76%
Percent of total change estimated as nominal (creep)......... 84.24%
Real case-mix percent increase............................... 3.56%
Nominal case-mix percent increase............................ 19.03%
------------------------------------------------------------------------
As we described earlier in this proposed rule, our CY 2008 HH PPS
final rule finalized a reduction over 4 years in the national
standardized 60-day episode payment rates to account for a large
increase in case-mix from 2000 to 2005 which we determined was not
related to treatment of more intense patients. We implemented a 2.75
percent reduction each year for 2008, 2009, and 2010 and planned to
reduce payments by 2.71 percent in 2011. In CY 2011 rulemaking, we
updated our analysis of nominal case-mix growth through 2008 and
determined that there was 17.45 percent nominal case-mix growth from
2000 to 2008. Therefore, we proposed and finalized an increase in the
planned 2.71 percent reduction to 3.79 percent for CY 2011. Also, in
the CY 2011 proposed rule, we stated that if we were to identify
further increases in nominal case-mix as more current data becomes
available, it would be our intent to account fully for those increases
when they are identified, rather than continuing to phase in the
reductions over more than 1 year. For the CY 2012 proposed rule, after
updating our models to incorporate HCC data, we have determined that
there was a 19.03 percent nominal case-mix change from 2000 to 2009. To
account for the remainder of the 19.03 percent residual increase in
nominal case-mix beyond that which has been accounted for in previous
payment reductions, we estimate that the percentage reduction to the
national standardized 60-day episode rates for nominal case-mix change
for CY 2012 will be 5.06 percent. Therefore, for CY 2012, we propose to
implement a 5.06 percent payment reduction to the national standardized
60-day episode rates to fully account for growth in nominal case-mix
from the inception of HH PPS through 2009.
B. Case-Mix Revision to the Case-Mix Weights
1. Hypertension Diagnosis Coding Under the HH PPS
In CY 2011 rulemaking, we proposed to remove ICD-9-CM code 401.1,
Benign Essential Hypertension, and ICD-9-CM code 401.9, Unspecified
Essential Hypertension, from the HH PPS case-mix model's hypertension
group. Beginning with the HH PPS refinements in 2008, hypertension was
included in the HH PPS system because data suggested it was associated
with elevated resource use. As a result, the diagnoses Unspecified
Essential Hypertension and Benign Essential Hypertension were
associated with additional points from the four-equation model and
subsequently, potentially higher case-mix weights in the HH PPS case-
mix system. When examining the trends in reporting of hypertension
codes from 2000 to 2008, our analysis showed a large increase in the
reporting of codes 401.1 and 401.9 in 2008. However, when looking at
2008 claims data, the average number of visits for claims with code
401.9 was slightly lower than the average for claims not reporting
these hypertension codes. In last year's proposed rule, we proposed to
remove codes 401.1 and 401.9 from our case-mix model based on
preliminary analysis of the trends in coding and resource use of
patients with these codes. We suspected that the 2008 refinements,
which newly awarded points for the diagnosis codes 401.1 and 401.9, led
to an increase in reporting of these codes and that this reporting was
a key driver of the high 2008 growth in nominal case-mix. In response
to this proposed policy change, we received numerous comments, many of
which stated that additional analysis was needed to substantiate the
rationale for removing hypertension codes 401.1 and 401.9. In the CY
2011 HH PPS final rule, we withdrew our proposal to eliminate 401.1 and
401.9 from our model and described our plans to do a more comprehensive
analysis of the resource use of patients with these two hypertension
codes. We have since completed a more thorough analysis. Based on the
results of our latest analyses, we propose to remove codes 401.1 and
401.9 from the HH PPS case-mix system.
We performed several analyses of the resource use and prevalence of
patients with Benign Essential Hypertension and Unspecified Essential
Hypertension (codes 401.1 and 401.9) to assess the appropriateness of
these codes in our case-mix model. We looked at the HH PPS episode data
using two samples to more accurately assess the trends in hypertension
prevalence over time. In one sample, we excluded episodes from
providers in areas exhibiting suspect billing practices. For the other
sample, we excluded outlier episodes. In all of the analyses that
follow, we report the results from the sample that excludes outliers
because results from the alternate analysis were highly similar. Also,
the sample that excludes outliers is more appropriate than one that
includes outliers because our case-mix research has been conducted on
samples without outliers.
One of our analyses looked at the prevalence of various
hypertension codes over time. We compared the change in prevalence of
401.1 and 401.9 diagnoses to the prevalence of other diagnoses in the
hypertension group--401.0 (malignant essential hypertension), 402
(hypertensive heart disease), 403 (hypertensive chronic kidney
disease), 404 (hypertensive heart and chronic kidney disease), and 405
(secondary hypertension)--from 2005 to 2009 (Table 2). Our analysis
shows that the prevalence of episodes with a 401.9 diagnosis continued
to increase in 2009, from 50.58 percent of episodes in 2008 to 55.52
percent in 2009, and more than doubled between 2005 and 2009. The
prevalence of episodes with a 401.1 diagnosis decreased from 2008 to
2009 but the prevalence remained slightly higher than the prevalence in
2005.
[[Page 40996]]
Table 2--Prevalence of Hypertension--2005-2009
[In percent]
----------------------------------------------------------------------------------------------------------------
Diagnosis 2005 2006 2007 2008 2009
----------------------------------------------------------------------------------------------------------------
Any hypertension.............................................. 33.32 40.22 46.26 60.37 65.65
401.0 Malignant essential hypertension........................ 0.56 0.54 0.53 0.56 0.47
401.1 Benign essential hypertension........................... 2.89 3.36 3.44 3.79 2.95
401.9 Essential hypertension, unspecified..................... 27.23 33.22 38.74 50.58 55.52
402 Hypertensive heart disease................................ 2.19 2.38 2.49 2.99 2.76
403 Hypertensive renal disease................................ 0.31 0.56 0.92 2.24 3.66
404 Hypertensive heart and renal disease...................... 0.14 0.17 0.20 0.31 0.39
405 Secondary hypertension.................................... 0.04 0.04 0.03 0.03 0.04
----------------------------------------------------------------------------------------------------------------
Outlier episodes are excluded.
Source: Abt Associates analysis of 20 percent sample of Home Health Datalink file for 2005-2009.
We also examined the prevalence of hypertension coding by various
agency characteristics, such as agency type, region, and provider size,
in 2005 versus 2009 (Tables 3 and 4). We compared the 2005 data (Table
3) to more current data (Table 4) because the 2005 data were used to
simulate the 2008 refinements for the CY 2008 HH PPS final rule
implementing the 153-group case-mix system (72 FR 49762 through 49945).
Based on our analysis, except for government-owned agencies and
agencies in a few regions, agencies (regardless of type) had a similar
prevalence of episodes with a 401.9 diagnosis across the board in 2009
(Table 4). Also, agencies had a relatively similar prevalence of
episodes with a 401.1 diagnosis across the board in 2009, except for
West South Central, which had a high prevalence of 6.68 percent (Table
4)--about 9 times the region's prevalence in 2005. In addition, small
facilities with less than 19 home health episodes in a year in the 20
percent sample of the Home Health Datalink file had a high prevalence
of diagnosis 401.1; 8.30 percent of their episodes had a 401.1
diagnosis. All categories of agencies appear to have a significant
increase in the reporting of a 401.9 diagnosis when comparing 2005 HH
PPS claims and OASIS data to 2009 HH PPS claims and OASIS data. The
reporting of a 401.9 diagnosis in 2009 was typically 1.8 to 2.1 times
the reporting of a 401.9 diagnosis in 2005, with the exception of the
East North and the West North Central regions which had an increase of
around 1.7 and 1.5 fold respectively. Also, it should be noted that the
Mid-Atlantic region had around a 2.4 fold increase in the reporting of
a 401.9 diagnosis between 2005 and 2009 and the West South Central
region had almost a threefold increase in the reporting of a 401.9
diagnosis between 2005 and 2009. Furthermore, many categories had an
increase in the reporting of a 401.1 diagnosis when comparing 2005 data
to 2009.
Table 3--Prevalence of Hypertension by Various Agency Characteristics--2005
[In percent]
----------------------------------------------------------------------------------------------------------------
Any 401.0 401.1 401.9 402 403 404 405
----------------------------------------------------------------------------------------------------------------
All Agencies.................... 33.59 0.56 2.96 27.34 2.26 0.32 0.15 0.04
----------------------------------------------------------------------------------------------------------------
Type of Facility
----------------------------------------------------------------------------------------------------------------
Free-Standing/Other Vol/NP...... 27.50 0.21 0.63 25.49 0.83 0.30 0.06 0.01
Free-Standing/Other Prop........ 39.35 0.86 4.86 29.63 3.48 0.30 0.19 0.06
Free-Standing/Other Govt........ 29.01 0.41 1.35 25.36 1.51 0.22 0.17 0.04
Hospital-Based Vol/NP........... 25.11 0.17 0.68 23.33 0.51 0.35 0.09 0.01
Hospital-Based Prop............. 29.79 0.30 0.68 27.50 0.83 0.37 0.16 0.01
Agency-Based Govt............... 30.94 0.80 3.04 24.46 1.92 0.53 0.23 0.02
----------------------------------------------------------------------------------------------------------------
Facility Location
----------------------------------------------------------------------------------------------------------------
New England..................... 39.36 1.06 5.25 27.83 4.63 0.37 0.30 0.01
Mid Atlantic.................... 26.09 0.22 0.81 23.79 0.65 0.24 0.09 0.01
South Atlantic.................. 36.87 0.81 5.93 27.41 2.21 0.30 0.14 0.09
East South Central.............. 31.97 0.42 0.90 29.15 1.26 0.24 0.07 0.01
West South Central.............. 21.15 0.25 0.74 19.57 0.32 0.19 0.09 0.01
East North Central.............. 36.54 0.20 0.62 34.59 0.47 0.62 0.06 0.02
West North Central.............. 37.81 0.56 1.46 32.10 3.17 0.35 0.21 0.01
Mountain........................ 29.95 0.45 1.58 24.74 2.70 0.35 0.16 0.03
Pacific......................... 25.33 0.32 1.81 22.17 0.76 0.21 0.07 0.02
Other........................... 36.33 0.46 2.46 28.89 4.30 0.16 0.12 0.01
----------------------------------------------------------------------------------------------------------------
Facility Size
----------------------------------------------------------------------------------------------------------------
< 19 episodes................... 36.71 0.79 3.86 28.75 2.53 0.52 0.19 0.10
20 to 49........................ 36.11 0.74 4.42 27.39 2.98 0.38 0.17 0.04
50 to 99........................ 35.98 0.80 4.06 27.97 2.73 0.31 0.11 0.02
100 to 199...................... 36.78 0.73 4.11 28.60 2.81 0.33 0.16 0.07
[[Page 40997]]
200+............................ 32.86 0.53 2.72 27.06 2.09 0.31 0.14 0.03
----------------------------------------------------------------------------------------------------------------
Outlier episodes are excluded.
Source: Abt Associates analysis of 20 percent sample of Home Health Datalink file.
Table 4--Prevalence of Hypertension by Various Agency Characteristics--2009
[In percent]
----------------------------------------------------------------------------------------------------------------
Any 401.0 401.1 401.9 402 403 404 405
----------------------------------------------------------------------------------------------------------------
All Agencies.................... 65.95 0.48 3.17 55.36 3.00 3.64 0.40 0.04
----------------------------------------------------------------------------------------------------------------
Type of Facility
----------------------------------------------------------------------------------------------------------------
Free-Standing/Other Vol/NP...... 60.11 0.17 0.94 53.06 0.71 5.05 0.24 0.01
Free-Standing/Other Prop........ 69.42 0.62 3.86 57.81 3.74 3.07 0.44 0.05
Free-Standing/Other Govt........ 54.60 0.45 3.13 44.98 2.00 3.41 0.72 0.02
Hospital-Based Vol/NP........... 56.82 0.16 1.22 49.49 0.78 4.93 0.32 0.02
Hospital-Based Prop............. 61.41 0.21 1.45 54.61 1.83 3.31 0.16 0.01
Agency-Based Govt............... 54.89 0.48 2.29 46.53 1.68 3.57 0.48 0.03
----------------------------------------------------------------------------------------------------------------
Facility Location
----------------------------------------------------------------------------------------------------------------
New England..................... 58.71 0.10 0.54 53.96 0.43 3.50 0.23 0.02
Mid Atlantic.................... 62.45 0.12 0.65 56.04 0.58 4.98 0.16 0.01
South Atlantic.................. 64.09 0.28 1.74 56.80 1.49 3.46 0.31 0.08
East South Central.............. 69.52 0.22 2.13 59.69 3.27 3.73 0.61 0.01
West South Central.............. 73.22 0.92 6.68 57.28 4.47 3.53 0.50 0.05
East North Central.............. 67.01 0.52 2.16 57.42 3.04 3.68 0.34 0.02
West North Central.............. 55.97 0.46 1.84 48.00 1.12 4.15 0.46 0.06
Mountain........................ 56.02 0.52 2.21 49.13 1.29 2.51 0.32 0.10
Pacific......................... 57.42 0.52 3.00 45.06 5.50 3.02 0.51 0.03
Other........................... 63.20 0.33 1.58 55.53 1.52 4.00 0.35 0.00
----------------------------------------------------------------------------------------------------------------
Facility Size
----------------------------------------------------------------------------------------------------------------
< 19 episodes................... 71.19 1.77 8.30 51.27 7.35 2.01 0.71 0.08
20 to 49........................ 68.39 1.35 6.13 53.07 5.63 2.04 0.44 0.04
50 to 99........................ 67.67 0.66 4.27 54.27 5.26 2.82 0.52 0.07
100 to 199...................... 65.99 0.52 4.03 54.90 3.12 3.07 0.41 0.08
200+............................ 64.37 0.21 1.52 56.61 1.38 4.38 0.33 0.02
----------------------------------------------------------------------------------------------------------------
Outlier episodes are excluded.
Source: Abt Associates analysis of 20 percent sample of Home Health Datalink file.
In last year's final regulation, we received a comment stating that
a multivariate analysis of the costliness of hypertension is advisable
to strengthen the evidence for the proposal to eliminate the 401.1 and
401.9 diagnoses from the case-mix model. In response to this comment,
we estimated a set of multivariate regression models to examine the
resources associated with the 401.1 and 401.9 diagnoses while adjusting
for other factors in the case-mix system (Tables 5 and 6). The
multivariate regression models used 2008 HH PPS claims and OASIS data
which excluded PEP, LUPA, and outlier episodes. Model 1 included
variables for the number of therapy visits, the clinical score, the
functional score, and indicators for whether a 401.1 or 401.9 diagnosis
was present. In this model, both the 401.1 and 401.9 diagnoses were
associated with significantly lower costs (-19 and -18 resource units,
respectively). This model indicates that an episode with a 401.1 or
401.9 code has less resource costs than an episode without a 401.1 or
401.9 code, when the amount of therapy, clinical score, and functional
score are held constant. Model 2 included variables for the payment
weight and the 401.1 and 401.9 indicators. In this model, both 401.1
and 401.9 were associated with lower costs and these impacts were
statistically significant. The diagnosis code 401.1 was associated with
significantly lower costs (-22 resource units) while the 401.9
indicator was associated with about -2 resource units. This model most
accurately shows the impact of codes 401.1 and 401.9 on resource use
within the payment system, because it directly controls for the payment
weight, which represents in a summary variable all the other conditions
paid for in the case-mix algorithm. Both models provide strong evidence
for removing the 401.1 diagnosis from the case-mix model, since it is
associated with significantly lower resource costs. The models also
provide strong evidence for removing the 401.9 diagnosis, since they do
not indicate that this condition is responsible for additional resource
costs beyond what is already accounted for in the case-mix model.
In addition, it should be noted that when we estimated the
multivariate regression models when excluding episodes from providers
in areas exhibiting suspect billing practices, ICD-9-CM diagnosis code
401.9 was associated with slightly lower costs and ICD-9-CM diagnosis
code 401.1 was associated with a slight increase in
[[Page 40998]]
resource costs (about +3 resource units). However, we believe that
relying on analyses that include outliers, as this sample does, is
problematic. In 2008 and 2009, outliers reached a historically high
rate per 100 episodes in home health, and the abuse of the PPS outlier
policy was subsequently recognized as a significant problem. In a 10
percent random beneficiary sample, there is a strong association
between the reporting of code 401.1 and outliers, and this association
could be contributing to the higher resource costs for episodes with
the 401.1 code in the regression that excludes episodes from suspect
areas. Although it is not certain whether the use of this code in
outlier cases is related to abusive outlier utilization, we are
cautious about relying on data that include outliers. In addition, even
absent any concerns about suspect billing practices, the increase in
resource costs associated with a 401.1 diagnosis is not large enough to
warrant awarding additional points in our case-mix system for the
diagnosis.
Table 5--Regression Results: Resources Associated With a 401.1 or 401.9 Diagnosis: Model 1 (2008)
----------------------------------------------------------------------------------------------------------------
Parameter Standard Pr >
Variable estimate error T value [bond]t[bond]
----------------------------------------------------------------------------------------------------------------
Intercept........................................... 171.1183 0.74992 228.18 < .0001
Number of therapy visits............................ 34.72435 0.0371 936.03 < .0001
Clinical score...................................... 8.7105 0.03774 230.8 < .0001
Functional score.................................... 8.63246 0.08876 97.26 < .0001
ICD9 401.1 present.................................. -18.72875 1.38201 -13.55 < .0001
ICD9 401.9 present.................................. -18.19412 0.53904 -33.75 < .0001
----------------------------------------------------------------------------------------------------------------
PEP, LUPA and outlier episodes are excluded.
Source: Abt Associates analysis of 20 percent sample of Home Health Datalink file for 2008.
Table 6--Regression Results: Resources Associated With a 401.1 or 401.9 Diagnosis: Model 2 (2008)
----------------------------------------------------------------------------------------------------------------
Parameter Standard Pr >
Variable estimate error T value [bond]t[bond]
----------------------------------------------------------------------------------------------------------------
Intercept........................................... -35.5089 0.68637 -51.73 < .0001
Payment weight...................................... 530.9656 0.51853 1023.98 < .0001
ICD9 401.1 present.................................. -21.96335 1.43741 -15.28 < .0001
ICD9 401.9 present.................................. -1.73284 0.55998 -3.09 0.002
----------------------------------------------------------------------------------------------------------------
PEP, LUPA and outlier episodes are excluded.
Source: Abt Associates analysis of 20 percent sample of Home Health Datalink file for 2008.
We also examined whether there were any subsets of patients with a
401.1 or 401.9 diagnosis who had higher resource costs. Potentially
such information could lead to adding interaction variables involving
the two hypertension diagnoses to the case-mix model. The model
currently includes several interactions (for example, gastrointestinal
disorders and ostomy). There was speculation that patients who required
respiratory treatments may have higher than expected resource costs in
the presence of either of the two hypertension codes--for example,
patients who are smokers. We therefore examined the resource costs for
patients with a 401.1 or a 401.9 diagnosis and different types of
respiratory treatments (Tables 7 and 8). The results showed that there
was a decrease in resource costs for episodes with patients with a
401.1 diagnosis and who received respiratory treatments (Table 7). In
addition, it can be noted that there was a decrease in resource costs
for episodes with patients with a 401.1 diagnosis and no respiratory
treatment. Table 8 shows that there was a decrease in average cost for
episodes with patients with a 401.9 diagnosis and who were on oxygen or
receiving continuous positive airway treatment. There was also an
increase in resource costs for episodes with 401.9 compared to those
without 401.9 for patients on ventilators. However, this increase in
resource costs associated with the presence of a 401.9 diagnosis is not
statistically significant. Overall, the results from Tables 7 and 8
show that there is little support for keeping 401.1 and 401.9 codes for
patients receiving respiratory treatments.
Table 7--Resource Costs for Patients With a 401.1 Diagnosis and Respiratory Treatment (2008)
----------------------------------------------------------------------------------------------------------------
401.1 Present
-------------------------------- Difference % Difference
No Yes
----------------------------------------------------------------------------------------------------------------
Oxygen.......................................... $575.79 $567.52 ($8.27) -1.44
Ventilator...................................... 662.71 612.24 (50.47) -7.62
Continuous positive airway pressure............. 587.05 530.93 (56.12) -9.56
None............................................ 567.88 554.61 (13.27) -2.34
----------------------------------------------------------------------------------------------------------------
Outliers are excluded.
Source: Abt Associates analysis of 20 percent sample of Home Health Datalink file for 2008.
[[Page 40999]]
Table 8--Resource Costs for Patients With a 401.9 Diagnosis and Respiratory Treatment (2008)
----------------------------------------------------------------------------------------------------------------
401.9 Present
-------------------------------- Difference % Difference
No Yes
----------------------------------------------------------------------------------------------------------------
Oxygen.......................................... $581.66 $568.46 (13.20) -2.27
Ventilator...................................... 648.94 683.77 34.83 5.37
Continuous positive airway pressure............. 599.69 572.08 (27.61) -4.60
None............................................ 568.42 566.75 (1.67) -0.29
----------------------------------------------------------------------------------------------------------------
Outliers are excluded.
Source: Abt Associates analysis of 20 percent sample of Home Health Datalink file for 2008.
We also looked at the average resource cost of episodes for
patients categorized by primary diagnosis, with and without a 401.9
diagnosis code, to determine whether there are other sub-categories of
patients diagnosed with 401.9 who are more resource intensive (Table
9). Many primary diagnoses had a lower average cost when code 401.9 was
present. Heart disease was among the primary diagnoses in which the
average resource cost for episodes with a 401.9 diagnosis was less than
the average cost without a 401.9 diagnosis. For six primary diagnoses,
there was an increase in resource cost when a 401.9 diagnosis was
present. However, the increases in resource costs for four of the six
diagnoses were not statistically significant. It should be noted that
while there was a large increase in resource costs for patients with
blindness/low vision when a 401.9 diagnosis was present, the results
were not statistically significant. There are few patients with a
primary diagnosis of blindness/low vision. The two diagnoses which
resulted in a significant increase in resource cost when a 401.9
diagnosis was present were stroke and gait abnormality (Table 9).
When further examining the data, we questioned the hypertension
coding for the episodes with stroke as a primary diagnosis. For the
28,923 episodes with a primary diagnosis of stroke, only 18,063
episodes had a 401.9 diagnosis present. Furthermore, of those 28,923
episodes, only 71 percent of the episodes had a hypertension diagnosis.
Because stroke is so strongly associated with hypertension, we would
expect more episodes with a primary diagnosis of stroke to also have a
hypertension diagnosis. Therefore, we believe that the data in the
table corresponding to the episodes with stroke as a primary diagnosis
is affected by incomplete coding. Also, if stroke almost always should
be listed followed by hypertension, there would be no reason for an
interaction term in the model involving stroke and hypertension. An
interaction in the model--identifying a subset of patients with a
condition who have another condition that changes the patient's
resource cost utilization--cannot apply in this case.
Table 9--Total Resource Costs by Primary Diagnosis and Whether 401.9 Is Present (2008)
--------------------------------------------------------------------------------------------------------------------------------------------------------
N with 401.9 401.9 not
Primary diagnosis N present present 401.9 present Difference % Difference
--------------------------------------------------------------------------------------------------------------------------------------------------------
Blindness/low vision.................................... 392 213 $392.95 $415.11 $22.16 5.64
Stroke.................................................. 28,923 18,063 742.54 768.66 26.12 3.52
Gait Abnormality........................................ 22,946 11,567 641.28 656.97 15.69 2.45
Hypertension............................................ 13,446 202 406.91 414.20 7.29 1.79
Neurological............................................ 14,869 6,583 622.88 628.27 5.39 0.86
Blood disorders......................................... 14,985 7,264 367.44 369.81 2.37 0.65
Orthopedic.............................................. 33,468 17,757 529.46 529.46 0.00 0.00
Cystostomy Care......................................... 2,469 915 436.92 433.80 (3.12) -0.71
Cancer.................................................. 20,885 9,298 459.59 452.73 (6.86) -1.49
Diabetes................................................ 96,018 54,461 462.55 450.32 (12.23) -2.64
Gastrointestinal........................................ 14,496 7,170 457.55 445.29 (12.26) -2.68
Traumatic wounds........................................ 27,855 13,849 554.73 539.44 (15.29) -2.76
Heart disease........................................... 68,297 36,040 484.49 469.11 (15.37) -3.17
MS...................................................... 4,206 1,329 651.37 620.30 (31.07) -4.77
Dysphagia............................................... 1,430 595 651.95 598.26 (53.69) -8.24
Tracheostomy............................................ 414 176 598.77 508.91 (89.86) -15.01
--------------------------------------------------------------------------------------------------------------------------------------------------------
Outlier episodes are excluded.
Source: Abt Associates analysis of 20% sample of Home Health Datalink file for 2008.
To further investigate the increase in average resource cost when
401.9 was present in patients with gait abnormality, we looked at
average resources and average visits for joint replacement patients,
which are patient groups strongly associated with a diagnosis of gait
abnormality. We chose to look at patients with joint, hip, and knee
replacements since they would be the sorts of patients in home health
that would have a skilled need as a result of gait abnormality and they
would typically have high therapy and resource costs. We also examined
the subgroups of these patients who were reported on the OASIS to have
a diagnosis of gait abnormality (Table 10). For patients with joint,
hip, and knee replacements that had a 401.9 diagnosis, resource costs
and visits differed little compared to such patients who did not have
the 401.9 diagnosis. None of the differences were statistically
significant. In addition, we saw that for the episodes with gait
abnormality as a primary diagnosis, there were no statistically
significant differences between the resource costs or number of visits
for joint, hip, and knee replacement patients when a 401.9 diagnosis
was present. These results indicate that there is no significant
difference in resource
[[Page 41000]]
cost for patients with joint replacements when a 401.9 diagnosis is
present.
It should also be noted that when examining the increase in average
resources for episodes with patients with a primary diagnosis of stroke
or gait abnormality when a 401.9 diagnosis is present, we could not
determine whether the increase in resource cost was due to the 401.9
diagnosis or due to a third confounding variable. As described earlier,
we estimated a set of multivariate regression models to determine the
relationship between a 401.9 diagnosis and resource cost, when
controlling for other variables in the case-mix model.
Table 10--Total Resource Costs and Visits by Type of Joint Replacement and Whether 401.9 Is Present for All Patients With Joint Replacements and the
Subset of Patients With Gait Abnormality (2008)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs Visits
--------------------------------------------------------------------------------------------------------
Diagnosis N 401.9 not 401.9 % 401.9 not 401.9 %
present present Difference Difference present present Difference Difference
--------------------------------------------------------------------------------------------------------------------------------------------------------
Joint replacement................. 45,689 $566.41 $559.88 ($6.53) -1.15% 15.71 15.86 0.15 0.95
Hip replacement................... 13,658 563.95 564.50 0.55 0.10 16.37 16.43 0.06 0.37
Knee replacement.................. 21,580 542.12 539.63 (2.49) -0.46 14.9 15.04 0.14 0.94
--------------------------------------------------------------------------------------------------------------------------------------------------------
Episodes with gait abnormality as primary diagnosis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Joint replacement................. 632 553.68 562.41 8.73 1.58 15.58 16.23 0.65 4.17
Hip replacement................... 315 587.44 609.34 21.90 3.73 16.83 17.99 1.16 6.89
Knee replacement.................. 382 554.78 529.23 (25.55) -4.61 14.98 14.57 (0.41) -2.74
--------------------------------------------------------------------------------------------------------------------------------------------------------
Outlier episodes are excluded.
Source: Abt Associates' analysis of 20 percent sample of Home Health Datalink file for 2008.
Some of our analysis was performed to further investigate issues
raised in comments we received on last year's proposed rule. In
response to last year's rule, one commenter stated that we should keep
the diagnosis code 401.9 in the case-mix system, stating that very
often clinically complex patients, such as hypertensive heart disease
patients, will be diagnosed with this code while waiting for proper
documentation that is required by ICD-9-CM to report a more specific
diagnosis code. To investigate the extent to which a 401.9 diagnosis
might be coded on an initial assessment while waiting for necessary
documentation for other hypertension codes, we looked at the
hypertension prevalence for start-of-care episodes (defined as those
with segment number equal to one) and recertification episodes (defined
as those with segment number greater than one) for various subgroups of
related episodes (Table 11). Related episodes are episodes without a
gap of more than 60 days in between them. In past rulemaking, we have
referred to these as episodes as part of a sequence of adjacent
episodes. In those rules, we defined episodes as adjacent if they were
separated by no more than a 60-day period between episodes. Some of the
subgroups we examined in our analysis were ones in which: (1) The
initial episode had a 401.9 code; (2) the 2nd episode in a sequence of
adjacent episodes had a 402, 403, 404, or 405 code; (3) codes 402, 403,
404, and 405 were not present on the initial episode, but were present
on the second episode in the sequence of adjacent episodes. Table 11
shows that, of the sequence of adjacent episodes where a 401.9 code is
reported on the initial episode, very few subsequent episodes had a
diagnosis of 402, 403, 404, or 405, and most subsequent episodes
continued to have a 401.9 diagnosis. Also, for those sequences of
adjacent episodes where a 402, 403, 404, or 405 code exists on the
second episode, many (over 60 percent) had the same code reported for
the initial episode. For patients that had a 402, 403, 404, or 405
diagnosis on their second episode but not their initial episode, many
had a 401.9 diagnosis on their initial episode. However, there were
only a small number of episodes with this pattern and it is not clear
if this pattern is related to the comment about coding 401.9 while
waiting for documentation or if this occurs due to the random
fluctuation in hypertension coding patterns. In summary, the results of
this analysis do not provide support for keeping 401.9 as a diagnosis
in the case-mix model based on the reason that it is used as a
placeholder while waiting for documentation to support another ICD-9-CM
hypertension code.
Table 11--Hypertension Prevalence by Segment and Type of Hypertension Reported on Segment 1 or Segment 2 (2009)
----------------------------------------------------------------------------------------------------------------
Diagnosis N 401.9 (%) 401.1 (%) 402 (%) 403 (%) 404 (%) 405 (%)
----------------------------------------------------------------------------------------------------------------
401.1 Benign Essential hypertension, unspecified (segment 1)
----------------------------------------------------------------------------------------------------------------
Segment 1.......................... 10,859 0.04 100.00 0.19 0.12 0.06 0.00
Segment 2.......................... 3,463 12.21 75.69 1.70 0.78 0.20 0.03
Segment 3.......................... 1,734 17.42 68.86 2.42 0.69 0.23 0.06
Segment 4.......................... 997 19.76 64.79 3.21 0.80 0.30 0.10
----------------------------------------------------------------------------------------------------------------
401.9 Essential hypertension, unspecified (segment 1)
----------------------------------------------------------------------------------------------------------------
Segment 1.......................... 305,530 100.00 0.00 0.08 0.06 0.01 0.00
Segment 2.......................... 70,493 87.63 0.44 0.74 1.41 0.11 0.00
Segment 3.......................... 29,235 84.76 0.73 1.14 1.82 0.15 0.01
Segment 4.......................... 14,255 82.94 0.98 1.35 2.13 0.18 0.01
----------------------------------------------------------------------------------------------------------------
[[Page 41001]]
402 Hypertensive heart disease (segment 1)
----------------------------------------------------------------------------------------------------------------
Segment 1.......................... 8,777 2.83 0.24 100.00 0.24 0.09 0.01
Segment 2.......................... 3,165 14.00 1.07 79.05 1.23 0.73 0.00
Segment 3.......................... 1,563 20.47 1.66 70.12 1.15 1.02 0.06
Segment 4.......................... 859 23.40 1.40 65.19 0.70 1.28 0.00
----------------------------------------------------------------------------------------------------------------
403 Hypertensive renal disease (segment 1)
----------------------------------------------------------------------------------------------------------------
Segment 1.......................... 18,740 1.02 0.07 0.11 100.00 0.03 0.01
Segment 2.......................... 4,497 9.12 0.18 0.51 79.25 0.78 0.04
Segment 3.......................... 1,806 11.46 0.39 0.44 73.75 1.33 0.06
Segment 4.......................... 843 12.81 0.47 0.59 72.00 1.66 0.00
----------------------------------------------------------------------------------------------------------------
404 Hypertensive heart and renal disease (segment 1)
----------------------------------------------------------------------------------------------------------------
Segment 1.......................... 1,331 2.93 0.45 0.60 0.38 100.00 0.00
Segment 2.......................... 404 8.66 1.98 2.23 6.44 73.51 0.00
Segment 3.......................... 191 12.57 1.57 2.62 7.33 67.54 0.00
Segment 4.......................... 101 12.87 1.98 0.99 10.89 67.33 0.00
----------------------------------------------------------------------------------------------------------------
405 Secondary hypertension (segment 1)
----------------------------------------------------------------------------------------------------------------
Segment 1.......................... 192 1.04 0.00 0.52 0.52 0.00 100.00
Segment 2.......................... 56 8.93 0.00 0.00 1.79 1.79 75.00
Segment 3.......................... 29 6.90 0.00 0.00 6.90 0.00 58.62
Segment 4.......................... 13 23.08 0.00 0.00 0.00 0.00 61.54
----------------------------------------------------------------------------------------------------------------
401.1 Secondary hypertension (segment 2)
----------------------------------------------------------------------------------------------------------------
Segment 1.......................... 3,269 9.51 80.18 1.04 0.24 0.24 0.00
Segment 2.......................... 3,269 0.06 100.00 0.28 0.12 0.15 0.00
Segment 3.......................... 1,548 9.95 80.68 1.68 0.32 0.06 0.00
Segment 4.......................... 987 15.40 72.10 3.00 0.20 0.20 0.00
----------------------------------------------------------------------------------------------------------------
401.9 Essential hypertension, unspecified (segment 2)
----------------------------------------------------------------------------------------------------------------
Segment 1.......................... 70,616 87.48 0.60 0.63 0.58 0.05 0.01
Segment 2.......................... 70,616 100.00 0.00 0.12 0.08 0.02 0.00
Segment 3.......................... 27,347 89.83 0.41 0.74 1.02 0.10 0.01
Segment 4.......................... 13,622 86.46 0.70 0.99 1.50 0.10 0.01
----------------------------------------------------------------------------------------------------------------
402 Hypertensive heart disease (segment 2)
----------------------------------------------------------------------------------------------------------------
Segment 1.......................... 3,298 15.92 1.79 75.86 0.70 0.27 0.00
Segment 2.......................... 3,298 2.67 0.27 100.00 0.27 0.06 0.00
Segment 3.......................... 1,478 13.94 0.88 81.33 0.68 0.74 0.00
Segment 4.......................... 788 17.51 1.02 74.62 0.51 1.27 0.00
----------------------------------------------------------------------------------------------------------------
403 Hypertensive renal disease (segment 2)
----------------------------------------------------------------------------------------------------------------
Segment 1.......................... 5,192 19.11 0.52 0.75 68.64 0.50 0.00
Segment 2.......................... 5,192 1.02 0.08 0.17 100.00 0.00 0.00
Segment 3.......................... 1,861 6.45 0.27 0.21 84.09 0.59 0.00
Segment 4.......................... 837 7.89 0.36 0.36 81.84 0.96 0.00
----------------------------------------------------------------------------------------------------------------
404 Hypertensive heart and renal disease (segment 2)
----------------------------------------------------------------------------------------------------------------
Segment 1.......................... 478 15.69 1.46 4.81 7.32 62.13 0.21
Segment 2.......................... 478 3.14 1.05 0.42 0.00 100.00 0.00
Segment 3.......................... 201 7.46 1.99 1.49 5.47 78.61 0.00
Segment 4.......................... 106 8.49 0.94 0.94 10.38 72.64 0.00
----------------------------------------------------------------------------------------------------------------
405 Secondary hypertension (on segment 2)
----------------------------------------------------------------------------------------------------------------
Segment 1.......................... 51 5.88 1.96 0.00 3.92 0.00 82.35
Segment 2.......................... 51 0.00 0.00 0.00 0.00 0.00 100.00
Segment 3.......................... 21 0.00 0.00 0.00 4.76 0.00 95.24
Segment 4.......................... 11 18.18 0.00 0.00 0.00 0.00 81.82
----------------------------------------------------------------------------------------------------------------
[[Page 41002]]
402 Hypertensive heart disease (not present on segment 1 but present on segment 2)
----------------------------------------------------------------------------------------------------------------
Segment 1.......................... 796 58.67 6.53 0.00 72.01 0.88 0.00
Segment 2.......................... 796 3.27 0.25 100.00 64.58 0.00 0.00
Segment 3.......................... 318 18.55 1.89 72.01 2.14 0.94 0.00
Segment 4.......................... 144 22.22 1.39 64.58 0.38 2.08 0.00
----------------------------------------------------------------------------------------------------------------
403 Hypertensive renal disease (not present on segment 1 but present on segment 2)
----------------------------------------------------------------------------------------------------------------
Segment 1.......................... 1,628 59.28 1.41 1.97 0.00 1.54 0.06
Segment 2.......................... 1,628 1.47 0.00 0.12 100.00 0.00 0.00
Segment 3.......................... 552 9.42 0.18 0.36 76.27 0.72 0.00
Segment 4.......................... 231 11.69 0.43 0.43 72.73 1.30 0.00
----------------------------------------------------------------------------------------------------------------
404 Hypertensive heart disease (not present on segment 1 but present on segment 2)
----------------------------------------------------------------------------------------------------------------
Segment 1.......................... 181 39.23 2.21 10.50 19.34 0.00 0.55
Segment 2.......................... 181 4.97 0.55 0.55 0.00 100.00 0.00
Segment 3.......................... 66 10.61 3.03 1.52 9.09 68.18 0.00
Segment 4.......................... 36 13.89 0.00 0.00 8.33 63.89 0.00
----------------------------------------------------------------------------------------------------------------
405 Secondary Hypertension (not present on segment 1 but present on segment 2)
----------------------------------------------------------------------------------------------------------------
Segment 1.......................... 9 33.33 11.11 0.00 22.22 0.00 0.00
Segment 2.......................... 9 0.00 0.00 0.00 0.00 0.00 100.00
Segment 3.......................... 4 0.00 0.00 0.00 0.00 0.00 100.00
Segment 4.......................... 2 0.00 0.00 0.00 0.00 0.00 100.00
----------------------------------------------------------------------------------------------------------------
Outlier episodes are excluded.
Source: Abt Associates' analysis of 20 percent sample of Home Health Datalink file for 2009.
To further investigate the issue whether 401.9 is used as a
placeholder while waiting for documentation to support coding of other
more complex hypertension codes, we looked at the average resource cost
for the initial episode, categorized by hypertension diagnosis, for all
of the episodes with a hypertension diagnosis of 402, 403, or 404 in
their second episode (Table 12). We compared the average cost of an
initial episode when there was a 401.9 diagnosis to the average cost of
an initial episode when both the initial and second episode had the
same diagnosis (both the initial and second episode had either a 402,
403, or 404 code). For example, for all 2nd episodes, in a sequence of
adjacent episodes, with a 402 diagnosis, we compared the average cost
of an initial episode when there was a 401.9 diagnosis to the average
cost of an initial episode when there was a 402 diagnosis. Considering
the comment that a 401.9 is coded while waiting for documentation for a
more complex diagnosis like 402 (hypertensive heart disease), one would
expect the average resource cost for an initial episode with a 401.9
code to be the same as an initial episode with a 402 code when looking
at all of the sequences which have a 402 diagnosis in the second
episode. Based on our analysis, the average resource cost for initial
episodes with a 401.9 diagnosis is lower than the average resource cost
for initial episodes with a 402, 403, and 404 diagnosis, given that a
402, 403, or 404 diagnosis exists on the second episode respectively.
It should be noted that the average resource cost for initial episodes
with a 401.9 diagnosis is only slightly lower than the average resource
cost for initial episodes with a 404 diagnosis, given a 404 diagnosis
on the second episode. However, the samples for this comparison are
small (N=69 and N=293). In general, the overall pattern of results of
this analysis does not support keeping 401.9 as a diagnosis in the
case-mix model based on the reason that 401.9 is coded while waiting
for documentation for another ICD-9 code.
Table 12--Resource Costs for Segment 1 by Hypertension Diagnoses on Segment 1 Given a Hypertension Diagnosis
Reported on Segment 2 (2009)
----------------------------------------------------------------------------------------------------------------
Hypertension diagnosis (segment 2)
-----------------------------------------------------------------------
402 403 404
-----------------------------------------------------------------------
Hypertension diagnosis (segment 1) Mean Mean Mean
resource resource resource
N cost for N cost for N cost for
initial initial initial
episode episode episode
----------------------------------------------------------------------------------------------------------------
None.................................... 254 $765.28 585 $725.84 54 $798.17
401.9................................... 467 651.24 962 660.99 69 683.99
402..................................... 2502 692.79 39 565.74 23 624.20
403..................................... 17 769.40 3557 741.52 34 650.24
[[Page 41003]]
404..................................... 7 756.36 25 619.69 293 689.01
----------------------------------------------------------------------------------------------------------------
Outlier episodes are excluded.
Source: Abt Associates' analysis of 20 percent sample of Home Health Datalink file for 2009.
In summary, we propose to remove ICD-9-CM code 401.1, Benign
Essential Hypertension, and ICD-9-CM code 401.9, Unspecified Essential
Hypertension, from the HH PPS case-mix model's hypertension group.
Based on our analysis, there continues to be an increase in the
prevalence of ICD-9-CM code 401.9 from 2008 to 2009. In addition,
agencies (regardless of type) typically had a twofold or higher
increase in the prevalence of a 401.9 diagnosis from 2005 to 2009, with
the exception of the East North and the West North Central regions
which had an increase of about 1.7 and 1.5 fold respectively.
Furthermore, many categories had an increase in the reporting of a
401.1 diagnosis when comparing 2005 data to 2009. Most compelling,
current data indicates that these diagnoses are not predictors of
higher home health patient resource costs. Rather, current data
indicates a lower cost associated with home health patients when these
codes are reported. The results from the two regression models provide
strong support for removing the 401.1 and 401.9 diagnoses from the
case-mix system, showing that the presence of these diagnoses is
associated with lower costs, when controlling for other case-mix
related factors. Therefore, we propose to remove codes 401.1 and 401.9
to more accurately align payment with resource use.
In the CY 2011 HH PPS final rule, in response to comments, we
described that if we were to finalize removing these codes from our
case-mix system, we would do so in such a way that we would revise our
case-mix weights to ensure that the removal of the codes would result
in the same projected aggregate expenditures. Therefore, we also
propose to revise the HH PPS case-mix weights as we describe in detail
in the following section. The revisions of the case-mix weights would
redistribute HH PPS payments among the case-mix groups such that
removal of these hypertension codes would not result in lower aggregate
payments. Rather, the change would be effectuated in a budget neutral
way.
2. Proposal for Revision of Case-Mix Weights
As we described in section II.B.1 of this preamble, we propose to
revise our HH PPS case-mix weights to remove two hypertension codes
from our case-mix system while maintaining budget neutrality. We also
believe that additional revisions to the case-mix weights are needed.
Our review of HH PPS utilization data shows a shift to an increased
share of episodes with very high numbers of therapy visits. This shift
was first observed in 2008 and it continued in 2009. Table 13 shows the
percentage distribution of episodes according to number of therapy
visits for 2001 through 2009.
Table 13--Distribution of Home Health Episodes According to Number of Therapy Visits (2001-2009)
[In percent]
----------------------------------------------------------------------------------------------------------------
Number of therapy visits 2001 2002 2003 2004 2005 2006 2007 2008 2009
----------------------------------------------------------------------------------------------------------------
None.................................... 54 52 51 50 50 50 50 49 48
1 to 5.................................. 14 15 15 15 15 15 14 14 14
6....................................... 3 3 3 3 3 3 3 3 3
7 to 9.................................. 6 6 6 6 6 6 6 9 9
10 to 13................................ 10 11 13 14 14 15 15 10 10
14+..................................... 12 12 12 12 12 12 12 15 16
----------------------------------------------------------------------------------------------------------------
Note: Based on a 10 percent random beneficiary sample.
The 2009 distribution of episodes by number of therapy visits
resembles the 2008 distribution with some important differences. In
last year's regulation, we described an increase of 25 percent in the
share of episodes with 14 or more therapy visits. In the 2009 sample,
the share with 14 or more therapy visits continued to increase while
the share of episodes with no therapy visits continued to decrease. The
frequencies also indicate that the share of episodes with 20 or more
therapy visits was 6 percent in 2009 (data not shown). This is a 50
percent increase from the share of episodes of 2007, when episodes with
at least 20 therapy visits accounted for only 4 percent of episodes.
In their 2010 and 2011 Reports to Congress, MedPAC suggests that
the HH PPS contains incentives which likely result in agencies
providing more therapy than is needed to maximize their Medicare
payments. In their March 2010 Report to the Congress, MedPAC stated
that ``therapy episodes appear to be overpaid relative to others and
that the amount of therapy changed significantly in response to the
2008 revisions to the payment system.'' In support of this statement,
MedPAC showed that there was a quick episode volume shift to the new
therapy thresholds, which suggests inappropriate therapy utilization.
In their March 2011 Report to the
[[Page 41004]]
Congress, MedPAC stated, ``The volume data for 2009 indicate that the
shifts that occurred in 2008 are continuing * * * Episodes with 14 or
more therapy visits increased by more than 20 percent, and those with
20 or more therapy visits increased by 30 percent.''
Also, in their March 2011 Report to Congress, MedPAC suggested that
the current HH PPS may ``overvalue therapy services and undervalue
nontherapy services.'' In this report, MedPAC describes that HHA
margins average 17.7 percent, with 20 percent of agencies achieving
margins of 37 percent. MedPAC further states that their analysis of
high-margin and low-margin agencies suggests that the HH PPS overpays
for episodes with high case-mix values and underpays for episodes with
low-case-mix values. Furthermore, MedPAC reports that home health
agencies with high margins had high case-mix values which were
attributable to the agencies providing more therapy episodes (MedPAC,
March 2011 Report to Congress). MedPAC went on to assert that ``unless
the case-mix system is revised, agencies will continue to have
significant incentives to favor therapy patients, avoid high-cost
nontherapy patients, and base the number of therapy visits on payment
incentives instead of patient characteristics.''
We concur that the therapy utilization shifts and the correlation
between high agency margins and high volumes of therapy episodes
strongly suggest that the costs which the HH PPS assigns to therapy
services when deriving the relative payment weights are higher than
actual costs incurred by agencies for therapy services. We believe that
one factor which contributes to this overpayment for therapy services
is the growing use of therapy assistants, instead of qualified
therapists, to provide home health therapy services. Current data
suggest that the percentage of therapy assistants which is reflected in
the therapy-wage weighted minutes used in the calculations of HH PPS
relative resource costs is too low. For our 2008 refinements, to
construct the relative resource costs for episodes, we used the labor
mix percentages reported in the Occupational Employment Statistics
(OES) data by the Bureau of Labor Statistics. In 2005, which is the
year of data that was used to develop the HH PPS refinements, the OES
data showed that 15 percent of physical therapy was provided by therapy
assistants and that 11 percent of occupational therapy was provided by
therapy assistants. This data was then used to develop the resource
costs for episodes which were used to develop the current HH PPS
payment weights. In 2008, the OES data showed that 19 percent of
physical therapy was provided by therapy assistants and that 13 percent
of occupational therapy was provided by therapy assistants. In
addition, by 2010, OES data has shown that the percentage of physical
therapy provided by therapy assistants was 20 percent and the
percentage of occupational therapy provided by therapy assistants was
14 percent. We note that these statistics reflect the mix for all home
health providers. Also, preliminary analysis of resource use data
collected during Medicare's Post-Acute Care Demonstration (PAC-PRD)
shows a somewhat higher prevalence of assistants providing therapy for
patients receiving Medicare's home health benefit than the OES data. We
note that in CY 2011, we began collecting data on HH PPS claims which
will enable us to quantify the percentage of therapy assistants who are
providing therapy and to assess how the percentages vary relative to
the quantity of therapy provided and the type of provider.
We believe that MedPAC has provided strong evidence that our
reimbursement for episodes with high therapy is too high. Also, based
on MedPAC's analysis and our own findings, we believe that the resource
costs reflected in our current case-mix weights for therapy episodes,
in particular for those episodes with high amounts of therapy, are
higher than current actual resource costs and that an adjustment to the
HH PPS therapy case-mix weights is warranted. We note that fully
addressing MedPAC's concerns with the way the HH PPS factors therapy
visits into the case-mix system will be a complex process which will
require more comprehensive structural changes to the HH PPS. While we
plan to address their concerns in a more comprehensive way in future
years, for CY 2012 we propose to revise the current case-mix weights by
lowering the relative weights for episodes with high therapy and
increasing the weights for episodes with little or no therapy. It
should be noted that we propose to revise the case-mix weights in a
budget neutral way. In other words, this proposal would redistribute
some HH PPS dollars from high therapy payment groups to other HH PPS
case-mix groups, such as the groups with little or no therapy. We
believe this proposed revision to the payment weights would result in
more accurate HH PPS payments for targeted case-mix groups while
addressing MedPAC concerns that our reimbursement for therapy episodes
is too high and our reimbursement for non-therapy episodes is too low.
Also, we believe our proposed revision of the payment weights will
discourage the provision of unnecessary therapy services and will slow
the growth of nominal case-mix. Our detailed approach, analysis, and
case-mix revision methodology which support this proposal are described
below.
During the 2008 HH PPS refinements, in addition to implementing a
change from an 80 group case-mix system to a 153 group case-mix system,
we developed new payment weights for the HH PPS case-mix system. To
derive these payment weights, we developed a four-equation model which
estimated an equation explaining an episode's resource use, as measured
in units corresponding to wage-weighted minutes (the dependent
variable), in terms of therapy visits and clinical and functional
variables (the independent, or explanatory, variables). Each equation
was created from a different subset of episodes (for example, early
episodes with 13 or fewer therapy visits). The results from the four-
equation model were then used to develop the severity levels for the
clinical and functional dimensions. Specifically, the coefficients of
the four-equation model were divided by 10 and rounded to the nearest
integer to create points which correspond to the impact of the variable
on the total resource cost of the episode. These points are reported in
Table 2a of the CY 2008 HH PPS final rule. For each episode in the
sample, the sum of clinical variable points and the sum of functional
variable points were calculated. Within each of the four equations, the
clinical or functional severity levels were then defined in terms of
intervals of the total clinical or functional points in such a way as
to create a relatively even distribution of episodes amongst the
severity levels. Also, the single 10-therapy visit threshold was
changed to three therapy thresholds at 6, 14, and 20 visits to promote
appropriate therapy utilization. Graduated steps between each of the
three thresholds were also defined to provide an equitable increase in
payment that would not otherwise occur between the three threshold
levels. After defining the severity levels and thresholds and graduated
steps between thresholds, we estimated a payment regression. The
payment regression quantifies the relationship between an episode's
resource use as measured in dollars corresponding to wage weighted
minutes (the dependent variable) and the episode's clinical severity
indicator variables (low, medium, or high), functional severity
[[Page 41005]]
indicator variables (low, medium, or high), four-equation indicator
variables (which indicate whether an episode is early/late and has low/
high therapy), and therapy visit indicator variables. The therapy visit
indicator variables were defined based on the graduated steps between
the therapy thresholds. The raw payment weights for the 153 case-mix
groups were then derived from the payment regression model
coefficients. Note that in the process of developing the weights for
episodes with therapy, we decelerated the increase in payment within
each grouping of additional therapy visits (that is, we decelerated the
increase in payment for each graduated therapy step). Finally, the
weights were altered to achieve budget neutrality to 2005.
Initially, for this proposed rule, during the process of revising
the case-mix weights, we re-estimated the payment regression model on
2008 data using the same dependent and independent variables we defined
for the payment regression model which we used for the HH PPS
refinements. We then compared the results to the current payment
regression, which was based on 2005 data. We saw that the coefficients
for the clinical and functional severity indicators were typically
smaller in 2008 compared to 2005. This finding implies that if we were
to use 2008 data to revise our payment weights, the clinical and
functional severity levels would be associated with lower relative
resource costs compared to our current payment regression model, and
would result in lower raw payment weights for episodes with little or
no therapy when compared to our current case-mix weights. These results
would not achieve our intended goals as we describe in more detail
below.
As a result of our re-estimation of the payment regression using
2008 data, we decided not to use data from 2008 or later to develop the
revised case-mix weights. Instead, we propose to use pre-2008 data,
which is before the implementation of the HH PPS refinements and the
behavioral and coding changes we described in our discussion of the
2008 therapy utilization and case-mix data in last year's proposed and
final regulations (75 FR 43238 through 43244 and 75 FR 70384). In last
year's proposed and final rules we presented several analyses that
described indications of a large change in coding practices between
2007 and 2008, the first year of the 153-group, refined system. Our
initial analysis indicated that if we were to use the 2008 data in our
payment regression to develop the revised weights, the regression would
assign a higher relative resource cost to high therapy episodes and
would assign a lower relative resource cost to episodes with little or
no therapy than was assigned when deriving the current weights. As we
described earlier in this section, we believe the data strongly suggest
that our current weights over-value high therapy episodes and under-
value non-therapy episodes and has strongly influenced the utilization
shifts to more episodes in the 14 and 20 therapy groups and fewer non-
therapy episodes beginning in 2008. Therefore, we believe that using
2008 or later data in our payment regression to revise the case-mix
weights would be inadvisable. The evidence strongly suggests that the
utilization shifts are influenced by agencies' attempts to maximize
Medicare payments. As such, we propose to use pre-2008 data in the
payment regression to revise our case-mix weights. We believe this data
is more reflective of costs associated with patients' actual clinical
needs than the 2008 and later data. We note that using pre-2008 data to
derive relative resource costs and to revise our case-mix weights does
not hinder our ability to achieve budget neutrality. We will describe
our approach to ensure budget neutrality later in this section.
We explored numerous methods for revising our case-mix weights
which were similar to the method we previously used for the 2008
refinements. We note that when developing the case-mix weights for the
2008 refinements, we were concerned that since there was an increase in
payment weight as additional therapy visits were provided, there may be
incentives to provide more therapy than clinically needed. To
discourage this, when developing our current weights, we incrementally
decreased the marginal payment for each grouping of therapy visits as
the number of therapy visits grew. When exploring ways to revise our
current case-mix weights, we initially applied a more aggressive
deceleration to the weights for each of the incremental therapy visit
steps similar to the approach we took for the current weights. We saw
that when we applied more deceleration for each incremental therapy
visit step, the payment weight for episodes with high numbers of
therapy visits, when taking into account the clinical and functional
score, was often the same as or larger than the current weight. Also,
we saw inversions in the payment weights. For example, we saw that the
payment weight for an episode with a clinical severity level of 1,
functional severity level of 1, and 14 therapy visits had a smaller
weight than for an episode with a clinical severity level of 1, a
functional severity level of 1, and 13 therapy visits. Because of these
observations, we decided against using the same type of approach we
originally used when developing our current case-mix therapy weights.
Instead, we developed a different approach to revise the case-mix
payment weights.
Before we can describe this new approach, we must first explain the
changes we made to the four-equation model to remove the hypertension
diagnoses ICD-9-CM code 401.1, Benign Essential Hypertension, and ICD-
9-CM code 401.9, Unspecified Essential Hypertension from our case-mix
system, as we have proposed to do. As we indicated in the CY 2011 HH
PPS final rule, our intention would be to revise the system in a manner
that redistributes all the resources in the system after removing the
two hypertension codes from our case-mix system. Our method of
redistributing the resources starts with changes to the four-equation
model, which is the foundation for the subsequent revised payment
regression and creation of revised case-mix weights. The changes to the
four-equation model are described below.
To examine the effects of removing the two hypertension codes 401.1
and 401.9 from the case-mix system and determine whether the thresholds
for the clinical severity indicators need to be changed if 401.1 and
401.9 are removed from the case-mix system, we estimated the four-
equation model with and without codes 401.1 and 401.9 in the
hypertension group. We used 2005 data for this estimation. We note that
the adjusted R-squared value for the four-equation model without codes
401.1 and 401.9 derived from 2005 data was 0.4621. We also note that we
used 2005 data to develop an accurate comparison of the current four-
equation model with the revised four-equation model without the two
hypertension codes because our current four-equation model was built
using 2005 data. In addition, we estimated the coefficients for the
variables in the four-equation model using 2005 data to maintain the
same variables we developed for our current four-equation model and
minimize changes to our current model. We then used the coefficients
from the four-equation model without codes 401.1 and 401.9 to determine
the points which would be associated with all the clinical and
functional variables found in our current four-equation model, as
described on Table 2a of the CY 2008 HH PPS final rule (Table 14A).
[[Page 41006]]
When comparing the four-equation model with the two hypertension
diagnoses (which is equivalent to our current model) to the four-
equation model without the two hypertension diagnoses, there were some
differences in the points assigned to variables. Specifically, there
was a different number of points for 58 of the 224 variables in the
four-equation model. However, the difference between the two models was
at most 1 point. Also, of the 58 variables which had a different number
of points, 33 were clinical and functional variables. (The remaining
variables were therapy-visit and early/later episode indicator
variables used in the four-equation model estimation procedure.) For 13
of the 33 clinical and functional variables, there was an extra point
assigned when the two hypertension codes are excluded, and for 20 of
the 33 clinical and functional variables, there was one less point
assigned compared to the current model (Table 14B).
Table 14A--Points Associated With the Updated 4-Equation Model Without
hypertension Codes 401.1 and 401.9
Case-Mix Adjustment Variables and Scores
(Note: 4--Equation Model was Estimated on Episodes from 2005 where 401.1
and 401.9 were not counted in the Hypertension Diagnosis Group)
------------------------------------------------------------------------
Episode number within sequence of
adjacent episodes 1 or 2 1 or 2 3+ 3+
------------------------------------------------------------------------
Therapy visits 0-13 14+ 0-13 14+
------------------------------------------------------------------------
EQUATION: 1 2 3 4
------------------------------------------------------------------------
CLINICAL DIMENSION
------------------------------------------------------------------------
1 Primary or Other Diagnosis = 3 3 3 3
Blindness/Low Vision...................
2 Primary or Other Diagnosis = Blood 2 5 ...... ......
disorders..............................
3 Primary or Other Diagnosis = Cancer, 3 8 3 10
selected benign neoplasms..............
4 Primary Diagnosis = Diabetes......... 5 13 1 8
5 Other Diagnosis = Diabetes........... 3 5 1 5
6 Primary or Other Diagnosis = 2 6 ...... 6
Dysphagia and Primary or Other
Diagnosis = Neuro 3--Stroke............
7 Primary or Other Diagnosis = ...... 6 ...... ......
Dysphagia and M0250 (Therapy at home) =
3 (Enteral)............................
8 Primary or Other Diagnosis = 2 6 1 5
Gastrointestinal disorders.............
9 Primary or Other Diagnosis = 2 ...... ...... ......
Gastrointestinal disorders and M0550
(ostomy) = 1 or 2......................
10 Primary or Other Diagnosis = ...... ...... 2 ......
Gastrointestinal disorders and Primary
or Other Diagnosis = Neuro 1--
Brain disorders and paralysis, or Neuro
2--Peripheral neurological disorders,
or Neuro 3--Stroke, or.................
Neuro 4--Multiple Sclerosis.............
11 Primary or Other Diagnosis = Heart 3 6 1 7
Disease or Hypertension................
12 Primary Diagnosis = Neuro 1--Brain 3 8 5 8
disorders and paralysis................
13 Primary or Other Diagnosis = Neuro 1-- 3 10 3 10
Brain disorders and paralysis and M0680
(Toileting) = 2 or more................
14 Primary or Other Diagnosis = Neuro 1-- 1 4 1 2
Brain disorders and paralysis or Neuro
2--Peripheral neurological
disorders and M0650 or M0660 (Dressing
upper or lower body) = 1, 2, or 3......
15 Primary or Other Diagnosis = Neuro 3-- ...... 2 ...... ......
Stroke.................................
16 Primary or Other Diagnosis = Neuro 3-- 1 3 2 8
Stroke and M0650 or M0660 (Dressing
upper or lower body) =
1, 2, or 3..............................
17 Primary or Other Diagnosis = Neuro 3-- 1 5 ...... ......
Stroke and M0700 (Ambulation) = 3 or
more...................................
18 Primary or Other Diagnosis = Neuro 4-- 3 3 12 18
Multiple Sclerosis and at least one of
the following:
M0670 (bathing) = 2 or more or M0680
(Toileting) = 2 or more or M0690
(Transferring) = 2 or more or..........
M0700 (Ambulation) = 3 or more..........
19 Primary or Other Diagnosis = Ortho 1-- 2 ...... ...... ......
Leg Disorders or Gait Disorders and
M0460 (most problematic
pressure ulcer stage) = 1, 2, 3 or 4....
20 Primary or Other Diagnosis = Ortho 1-- 5 5 ...... ......
Leg or Ortho 2--Other orthopedic
disorders and M0250
(Therapy at home) = 1 (IV/Infusion) or 2
(Parenteral)...........................
21 Primary or Other Diagnosis = Psych 1-- 4 6 2 6
Affective and other psychoses,
depression.............................
22 Primary or Other Diagnosis = Psych 2-- 1 3 ...... 3
Degenerative and other organic
psychiatric disorders..................
23 Primary or Other Diagnosis = 1 5 1 5
Pulmonary disorders....................
24 Primary or Other Diagnosis = 1
Pulmonary disorders and M0700
(Ambulation) = 1 or more...............
25 Primary Diagnosis = Skin 1--Traumatic 10 20 8 20
wounds, burns, and post-operative
complications..........................
26 Other Diagnosis = Skin 1--Traumatic 6 6 4 4
wounds, burns, post-operative
complications..........................
27 Primary or Other Diagnosis = Skin 1-- 2 ...... 2 ......
Traumatic wounds, burns, and post-
operative complications or
Skin 2--Ulcers and other skin conditions
and M0250 (Therapy at home) = 1 (IV/
Infusion) or 2 (Parenteral)............
28 Primary or Other Diagnosis = Skin 2-- 6 12 5 12
Ulcers and other skin conditions.......
29 Primary or Other Diagnosis = 4 4 4 ......
Tracheostomy...........................
30 Primary or Other Diagnosis = Urostomy/ 6 22 4 22
Cystostomy.............................
31 M0250 (Therapy at home) = 1 (IV/ 8 15 5 11
Infusion) or 2 (Parenteral)............
32 M0250 (Therapy at home) = 3 (Enteral) 4 11 ...... 11
33 M0390 (Vision) = 1 or more........... 1 ...... ...... 2
34 M0420 (Pain) = 2 or 3................ 1 ...... ...... ......
35 M0450 = Two or more pressure ulcers 3 3 5 5
at stage 3 or 4........................
36 M0460 (Most problematic pressure 5 11 5 11
ulcer stage) = 1 or 2..................
37 M0460 (Most problematic pressure 16 26 12 22
ulcer stage) = 3 or 4..................
38 M0476 (Stasis ulcer status) = 2...... 7 7 7 7
39 M0476 (Stasis ulcer status) = 3...... 11 11 11 11
40 M0488 (Surgical wound status) = 2.... ...... 2 3 ......
41 M0488 (Surgical wound status) = 3.... 4 4 4 4
42 M0490 (Dyspnea) = 2, 3, or 4......... 2 2 ...... ......
[[Page 41007]]
43 M0540 (Bowel Incontinence) = 2 to 5.. 1 2 1 ......
44 M0550 (Ostomy) = 1 or 2.............. 5 9 3 9
45 M0800 (Injectable Drug Use) = 0, 1, 0 1 2 3
or 2...................................
------------------------------------------------------------------------
FUNCTIONAL DIMENSION
------------------------------------------------------------------------
46 M0650 or M0660 (Dressing upper or 2 4 2 2
lower body) = 1, 2, or 3...............
47 M0670 (Bathing) = 2 or more.......... 3 3 6 6
48 M0680 (Toileting) = 2 or more........ 2 3 2 ......
49 M0690 (Transferring) = 2 or more..... ...... 1 ...... ......
50 M0700 (Ambulation) = 1 or 2.......... 1 ...... 1 ......
51 M0700 (Ambulation) = 3 or more....... 3 3 4 5
------------------------------------------------------------------------
Notes: The data for the regression equations come from a 20 percent
random sample of episodes from CY 2005. The sample excludes LUPA
episodes, outlier episodes, and episodes with SCIC or PEP adjustments.
Points are additive, however, points may not be given for the same line
item in the table more than once.
Please see Medicare Home Health Diagnosis Coding guidance at http://www.cms.hhs.gov/HomeHealthPPS/03_coding&billing.asp for definitions
of primary and secondary diagnoses.
Table 14B--The Difference in Points Between the Current and Proposed
Case-Mix Adjustment Scores
------------------------------------------------------------------------
Episode number within sequence of
adjacent episodes 1 or 2 1 or 2 3+ 3+
------------------------------------------------------------------------
Therapy visits 0-13 14+ 0-13 14+
------------------------------------------------------------------------
EQUATION: 1 2 3 4
------------------------------------------------------------------------
CLINICAL DIMENSION
------------------------------------------------------------------------
1 Primary or Other Diagnosis = 0 0 0 0
Blindness/Low Vision...................
2 Primary or Other Diagnosis = Blood 0 0 ...... ......
disorders..............................
3 Primary or Other Diagnosis = Cancer, -1 1 0 0
selected benign neoplasms..............
4 Primary Diagnosis = Diabetes......... 0 1 0 0
5 Other Diagnosis = Diabetes........... 1 1 0 1
6 Primary or Other Diagnosis = 0 0 ...... 0
Dysphagia and Primary or Other
Diagnosis = Neuro 3--Stroke............
7 Primary or Other Diagnosis = ...... 0 ...... ......
Dysphagia and M0250 (Therapy at home) =
3 (Enteral)............................
8 Primary or Other Diagnosis = 0 0 0 1
Gastrointestinal disorders.............
9 Primary or Other Diagnosis = -1 ...... ...... ......
Gastrointestinal disorders and M0550
(ostomy) = 1 or 2......................
10 Primary or Other Diagnosis = ...... ...... 0 ......
Gastrointestinal disorders and Primary
or Other Diagnosis = Neuro 1--
Brain disorders and paralysis, or Neuro
2--Peripheral neurological disorders,
or Neuro 3--Stroke,....................
or Neuro 4--Multiple Sclerosis..........
11 Primary or Other Diagnosis = Heart 0 -1 0 -1
Disease or Hypertension................
12 Primary Diagnosis = Neuro 1--Brain 0 0 0 0
disorders and paralysis................
13 Primary or Other Diagnosis = Neuro 1-- 0 0 0 0
Brain disorders and paralysis and M0680
(Toileting) = 2 or more................
14 Primary or Other Diagnosis = Neuro 1-- -1 0 -1 0
Brain disorders and paralysis or Neuro
2--Peripheral
neurological disorders and M0650 or
M0660 (Dressing upper or lower body) =
1, 2, or 3.............................
15 Primary or Other Diagnosis = Neuro 3-- ...... 1 ...... ......
Stroke.................................
16 Primary or Other Diagnosis = Neuro 3-- 0 0 0 0
Stroke and M0650 or M0660 (Dressing
upper or lower body) =
1, 2, or 3..............................
17 Primary or Other Diagnosis = Neuro 3-- 0 0 ...... ......
Stroke and M0700 (Ambulation) = 3 or
more...................................
18 Primary or Other Diagnosis = Neuro 4-- 0 0 0 0
Multiple Sclerosis and at least one of
the following:
M0670 (bathing) = 2 or more or M0680
(Toileting) = 2 or more or M0690
(Transferring) = 2 or more or..........
M0700 (Ambulation) = 3 or more..........
19 Primary or Other Diagnosis = Ortho 1-- 0 ...... ...... ......
Leg Disorders or Gait Disorders and
M0460 (most problematic
pressure ulcer stage) = 1, 2, 3 or 4....
20 Primary or Other Diagnosis = Ortho 1-- 0 0 ...... ......
Leg or Ortho 2--Other orthopedic
disorders and M0250 (Therapy
at home) = 1 (IV/Infusion) or 2
(Parenteral)...........................
21 Primary or Other Diagnosis = Psych 1-- 1 1 0 1
Affective and other psychoses,
depression.............................
22 Primary or Other Diagnosis = Psych 2-- 0 1 ...... 1
Degenerative and other organic
psychiatric disorders..................
23 Primary or Other Diagnosis = 0 0 0 0
Pulmonary disorders....................
24 Primary or Other Diagnosis = 0 ...... ...... ......
Pulmonary disorders and M0700
(Ambulation) = 1 or more...............
25 Primary Diagnosis = Skin 1--Traumatic 0 0 0 0
wounds, burns, and post-operative
complications..........................
26 Other Diagnosis = Skin 1--Traumatic 0 0 0 0
wounds, burns, post-operative
complications..........................
27 Primary or Other Diagnosis = Skin 1-- 0 ...... 0 ......
Traumatic wounds, burns, and post-
operative complications or
Skin 2--Ulcers and other skin conditions
and M0250 (Therapy at home) = 1 (IV/
Infusion) or 2 (Parenteral)............
28 Primary or Other Diagnosis = Skin 2-- 0 0 0 0
Ulcers and other skin conditions.......
29 Primary or Other Diagnosis = 0 0 0 ......
Tracheostomy...........................
30 Primary or Other Diagnosis = Urostomy/ 0 -1 0 -1
Cystostomy.............................
[[Page 41008]]
31 M0250 (Therapy at home) = 1 (IV/ 0 0 0 -1
Infusion) or 2 (Parenteral)............
32 M0250 (Therapy at home) = 3 (Enteral) 0 -1 ...... -1
33 M0390 (Vision) = 1 or more........... 0 ...... ...... 1
34 M0420 (Pain) = 2 or 3................ 0 ...... ...... ......
35 M0450 = Two or more pressure ulcers 0 0 0 0
at stage 3 or 4........................
36 M0460 (Most problematic pressure 0 0 0 0
ulcer stage) = 1 or 2..................
37 M0460 (Most problematic pressure 0 0 0 -1
ulcer stage) = 3 or 4..................
38 M0476 (Stasis ulcer status) = 2...... -1 -1 -1 -1
39 M0476 (Stasis ulcer status) = 3...... 0 0 0 0
40 M0488 (Surgical wound status) = 2.... ...... 0 0 ......
41 M0488 (Surgical wound status) = 3.... 0 0 0 0
42 M0490 (Dyspnea) = 2, 3, or 4......... 0 0 ...... ......
43 M0540 (Bowel Incontinence) = 2 to 5.. 0 0 0 ......
44 M0550 (Ostomy) = 1 or 2.............. 0 0 0 0
45 M0800 (Injectable Drug Use) = 0, 1, -1 0 0 -1
or 2...................................
------------------------------------------------------------------------
FUNCTIONAL DIMENSION
------------------------------------------------------------------------
46 M0650 or M0660 (Dressing upper or 0 0 0 0
lower body) = 1, 2, or 3...............
47 M0670 (Bathing) = 2 or more.......... 0 0 0 0
48 M0680 (Toileting) = 2 or more........ 0 0 0 ......
49 M0690 (Transferring) = 2 or more..... ...... -1 ...... ......
50 M0700 (Ambulation) = 1 or 2.......... 0 ...... 0 ......
51 M0700 (Ambulation) = 3 or more....... 0 -1 0 0
------------------------------------------------------------------------
Notes: The data for the regression equations come from a 20 percent
random sample of episodes from CY 2005. The sample excludes LUPA
episodes, outlier episodes, and episodes with SCIC or PEP adjustments.
Points are additive, however points may not be given for the same line
item in the table more than once.
Please see Medicare Home Health Diagnosis Coding guidance at http://www.cms.hhs.gov/HomeHealthPPS/03_coding&billing.asp for definitions
of primary and secondary diagnoses.
We also examined how episodes in the sample changed clinical
severity groups when going from a four-equation model that includes
401.1 and 401.9 to a four-equation model that does not include 401.1
and 401.9. It should be noted that a small number of episodes also
changed functional groups. In our analysis, we looked at the
distribution of episodes in each clinical severity level (low, medium,
high) by the four-equation model indicators (early/late episodes and
low/high therapy episodes). When comparing the distribution of episodes
using the four-equation model without the 401.1 and 401.9 hypertension
codes to the distribution of episodes using the four-equation model
with the hypertension codes (our current four-equation model), there
was a similar distribution of episodes between the low, medium and high
clinical levels, for each of the four-equation model indicators. We
also looked at the distribution of episodes in each functional severity
level by the four-equation model indicator. There was also a very
similar distribution of episodes for the three functional severity
levels using the four-equation model without the two hypertension codes
compared to the distribution of episodes using the current four-
equation model, for each of the four-equation model indicators. Since
the four-equation model without the hypertension codes 401.1 and 401.9
had similar clinical and functional distributions of episodes as the
current model, we decided that it was not necessary to change the
thresholds for the clinical and functional severity levels.
When developing the new payment regression model, we used scores
from the four-equation model without hypertension codes 401.1 and 401.9
to identify the clinical and functional severity levels to be used as
payment regression variables. In addition, as we described earlier, we
decided to implement a revision of the weights using a new method of
decelerating therapy resources with higher numbers of therapy visits.
The new method involved the removal of the therapy visit step
indicators from the payment regression model. This approach has the
advantage of staging the introduction of clinical and functional
severity levels into the model as a separate step, to avoid influence
on the clinical and functional scores from numerous therapy step
variables that would otherwise be simultaneously entered into the
regression. In other words, we eliminated the therapy visit step
indicators from the payment regression model to ensure that more of the
resource use would be captured by clinical and functional variables,
rather than therapy variables. Later, we implement a method to account
for the resource use for the therapy step variables. The new payment
regression model that was developed estimated the relationship between
an episode's total resource (as measured in dollars corresponding to
wage weighted minutes) and the clinical score indicators, functional
score indicators, and four-equation indicators (early/late episodes and
low/high therapy services).
It should be noted that for the payment regression model, we used
data from 2007, which is the most recent data available before the
implementation of the HH PPS refinements. The coefficients for the
payment regression model using 2007 data can be found at Table 15. The
adjusted R-squared value for the payment regression model using 2007
data is 0.3769.
[[Page 41009]]
Table 15--Proposed Payment Regression Model
------------------------------------------------------------------------
New payment
Variable name Variable description regression
coefficients
------------------------------------------------------------------------
clin--grp2--1.................. Step 1, Clinical Score $6.55
5 to 8.
clin--grp3--1.................. Step 1, Clinical Score 37.72
9 or More.
func--grp2--1.................. Step 1, Functional 88.99
Score = 6.
func--grp3--1.................. Step 1, Functional 129.81
Score 7 or More.
clin--grp2--21................. Step 2.1, Clinical 87.49
Score 7 to 14.
clin--grp3--21................. Step 2.1, Clinical 191.74
Score 15 or More.
func--grp2--21................. Step 2.1, Functional 43.63
Score = 7.
func--grp3--21................. Step 2.1, Functional 65.49
Score 8 or More.
clin--grp2--22................. Step 2.2, Clinical 76.41
Score 9 to 16.
clin--grp3--22................. Step 2.2, Clinical 177.93
Score 17+.
func--grp2--22................. Step 2.2, Functional 36.55
Score = 8.
func--grp3--22................. Step 2.2, Functional 109.94
Score 9 or More.
clin--grp2--3.................. Step 3, Clinical Score 28.53
3 to 5.
clin--grp3--3.................. Step 3, Clinical Score 112.15
6 or More.
func--grp2--3.................. Step 3, Functional 73.68
Score = 9.
func--grp3--3.................. Step 3, Functional 113.33
Score 10 or More.
clin--grp2--4.................. Step 4, Clinical Score 84.62
8 to 14.
clin--grp3--4.................. Step 4, Clinical Score 213.78
15 or More.
func--grp2--4.................. Step 4, Functional 73.13
Score = 7.
func--grp3--4.................. Step 4, Functional 133.71
Score 8 or More.
step2--1....................... Step 2.1, 1st and 2nd 386.71
Episodes, 14 to 19
Therapy Visits.
step2--2....................... Step 2.2, 3rd+ 413.85
Episodes, 14 to 19
Therapy Visits.
step3.......................... Step 3, 3rd+ Episodes, -63.66
0-13 Therapy Visits.
step4.......................... Step 4, All Episodes, 700.20
20+ Therapy Visits.
--cons......................... Intercept............. 348.74
------------------------------------------------------------------------
Note: The data for the payment regression model come from a 20 percent
random sample of episodes from CY 2007.
The raw weights for each of the 153 groups were then calculated
based on the payment regression model. It should be noted that the raw
weights do not change across the graduated therapy steps between the
therapy thresholds. In the next step of weight revision, the weights
associated with 0 to 5 therapy visits were increased by 7.5 percent.
Also, the weights associated with 14-15 therapy visits were decreased
by 5 percent and the weights associated with 20+ therapy visits were
decreased by 10 percent. These adjustments were made to discourage
inappropriate use of therapy while addressing concerns that non-therapy
services are undervalued. The larger reduction factor for 20 or more
therapy visits (10 percent) compared to the reduction factor for 14 to
15 therapy visits (5 percent) implements a more aggressive deceleration
than we used in the current weights. Currently, there is a high payment
weight associated with the 20 or more therapy visit threshold to
capture the costs associated with providing 20 therapy visits, as well
as numbers of therapy visits well beyond 20 therapy visits. As a
result, there is a large increase in the payment weight between the 18-
19 therapy visit step and the 20 or more therapy visit threshold. This
large increase in the payment weight may create incentives for agencies
to provide unnecessary therapy visits up to and including 20 visits,
and may explain MedPAC's observation that there was a larger increase
in the number of episodes in the 20 or more therapy visit group than
the 14 or more therapy visit group. By implementing a larger reduction
at the 20 or more therapy visits, we will provide a disincentive for
agencies to pad episodes just to 20 visits or slightly more, to be able
to realize a large margin from that threshold, which was designed to
pay for not only episodes involving 20 or just above 20 therapy visits,
but also episodes involving considerably more than 20 therapy visits.
After the adjustments were applied to the raw weights, the weights
were further adjusted to create an increase in the payment weights for
the therapy visit steps between the therapy thresholds. Weights with
the same clinical severity level, functional severity level, and early/
later episode status were grouped together. Then within those groups,
the weights for each therapy step between thresholds were gradually
increased. We did this by interpolating between the main thresholds on
the model (from 0-5 to 14-15 therapy visits, and from 14-15 to 20+
therapy visits). We used a linear model to implement the interpolation
so the payment weight increase for each step between the thresholds
(such as the increase between 0-5 therapy visits and 6 therapy visits
and the increase between 6 therapy visits and 7-9 therapy visits) was
constant. The interpolated weights were then adjusted so that the
average case-mix for the weights was equal to 1.
When developing our model, we considered a number of different sets
of adjustments. We further explored two sets of adjustments because the
adjustments were in line with our goals to address therapy incentives.
The two sets of adjustments are shown in Table 16. We looked at the
payment to cost ratios for various subgroups, where the payment was
defined as the predicted resource use and the cost was defined as the
wage weighted minutes in dollars. After looking at the payment to cost
ratios, we decided to propose the less aggressive set of adjustments
(option 2) to address therapy incentives while maintaining our target
payment to cost ratios for groups. Specifically, when examining the
payment to cost ratios by number of therapy visits, it appears that
currently, episodes with three to five therapy visits are underpaid and
episodes with 20 or just over 20 therapy visits are overpaid. When
using our proposed payment weights, the episodes with three to five
therapy visits have a higher payment to cost ratio and would receive
higher payments. Also, episodes with around 20 therapy visits have more
reasonable payment to cost ratios when using the proposed weights
compared to ratios
[[Page 41010]]
with the current weights. (Please see the Abt technical report located
at http://www.cms.gov/center/hha.asp for the payment to cost ratio
tables and more information.)
Table 16--Adjustments to the Raw Weights
------------------------------------------------------------------------
Option 1: Most Option 2: Less
aggressive aggressive
Therapy step group direct direct
adjustments adjustments
------------------------------------------------------------------------
0 to 5 Therapy Visits................... 1.15 1.075
14 to 15 Therapy Visits................. 0.9 0.95
20+ Therapy Visits...................... 0.8 0.9
------------------------------------------------------------------------
After applying the adjustments in Table 16 to the raw weights,
applying the interpolation between the therapy thresholds, and
adjusting the weights so that the average case-mix for the weights was
equal to 1, we applied a budget neutrality factor (1.2847) to the
weights to ensure that the final proposed weights result in aggregate
expenditures in 2009 approximately equal to expenditures using the
current payment weights. It is important to note that our authority
allows us to reduce home health payments only as described in section
1895(b)(3)(B)(iv) of the Act. As such, we must revise our payment
weights in a budget neutral manner. Therefore, after deriving revised
relative case-mix weights, we increased the weights to achieve budget
neutrality to the most current, complete data available, which is 2009.
We show the final set of new payment weights for the 153 groups that we
are proposing in Table 17. The R-squared value when we ran a regression
of the episode's total resources (dependent variable) using our
proposed weights (independent variable) is 0.5384. It should be noted
that we will continue to evaluate and potentially refine the payment
weights as new data and analysis becomes available.
It also should be noted that as we described in section A of this
proposed rule, we also are proposing to reduce payments under our
authority in section 1895(b)(3)(B)(iv) of the Act to reduce the home
health base episode payment to account for nominal case-mix growth
through 2009.
Table 17--Final Proposed Payment Weights (2007)
----------------------------------------------------------------------------------------------------------------
Clinical and
functional
Step (episode and/or therapy visit levels (1 = Final weights
Payment group ranges) low; 2 = (2007
medium; 3 = recalibration)
high)
----------------------------------------------------------------------------------------------------------------
10111...................................... 1st and 2nd Episodes, 0 to 5 C1F1 0.8468
Therapy Visits.
10112...................................... 1st and 2nd Episodes, 6 Therapy C1F1 0.9931
Visits.
10113...................................... 1st and 2nd Episodes, 7 to 9 C1F1 1.1394
Therapy Visits.
10114...................................... 1st and 2nd Episodes, 10 Therapy C1F1 1.2857
Visits.
10115...................................... 1st and 2nd Episodes, 11 to 13 C1F1 1.4320
Therapy Visits.
10121...................................... 1st and 2nd Episodes, 0 to 5 C1F2 1.0630
Therapy Visits.
10122...................................... 1st and 2nd Episodes, 6 Therapy C1F2 1.1847
Visits.
10123...................................... 1st and 2nd Episodes, 7 to 9 C1F2 1.3065
Therapy Visits.
10124...................................... 1st and 2nd Episodes, 10 Therapy C1F2 1.4283
Visits.
10125...................................... 1st and 2nd Episodes, 11 to 13 C1F2 1.5501
Therapy Visits.
10131...................................... 1st and 2nd Episodes, 0 to 5 C1F3 1.1621
Therapy Visits.
10132...................................... 1st and 2nd Episodes, 6 Therapy C1F3 1.2734
Visits.
10133...................................... 1st and 2nd Episodes, 7 to 9 C1F3 1.3847
Therapy Visits.
10134...................................... 1st and 2nd Episodes, 10 Therapy C1F3 1.4961
Visits.
10135...................................... 1st and 2nd Episodes, 11 to 13 C1F3 1.6074
Therapy Visits.
10211...................................... 1st and 2nd Episodes, 0 to 5 C2F1 0.8627
Therapy Visits.
10212...................................... 1st and 2nd Episodes, 6 Therapy C2F1 1.0434
Visits.
10213...................................... 1st and 2nd Episodes, 7 to 9 C2F1 1.2240
Therapy Visits.
10214...................................... 1st and 2nd Episodes, 10 Therapy C2F1 1.4047
Visits.
10215...................................... 1st and 2nd Episodes, 11 to 13 C2F1 1.5853
Therapy Visits.
10221...................................... 1st and 2nd Episodes, 0 to 5 C2F2 1.0788
Therapy Visits.
10222...................................... 1st and 2nd Episodes, 6 Therapy C2F2 1.2350
Visits.
10223...................................... 1st and 2nd Episodes, 7 to 9 C2F2 1.3912
Therapy Visits.
10224...................................... 1st and 2nd Episodes, 10 Therapy C2F2 1.5473
Visits.
10225...................................... 1st and 2nd Episodes, 11 to 13 C2F2 1.7035
Therapy Visits.
10231...................................... 1st and 2nd Episodes, 0 to 5 C2F3 1.1780
Therapy Visits.
10232...................................... 1st and 2nd Episodes, 6 Therapy C2F3 1.3237
Visits.
10233...................................... 1st and 2nd Episodes, 7 to 9 C2F3 1.4694
Therapy Visits.
10234...................................... 1st and 2nd Episodes, 10 Therapy C2F3 1.6151
Visits.
10235...................................... 1st and 2nd Episodes, 11 to 13 C2F3 1.7608
Therapy Visits.
10311...................................... 1st and 2nd Episodes, 0 to 5 C3F1 0.9384
Therapy Visits.
10312...................................... 1st and 2nd Episodes, 6 Therapy C3F1 1.1487
Visits.
10313...................................... 1st and 2nd Episodes, 7 to 9 C3F1 1.3589
Therapy Visits.
10314...................................... 1st and 2nd Episodes, 10 Therapy C3F1 1.5692
Visits.
[[Page 41011]]
10315...................................... 1st and 2nd Episodes, 11 to 13 C3F1 1.7794
Therapy Visits.
10321...................................... 1st and 2nd Episodes, 0 to 5 C3F2 1.1545
Therapy Visits.
10322...................................... 1st and 2nd Episodes, 6 Therapy C3F2 1.3403
Visits.
10323...................................... 1st and 2nd Episodes, 7 to 9 C3F2 1.5261
Therapy Visits.
10324...................................... 1st and 2nd Episodes, 10 Therapy C3F2 1.7118
Visits.
10325...................................... 1st and 2nd Episodes, 11 to 13 C3F2 1.8976
Therapy Visits.
10331...................................... 1st and 2nd Episodes, 0 to 5 C3F3 1.2537
Therapy Visits.
10332...................................... 1st and 2nd Episodes, 6 Therapy C3F3 1.4290
Visits.
10333...................................... 1st and 2nd Episodes, 7 to 9 C3F3 1.6043
Therapy Visits.
10334...................................... 1st and 2nd Episodes, 10 Therapy C3F3 1.7796
Visits.
10335...................................... 1st and 2nd Episodes, 11 to 13 C3F3 1.9549
Therapy Visits.
21111...................................... 1st and 2nd Episodes, 14 to 15 C1F1 1.5782
Therapy Visits.
21112...................................... 1st and 2nd Episodes, 16 to 17 C1F1 1.7630
Therapy Visits.
21113...................................... 1st and 2nd Episodes, 18 to 19 C1F1 1.9478
Therapy Visits.
21121...................................... 1st and 2nd Episodes, 14 to 15 C1F2 1.6719
Therapy Visits.
21122...................................... 1st and 2nd Episodes, 16 to 17 C1F2 1.8750
Therapy Visits.
21123...................................... 1st and 2nd Episodes, 18 to 19 C1F2 2.0781
Therapy Visits.
21131...................................... 1st and 2nd Episodes, 14 to 15 C1F3 1.7188
Therapy Visits.
21132...................................... 1st and 2nd Episodes, 16 to 17 C1F3 1.9473
Therapy Visits.
21133...................................... 1st and 2nd Episodes, 18 to 19 C1F3 2.1758
Therapy Visits.
21211...................................... 1st and 2nd Episodes, 14 to 15 C2F1 1.7660
Therapy Visits.
21212...................................... 1st and 2nd Episodes, 16 to 17 C2F1 1.9455
Therapy Visits.
21213...................................... 1st and 2nd Episodes, 18 to 19 C2F1 2.1250
Therapy Visits.
21221...................................... 1st and 2nd Episodes, 14 to 15 C2F2 1.8596
Therapy Visits.
21222...................................... 1st and 2nd Episodes, 16 to 17 C2F2 2.0575
Therapy Visits.
21223...................................... 1st and 2nd Episodes, 18 to 19 C2F2 2.2553
Therapy Visits.
21231...................................... 1st and 2nd Episodes, 14 to 15 C2F3 1.9065
Therapy Visits.
21232...................................... 1st and 2nd Episodes, 16 to 17 C2F3 2.1298
Therapy Visits.
21233...................................... 1st and 2nd Episodes, 18 to 19 C2F3 2.3531
Therapy Visits.
21311...................................... 1st and 2nd Episodes, 14 to 15 C3F1 1.9897
Therapy Visits.
21312...................................... 1st and 2nd Episodes, 16 to 17 C3F1 2.1822
Therapy Visits.
21313...................................... 1st and 2nd Episodes, 18 to 19 C3F1 2.3747
Therapy Visits.
21321...................................... 1st and 2nd Episodes, 14 to 15 C3F2 2.0833
Therapy Visits.
21322...................................... 1st and 2nd Episodes, 16 to 17 C3F2 2.2941
Therapy Visits.
21323...................................... 1st and 2nd Episodes, 18 to 19 C3F2 2.5050
Therapy Visits.
21331...................................... 1st and 2nd Episodes, 14 to 15 C3F3 2.1302
Therapy Visits.
21332...................................... 1st and 2nd Episodes, 16 to 17 C3F3 2.3665
Therapy Visits.
21333...................................... 1st and 2nd Episodes, 18 to 19 C3F3 2.6027
Therapy Visits.
22111...................................... 3rd+ Episodes, 14 to 15 Therapy C1F1 1.6365
Visits.
22112...................................... 3rd+ Episodes, 16 to 17 Therapy C1F1 1.8018
Visits.
22113...................................... 3rd+ Episodes, 18 to 19 Therapy C1F1 1.9672
Visits.
22121...................................... 3rd+ Episodes, 14 to 15 Therapy C1F2 1.7149
Visits.
22122...................................... 3rd+ Episodes, 16 to 17 Therapy C1F2 1.9037
Visits.
22123...................................... 3rd+ Episodes, 18 to 19 Therapy C1F2 2.0924
Visits.
22131...................................... 3rd+ Episodes, 14 to 15 Therapy C1F3 1.8724
Visits.
22132...................................... 3rd+ Episodes, 16 to 17 Therapy C1F3 2.0497
Visits.
22133...................................... 3rd+ Episodes, 18 to 19 Therapy C1F3 2.2270
Visits.
22211...................................... 3rd+ Episodes, 14 to 15 Therapy C2F1 1.8004
Visits.
22212...................................... 3rd+ Episodes, 16 to 17 Therapy C2F1 1.9685
Visits.
22213...................................... 3rd+ Episodes, 18 to 19 Therapy C2F1 2.1365
Visits.
22221...................................... 3rd+ Episodes, 14 to 15 Therapy C2F2 1.8789
Visits.
22222...................................... 3rd+ Episodes, 16 to 17 Therapy C2F2 2.0703
Visits.
22223...................................... 3rd+ Episodes, 18 to 19 Therapy C2F2 2.2618
Visits.
22231...................................... 3rd+ Episodes, 14 to 15 Therapy C2F3 2.0364
Visits.
22232...................................... 3rd+ Episodes, 16 to 17 Therapy C2F3 2.2164
Visits.
22233...................................... 3rd+ Episodes, 18 to 19 Therapy C2F3 2.3964
Visits.
22311...................................... 3rd+ Episodes, 14 to 15 Therapy C3F1 2.0183
Visits.
22312...................................... 3rd+ Episodes, 16 to 17 Therapy C3F1 2.2013
Visits.
22313...................................... 3rd+ Episodes, 18 to 19 Therapy C3F1 2.3842
Visits.
22321...................................... 3rd+ Episodes, 14 to 15 Therapy C3F2 2.0967
Visits.
22322...................................... 3rd+ Episodes, 16 to 17 Therapy C3F2 2.3031
Visits.
22323...................................... 3rd+ Episodes, 18 to 19 Therapy C3F2 2.5094
Visits.
22331...................................... 3rd+ Episodes, 14 to 15 Therapy C3F3 2.2542
Visits.
22332...................................... 3rd+ Episodes, 16 to 17 Therapy C3F3 2.4492
Visits.
22333...................................... 3rd+ Episodes, 18 to 19 Therapy C3F3 2.6441
Visits.
30111...................................... 3rd+ Episodes, 0 to 5 Therapy C1F1 0.6923
Visits.
30112...................................... 3rd+ Episodes, 6 Therapy Visits.... C1F1 0.8811
30113...................................... 3rd+ Episodes, 7 to 9 Therapy C1F1 1.0699
Visits.
[[Page 41012]]
30114...................................... 3rd+ Episodes, 10 Therapy Visits... C1F1 1.2588
30115...................................... 3rd+ Episodes, 11 to 13 Therapy C1F1 1.4476
Visits.
30121...................................... 3rd+ Episodes, 0 to 5 Therapy C1F2 0.8712
Visits.
30122...................................... 3rd+ Episodes, 6 Therapy Visits.... C1F2 1.0399
30123...................................... 3rd+ Episodes, 7 to 9 Therapy C1F2 1.2087
Visits.
30124...................................... 3rd+ Episodes, 10 Therapy Visits... C1F2 1.3774
30125...................................... 3rd+ Episodes, 11 to 13 Therapy C1F2 1.5462
Visits.
30131...................................... 3rd+ Episodes, 0 to 5 Therapy C1F3 0.9675
Visits.
30132...................................... 3rd+ Episodes, 6 Therapy Visits.... C1F3 1.1485
30133...................................... 3rd+ Episodes, 7 to 9 Therapy C1F3 1.3294
Visits.
30134...................................... 3rd+ Episodes, 10 Therapy Visits... C1F3 1.5104
30135...................................... 3rd+ Episodes, 11 to 13 Therapy C1F3 1.6914
Visits.
30211...................................... 3rd+ Episodes, 0 to 5 Therapy C2F1 0.7615
Visits.
30212...................................... 3rd+ Episodes, 6 Therapy Visits.... C2F1 0.9693
30213...................................... 3rd+ Episodes, 7 to 9 Therapy C2F1 1.1771
Visits.
30214...................................... 3rd+ Episodes, 10 Therapy Visits... C2F1 1.3849
30215...................................... 3rd+ Episodes, 11 to 13 Therapy C2F1 1.5927
Visits.
30221...................................... 3rd+ Episodes, 0 to 5 Therapy C2F2 0.9405
Visits.
30222...................................... 3rd+ Episodes, 6 Therapy Visits.... C2F2 1.1281
30223...................................... 3rd+ Episodes, 7 to 9 Therapy C2F2 1.3158
Visits.
30224...................................... 3rd+ Episodes, 10 Therapy Visits... C2F2 1.5035
30225...................................... 3rd+ Episodes, 11 to 13 Therapy C2F2 1.6912
Visits.
30231...................................... 3rd+ Episodes, 0 to 5 Therapy C2F3 1.0367
Visits.
30232...................................... 3rd+ Episodes, 6 Therapy Visits.... C2F3 1.2367
30233...................................... 3rd+ Episodes, 7 to 9 Therapy C2F3 1.4366
Visits.
30234...................................... 3rd+ Episodes, 10 Therapy Visits... C2F3 1.6365
30235...................................... 3rd+ Episodes, 11 to 13 Therapy C2F3 1.8364
Visits.
30311...................................... 3rd+ Episodes, 0 to 5 Therapy C3F1 0.9646
Visits.
30312...................................... 3rd+ Episodes, 6 Therapy Visits.... C3F1 1.1753
30313...................................... 3rd+ Episodes, 7 to 9 Therapy C3F1 1.3861
Visits.
30314...................................... 3rd+ Episodes, 10 Therapy Visits... C3F1 1.5968
30315...................................... 3rd+ Episodes, 11 to 13 Therapy C3F1 1.8076
Visits.
30321...................................... 3rd+ Episodes, 0 to 5 Therapy C3F2 1.1435
Visits.
30322...................................... 3rd+ Episodes, 6 Therapy Visits.... C3F2 1.3342
30323...................................... 3rd+ Episodes, 7 to 9 Therapy C3F2 1.5248
Visits.
30324...................................... 3rd+ Episodes, 10 Therapy Visits... C3F2 1.7155
30325...................................... 3rd+ Episodes, 11 to 13 Therapy C3F2 1.9061
Visits.
30331...................................... 3rd+ Episodes, 0 to 5 Therapy C3F3 1.2398
Visits.
30332...................................... 3rd+ Episodes, 6 Therapy Visits.... C3F3 1.4427
30333...................................... 3rd+ Episodes, 7 to 9 Therapy C3F3 1.6456
Visits.
30334...................................... 3rd+ Episodes, 10 Therapy Visits... C3F3 1.8485
30335...................................... 3rd+ Episodes, 11 to 13 Therapy C3F3 2.0514
Visits.
40111...................................... All Episodes, 20+ Therapy Visits... C1F1 2.1325
40121...................................... All Episodes, 20+ Therapy Visits... C1F2 2.2812
40131...................................... All Episodes, 20+ Therapy Visits... C1F3 2.4043
40211...................................... All Episodes, 20+ Therapy Visits... C2F1 2.3046
40221...................................... All Episodes, 20+ Therapy Visits... C2F2 2.4532
40231...................................... All Episodes, 20+ Therapy Visits... C2F3 2.5764
40311...................................... All Episodes, 20+ Therapy Visits... C3F1 2.5671
40321...................................... All Episodes, 20+ Therapy Visits... C3F2 2.7158
40331...................................... All Episodes, 20+ Therapy Visits... C3F3 2.8390
----------------------------------------------------------------------------------------------------------------
C. Outlier Policy
1. Background
Section 1895(b)(5) of the Act allows for the provision of an
addition or adjustment to the national standardized 60-day case-mix and
wage-adjusted episode payment amounts in the case of episodes that
incur unusually high costs due to patient home health (HH) care needs.
Prior to the enactment of the Affordable Care Act in March 2010, this
section of the Act stipulated that total outlier payments could not
exceed 5 percent of total projected or estimated HH payments in a given
year. In the July 2000 final rule (65 FR 41188 through 41190), we
described the method for determining outlier payments. Under this
system, outlier payments are made for episodes whose estimated costs
exceed a threshold amount for each Home Health Resource Group (HHRG).
The episode's estimated cost is the sum of the national wage-adjusted
per-visit payment amounts for all visits delivered during the episode.
The outlier threshold for each case-mix group or partial episode
payment (PEP) adjustment is defined as the 60-day episode payment or
PEP adjustment for that group plus a fixed dollar loss (FDL) amount.
The outlier payment is defined to be a proportion of the wage-adjusted
estimated cost beyond the wage-adjusted threshold. The threshold
[[Page 41013]]
amount is the sum of the wage and case-mix adjusted PPS episode amount
and wage-adjusted fixed dollar loss amount. The proportion of
additional costs paid as outlier payments is referred to as the loss-
sharing ratio.
2. Regulatory Update
In the CY 2010 HH PPS final rule (74 FR 58080 through 58087), we
discussed excessive growth in outlier payments, primarily the result of
unusually high outlier payments in a few areas of the country. Despite
program integrity efforts associated with excessive outlier payments in
targeted areas of the country, we discovered that outlier expenditures
exceeded the 5 percent statutory limit. Consequently, we assessed the
appropriateness of taking action to curb outlier abuse. To mitigate
possible billing vulnerabilities associated with excessive outlier
payments and adhere to our statutory limit on outlier payments, we
adopted an outlier policy that included a 10 percent agency level cap
on outlier payments. This cap was done in concert with a reduced fixed
dollar loss (FDL) ratio of 0.67. These policies resulted in a projected
target outlier pool of approximately 2.5 percent. (The previous outlier
pool was 5 percent of total HH expenditures.)
For CY 2010, we first returned 5 percent of these dollars back into
the national standardized 60-day episode rates, the national per-visit
rates, the low utilization payment adjustment (LUPA) add-on payment
amount, and the non-routine supplies (NRS) conversion factor. Then, we
reduced the CY 2010 rates by 2.5 percent to account for the new outlier
pool of 2.5 percent. This outlier policy was adopted for CY 2010 only.
3. Statutory Update
As outlined in the CY 2011 HH PPS final rule (75 FR 70397 through
70399), sections 3131(b)(1) and 3131(b)(2) of the Affordable Care Act
amended sections 1895(b)(3)(C) and 1895(b)(5) of the Act. Specifically,
section 3131(b)(2) of the Affordable Care Act amended section
1895(b)(5) of the Act by redesignating the existing language as section
1895(b)(5)(A) of the Act, and revising it to state that the Secretary,
``may provide for an addition or adjustment to the payment amount
otherwise made in the case of outliers because of unusual variations in
the type or amount of medically necessary care. The total amount of the
additional payments or payment adjustments made under this paragraph
with respect to a fiscal year or year may not exceed 2.5 percent of the
total payments projected or estimated to be made based on the
prospective payment system under this subsection in that year.''
The result of these revisions was that, beginning in CY 2011, we
reduced payment rates by 5 percent, targeted up to 2.5 percent of
estimated total payments to be paid as outlier payments, and applied a
10 percent agency-level outlier cap.
4. Loss-Sharing Ratio and Fixed Dollar Loss (FDL) Ratio
For a given level of outlier payments, there is a trade-off between
the values selected for the FDL ratio and the loss-sharing ratio. A
high FDL ratio reduces the number of episodes that can receive outlier
payments, but makes it possible to select a higher loss-sharing ratio
and, therefore, increase outlier payments for outlier episodes.
Alternatively, a lower FDL ratio means that more episodes can qualify
for outlier payments, but outlier payments per episode must then be
lower.
The FDL ratio and the loss-sharing ratio must be selected so that
the estimated total outlier payments do not exceed the 2.5 percent
aggregate level (as required by section 1895(b)(5)(A) of the Act). In
the past, we have used a value of 0.80 for the loss-sharing ratio,
which is relatively high, but preserves incentives for agencies to
attempt to provide care efficiently for outlier cases. With a loss-
sharing ratio of 0.80, Medicare pays 80 percent of the additional costs
above the wage-adjusted outlier threshold amount. In the CY 2011 HH PPS
final rule (75 FR 70398), in targeting total outlier payments as 2.5
percent of total HH PPS payments, we implemented an FDL ratio of 0.67.
A preliminary look at partial CY 2010 Health Care Information
System (HCIS) data indicates that, because the total outlier payments
comprise approximately 2 percent of total payments, we would maintain
the current FDL ratio of 0.67. However, in the final rule, we will
update our estimate of the FDL ratio using the most current and
complete year of HH PPS data available.
Table 18 shows outlier payment history as a percentage of total HH
PPS payments between calendar years 2004 and 2009. Preliminary data for
CY 2010 is also provided; however, this data represents only a portion
of the data available and is current only through part of the third
quarter.
Table 18--Outlier Payment History--CY 2004 Through CY 2010
----------------------------------------------------------------------------------------------------------------
Outlier
Year Outlier payment Total HH PPS payment
payment percentage
----------------------------------------------------------------------------------------------------------------
2004.................................................... $309,198,604 $11,500,462,624 2.69
2005.................................................... 527,096,653 12,885,434,951 4.09
2006.................................................... 701,945,386 14,041,853,560 5.00
2007.................................................... 996,316,407 15,677,329,001 6.36
2008.................................................... 1,127,162,152 17,114,906,875 6.59
2009.................................................... 1,204,246,569 18,895,476,901 6.37
2010.................................................... 233,274,303 13,878,411,396 * 1.68
----------------------------------------------------------------------------------------------------------------
* This CY 2010 outlier payment projection is based only on claims reported through part of the third quarter.
5. Outlier Relationship to the HH Payment Study
As we discuss later in this proposed rule, section 3131(d) of the
Affordable Care Act requires CMS to conduct a study and report on
developing HH payment revisions that will ensure access to care and
payment for HH patients with high severity of illness. Our Report to
Congress containing this study's recommendations is due no later than
March 1, 2014. Section 3131(d)(1)(A)(iii) of the Affordable Care Act,
in particular, states that this study may include analysis of potential
revisions to outlier payments to better reflect costs of treating
Medicare beneficiaries with high levels of severity of illness.
D. CY 2012 Rate Update
1. Home Health Market Basket Update
Section 1895(b)(3)(B) of the Act requires that the standard
prospective
[[Page 41014]]
payment amounts for CY 2012 be increased by a factor equal to the
applicable home health market basket update for those HHAs that submit
quality data as required by the Secretary. Section 3401(e) of the
Affordable Care Act amended section 1895(b)(3)(B) of the Act by adding
a new clause (vi) which states, ``After determining the home health
market basket percentage increase * * * the Secretary shall reduce such
percentage * * * for each of 2011, 2012, and 2013, by 1 percentage
point. The application of this clause may result in the home health
market basket percentage increase under clause (iii) being less than
0.0 for a year, and may result in payment rates under the system under
this subsection for a year being less than such payment rates for the
preceding year.''
The proposed HH PPS market basket update for CY 2012 is 2.5
percent. This is based on Global Insight Inc.'s first quarter 2011
forecast, utilizing historical data through the fourth quarter of 2010.
A detailed description of how we derive the HHA market basket is
available in the CY 2008 HH PPS proposed rule (72 FR 25356, 25435). Due
to the requirement in section 1895(b)(3)(B)(vi) of the Act, the
proposed CY 2012 market basket update of 2.5 percent must be reduced by
1 percentage point to 1.5 percent. In effect, the proposed CY 2012
market basket update becomes 1.5 percent.
2. Home Health Care Quality Reporting Program
a. Background and Quality Reporting Requirements
Section 1895(b)(3)(B)(v)(II) of the Act states that ``each home
health agency shall submit to the Secretary such data that the
Secretary determines are appropriate for the measurement of health care
quality. Such data shall be submitted in a form and manner, and at a
time, specified by the Secretary for purposes of this clause.'' In
addition, section 1895(b)(3)(B)(v)(I) of the Act dictates that ``for
2007 and each subsequent year, in the case of a HHA that does not
submit data to the Secretary in accordance with subclause (II) with
respect to such a year, the HH market basket percentage increase
applicable under such clause for such year shall be reduced by 2
percentage points.'' This requirement has been codified in regulations
at Sec. 484.225(i). HHAs that meet the quality data reporting
requirements would be eligible for the full home health market basket
percentage increase. HHAs that do not meet the reporting requirements
would be subject to a 2 percent reduction to the home health market
basket increase.
b. OASIS Data
Accordingly, for CY 2012, we propose to continue to use a HHA's
submission of OASIS data as one form of quality data to meet the
requirement that the HHA submit data appropriate for the measurement of
health care quality. We are proposing for CY 2012 to consider OASIS
assessments submitted by HHAs to CMS in compliance with HHA Conditions
of Participation and Conditions for Payment for episodes beginning on
or after July 1, 2010 and before July 1, 2011 as fulfilling one portion
of the quality reporting requirement for CY 2012. This time period
would allow 12 full months of data collection and would provide us the
time necessary to analyze and make any necessary payment adjustments to
the payment rates for CY 2012. We propose to reconcile the OASIS
submissions with claims data to verify full compliance with the OASIS
portion of the quality reporting requirements in CY 2012 and each year
thereafter on an annual cycle July 1 through June 30 as described
above.
As set forth in the CY 2008 final rule, agencies do not need to
submit OASIS data for those patients who are excluded from the OASIS
submission requirements under the Home Health Conditions of
Participation (CoPs) Sec. 484.1-Sec. 484.265, as well as those
excluded, as described at 70 FR 76202:
Those patients receiving only nonskilled services;
Those patients for whom neither Medicare nor Medicaid is
paying for home health care (patients receiving care under a Medicare
or Medicaid Managed Care Plan are not excluded from the OASIS reporting
requirement);
Those patients receiving pre- or post-partum services; or
Those patients under the age of 18 years.
As set forth in the CY 2008 HH PPS final rule (72 FR 49863),
agencies that become Medicare-certified on or after May 31 of the
preceding year (2011 for payments in 2012) are excluded from any
payment penalty for quality reporting purposes for the following CY.
Therefore, HHAs that are certified on or after May 1, 2011 are excluded
from the quality reporting requirement for CY 2012 payments. These
exclusions only affect quality reporting requirements and do not affect
the HHA's reporting responsibilities under the Conditions of
Participation and Conditions of Payment.
(1) OASIS Data and Annual Payment Update
HHAs that submit OASIS data as specified above are considered to
have met one portion of the quality data reporting requirements.
Additional portions of the quality data reporting requirements are
discussed below under sections D.2.c and D.2.d of this preamble.
(2) OASIS Data and Public Reporting
Section 1895(b)(3)(B)(v)(III) of the Act further states that
``[t]he Secretary shall establish procedures for making data submitted
under sub clause (II) available to the public. Such procedures shall
ensure that a home health agency has the opportunity to review the data
that is to be made public with respect to the agency prior to such data
being made public.''
To meet the requirement for making such data public, we propose to
continue using a subset of OASIS data that is utilized for quality
measure development and reported on the Home Health Compare Web site.
Currently, the Home Health Compare web site lists 23 quality measures
from the OASIS data set as described below. The Home Health Compare web
site, which was redesigned in October 2010, is located at http://www.medicare.gov/HHCompare/Home.asp. Each HHA currently has pre-
publication access, through the CMS contractor, to its own quality data
that the contractor updates periodically. We propose to continue this
process, to enable each agency to view its quality measures before
public posting of data on Home Health Compare.
The following 13 OASIS-C process measures have been publicly
reported on Home Health Compare since October 2010:
Timely initiation of care.
Influenza immunization received for current flu season.
Pneumococcal polysaccharide vaccine ever received.
Heart failure symptoms addressed during short-term
episodes.
Diabetic foot care and patient education implemented
during short-term episodes of care.
Pain assessment conducted.
Pain interventions implemented during short-term episodes.
Depression assessment conducted.
Drug education on all medications provided to patient/
caregiver during short-term episodes.
Falls risk assessment for patients 65 and older.
Pressure ulcer prevention plans implemented.
Pressure ulcer risk assessment conducted.
[[Page 41015]]
Pressure ulcer prevention included in the plan of care.
We published information about these new process measures in the
Federal Register in the CY 2010 HH PPS proposed and final rules (74 FR
40960 and 74 FR 58096, respectively), and in the CY 2011 HH PPS
proposed and final rules (75 FR 43250 and 75 FR 70401, respectively).
We proposed and finalized the decision to update Home Health Compare in
October 2010 to reflect the addition of the process measures.
We propose to continue publicly reporting these 13 process measures
and consider them as measures of home health quality.
The following 10 OASIS-C outcome measures are currently listed on
Home Health Compare:
Improvement in ambulation/locomotion.
Improvement in bathing.
Improvement in bed transferring.
Improvement in management of oral medications.
Improvement in pain interfering with activity.
Acute care hospitalization.
Emergency Department Use Without Hospitalization.
Improvement in dyspnea.
Improvement in status of surgical wounds.
Increase in number of pressure ulcers.
As proposed and finalized in the CY 2011 HH PPS final rule (75 FR
70401), these OASIS-C outcome measure calculations will be publicly
reported for the first time in July 2011. (3) Transition from OASIS-B1
to OASIS-C
The implementation of OASIS-C on January 1, 2010 impacted the
schedule of quality measure reporting for CY 2010 and CY 2011. Although
sufficient OASIS-C data were collected during CY 2010 and early CY 2011
and risk models were in development, the outcome reports (found on Home
Health Compare and the contractor outcome reports used for HHA's
performance improvement activities) remained static with OASIS-B1 data.
The last available OASIS-B1 reports remained in the system and on the
Home Health Compare site until they could be replaced with OASIS-C
reports. Sufficient numbers of patient episodes were needed to report
measures based on new OASIS-C data. This is important because measures
based on patient sample sizes taken over short periods of time can be
inaccurate and misleading due to issues like seasonal variation and
under-representation of long-stay home health patients. Once sufficient
OASIS-C data were collected and submitted to CMS's national repository,
we could begin producing new reports based on OASIS-C.
December 2009 was the last month for which outcome data were
calculated for OASIS-B1 data and OASIS-B1 CASPER outcome reports
continued to be available after March 2010. OASIS-C process measures
were made available to preview in September 2010 and were publicly
reported in October 2010. OASIS-C outcome measures will be available to
preview in June 2011 and will be publicly reported in July 2011.
c. Claims Data, Proposed Requirements and Outcome Measure Change
We propose to continue to use the aforementioned specified measures
derived from the OASIS-C data for purposes of measuring home health
care quality. We propose to also use measures derived from Medicare
claims data to measure home health quality. This would also ensure that
providers would not have an additional burden of reporting quality of
care measures through a separate mechanism, and that the costs
associated with the development and testing of a new reporting
mechanism would be avoided.
The change to OASIS-C brought about modifications to the OASIS-B1
measure ``Emergent Care,'' and resulted in the following change to that
measure:
Emergency Department Use without Hospitalization: This
measure replaces the previously reported measure: Emergent care. It
excludes emergency department visits that result in a hospital
admission because those visits are already captured in the acute care
hospitalization measure.
Upon review of actual claims data for emergency department visits
and responses to OASIS-C data item M2300, we determined that the claims
data are a more robust source of data for this measure, therefore the
OASIS-based measure ``Emergency Department Use Without
Hospitalization'' will not be publicly reported in July 2011. The ED
Use Without Hospitalization measure will be recalculated from claims
data and we propose that public reporting of the claims-based measure
would begin January 2012. We invite comment on the proposed use of
claims data in the calculation of home health quality measures and as
an additional measurement of home health quality.
To summarize, we propose that the following 13 process and 9
outcome measures, which comprise measurement of home health care
quality, would continue to be publicly reported in July 2011 and
quarterly thereafter:
Timely initiation of care.
Influenza immunization received for current flu season.
Pneumococcal polysaccharide vaccine ever received.
Heart failure symptoms addressed during short-term
episodes.
Diabetic foot care and patient education implemented
during short-term episodes of care.
Pain assessment conducted.
Pain interventions implemented during short-term episodes.
Depression assessment conducted.
Drug education on all medications provided to patient/
caregiver during short-term episodes.
Falls risk assessment for patients 65 and older.
Pressure ulcer prevention plans implemented.
Pressure ulcer risk assessment conducted.
Pressure ulcer prevention included in the plan of care.
Improvement in ambulation/locomotion.
Improvement in bathing.
Improvement in bed transferring.
Improvement in management of oral medications.
Improvement in pain interfering with activity.
Acute care hospitalization.
Improvement in dyspnea.
Improvement in status of surgical wounds.
Increase in number of pressure ulcers.
We propose that the claims-based measure ``Emergency Department Use
without Hospitalization'' would be publicly reported in January 2012.
d. Home Health Care CAHPS Survey (HHCAHPS)
In the HH PPS Rate Update for CY 2011 final rule (75 FR 70404 et
seq.), we stated that the expansion of the HH quality measures
reporting requirements for Medicare-certified agencies will include the
CAHPS[reg] Home Health Care (HHCAHPS) Survey for the CY 2012 annual
payment update (APU). We are maintaining our existing policy as issued
in the CY 2011 HH PPS Rate Update, and are moving forward with our
plans for HHCAHPS linkage to the pay-for-reporting (P4R) requirements
affecting the HH PPS rate update for CY 2012.
(1) Background and Description of HHCAHPS
As part of the U.S. Department of Health and Human Services' (DHHS)
Transparency Initiative, we have implemented a process to measure and
publicly report patient experiences with home health care using a
survey
[[Page 41016]]
developed by the Agency for Healthcare Research and Quality's (AHRQ's)
Consumer Assessment of Healthcare Providers and Systems (CAHPS[supreg])
program, and endorsed by the National Quality Forum (NQF). The HHCAHPS
survey is part of a family of CAHPS[supreg] surveys that asks patients
to report on and rate their experiences with health care. The Home
Health Care CAHPS (HHCAHPS) survey presents home health patients with a
set of standardized questions about their home health care providers
and about the quality of their home health care. Prior to this survey,
there was no national standard for collecting information about patient
experiences that would enable valid comparisons across all HHAs. The
history of the HHCAHPS has been given in previous rules, but it is also
available on our Web site at https://homehealthcahps.org and also, in
the HHCAHPS Protocols and Guidelines Manual, which is downloadable from
our Web site.
For public reporting purposes, we will present five measures--three
composite measures and two global ratings of care from the questions on
the HHCAHPS survey. The publicly reported data will be adjusted for
differences in patient mix across home health agencies. Each composite
measure consists of four or more questions regarding one of the
following related topics:
Patient care (Q9, Q16, Q19, and Q24);
Communications between providers and patients (Q2, Q15,
Q17, Q18, Q22, and Q23);
Specific care issues on medications, home safety, and pain
(Q3, Q4, Q5, Q10, Q12, Q13, and Q14);
The two global ratings are the overall rating of care given by the
HHA's care providers, and the patient's willingness to recommend the
HHA to family and friends.
The HHCAHPS survey is currently available in six languages. At the
time of the CY 2010 HH PPS final rule, HHCAHPS was only available in
English and Spanish translations. In the proposed rule for CY 2010, we
stated that we would provide additional translations of the survey over
time in response to suggestions for any additional language
translations. We now offer HHCAHPS in English, Spanish, Mandarin
(Simplified) Chinese, Cantonese (Classical) Chinese, Russian, and
Vietnamese languages. We will continue to consider additional
translations of the HHCAHPS in response to the needs of the home health
patient population.
All of the requirements about eligibility for HHCAHPS and
conversely, which home health patients are ineligible for HHCAHPS are
delineated and detailed in the HHCAHPS Protocols and Guidelines Manual
which is downloadable from the official Home Health Care CAHPS Web site
https://homehealthcahps.org. To be eligible, home health patients must
have received at least two skilled home health visits in the past 2
months, paid for by Medicare or Medicaid. HHCAHPS surveys will not be
taken from patients who are:
Under the age of 18;
Deceased;
Receiving hospice care;
Receiving routine maternity care only;
Living in a State that restricts the release of patient
information for a specific condition or illness that the patient has;
or are
Requesting that their names not be released to anyone.
We stated in previous rules that Medicare-certified agencies are
required to contract with an approved HHCAHPS survey vendor. Beginning
in summer 2009, interested vendors applied to become approved HHCAHPS
survey vendors. HHCAHPS survey vendors are required to attend
introductory and all update trainings conducted by CMS and the HHCAHPS
Survey Coordination Team, as well as to pass a post-training
certification test. We now have approximately 40 approved HHCAHPS
survey vendors. The list of approved vendors is available at https://homehealthcahps.org.
(2) HHCAHPS Requirements for CY 2012
In the CY 2010 HH PPS final rule (74 FR 58078 et seq.), we stated
that HHCAHPS would not be required for the APU for CY 2011. We did this
so that HHAs would have more time to prepare for the implementation of
HHCAHPS. Therefore, in the CY 2010 HH PPS final rule, we stated that
data collection should take place beginning in the third quarter of CY
2010 to meet the HHCAHPS reporting requirements for the CY 2012 APU. In
the CY 2010 HH PPS final rule, and in the CY 2011 HH PPS final rule, we
stated that Medicare-certified agencies would be required to
participate in a dry run for at least 1 month in third quarter of 2010
(July, August, and/or September), and to begin continuous monthly data
collection in October 2010 through March 2011, for the CY 2012 APU. The
dry run data were due to the Home Health CAHPS[supreg] Data Center by
11:59 p.m., eastern standard time (e.s.t.) on January 21, 2011. The dry
run data will not be publicly reported on the CMS Home Health Compare
web site. The purpose of the dry run was to provide an opportunity for
vendors and HHAs to acquire first-hand experience with data collection,
including sampling and data submission to the Home Health Care
CAHPS[supreg] Data Center.
In the CY 2011 HH PPS final rule, it was stated that the mandatory
period of data collection for the CY 2012 APU would include the dry run
data in the third quarter 2010, data from each month in the fourth
quarter of 2010 (October, November and December 2010), and data from
each month in the first quarter 2011 (January, February and March
2011). We previously stated that all Medicare-certified HHAs should
continuously collect HHCAHPS survey data for every month in every
quarter beginning October 2010, and submit these data for the fourth
quarter of 2010 to the Home Health CAHPS[supreg] Data Center by 11:59
p.m., eastern daylight time (e.d.t.) on April 21, 2011. In the CY 2011
HH PPS final rule, we stated that the data collected for the 3 months
of the first quarter 2011 would have to be submitted to the Home Health
CAHPS[supreg] Data Center by 11:59 p.m., e.d.t. on July 21, 2011. We
also stated that these data submission deadlines would be firm (that
is, no late submissions would be accepted).
These periods (a dry run in third quarter 2010, and 6 months of
data from October 2010 through March 2011) were deliberately chosen to
comprise the HHCAHPS reporting requirements for the CY 2012 APU because
they coincided with the OASIS-C reporting requirements that would
already have been due on June 30, 2011 for the CY 2012 APU. We would
also exempt Medicare-certified agencies from the HHCAHPS reporting
requirements if they had fewer than 60 HHCAHPS-eligible unique patients
from April 1, 2009 through March 31, 2010. In the CY 2011 HH PPS final
rule, we stated that by January 21, 2011 HHAs would need to provide CMS
with patient counts for the period of April 1, 2009 through March 31,
2010. We have posted a form on https://homehealthcahps.org that the
HHAs would need to use to submit their patient counts. This patient
counts reporting requirement would pertain only to Medicare-certified
HHAs with fewer than 60 HHCAHPS eligible, unduplicated or unique
patients for that time period. The aforementioned agencies would be
exempt from conducting the HHCAHPS survey for the APU in CY 2012.
We stated in the CY 2010 HH PPS final rule (74 FR 58078) and in the
CY
[[Page 41017]]
2011 HH PPS final rule that we would exempt newly Medicare-certified
HHAs. We realize that if an HHA became Medicare-certified April 1, 2010
and after, then they would be exempt from participating in HHCAHPS.
For CY 2012, we propose to maintain our policy that all HHAs,
unless covered by specific exclusions, must meet the quality reporting
requirements or be subject to a two (2) percentage point reduction in
the HH market basket percentage increase, in accordance with section
1895(b)(3)(B)(v)(I) of the Act.
(3) HHCAHPS Reconsiderations and Appeals Process
We stated in the CY 2011 HH PPS final rule that we would propose a
reconsiderations and appeals process for HHAs not meeting the HHCAHPS
reporting requirements for CY 2012. We are therefore now proposing a
reconsiderations and appeals process for HHAs that fail to meet the
HHCAHPS data collection requirements. We are proposing that HHAs that
are not compliant with OASIS-C and/or HHCAHPS requirements for the CY
2012 APU requirements will be notified after a process is followed to
confirm that they were noncompliant with CY 2012 quality reporting
requirements. We are proposing to issue a Joint Signature Memorandum to
RHHIs/MACs with a list of HHAs not compliant with OASIS and/or HHCAHPS.
We are proposing that the September Memorandum include language
regarding evidence required for the reconsideration process. We are
proposing that the language in the transmittal include information to
the HHAs about how to prepare a request for reconsideration of the CMS
decision, and these HHAs will have 30 days to file their requests for
reconsiderations to CMS. We are proposing that we examine each request
and make a determination about whether we plan to uphold our original
decision. We are proposing that HHAs receive CMS'reconsideration
decision by December 31, 2011. We are proposing that HHAs have a right
to appeal under 42 CFR 405, subpart R, to the Provider Reimbursement
Review Board (PRRB) if they were not satisfied with the CMS
reconsideration determination.
We are proposing that this Memorandum be a CMS transmittal that
would be sent out the first week of September 2011 from the CMS Manual
System, Medicare Claims Processing. We are proposing that this CMS
transmittal be sent to Fiscal Intermediaries (FIs), Regional Home
Health Intermediaries (RHHIs) and/or Carriers. We propose that the
RHHIs/MACs verify the claims submissions for the identified timeframe
for the 2012 APU period, to confirm that the claims match the HHAs we
identified as noncompliant with OASIS and HHCAHPS. In late September/
early October, the appropriate staff within CMS would review your
submission. If necessary, the RHHIs/MACs would identify and notify the
HHAs that they could lose 2 percent of their 2012 APU, and provide them
with instructions on how to request reconsideration. In early November
2011, the RHHIs/MACS would forward the HHAs reconsiderations to CMS on
a flow basis so that we could review and prepare recommendations for
cross component review within CMS throughout the month of November. We
propose to have CMS finish this process in December, and about mid-
December to circulate the recommendations for clearance and final
determinations by CMS senior leadership. We propose that the HHAs would
be informed about CMS' final decisions by December 31, 2011.
(4) HHCAHPS Oversight Activities
We stated in the CY 2011 HH PPS final rule that vendors and HHAs
would be required to participate in HHCAHPS oversight activities to
ensure compliance with HHCAHPS protocols, guidelines, and survey
requirements. The purpose of the oversight activities is to ensure that
HHAs and approved survey vendors follow the HHCAHPS Protocols and
Guidelines Manual. As stated, all approved survey vendors must develop
a Quality Assurance Plan (QAP) for survey administration in accordance
with the HHCAHPS Protocols and Guidelines Manual. The first QAP must be
submitted within 6 weeks of the data submission deadline after the
vendor's first quarterly data submission. The QAP must be updated and
submitted annually thereafter and at any time that changes occur in
staff or vendor capabilities or systems. A model QAP is included in the
HHCAHPS Protocols and Guidelines Manual. The QAP should include the
following:
Organizational Background and Staff Experience.
Work Plan.
Sampling Plan.
Survey Implementation Plan.
Data Security, Confidentiality and Privacy Plan.
Questionnaire Attachments.
As part of the oversight activities, the HHCAHPS Survey
Coordination Team conducts on-site visits to the HHCAHPS vendors. The
purpose of the site visits is to allow the HHCAHPS Coordination Team to
observe the entire Home Health Care CAHPS Survey implementation
process, from the sampling stage through file preparation and
submission, as well as to assess how the HHCAHPS data are stored. The
HHCAHPS Survey Coordination Team reviews the survey vendor's survey
systems, and assesses administration protocols based on the HHCAHPS
Protocols and Guidelines Manual posted at https://homehealthcahps.org.
The HHCAHPS Survey Coordination Team includes the CMS staff assigned to
work on HHCAHPS, and the Federal contractor for the HHCAHPS
implementation. HHCAHPS survey vendors are not part of the HHCAHPS
Survey Coordination Team. The systems and program review include, but
are not limited, to the following:
Survey management and data systems;
Printing and mailing materials facilities;
Telephone call center facilities;
Data receipt, entry and storage facilities; and
Written documentation of survey processes.
After the site visits, vendors are given a defined time period in
which to correct any identified issues and provide follow-up
documentation of corrections for review. In general, we propose that
the defined time periods will be between 2 weeks to 1 month after these
issues are stated in the HHCAHPS Coordination Team's site visit report
to the survey vendor. It is proposed that survey vendors will be
subject to follow-up site visits as needed.
(5) HHCAHPS Requirements for CY 2013
For the CY 2013 APU, we propose to require HHCAHPS data collection
and reporting for four quarters. The data collection period will
include second quarter 2011 through first quarter 2012. We propose that
HHAs will be required to submit their HHCAHPS data files to the Home
Health CAHPS Data Center the third Thursday of the month (in the months
of October, January, April and July). HHAs will be required to submit
their HHCAHPS data files to the Home Health CAHPS Data Center for CY
2013 as follows: the data for the second quarter 2011 by 11:59 p.m.,
e.d.t. on October 20, 2011; the data for the third quarter 2011 by
11:59 p.m., e.s.t. on January 19, 2012; the data for the fourth quarter
2011 by 11:59 p.m., e.d.t. on April 19, 2012; and the data for the
first quarter 2012 by 11:59 p.m., e.d.t. on July 19, 2012.
[[Page 41018]]
We propose to require that all HHAs that have fewer than 60
HHCAHPS-eligible unduplicated or unique patients in the period of April
1, 2010 through March 31, 2011 will be exempt from the HHCAHPS data
collection and submission requirements for the CY 2013 APU. For the CY
2013 APU, agencies with fewer than 60 HHCAHPS-eligible, unduplicated or
unique patients would be required to submit their counts on the
Participation Exemption Request form posted at https://homehealthcahps.org by 11:59 p.m., e.d.t. on April 19, 2012. This
deadline is firm, as are all of the quarterly data submission
deadlines.
We propose to exempt HHAs receiving Medicare certification on or
after April 1, 2011 from the full HHCAHPS reporting requirement for the
CY 2013 APU, because these HHAs were not Medicare-certified in the
period of April 1, 2010 and March 31, 2011.
(6) HHCAHPS Codified Criteria
The following codified criteria stay the same as issued in the CY
2011 HH PPS final rule (75 FR 70465). We stated in Sec. 484.250(b)
that ``An HHA that has less than 60 eligible unique HHCAHPS patients
annually must submit to CMS their total HHCAHPS patient count to CMS to
be exempt from the HHCAHPS reporting requirements.'' In Sec.
484.250(c), we stated that ``An HHA must contract with an approved,
independent HHCAHPS survey vendor to administer the HHCAHPS on its
behalf.''
In Sec. 484.250(c)(1), we stated that ``CMS approves an HHCAHPS
survey vendor if such applicant has been in business for a minimum of 3
years and has conducted surveys of individuals and samples for at least
2 years. For HHCAHPS, a ``survey of individuals'' is defined as the
collection of data from at least 600 individuals selected by
statistical sampling methods and the data collected are used for
statistical purposes. All applicants that meet these requirements will
be approved by CMS.''
In Sec. 484.250(c)(2) we stated that ``No organization, firm, or
business that owns, operates, or provides staffing for a HHA is
permitted to administer its own Home Health Care CAHPS (HHCAHPS) Survey
or administer the survey on behalf of any other HHA in the capacity as
an HHCAHPS survey vendor. Such organizations will not be approved by
CMS as HHCAHPS survey vendors.''
The following criteria from the CY 2011 HH PPS final rule are
proposed to be revised so that the requirements for OASIS and Home
Health CAHPS are clearly delineated in the regulations. In the CY 2011
HH PPS final rule (75 FR 70465), we stated for Sec. 484.250, Patient
Assessment Data, that ``An HHA must submit to CMS the OASIS-C data
described at Sec. 484.55(b)(1) and Home Health Care CAHPS data for CMS
to administer the payment rate methodologies described in Sec.
484.215, Sec. 484.230, and Sec. 484.235 of this subpart, and meet the
quality reporting requirements of section 1895(b)(3)(B)(v) of the
Act.''
We propose to revise this section to clarify that HHCAHPS is
associated with the APU described at Sec. 484.225(i) and the quality
reporting requirements, and not with other payment requirements.
(7) HHCAHPS Requirements for CY 2014
For the CY 2014 APU, we propose to require HHCAHPS data collection
and reporting for four quarters. The data collection period would
include second quarter 2012 through first quarter 2013. It is proposed
that HHAs will be required to submit their HHCAHPS data files to the
Home Health CAHPS Data Center the third Thursday of the month for the
months of October, January, April and July. It is proposed that HHAs
will be required to submit their HHCAHPS data files to the Home Health
CAHPS Data Center for CY 2014 as follows: for the second quarter 2012
by 11:59 p.m., e.d.t. on October 18, 2012; for the third quarter 2012
by 11:59 p.m., e.s.t. on January 17, 2013; for the fourth quarter 2012
by 11:59 p.m., e.d.t. on April 18, 2013; and for the first quarter 2013
by 11:59 p.m., e.d.t. on July 18, 2013.
As noted, we exempt HHAs receiving Medicare certification on or
after April 1, 2012 from the full HHCAHPS reporting requirement for the
CY 2014 APU, as data submission and analysis will not be possible for
an agency that late in the reporting period for the CY 2014 APU
requirements.
As noted, we require that all HHAs that have fewer than 60 HHCAHPS-
eligible unduplicated or unique patients in the period of April 1, 2011
through March 31, 2012 will be exempt from the HHCAHPS data collection
and submission requirements for the CY 2014 APU. For the CY 2014 APU,
agencies with fewer than 60 HHCAHPS-eligible, unduplicated or unique
patients would be required to submit their counts on the Participation
Exemption Request form posted on https://homehealthcahps.org by 11:59
p.m., e.d.t. on April 18, 2013. This deadline is firm, as are all of
the quarterly data submission deadlines.
(8) For Further Information on the HHCAHPS Survey
We encourage HHAs interested in learning about the survey to view
the HHCAHPS Survey Web site at the official Web site for the HHCAHPS at
https://homehealthcahps.org. Home health agencies can also send an e-
mail to the HHCAHPS Survey Coordination Team at [email protected], or
telephone toll-free (1-866-354-0985) for more information about
HHCAHPS.
3. Home Health Wage Index
Sections 1895(b)(4)(A)(ii) and (b)(4)(C) of the Act require the
Secretary to provide appropriate adjustments to the proportion of the
payment amount under the HH PPS to account for area wage differences,
using adjustment factors that reflect the relative level of wages and
wage-related costs applicable to the furnishing of home health
services. We apply the appropriate wage index value to the labor
portion of the HH PPS rates based on the site of service for the
beneficiary (defined by section 1861(m) of the Act as the beneficiary's
place of residence). Previously, we determined each HHA's labor market
area based on definitions of Metropolitan Statistical Areas (MSAs)
issued by the Office of Management and Budget (OMB). We have
consistently used the pre-floor, pre-reclassified hospital wage index
data to adjust the labor portion of the HH PPS rates. We believe the
use of the pre-floor, pre-reclassified hospital wage index data results
in an appropriate adjustment to the labor portion of the costs, as
required by statute.
In the CY 2006 HH PPS final rule for (70 FR 68132), we began
adopting revised labor market area definitions as discussed in the
Office of Management and Budget (OMB) Bulletin No. 03-04 (June 6,
2003). This bulletin announced revised definitions for Metropolitan
Statistical Areas (MSAs) and the creation of Micropolitan Statistical
Areas and Core-Based Statistical Areas (CBSAs). The bulletin is
available online at http://www.whitehouse.gov/omb/bulletins/b03-04.html. In addition, OMB published subsequent bulletins regarding CBSA
changes, including changes in CBSA numbers and titles. This rule
incorporates the CBSA changes published in the most recent OMB
bulletin. The OMB bulletins are available at http://www.whitehouse.gov/omb/bulletins/index.html.
Finally, we continue to use the methodology discussed in the CY
2007 HH PPS final rule for (71 FR 65884) to address those geographic
areas in which there are no IPPS hospitals and, thus, no
[[Page 41019]]
hospital wage data on which to base the calculation of the HH PPS wage
index. For rural areas that do not have IPPS hospitals and, therefore,
lack hospital wage data on which to base a wage index, we use the
average wage index from all contiguous CBSAs as a reasonable proxy.
Since CY 2007, this methodology was used to calculate the wage index
for rural Massachusetts. However, we now have wage data from an IPPS
hospital in rural Massachusetts. The hospital was formerly a critical
access hospital (CAH), but converted to an IPPS hospital in 2008, the
base year for the 2012 wage index. Therefore, it is no longer necessary
to apply this methodology to rural Massachusetts for CY 2012.
For rural Puerto Rico, we do not apply this methodology due to the
distinct economic circumstances that exist there, but instead continue
using the most recent wage index previously available for that area
(from CY 2005).
For urban areas without IPPS hospitals, we use the average wage
index of all urban areas within the State as a reasonable proxy for the
wage index for that CBSA. For CY 2012, there is an additional urban
area (Yuba City, CA) without hospital wage data. Therefore, for CY
2012, the two urban areas without hospital wage data are Hinesville-
Fort Stewart, Georgia (CBSA 25980) and Yuba City, CA (CBSA 49700).
The wage index values for rural areas and the CBSAs and their
associated wage index values are available via the Internet at: http://www.cms.gov/HomeHealthPPS/HHPPSRN/list.asp.
4. Proposed CY 2012 Payment Update
a. National Standardized 60-Day Episode Rate
The Medicare HH PPS has been in effect since October 1, 2000. As
set forth in the July 3, 2000 final rule (65 FR 41128), the base unit
of payment under the Medicare HH PPS is a national standardized 60-day
episode rate. As set forth in Sec. 484.220, we adjust the national
standardized 60-day episode rate by a case-mix relative weight and a
wage index value based on the site of service for the beneficiary.
In the CY 2008 HH PPS final rule with comment period, we refined
the case-mix methodology and also rebased and revised the home health
market basket. To provide appropriate adjustments to the proportion of
the payment amount under the HH PPS to account for area wage
difference, we apply the appropriate wage index value to the labor
portion of the HH PPS rates. The labor-related share of the case-mix
adjusted 60-day episode rate is 77.082 percent and the non-labor-
related share is 22.918 percent. The proposed CY 2012 HH PPS rates use
the same case-mix methodology and application of the wage index
adjustment to the labor portion of the HH PPS rates as set forth in the
CY 2008 HH PPS final rule with comment period. Following are the steps
we take to compute the case-mix and wage adjusted 60-day episode rate:
(1) Multiply the national 60-day episode rate by the patient's
applicable case-mix weight.
(2) Divide the case-mix adjusted amount into a labor (77.082
percent) and a non-labor portion (22.918 percent).
(3) Multiply the labor portion by the applicable wage index based
on the site of service of the beneficiary.
(4) Add the wage-adjusted portion to the non-labor portion,
yielding the case-mix and wage adjusted 60-day episode rate, subject to
any additional applicable adjustments.
In accordance with section 1895(b)(3)(B) of the Act, this document
constitutes the annual update of the HH PPS rates. The HH PPS
regulations at Sec. 484.225 set forth the specific annual percentage
update methodology. In accordance with Sec. 484.225(i), for a HHA that
does not submit home health quality data, as specified by the
Secretary, the unadjusted national prospective 60-day episode rate is
equal to the rate for the previous calendar year increased by the
applicable home health market basket index amount minus two percentage
points. Any reduction of the percentage change will apply only to the
calendar year involved and will not be considered in computing the
prospective payment amount for a subsequent calendar year.
For CY 2012, we are proposing to base the wage index adjustment to
the labor portion of the HH PPS rates on the most recent pre-floor and
pre-reclassified hospital wage index. As discussed in the July 3, 2000
HH PPS final rule, for episodes with four or fewer visits, Medicare
pays the national per-visit amount by discipline, referred to as a
LUPA. We propose to update the national per-visit rates by discipline
annually by the applicable home health market basket percentage. We
propose to adjust the national per-visit rate by the appropriate wage
index based on the site of service for the beneficiary, as set forth in
Sec. 484.230. We propose to adjust the labor portion of the updated
national per-visit rates used to calculate LUPAs by the most recent
pre-floor and pre-reclassified hospital wage index. We are also
proposing to update the LUPA add-on payment amount and the NRS
conversion factor by the applicable home health market basket update of
1.5 percent for CY 2012.
Medicare pays the 60-day case-mix and wage-adjusted episode payment
on a split percentage payment approach. The split percentage payment
approach includes an initial percentage payment and a final percentage
payment as set forth in Sec. 484.205(b)(1) and Sec. 484.205(b)(2). We
may base the initial percentage payment on the submission of a request
for anticipated payment (RAP) and the final percentage payment on the
submission of the claim for the episode, as discussed in Sec. 409.43.
The claim for the episode that the HHA submits for the final percentage
payment determines the total payment amount for the episode and whether
we make an applicable adjustment to the 60-day case-mix and wage-
adjusted episode payment. The end date of the 60-day episode as
reported on the claim determines which calendar year rates Medicare
would use to pay the claim.
We may also adjust the 60-day case-mix and wage-adjusted episode
payment based on the information submitted on the claim to reflect the
following:
A low utilization payment provided on a per-visit basis as
set forth in Sec. 484.205(c) and Sec. 484.230.
A partial episode payment adjustment as set forth in Sec.
484.205(d) and Sec. 484.235.
An outlier payment as set forth in Sec. 484.205(e) and
Sec. 484.240.
b. Proposed Updated CY 2012 National Standardized 60-Day Episode
Payment Rate
In calculating the annual update for the CY 2012 national
standardized 60-day episode payment rates, we first look at the CY 2011
rates as a starting point. The CY 2011 national standardized 60-day
episode payment rate is $2,192.07.
Next, we update the payment amount by the proposed CY 2012 home
health market basket update of 1.5 percent.
As previously discussed in section II.A. (``Case-Mix Measurement'')
of this proposed rule, our updated analysis of the change in case-mix
that is not due to an underlying change in patient health status
reveals an additional increase in nominal change in case-mix.
Therefore, we propose to reduce rates by 5.06 percent in CY 2012,
resulting in a proposed CY 2012 national standardized 60-day episode
payment rate of $2,112.37. The proposed CY 2012 national standardized
60-day episode payment rate for an HHA that submits the required
quality data is shown in Table 19. The proposed CY 2012 national
standardized 60-day episode
[[Page 41020]]
payment rate for an HHA that does not submit the required quality data
is updated by the proposed CY 2012 home health market basket update
(1.5 percent) minus 2 percentage points and is shown in Table 20.
Table 19--Proposed CY 2012 National 60-Day Episode Payment Amount Updated by the Proposed Home Health Market
Basket Update, Before Case-Mix Adjustment and Wage Adjustment Based on the Site of Service for the Beneficiary
----------------------------------------------------------------------------------------------------------------
Multiply by
the proposed Reduce by 5.06 Proposed CY
CY 2012 home percent for 2012 national
CY 2011 National standardized 60-day episode payment rate health market nominal change standardized 6-
basket update in case-mix day episode
of 1.5 percent payment rate
----------------------------------------------------------------------------------------------------------------
$2,192.07....................................................... x 1.015 x 0.9494 $2,112.37
----------------------------------------------------------------------------------------------------------------
Table 20--For HHAs That Do Not Submit the Quality Data--Proposed CY 2012 National 60-Day Episode Payment Amount
Updated by the Proposed Home Health Market Basket Update Before Case-Mix Adjustment and Wage Adjustment Based on
the Site of Service for the Beneficiary
----------------------------------------------------------------------------------------------------------------
Multiply by
the proposed
CY 2012 home
health market Reduce by 5.06 Proposed CY
basket update percent for 2012 National
CY 2011 National standardized 60-day episode payment rate of 1.5 percent nominal change standardized
minus 2 in case-mix 60-day episode
percentage payment rate
points (-0.5
percent)
----------------------------------------------------------------------------------------------------------------
$2,192.07....................................................... x 0.995 x 0.9494 $2070.75
----------------------------------------------------------------------------------------------------------------
c. National Per-Visit Rates Used To Pay LUPAs and Compute Imputed Costs
Used in Outlier Calculations
In calculating the CY 2012 national per-visit rates used to
calculate payments for LUPA episodes and to compute the imputed costs
in outlier calculations, the CY 2011 national per-visit rates for each
discipline are updated by the proposed CY 2012 home health market
basket update of 1.5 percent. National per-visit rates are not subject
to the 5.06 percent reduction related to the nominal increase in case-
mix. The CY 2012 national per-visit rates per discipline are shown in
Table 21. The six home health disciplines are as follows:
Home Health Aide (HH aide);
Medical Social Services (MSS);
Occupational Therapy (OT);
Physical Therapy (PT);
Skilled Nursing (SN); and
Speech Language Pathology Therapy (SLP).
Table 21--Proposed CY 2012 National Per-Visit Amounts for LUPAs (Not Including the LUPA Add-On Amount for a
Beneficiary's Only Episode or the Initial Episode in a Sequence of Adjacent Episodes) and Outlier Calculations
Updated by the Proposed Health Market Basket Update, Before Wage Index Adjustment
----------------------------------------------------------------------------------------------------------------
For HHAs that DO submit the For HHAs that DO NOT submit
required quality data the required quality data
---------------------------------------------------------------
Multiply by
CY 2011 per- the proposed
visit amounts Multiply by CY 2012 market
Home health discipline type per 60-day the proposed Proposed CY basket update Proposed CY
episode CY 2012 market 2012 per-visit of 1.5 percent 2012 per-visit
basket update payment minus 2 payment
of 1.5 percent percentage
points (-0.5
percent)
----------------------------------------------------------------------------------------------------------------
HH Aide......................... $50.42 x 1.015 $51.18 x 0.995 $50.17
MSS............................. 178.46 x 1.015 181.14 x 0.995 177.57
OT.............................. 122.54 x 1.015 124.38 x 0.995 121.93
PT.............................. 121.73 x 1.015 123.56 x 0.995 121.12
SN.............................. 111.32 x 1.015 112.99 x 0.995 110.76
SLP............................. 132.27 x 1.015 134.25 x 0.995 131.61
----------------------------------------------------------------------------------------------------------------
[[Page 41021]]
d. LUPA Add-on Payment Amount Update
Beginning in CY 2008, LUPA episodes that occur as the only episode
or initial episode in a sequence of adjacent episodes are adjusted by
adding an additional amount to the LUPA payment before adjusting for
area wage differences. We update the LUPA payment amount by the
proposed CY 2012 home health market basket update percentage of 1.5
percent. The LUPA add-on payment amount is not subject to the 5.06
percent reduction related to the nominal increase in case-mix. For CY
2012, we propose that the add-on to the LUPA payment to HHAs that
submit the required quality data be updated by the proposed CY 2012
home health market basket update of 1.5 percent. The proposed CY 2012
LUPA add-on payment amount is shown in Table 22. We propose that the
add-on to the LUPA payment to HHAs that do not submit the required
quality data would be updated by the proposed CY 2012 home health
market basket update (1.5 percent) minus two percentage points.
Table 22--Proposed CY 2012 LUPA Add-On Amounts
----------------------------------------------------------------------------------------------------------------
For HHAs that DO submit the For HHAs that DO NOT submit
required quality data the required quality data
---------------------------------------------------------------
Multiply by
the proposed
Multiply by CY 2012 market
CY 2011 LUPA add-on amount the proposed Proposed CY basket update Proposed CY
CY 2012 market 2012 LUPA add- of 1.5 percent 2012 LUPA add-
basket update on amount minus 2 on amount
of 1.5 percent percentage
points (-0.5
percent)
----------------------------------------------------------------------------------------------------------------
$93.31.......................................... x 1.015 $94.71 x 0.995 $92.84
----------------------------------------------------------------------------------------------------------------
e. Nonroutine Medical Supply Conversion Factor Update
Payments for nonroutine medical supplies (NRS) are computed by
multiplying the relative weight for a particular severity level by the
NRS conversion factor. We first increase CY 2010 NRS conversion factor
($52.54) by the proposed market basket of 1.5 percent. Then we reduce
that amount by 5.06 percent to account for the increase in nominal
case-mix. The final updated CY 2012 NRS conversion factor for 2012
appears in Table 23. For CY 2012, the NRS conversion factor is $53.33.
Table 23--Proposed CY 2012 NRS Conversion Factor for HHAs That DO Submit
the Required Quality Data
------------------------------------------------------------------------
Multiply by the
proposed CY 2012 Proposed CY 2011
CY 2011 NRS conversion factor market basket NRS conversion
update of 1.5 factor
percent
------------------------------------------------------------------------
$52.54.......................... x 1.015 $53.33
------------------------------------------------------------------------
Using the NRS conversion factor ($53.33) for CY 2012, the payment
amounts for the various severity levels are shown in Table 24.
Table 24--Proposed CY 2012 NRS Payment Amounts for HHAs That DO Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
Proposed CY
Severity level Points (scoring) Relative 2012 NRS
weight payment amount
----------------------------------------------------------------------------------------------------------------
1............................................ 0................................ 0.2698 $14.39
2............................................ 1 to 14.......................... 0.9742 51.95
3............................................ 15 to 27......................... 2.6712 142.46
4............................................ 28 to 48......................... 3.9686 211.65
5............................................ 49 to 98......................... 6.1198 326.37
6............................................ 99+.............................. 10.5254 561.32
----------------------------------------------------------------------------------------------------------------
For HHAs that do not submit the required quality data, we again
begin with the CY 2011 NRS conversion factor. We first increase the CY
2011 NRS conversion factor ($52.54) by the proposed CY 2012 home health
market basket update percentage of 1.5 percent minus 2 percentage
points. The CY 2011 NRS conversion factor for HHAs that do not submit
quality data is shown in Table 25.
[[Page 41022]]
Table 25--Proposed CY 2012 NRS Conversion Factor for HHAs That Do Not
Submit the Required Quality Data
------------------------------------------------------------------------
Multiply by the
proposed CY 2012
market basket Proposed CY 2012
CY 2011 NRS conversion factor update of 1.5 NRS conversion
percent minus 2 factor
percentage points
(-0.5 percent)
------------------------------------------------------------------------
$52.54.......................... x 0.995 $52.28
------------------------------------------------------------------------
The payment amounts for the various severity levels based on the
updated conversion factor for HHAs that do not submit quality data are
calculated in Table 26.
Table 26--Proposed CY 2012 NRS Payment Amounts for HHAs That Do Not Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
Relative Proposed NRS
Severity level Points (scoring) weight payment amount
----------------------------------------------------------------------------------------------------------------
1............................................ 0................................ 0.2698 $14.11
2............................................ 1 to 14.......................... 0.9742 50.93
3............................................ 15 to 27......................... 2.6712 139.65
4............................................ 28 to 48......................... 3.9686 207.48
5............................................ 49 to 98......................... 6.1198 319.94
6............................................ 99+.............................. 10.5254 550.27
----------------------------------------------------------------------------------------------------------------
5. Rural Add-On
Section 421(a) of the Medicare Prescription Drug, Improvement, and
Modernization Act (MMA) of 2003 (Pub. L. 108-173, enacted on December
8, 2003 and as amended by section 3131(c) of the Affordable Care Act)
provides an increase of 3 percent of the payment amount otherwise made
under section 1895 of the Act for home health services furnished in a
rural area (as defined in section 1886(d)(2)(D) of the Act), for
episodes and visits ending on or after April 1, 2010 and before January
1, 2016. The statute waives budget neutrality related to this
provision, as the statute specifically states that the Secretary shall
not reduce the standard prospective payment amount (or amounts) under
section 1895 of the Act applicable to home health services furnished
during a period to offset the increase in payments resulting in the
application of this section of the statute.
The 3 percent rural add-on is applied to the national standardized
60-day episode rate, national per-visit rates, LUPA add-on payment, and
NRS conversion factor when home health services are provided in rural
(non-CBSA) areas. Refer to Tables 27 thru 31 for these payment rates.
Table 27--Proposed CY 2012 Payment Amounts for 60-Day Episodes for Services Provided in a Rural Area Before Case-
Mix and Wage Index Adjustment
----------------------------------------------------------------------------------------------------------------
For HHAs that do submit quality data For HHAs that do not submit quality data
----------------------------------------------------------------------------------------------------------------
Proposed Rural Proposed rural
CY 2012 Proposed CY CY 2012
Proposed CY 2012 national Multiply by national 2012 national Multiply by national
standardized 60-day episode the 3 percent standardized standardized the 3 percent standardized
payment rate rural add-on 60-day episode 60-day episode rural add-on 60-day episode
payment rate payment rate payment rate
----------------------------------------------------------------------------------------------------------------
$2,112.37....................... x 1.03 $2,175.74 $2,070.75 x 1.03 $2,132.87
----------------------------------------------------------------------------------------------------------------
Table 28--Proposed CY 2012 Per-Visit Amounts for Services Provided in a Rural Area, Before Wage Index Adjustment
--------------------------------------------------------------------------------------------------------------------------------------------------------
For HHAs that do submit quality data For HHAs that do not submit quality data
-----------------------------------------------------------------------------------------------
Home health discipline type Proposed CY Multiply by Proposed rural Proposed CY Multiply by Proposed rural
2012 per-visit the 3 percent CY 2012 per- 2012 per-visit the 3 percent CY 2012 per-
rate rural add-on visit rate rate rural add-on visit rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
HH Aide................................................. $51.18 x 1.03 $52.72 $50.17 x 1.03 $51.68
MSS..................................................... 181.14 x 1.03 186.57 177.57 x 1.03 182.90
OT...................................................... 124.38 x 1.03 128.11 121.93 x 1.03 125.59
PT...................................................... 123.56 x 1.03 127.27 121.12 x 1.03 124.75
SN...................................................... 112.99 x 1.03 116.38 110.76 x 1.03 114.08
[[Page 41023]]
SLP..................................................... 134.25 x 1.03 138.28 131.61 x 1.03 135.56
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 29--Proposed CY 2012 LUPA Add-On Amounts for Services Provided in Rural Areas
----------------------------------------------------------------------------------------------------------------
For HHAs that do submit quality data For HHAs that do not submit quality data
----------------------------------------------------------------------------------------------------------------
Multiply by Proposed rural Proposed CY Multiply by Proposed Rural
Proposed CY 2012 LUPA add-on the 3 percent CY 2012 LUPA 2012 LUPA add- the 3 percent CY 2012 LUPA
amount rural add-on add-on amount on amount rural add-on add-on amount
----------------------------------------------------------------------------------------------------------------
$94.71.......................... x 1.03 $97.55 $92.84 x 1.03 $95.63
----------------------------------------------------------------------------------------------------------------
Table 30--Proposed CY 2012 NRS Conversion Factor for Services Provided in Rural Areas
----------------------------------------------------------------------------------------------------------------
For HHAs that do submit quality data For HHAs that do not submit quality data
----------------------------------------------------------------------------------------------------------------
Proposed rural Proposed CY Proposed CY
Proposed CY 2011 conversion Multiply by CY 2012 2012 Multiply by rural 2012
factor the 3 percent conversion conversion the 3 percent conversion
rural add-on factor factor rural add-on factor
----------------------------------------------------------------------------------------------------------------
$53.33.......................... x 1.03 $54.93 $52.28 x 1.03 $53.85
----------------------------------------------------------------------------------------------------------------
Table 31--Proposed CY 2012 NRS Payment Amounts for Services Provided in Rural Areas
----------------------------------------------------------------------------------------------------------------
For HHAs that do submit For HHAs that do not submit
quality data (NRS conversion quality data (NRS conversion
factor = $54.93) factor = $53.85)
Points ---------------------------------------------------------------
Severity level (scoring) Total NRS Total NRS
Relative payment amount Relative payment amount
weight for rural weight for rural
areas areas
----------------------------------------------------------------------------------------------------------------
1............................. 0............... 0.2698 $14.82 0.2698 $14.53
2............................. 1 to 14......... 0.9742 53.51 0.9742 52.46
3............................. 15 to 27........ 2.6712 146.73 2.6712 143.84
4............................. 28 to 48........ 3.9686 218.00 3.9686 213.71
5............................. 49 to 98........ 6.1198 336.16 6.1198 329.55
6............................. 99+............. 10.5254 578.16 10.5254 566.79
----------------------------------------------------------------------------------------------------------------
E. Therapy Corrections and Clarifications
1. Therapy Technical Correction to Regulation Text
As part of our ``Home Health Prospective Payment System Rate Update
for Calendar Year 2011,'' (75 FR 70389 through 70461), we clarified
policies related to how therapy services are to be provided and
documented.
Specifically, the clarifications included that: (1) Measurable
treatment goals be described in the plan of care and that the patient's
clinical record demonstrate that the method used to assess a patient's
function include objective measurement and successive comparison of
measurements, thus enabling objective measurement of progress toward
goals and/or therapy effectiveness; (2) a qualified therapist (instead
of an assistant) perform the needed therapy service, assess the
patient, measure progress, and document progress toward goals at least
once every 30 days during a therapy patient's course of treatment; and
(3) for those patients needing 13 or 19 therapy visits, we require that
a qualified therapist (instead of an assistant) perform the therapy
service required at the 13th and 19th visits, assess the patient, and
measure and document the effectiveness of the therapy.
As a result of comments received on the CY 2011 proposed rule, we
finalized flexibility for the 13th and 19th visit requirements in cases
when: (1) The patient resides in a rural area; (2) documented
exceptional circumstances prevent the therapist from making the
required visit; and (3) patients receive more than one type of therapy.
The CY 2011 HH PPS final rule preamble discussions clearly described
that even with the flexibility which we finalized, for those patients
who require 13 and 19 therapy visits, the qualified therapist's visit,
assessment, and documentation must occur no later than the 13th and
19th visits.
However, regulation text associated with these changes at Sec.
409.44(c)(2)(i)(D)(2) reads, ``Where more than one discipline of
therapy is being provided, the qualified therapist
[[Page 41024]]
from each discipline must provide the therapy service and functionally
reassess the patient in accordance with Sec. 409.44(c)(2)(i)(A) during
the visit which would occur close to but before the 19th visit per the
plan of care.'' Therefore, to better align our regulations with our
described final policies, we propose to correct the regulation text at
Sec. 409.44(c)(2)(i)(D)(2) to read ``Where more than one discipline of
therapy is being provided, the qualified therapist from each discipline
must provide the therapy service and functionally reassess the patient
in accordance with Sec. 409.44(c)(2)(i)(A) during the visit which
would occur close to but no later than the 19th visit per the plan of
care.''
2. Occupational Therapy Policy Clarifications
We are proposing to clarify when occupational therapy is considered
a dependent service versus when it is considered a qualifying service
under the Medicare home health benefit. Section 1861(m)(2) of the Act
established occupational therapy as a home health service. Section
1814(2)(C) of the Act provided that to qualify for the benefit, a
physician must certify that such services are or were required because
the individual needs or needed skilled nursing care (other than solely
venipuncture for the purpose of obtaining a blood sample) on an
intermittent basis or physical or speech therapy or, in the case of an
individual who has been furnished home health services based on such a
need and who no longer has such a need for such care or therapy,
continues or continued to need occupational therapy. We codified the
requirement for skilled services in the Medicare home health benefit at
Sec. 409.42(c). This section further delineates beneficiary
qualifications for home health, including what is meant by, ``in need
of skilled services.'' Following this detailed explanation, skilled
services, in Sec. 409.42(c)(2) through (c)(4) include physical therapy
services and speech-language pathology services that meet the
requirements of Sec. 409.44(c), and continuing occupational therapy
services that meet the requirements of Sec. 409.44(c) if the
beneficiary's eligibility for home health services has been established
by virtue of a prior need for intermittent skilled nursing care,
speech-language pathology services, or physical therapy in the current
or prior certification period.
In addition to the above-mentioned designation and treatment of
occupational therapy as a qualifying home health service, occupational
therapy is also described as a dependent service, as currently
specified in Sec. 409.45(d) where we state occupational therapy
services that are not qualifying services under Sec. 409.44(c) are
nevertheless covered as dependent services if the requirements of Sec.
409.44(c)(2)(i) through (iv), as to reasonableness and necessity, are
met.
To clarify the status of when occupational therapy becomes a
qualifying service, we propose to change the above-mentioned regulation
text at Sec. 409.42(c)(4) to establish exactly when occupational
therapy becomes a qualifying service. That is, we propose to amend this
regulatory text to demonstrate when a continuing need for occupational
therapy allows for its continued eligibility even though it becomes the
sole skilled service being provided. Specifically, we propose to amend
Sec. 409.42(c)(4) to state occupational therapy services that meet the
requirements of Sec. 409.44(c) initially qualify for home health
coverage as a dependent service as defined in Sec. 409.45(d) if the
beneficiary's eligibility for home health services has been established
by virtue of a prior need for intermittent skilled nursing care,
speech-language pathology services, or physical therapy in the current
or prior certification period. Subsequent to an initial covered
occupational therapy service, continuing occupational therapy services
which meet the requirements of Sec. 409.44(c) are considered to be
qualifying services.
We also propose a change to Sec. 409.44(c)to include a technical
correction to this regulation text. Specifically, the current
regulation text states ``(c) Physical therapy, speech-language
pathology services, and occupational therapy. To be covered, physical
therapy, speech-language pathology services, and occupational therapy
must satisfy the criteria in paragraphs (c)(1) through (4) of this
section.'' We propose to correct ``(c)(1) through (4)'' to, ``(c)(1)
and (2),'' which is the correct reference.
F. Home Health Face-to-Face Encounter
As described in the CY 2011 HH PPS final rule (70 FR 70427),
section 6407(a) of the Patient Protection and Affordable Care Act, as
amended by section 10605 of the Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152), amended the requirements
for physician certification of home health services contained in
sections 1814(a)(2)(C) and 1835(a)(2)(A) of the Act by requiring that,
as a condition for payment, prior to certifying a patient's eligibility
for the home health benefit, the physician must document that the
physician himself or herself or a permitted nonphysician practitioner
(NPP) has had a face-to-face encounter with the patient.
The statute describes NPPs who may perform this face-to-face
patient encounter as a nurse practitioner or clinical nurse specialist,
as those terms are defined in section 1861(aa)(5) of the Act, who is
working in collaboration with the physician in accordance with State
law, or a certified nurse-midwife (as defined in section 1861(gg) of
the Act, as authorized by State law), or a physician assistant (as
defined in section 1861(aa)(5) of the Act), under the supervision of
the physician.
The statutory provision allows the permitted NPPs to perform the
face-to-face encounter and inform the certifying physician, who
documents the encounter as part of the certification of eligibility.
Stakeholder feedback received during the CY 2011 rulemaking comment
period urged CMS to also allow, in addition to an NPP, the physician
who attended to the patient during a recent hospital or post-acute stay
to inform the certifying physician regarding their encounters with the
patient, as an NPP is allowed to do presently to satisfy the face-to-
face encounter requirement. Typically, it is the patient's primary care
physician who certifies a patient's eligibility for the home health
benefit and oversees the patient's home health care plan. As finalized
in the CY 2011 HH PPS final rule, a hospital or post-acute attending
physician's encounter with the home health patient satisfies the face-
to-face encounter requirement only when the attending physician
certifies the patient's home health eligibility.
Stakeholders stated to CMS that many hospital attending physicians
may order home health services upon discharge, but do not want the
burden associated with certifying home health eligibility and
establishing a patient's plan of care. Stakeholders further stated that
because NPPs can perform the encounter and inform the certifying
physician, it makes no sense to preclude the physician who attended to
the patient in the hospital from informing the certifying physician
about the patient for the purpose of satisfying the face-to-face
encounter. Further, they argued that for patients admitted to home
health following a hospital or post-acute discharge, such a policy
would be consistent with the goal of the provision, which is increased
physician involvement in a patient's home health certification of
eligibility.
Fifty percent of home health patients are admitted to home health
immediately following a hospital discharge. As such, the physician who
attended to these patients in the
[[Page 41025]]
hospital has the sort of involvement with the patient and knowledge
about the patient's need for home care which was the intent of the
provision. Similarly, for patients admitted to home health from a post-
acute setting, the physician who attended to the patient during the
post-acute stay would also have the involvement with and knowledge of
the patient as was the intent of the provision.
We believe that the statute does not preclude a patient's acute or
post-acute attending physician from informing the certifying physician
regarding their experience with the patient for the purpose of the
face-to-face encounter requirement, as an NPP can. Instead, we believe
that for patients admitted to home health following discharge from an
acute or post-acute stay, the statutory language contains an
unintentional gap in that it does not explicitly include language which
allows the acute or post-acute attending physician to inform the
certifying physician regarding his or her face-to-face encounters with
the patient.
Therefore, for patients admitted to home health upon discharge from
a hospital or post-acute setting, we propose to allow the physician who
attended to the patient in the hospital or post-acute setting to inform
the certifying physician regarding their encounters with the patient to
satisfy the face-to-face encounter requirement, much like an NPP
currently can.
In addition to meeting the goals of the face-to-face encounter
provision, we believe this proposed policy change will result in
enhanced communication between the attending and certifying physicians.
We believe this enhanced communication will result in an improved
transition of care from the hospital or post-acute setting to the home
health setting. Improving a patient's transition from one healthcare
setting to another is widely regarded to be directly related to
improved patient care and improved patient outcomes. We believe that
this policy change encourages the attending acute or post-acute
physician who is best informed of the patient's most current clinical
condition to collaboratively communicate the patient's need for home
health services to the certifying physician. Because a standard
protocol of communication or documentation is not mandated between the
acute or post-acute physician and a patient's community physician, we
believe the additional flexibility with the face-to-face encounter will
encourage increased communication between the physicians and better
care coordination for the patient. Increased physician communication
regarding the patient's clinical condition fits within the framework of
Congress' goals associated with the face-to-face encounter requirement.
We propose to revise Sec. 424.22(a)(1)(v) so that the certifying
physician's documentation of the face-to-face encounter clearly states
that either the certifying physician himself or herself, the permitted
NPP, or, for patients admitted to home health immediately after an
acute or post-acute stay, the attending acute or post-acute physician,
has had a face-to-face encounter with the patient. We propose that the
attending acute or post-acute physician must communicate the clinical
findings of the face-to-face encounters with the patient to the
certifying physician, so that the certifying physician could document
the face-to-face encounter accordingly, as part of the signed
certification. Further, we are proposing to simplify the regulation
text at Sec. 424.22(a)(1)(v)(A) as some found the current regulation
text confusing as it relates to the need for NPPs to document their
encounters with the patient. Some confused this documentation, which is
required of all practitioners who see Medicare patients, with the face-
to-face encounter documentation which is part of the certification.
Therefore, we propose to revise in Sec. 424.22(a)(1)(v)(A) that the
nonphysician practitioner or the attending acute or post-acute
physician performing the face-to-face encounter must communicate the
clinical findings of that face-to-face patient encounter to the
certifying physician.
We propose implementing the above face-to-face encounter provision
for starts of care beginning January 1, 2012 and later.
G. Payment Reform: Home Health Study and Report
Section 3131(d) of the Affordable Care Act requires the Secretary
to conduct a study on home health agency costs of providing access to
care to low-income Medicare beneficiaries or beneficiaries in medically
underserved areas, and in treating beneficiaries with varying levels of
severity of illness (specifically, patients with ``high levels of
severity of illness''). As part of the study, we may analyze methods to
revise the current Home Health Prospective Payment System (HH PPS) to
ensure access to care and better account for costs for these patients.
The study may analyze the need for payment adjustments for services
that involve either more or fewer resources than are reflected in the
current HH PPS; changes to reflect resources involved with providing
home health services to low-income Medicare beneficiaries or Medicare
beneficiaries residing in medically underserved areas, and ways outlier
payments could be revised to reflect costs of treating Medicare
beneficiaries with high levels of severity of illness. Section 3131(d)
of the Affordable Care Act also allows for the study to investigate
other issues with the payment system as the Secretary determines
appropriate. We plan for the study to evaluate the current HH PPS and
develop payment reform options which might minimize vulnerabilities and
more accurately align payment with patient resource costs. No later
than March 1, 2014, we must deliver a Report to Congress regarding the
study, which may include potential recommendations for revisions to the
HH PPS, recommendations for legislation and administrative action and
recommendations for whether additional research is needed.
The Affordable Care Act study provision was enacted to address
concerns that some beneficiaries are at risk of not having access to
Medicare home health services and that the current HH PPS encourages
providers to adopt selective admission patterns to achieve higher
margins.
Congress also provided CMS with the authority to conduct a separate
demonstration project to test recommended payment system changes
resulting from this study.
To accomplish these goals, in the fall of 2010 we awarded a
contract to set the foundation for the study and develop a study
analytic approach. Progress to date includes: (1) Reviewing research
relevant to the goals of the study; (2) establishing and convening a
technical expert panel comprised of home health industry stakeholders,
subject matter experts, and researchers to obtain input regarding the
study analytic plan (specifically, we solicited input from the panel
regarding approaches to define and study these vulnerable populations
which may experience difficulties accessing home health care); (3)
hosting Open Door Forums to solicit additional input on the study
analytic design from HHAs, providers, and trade associations; and (4)
currently performing investigatory data analysis and finishing the
analytic design. Materials related to the contractor's findings are
available at http://www.cms.gov/HomeHealthPPS/Downloads/HHPPS_LiteratureReview.pdf.
This summer, we plan to award another contract that will build upon
the foundation established. Specifically, this contract will refine the
analytic
[[Page 41026]]
plan, perform the detailed analysis and ultimately recommend payment
model options. We will provide updates regarding our progress in future
rulemaking and open door forums.
H. International Classification of Diseases 10th Edition (ICD-10)
Coding
Effective March 17, 2009, CMS finalized its policies for the HIPAA
Administrative Simplification: Modifications to the Medical Data Code
Set Standards to Adopt ICD-10-CM and ICD-10-PCS (74 FR 3328). The March
17, 2009 final rule modifies the standard medical data code sets for
coding diagnoses by adopting the International Classification of
Disease, 10th Revision, Clinical Modification (ICD-10-CM) for diagnosis
coding, including the Official ICD-10-CM Guidelines for Coding and
Reporting. These new codes replace the International Classification of
Diseases, 9th Revision, Clinical Modification, Volumes 1 and 2,
including the Official ICD-9-CM Guidelines for Coding and Reporting.
Entities are required to have implemented the adopted policies by
October 1, 2013. On October 1, 2013, the ICD-9 code sets used to report
medical diagnoses will be replaced by the ICD-10 code sets. In
preparation for the transition to the use of ICD-10-CM codes, CMS is
currently undergoing extensive efforts to update the Medicare payment
systems.
One of the key activities identified under this transition to ICD-
10-CM codes is the need for CMS to review and update the payment
systems which currently use ICD-9-CM codes. Home Health Agencies report
ICD-9-CM codes for their patients through OASIS-C. HHAs enter data
(including the ICD-9-CM codes) collected from their patients' OASIS
assessments into a data collection software tool. For Medicare
patients, the data collection software invokes HH PPS Grouper software
to assign a Health Insurance Prospective Payment System (HIPPS) code on
the Medicare HH PPS bill, ultimately enabling CMS' claims processing
system to reimburse the HHA for services provided to patients receiving
Medicare's home health benefit. The HH PPS Grouper currently utilizes
ICD-9-CM codes to calculate the HIPPS code. Effective October 1, 2013,
the HH PPS Grouper will utilize the ICD-10-CM codes to calculate the
HIPPS code.
We have been working with the HHRG maintenance contractor to revise
the HHRG to accommodate ICD-10-CM codes, as well as identify the
appropriate ICD-10-CM codes to be included in each diagnosis group
within the HHRG. In addition, we have also contracted with Abt
Associates to assist with resolving the transition of certain codes
that may be mapped to more than one diagnosis code under ICD-10-CM.
To assist home health agencies and their vendors in preparing for
this transition, the Agency is committed to providing information for
transitioning the HHRG to accommodate ICD-10-CM codes effective October
1, 2013. The Agency will update providers and vendors through the ICD-
10-CM National Provider outreach calls on our conversion plans.
Additional detail concerning teleconference registration is available
at http://www.cms.gov/ICD10/Tel10/list.asp?intNumPerPage=20&submit=Go.
Further details pertaining to our plans will be announced through the
National Provider outreach calls.
We will provide a proposed list of ICD-10-CM codes for the HHRG
through the ICD-10 section of the Web site. Specific dates will be
announced through the National Provider outreach calls. The preliminary
plans include publishing the proposed list of ICD-10-CM codes for the
HHRG by October, 1, 2011, for industry review, as well as describing
our testing approach for the HHRG to accommodate and process ICD-10-CM
codes through the ICD-10 section of the CMS Web site. The objective of
the ICD-10-CM HHRG testing is to verify that all properly formatted
input data containing ICD-10-CM diagnosis codes will produce the
expected output. The HHRG maintenance contractor will convert current
OASIS-C records to their translated ICD-10-CM codes to determine that
appropriate outputs are achieved. CMS and the HHRG maintenance
contractor will review the results of the testing to determine if
additional testing is required.
In addition, in April 2013, we plan to share the ICD-10-CM HHRG
software with those vendors and home health agencies that have agreed
to serve as Beta Testers and get their feedback regarding the
software's functionality. Issues and concerns noted by the Beta Testers
will be reviewed and addressed by the HHRG Maintenance Contractor in
consultation with CMS.
CMS plans to release the final version of the ICD-10-CM HHRG in
July 2013 to permit HHAs and their vendors sufficient time to install
the software.
I. Clarification To Benefit Policy Manual Language on ``Confined to the
Home'' Definition
To address the recommended changes of the Office of Inspector
General (OIG) to the home health benefit policy manual, CMS is
proposing to clarify its ``confined to the home'' definition to more
accurately reflect the definition as articulated in the Act. Further
clarification of the ``confined to the home'' definition will not only
ensure statutory compatibility, but will also strengthen the position
of the Government in applicable court cases. We propose to realign the
existing manual criteria with the statute to create a clearer and more
accurate ``confined to the home'' definition. We believe that such
changes will strengthen our manual's definition of ``confined to the
home'', providing more definitive guidance to home health agencies for
compliance with this requirement.
We propose to move the requirement that the patient need supportive
devices, transportation, etc., to the beginning of section 30.1.1 of
the Chapter 7 Home Health Benefit Policy Manual as a necessary
requirement to be considered ``confined to the home.'' Further, we
propose to remove vague terms from section 30.1.1, such as ``generally
speaking,'' to ensure clear and specific requirements for the
definition. These changes more closely align our policy manual with the
Act to prevent confusion or distortion of requirements and promote a
clearer enforcement of the statute. As such, we propose that section
30.1.1 begin with the following, revised language: ``30.1.1--Patient
Confined to the Home.''
For a patient to be eligible to receive covered home health
services under both Part A and Part B, the statute requires that a
physician certify in all cases that the patient is confined to his/her
home. For purposes of the statute, an individual shall be considered
``confined to the home'' (that is, homebound) if the following exist:
(1) The individual has a condition due to an illness or injury that
restricts his or her ability to leave their place of residence except
with: the aid of supportive devices such as crutches, canes,
wheelchairs, and walkers; the use of special transportation; or the
assistance of another person; or if leaving home is medically
contraindicated.
(2) The individual does not have to be bedridden to be considered
``confined to the home''. However, the condition of the patient should
be such that there exists a normal inability to leave home and,
consequently, leaving home would require a considerable and taxing
effort.
If the patient does in fact leave the home, the patient may
nevertheless be considered homebound if the absences from the home are
infrequent or for periods of relatively short duration, or are
attributable to the need to receive health care treatment. Absences
[[Page 41027]]
attributable to the need to receive health care treatment include, but
are not limited to:
Attendance at adult day centers, licensed or certified by
a State or accredited to furnish adult day-care services in the State,
to receive therapeutic, psychological, or medical treatment;
Ongoing receipt of outpatient kidney dialysis; or
The receipt of outpatient chemotherapy or radiation
therapy.
Any absence of an individual from the home attributable to the need
to receive health care treatment, including regular absences for the
purpose of participating in therapeutic, psychosocial, or medical
treatment in an adult day-care program that is licensed or certified by
a State, or accredited to furnish adult day-care services in a State,
shall not disqualify an individual from being considered to be confined
to his home. Any other absence of an individual from the home shall not
so disqualify an individual if the absence is of an infrequent or of
relatively short duration. For purposes of the preceding sentence, any
absence for the purpose of attending a religious service shall be
deemed to be an absence of infrequent or short duration. It is expected
that in most instances, absences from the home that occur will be for
the purpose of receiving health care treatment. However, occasional
absences from the home for nonmedical purposes, for example, an
occasional trip to the barber, a walk around the block or a drive,
attendance at a family reunion, funeral, graduation, or other
infrequent or unique event would not necessitate a finding that the
patient is not homebound if the absences are undertaken on an
infrequent basis or are of relatively short duration and do not
indicate that the patient has the capacity to obtain the health care
provided outside rather than in the home.
Some examples of homebound patients that illustrate the factors
used to determine whether a homebound condition exists would be: * *
*''
III. Collection of Information Requirements
This document does not impose any new information collection and
recordkeeping requirements. The information collection requirements
discussed in proposed Sec. 424.22 are currently approved under OMB
control number 0938-1083. The information collection requirements
discussed in proposed Sec. 484.250, the OASIS-C and Home Health Care
CAHPS, are currently approved under OMB control numbers 0938-0760 and
0938-1066, respectively. Consequently, it need not be reviewed by the
Office of Management and Budget under the authority of the Paperwork
Reduction Act of 1995 (44 U.S.C. Chapter 35).
IV. Response to Comments
Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.
V. Regulatory Impact Analysis
A. Introduction
We have examined the impact of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the
Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4),
and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. A regulatory impact analysis (RIA) must be prepared for
major rules with economically significant effects ($100 million or more
in any 1 year). This proposed rule has been designated an
``economically significant'' rule under section 3(f)(1) of Executive
Order 12866. Accordingly, the rule has been reviewed by the Office of
Management and Budget.
B. Statement of Need
This proposed rule adheres to the following statutory requirements.
Section 4603(a) of the BBA mandated the development of a HH PPS for all
Medicare-covered HH services provided under a plan of care (POC) that
were paid on a reasonable cost basis by adding section 1895 of the Act,
entitled ``Prospective Payment For Home Health Services''. Section
1895(b)(1) of the Act requires the Secretary to establish a HH PPS for
all costs of HH services paid under Medicare. In addition, section
1895(b)(3)(A) of the Act requires (1) the computation of a standard
prospective payment amount include all costs for HH services covered
and paid for on a reasonable cost basis and that such amounts be
initially based on the most recent audited cost report data available
to the Secretary, and (2) the standardized prospective payment amount
be adjusted to account for the effects of case-mix and wage levels
among HHAs. Section 1895(b)(3)(B) of the Act addresses the annual
update to the standard prospective payment amounts by the HH applicable
percentage increase. Section 1895(b)(4) of the Act governs the payment
computation. Sections 1895(b)(4)(A)(i) and (b)(4)(A)(ii) of the Act
require the standard prospective payment amount to be adjusted for
case-mix and geographic differences in wage levels. Section
1895(b)(4)(B) of the Act requires the establishment of appropriate
case-mix adjustment factors for significant variation in costs among
different units of services. Lastly, section 1895(b)(4)(C) of the Act
requires the establishment of wage adjustment factors that reflect the
relative level of wages, and wage-related costs applicable to HH
services furnished in a geographic area compared to the applicable
national average level.
Section 1895(b)(5) of the Act, as amended by section 3131 of the
Affordable Care Act, gives the Secretary the option to make changes to
the payment amount otherwise paid in the case of outliers because of
unusual variations in the type or amount of medically necessary care.
Section 1895(b)(3)(B)(v) of the Act requires HHAs to submit data for
purposes of measuring health care quality, and links the quality data
submission to the annual applicable percentage increase. Also, section
3131 of the Affordable Care Act requires that HH services furnished in
a rural area (as defined in section 1886(d)(2)(D) of the Act) with
respect to episodes and visits ending on or after April 1, 2010, and
before January 1, 2016, receive an increase of 3 percent the payment
amount otherwise made under section 1895 of the Act.
C. Overall Impact
The update set forth in this proposed rule applies to Medicare
payments under HH PPS in CY 2012. Accordingly, the following analysis
describes the impact in CY 2012 only. We estimate that the net impact
of the proposals in
[[Page 41028]]
this rule is approximately $640 million in CY 2012 savings. The $640
million impact due to the proposed CY 2012 HH PPS rule reflects the
distributional effects of an updated wage index ($20 million increase)
plus the 1.5 percent HH market basket update ($290 million increase),
for a total increase of $310 million. The 5.06 percent case-mix
adjustment applicable to the national standardized 60-day episode rates
($950 million decrease) plus the combined wage index and market basket
($310 million increase) results in a total savings of $640 million in
CY 2012. The $640 million in savings is reflected in the first row of
column 3 of Table 32 as a 3.35 percent decrease in expenditures when
comparing the current CY 2011 HH PPS to the proposed CY 2012 HH PPS.
The RFA requires agencies to analyze options for regulatory relief
of small entities, if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, small entities
include small businesses, nonprofit organizations, and small
governmental jurisdictions. Most hospitals and most other providers and
suppliers are small entities, either by nonprofit status or by having
revenues of less than $7.0 million to $34.5 million in any 1 year. For
the purposes of the RFA, our updated data show that approximately 98
percent of HHAs are considered to be small businesses according to the
Small Business Administration's size standards with total revenues of
$13.5 million or less in any 1 year. Individuals and States are not
included in the definition of a small entity. The Secretary has
determined that this proposed rule would have a significant economic
impact on a substantial number of small entities. We define small HHAs
as those with total revenues of $13.5 million or less in any 1 year.
Analysis of Medicare cost report data reveals a 3.63 percent decrease
in estimated payments to small HHAs in CY 2012.
A discussion on the alternatives considered is presented in section
V.E. below. The following analysis, with the rest of the preamble,
constitutes our initial RFA analysis. We solicit comment on the RFA
analysis provided.
In this proposed rule, we have stated that our analysis reveals
that nominal case-mix continues to grow under the HH PPS. Specifically,
nominal case-mix has grown from the 17.45 percent growth identified in
our analysis for CY 2011 rulemaking to 19.03 percent for this year's
rulemaking (see further discussion in sections II.A. and II.B.).
Because we have not yet accounted for all of the increase in nominal
case-mix, that is case-mix that is not real (real being related to
treatment of more resource intense patients), case-mix reductions are
necessary. As such, we believe it is appropriate to reduce the HH PPS
rates now, so as to move towards more accurate payment for the delivery
of home health services. Our analysis shows that smaller HHAs are
impacted slightly more than are larger HHAs by the proposed provisions
of this rule.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 603 of RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a metropolitan
statistical area and has fewer than 100 beds. This proposed rule
applies to HHAs. Therefore, the Secretary has determined that this
proposed rule would not have a significant economic impact on the
operations of small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2011, that
threshold is approximately $136 million. This proposed rule is not
anticipated to have an effect on State, local, or tribal governments in
the aggregate, or by the private sector, of $136 million or more.
D. Detailed Economic Analysis
This proposed rule sets forth updates to the HH PPS rates contained
in the CY 2011 HH PPS final rule. The impact analysis of this proposed
rule presents the estimated expenditure effects of policy changes
proposed in this rule. We use the latest data and best analysis
available, but we do not make adjustments for future changes in such
variables as number of visits or case-mix.
This analysis incorporates the latest estimates of growth in
service use and payments under the Medicare home health benefit, based
on Medicare claims from 2009. We note that certain events may combine
to limit the scope or accuracy of our impact analysis, because such an
analysis is future-oriented and, thus, susceptible to errors resulting
from other changes in the impact time period assessed. Some examples of
such possible events are newly-legislated general Medicare program
funding changes made by the Congress, or changes specifically related
to HHAs. In addition, changes to the Medicare program may continue to
be made as a result of the Affordable Care Act, or new statutory
provisions. Although these changes may not be specific to the HH PPS,
the nature of the Medicare program is such that the changes may
interact, and the complexity of the interaction of these changes could
make it difficult to predict accurately the full scope of the impact
upon HHAs.
Table 32 represents how HHA revenues are likely to be affected by
the policy changes proposed in this rule. For this analysis, we used
linked home health claims and OASIS assessments; the claims represented
a 20-percent sample of 60-day episodes occurring in CY 2009. The first
column of Table 32 classifies HHAs according to a number of
characteristics including provider type, geographic region, and urban
and rural locations. The second column shows the payment effects of the
wage index only. The third column shows the payment effects of all the
proposed policies outlined earlier in this rule. For CY 2012, the
average impact for all HHAs due to the effects of the wage index is a
0.10 percent increase in payments. The overall impact for all HHAs, in
estimated total payments from CY 2011 to CY 2012, is a decrease of
approximately 3.35 percent.
As shown in Table 32, the combined effects of all of the changes
vary by specific types of providers and by location. Rural and
voluntary non-profit agencies fare considerably better than urban and
proprietary agencies as a result of the proposed provisions of this
rule. We believe this is due mainly to the distributional effects of
the recalibration of the case-mix weights as described in section II.A
of the proposed rule. Essentially, these impacts suggest that under the
current case-mix system, rural and voluntary non-profit agencies bill
less for high therapy episodes than do urban and proprietary agencies.
[[Page 41029]]
Table 32--Proposed Home Health Agency Policy Impacts for CY 2012, by
Facility Type and Area of the Country
------------------------------------------------------------------------
Comparisons
-------------------
Percent change Impact of all CY
Group due to the 2012 policies \1\
effects of the (percent)
updated wage
index (percent)
------------------------------------------------------------------------
All Agencies...................... 0.10 -3.35
Type of Facility
Free-Standing/Other Vol/NP.... 0.29 -0.49
Free-Standing/Other 0.08 -4.68
Proprietary..................
Free-Standing/Other Government -0.13 -2.13
Facility-Based Vol/NP......... -0.03 0.17
Facility-Based Proprietary.... 0.03 -3.02
Facility-Based Government..... -0.06 -0.59
Subtotal: Freestanding.... 0.12 -3.82
Subtotal: Facility-based.. -0.03 -0.21
Subtotal: Vol/NP.......... 0.17 -0.24
Subtotal: Proprietary..... 0.08 -4.65
Subtotal: Government...... -0.10 -1.38
Type of Facility (Rural * Only)
Free-Standing/Other Vol/NP.... 1.88 0.94
Free-Standing/Other 0.25 -3.74
Proprietary..................
Free-Standing/Other Government -0.21 -1.39
Facility-Based Vol/NP......... -0.20 0.20
Facility-Based Proprietary.... -0.30 -2.12
Facility-Based Government..... -0.05 -0.27
Type of Facility (Urban * Only)
Free-Standing/Other Vol/NP.... 0.05 -0.70
Free-Standing/Other 0.06 -4.83
Proprietary..................
Free-Standing/Other Government -0.02 -3.13
Facility-Based Vol/NP......... 0.02 0.16
Facility-Based Proprietary.... 0.25 -3.65
Facility-Based Government..... -0.09 -0.99
Type of Facility (Urban* or
Rural*)
Rural......................... 0.35 -2.15
Urban......................... 0.05 -3.57
Facility Location: Region*
North......................... 0.68 0.71
South......................... -0.08 -4.97
Midwest....................... -0.09 -3.91
West.......................... 0.36 -0.82
Outlying...................... 0.43 -3.05
Facility Location: Area of the
Country
New England................... 1.35 0.69
Mid Atlantic.................. 0.30 0.71
South Atlantic................ -0.49 -5.77
East South Central............ -0.66 -6.28
West South Central............ 0.51 -3.76
East North Central............ -0.22 -4.41
West North Central............ 0.49 -1.63
Mountain...................... 0.32 -4.22
Pacific....................... 0.37 0.68
Outlying...................... 0.43 -3.05
Facility Size: (Number of First
Episodes)
< 19.......................... 0.32 -3.05
20 to 49...................... 0.32 -3.41
50 to 99...................... 0.33 -3.57
100 to 199.................... 0.16 -3.81
200 or More................... -0.02 -3.15
Facility Size: (estimated total
revenue)
Small (estimated total revenue 0.13 -3.63
<= $13.5 million)............
Large (estimated total revenue -0.02 -2.10
> $13.5 million).............
------------------------------------------------------------------------
Note: Based on a 20 percent sample of CY 2009 claims linked to OASIS
assessments.
* Urban/rural status, for the purposes of these simulations, is based on
the wage index on which episode payment is based. The wage index is
based on the site of service of the beneficiary.
REGION KEY:
New England: Connecticut, Maine, Massachusetts, New Hampshire, Rhode
Island, Vermont; Middle Atlantic: Pennsylvania, New Jersey, New York;
South Atlantic: Delaware, District of Columbia, Florida, Georgia,
Maryland, North Carolina, South Carolina, Virginia, West Virginia;
East North Central: Illinois, Indiana, Michigan, Ohio, Wisconsin; East
South Central: Alabama, Kentucky, Mississippi, Tennessee; West North
Central: Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota,
South Dakota; West South Central: Arkansas, Louisiana, Oklahoma,
Texas; Mountain: Arizona, Colorado, Idaho, Montana, Nevada, New
Mexico, Utah, Wyoming; Pacific: Alaska, California, Hawaii, Oregon,
Washington; Outlying: Guam, Puerto Rico, Virgin Islands.
[[Page 41030]]
\1\ Percent change due to the effects of the updated wage index, the 1.5
percent proposed market basket update, the 5.06 percent case-mix
adjustment, and the 3 percent rural add-on.
E. Alternatives Considered
As described in section V.C. above, if we implement the case-mix
adjustment for CY 2012 along with the market basket update and the
updated wage index, the aggregate impact would be a net decrease of
$640 million in payments to HHAs, resulting from a $310 million
increase due to the updated wage index and the market basket update and
a $950 million reduction from the 5.06 percent case-mix adjustment. If
we were to not implement the case-mix adjustment for CY 2012, Medicare
would pay an estimated $950 million more to HHAs in CY 2012, for a net
increase in payments to HHAs in CY 2012 of $310 million (market basket
update and updated wage index). We believe that not implementing a
case-mix adjustment, and paying out an additional $950 million to HHAs
when those additional payments are not reflective of HHAs treating
sicker patients, would not be in line with the intent of the HH PPS,
which is to pay accurately and appropriately for the delivery of home
health services to Medicare beneficiaries.
Section 1895(b)(3)(B)(iv) of the Act gives CMS the authority to
implement payment reductions for nominal case-mix growth, changes in
case-mix that are unrelated to actual changes in patient health status.
We are committed to monitoring the accuracy of payments to HHAs, which
includes the measurement of the increase in nominal case-mix, which is
an increase in case-mix that is not due to patient acuity. As discussed
in section II.A. of this rule, we have determined that there is a 19.03
percent nominal case-mix change from 2000 to 2009. To account for the
remainder of the 19.03 percent residual increase in nominal case-mix
beyond that which was has been accounted for in previous payment
reductions (2.75 percent in CY 2008 through CY 2010 and 3.79 percent in
CY 2011), we have estimated that the percentage reduction to the
national standardized 60-day episode rates for nominal case-mix change
for CY 2012 would be 5.06 percent.
We believe that the alternative of not implementing a case-mix
adjustment to the payment system in CY 2012 to account for the increase
in case-mix that is not real would be detrimental to the integrity of
the PPS. As discussed in section II.A. of this rule, because nominal
case-mix continues to grow (about 1 percent each year in 2006 and 2007,
4 percent in 2008, and 2 percent in 2009), and thus to date we have not
accounted for all the increase in nominal case-mix growth, we believe
it is appropriate to reduce HH PPS rates now, thereby paying more
accurately for the delivery of home health services under the Medicare
home health benefit. The other reduction to HH PPS payments, a 1.0
percentage point reduction to the proposed CY 2012 home health market
basket update, is discussed in this rule and is not discretionary as it
is a requirement in section 1895(b)(3)(B)(vi) of the Act (as amended by
the Affordable Care Act).
We solicit comment on the alternatives considered in this analysis.
F. Accounting Statement and Table
As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars_a004_a-4), in Table 16 below, we
have prepared an accounting statement showing the classification of the
transfers associated with the provisions of this proposed rule. This
table provides our best estimate of the decrease in Medicare payments
under the HH PPS as a result of the changes presented in this proposed
rule.
Table 33--Accounting Statement: Classification of Estimated Transfers,
From the CY 2011 HH PPS to the CY 2012 HH PPS
------------------------------------------------------------------------
Category Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............ -$640 million.
From Whom to Whom? Federal Government to HH
providers.
------------------------------------------------------------------------
G. Conclusion
In conclusion, we estimate that the net impact of the proposals in
this rule is approximately $640 million in CY 2012 savings. The $640
million impact to the proposed CY 2012 HH PPS reflects the
distributional effects of an updated wage index ($20 million increase),
the 1.5 percent home health market basket update ($290 million
increase), and the 5.06 percent case-mix adjustment applicable to the
national standardized 60-day episode rates ($950 million decrease).
This analysis, together with the remainder of this preamble, provides a
Regulatory Impact Analysis.
VI. Federalism Analysis
Executive Order 13132 on Federalism (August 4, 1999) establishes
certain requirements that an agency must meet when it promulgates a
proposed rule (and subsequent final rule) that imposes substantial
direct requirement costs on State and local governments, preempts State
law, or otherwise has Federalism implications. We have reviewed this
proposed rule under the threshold criteria of Executive Order 13132,
Federalism, and have determined that it would not have substantial
direct effects on the rights, roles, and responsibilities of States,
local or tribal governments.
List of Subjects
42 CFR Part 409
Health facilities, Medicare.
42 CFR Part 424
Emergency medical services, Health facilities, Health professions,
Medicare, Reporting and recordkeeping requirements.
42 CFR Part 484
Health facilities, Health professions, Medicare, Reporting and
recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposed to amend 42 CFR chapter IV as set forth
below:
PART 409--HOSPITAL INSURANCE BENEFITS
1. The authority citation for part 409 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
Subpart C--Posthospital SNF Care
2. Section 409.42 is amended by revising paragraph (c)(4) to read
as follows:
Sec. 409.42 Beneficiary qualifications for coverage of services.
* * * * *
(c) * * *
(4) Occupational therapy services that meet the requirements of
Sec. 409.44(c) of this subpart initially qualify for home health
coverage as a dependent service as defined in Sec. 409.45(d) of this
subpart if the beneficiary's eligibility for home health services has
been established by virtue of a prior need for intermittent skilled
nursing care, speech-language pathology services, or physical therapy
in the current or prior certification
[[Page 41031]]
period. Subsequent to an initial covered occupational therapy service,
continuing occupational therapy services which meet the requirements of
Sec. 409.44(c) of this subpart are considered to be qualifying
services.
* * * * *
3. Section 409.44 is amended by--
A. Revising the introductory text of paragraph (c).
B. Revising paragraph (c)(2)(i)(D)(2).
The revisions read as follows:
Sec. 409.44 Skilled services requirements.
* * * * *
(c) Physical therapy, speech-language pathology services, and
occupational therapy. To be covered, physical therapy, speech-language
pathology services, and occupational therapy must satisfy the criteria
in paragraphs (c)(1) and (2) of this section.
* * * * *
(2) * * *
(i) * * *
(D) * * *
(2) Where more than one discipline of therapy is being provided,
the qualified therapist from each discipline must provide the therapy
service and functionally reassess the patient in accordance with Sec.
409.44(c)(2)(i)(A) of this section during the visit which would occur
close to but no later than the 19th visit per the plan of care.
* * * * *
PART 424--CONDITIONS FOR MEDICARE PAYMENT
4. The authority citation for part 424 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395hh).
Subpart B--Certification and Plan Requirements
5. Section 424.22 is amended by--
A. Revising the introductory text of paragraph (a)(1)(v).
B. Revising paragraph (a)(1)(v)(A).
The revisions read as follows:
Sec. 424.22 Requirements for home health services.
* * * * *
(a) * * *
(1) * * *
(v) The physician responsible for performing the initial
certification must document that the face-to-face patient encounter,
which is related to the primary reason the patient requires home health
services, has occurred no more than 90 days prior to the home health
start of care date or within 30 days of the start of the home health
care by including the date of the encounter, and including an
explanation of why the clinical findings of such encounter support that
the patient is homebound and in need of either intermittent skilled
nursing services or therapy services as defined in Sec. 409.42(a) and
(c) of this subpart, respectively. Under sections 1814(a)(2)(C) and
1835(a)(2)(A) of the Act, the face-to-face encounter must be performed
by the certifying physician himself or herself, by the nurse
practitioner, a clinical nurse specialist (as those terms are defined
in section 1861(aa)(5) of the Act) who is working in collaboration with
the physician in accordance with State law, a certified nurse midwife
(as defined in section 1861(gg) of the Act) as authorized by State law,
a physician assistant (as defined in section 1861(aa)(5) of the Act)
under the supervision of the physician, or, for patients admitted to
home health immediately after an acute or post-acute stay, the
attending acute or post-acute physician. The documentation of the face-
to-face patient encounter must be a separate and distinct section of,
or an addendum to, the certification, and must be clearly titled, dated
and signed by the certifying physician.
(A) The nonphysician practitioner or the attending acute or post-
acute physician performing the face-to-face encounter must communicate
the clinical findings of that face-to-face patient encounter to the
certifying physician.
* * * * *
PART 484--HOME HEALTH SERVICES
6. The authority citation for part 484 continues to read as
follows:
Authority: Secs. 1102 and 1871 of the Social Security Act (42
U.S.C. 1302 and 1395(hh)).
Subpart E--Prospective Payment System for Home Health Agencies
7. Section 484.250 is revised to read as follows:
Sec. 484.250 Patient assessment data.
(a) Data submission. The following data must be submitted to CMS:
(1) An HHA must submit the OASIS-C data described at Sec.
484.55(b)(1) of this part for CMS to administer the payment rate
methodologies described in Sec. 484.215, Sec. 484.230, and Sec.
484.235 of this subpart, and meet the quality reporting requirements of
section 1895(b)(3)(B)(v) of the Act.
(2) An HHA must submit the Home Health Care CAHPS survey data for
CMS to administer the payment rate methodologies described in Sec.
484.225(i) of this subpart, and meet the quality reporting requirements
of section 1895(b)(3)(B)(v) of the Act.
(b) Patient count. An HHA that has less than 60 eligible unique
HHCAHPS patients annually must annually submit to CMS their total
HHCAHPS patient count to CMS to be exempt from the HHCAHPS reporting
requirements for a calendar year period.
(c) Survey requirements. An HHA must contract with an approved,
independent HHCAHPS survey vendor to administer the HHCAHPS Survey on
its behalf.
(1) CMS approves an HHCAHPS survey vendor if such applicant has
been in business for a minimum of 3 years and has conducted surveys of
individuals and samples for at least 2 years.
(i) For HHCAHPS, a ``survey of individuals'' is defined as the
collection of data from at least 600 individuals selected by
statistical sampling methods and the data collected are used for
statistical purposes.
(ii) All applicants that meet these requirements will be approved
by CMS.
(2) No organization, firm, or business that owns, operates, or
provides staffing for a HHA is permitted to administer its own Home
Health Care CAHPS (HHCAHPS) Survey or administer the survey on behalf
of any other HHA in the capacity as an HHCAHPS survey vendor. Such
organizations will not be approved by CMS as HHCAHPS survey vendors.
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: June 10, 2011.
Donald M. Berwick,
Administrator, Centers for Medicare & Medicaid Services.
Approved: June 24, 2011.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2011-16938 Filed 7-5-11; 4:15 pm]
BILLING CODE 4120-01-P