[Federal Register Volume 80, Number 132 (Friday, July 10, 2015)]
[Proposed Rules]
[Pages 39840-39914]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-16790]



[[Page 39839]]

Vol. 80

Friday,

No. 132

July 10, 2015

Part II





Department of Health and Human Services





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Center for Medicare & Medicaid Services





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42 CFR Parts 409, 424, and 484





Medicare and Medicaid Programs; CY 2016 Home Health Prospective Payment 
System Rate Update; Home Health Value-Based Purchasing Model; and Home 
Health Quality Reporting Requirements; Proposed Rules

  Federal Register / Vol. 80 , No. 132 / Friday, July 10, 2015 / 
Proposed Rules  

[[Page 39840]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Center for Medicare & Medicaid Services

42 CFR Parts 409, 424, and 484

[CMS-1625-P]
RIN 0938-AS46


Medicare and Medicaid Programs; CY 2016 Home Health Prospective 
Payment System Rate Update; Home Health Value-Based Purchasing Model; 
and Home Health Quality Reporting Requirements

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would update Home Health Prospective 
Payment System (HH PPS) rates, including the national, standardized 60-
day episode payment rates, the national per-visit rates, and the non-
routine medical supply (NRS) conversion factor under the Medicare 
prospective payment system for home health agencies (HHAs), effective 
for episodes ending on or after January 1, 2016. As required by the 
Affordable Care Act, this proposed rule implements the third year of 
the four-year phase-in of the rebasing adjustments to the HH PPS 
payment rates. This proposed rule provides information on our efforts 
to monitor the potential impacts of the rebasing adjustments. This 
proposed rule also proposes: reductions to the national, standardized 
60-day episode payment rate in CY 2016 and CY 2017 of 1.72 percent in 
each year to account for estimated case-mix growth unrelated to 
increases in patient acuity (nominal case-mix growth) between CY 2012 
and CY 2014; a HH value-based purchasing (HHVBP) model to be 
implemented beginning January 1, 2016 in which all Medicare-certified 
HHAs in selected states will be required to participate; changes to the 
home health quality reporting program requirements; and minor technical 
regulations text changes. Finally, this proposed rule would update the 
HH PPS case-mix weights using the most current, complete data available 
at the time of rulemaking and provide an update on the Report to 
Congress regarding the home health (HH) study.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on September 4, 
2015.

ADDRESSES: In commenting, please refer to file code CMS-1625-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-1625-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-1625-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:
    Hillary Loeffler, (410) 786-0456, for general information about the 
HH PPS.
    Michelle Brazil, (410) 786-1648 for information about the HH 
quality reporting program.
    Lori Teichman, (410) 786-6684, for information about HHCAHPS.
    Robert Flemming, (844) 280-5628, for information about the HHVBP 
model.

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. Executive Summary
    A. Purpose
    B. Summary of the Major Provisions
    C. Summary of Costs and Benefits
II. Background
    A. Statutory Background
    B. System for Payment of Home Health Services
    C. Updates to the Home Health Prospective Payment System
    D. Advancing Health Information Exchange
III. Proposed Provisions of the Home Health Prospective Payment 
System
    A. Monitoring for Potential Impacts--Affordable Care Act 
Rebasing Adjustments
    B. CY 2016 HH PPS Case-Mix Weights and Proposed Reduction to the 
National, Standardized 60-Day Episode Payment Rate To Account for 
Nominal Case-Mix Growth
    1. CY 2016 HH PPS Case-Mix Weights
    2. Reduction to the National, Standardized 60-Day Episode 
Payment Rate to Account for Nominal Case-Mix Growth
    C. CY 2016 Home Health Rate Update
    1. CY 2016 Home Health Market Basket Update
    2. CY 2016 Home Health Wage Index
    3. CY 2016 Annual Payment Update
    a. Background
    b. CY 2016 National, Standardized 60-Day Episode Payment Rate

[[Page 39841]]

    c. CY 2016 National Per-Visit Rates
    d. Low-Utilization Payment Adjustment (LUPA) Add-On Factors
    e. CY 2016 Nonroutine Medical Supply Payment Rates
    f. Rural Add-On
    D. Payments for High-Cost Outliers Under the HH PPS
    E. Report to Congress on the Home Health Study Required by 
Section 3131(d) of the Affordable Care Act and an Update on 
Subsequent Research and Analysis
    F. Technical Regulations Text Changes
IV. Proposed Home Health Value-Based Purchasing (HHVBP) Model
V. Proposed Provisions of the Home Health Care Quality Reporting 
Program (HHQRP)
    A. Background and Statutory Authority
    B. General Considerations Used for the Selection of Quality 
Measures for the HH QRP
    C. HH QRP Quality Measures and Measures Under Consideration for 
Future Years
    D. Form, Manner, and Timing of OASIS Data Submission and OASIS 
Data for Annual Payment Update
    1. Statutory Authority
    2. Home Health Quality Reporting Program Requirements for CY 
2016 Payment and Subsequent Years
    3. Previously Established Pay-for-Reporting Performance 
Requirement for Submission of OASIS Quality Data
    E. Home Health Care CAHPS Survey (HHCAHPS)
    1. Background and Description of HHCAHPS
    2. HHCAHPS Oversight Activities
    3. HHCAHPS Requirements for the CY 2016 APU
    4. HHCAHPS Requirements for the CY 2017 APU
    5. HHCAHPS Requirements for the CY 2018 APU
    6. HHCAHPS Reconsideration and Appeals Process
    7. Summary
    F. Public Display of Home Health Quality Data for the HH QRP
VI. Collection of Information Requirements
VII. Response to Comments
VII. Regulatory Impact 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 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, Pub. L. 105-33
BBRA Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 
1999, Pub. L. 106-113
CAD Coronary Artery Disease
CAH Critical Access Hospital
CBSA Core-Based Statistical Area
CASPER Certification and Survey Provider Enhanced Reports
CHF Congestive Heart Failure
CMI Case-Mix Index
CMP Civil Money Penalty
CMS Centers for Medicare & Medicaid Services
CoPs Conditions of Participation
COPD Chronic Obstructive Pulmonary Disease
CVD Cardiovascular Disease
CY Calendar Year
DM Diabetes Mellitus
DRA Deficit Reduction Act of 2005, Pub. L. 109-171, enacted February 
8, 2006
FDL Fixed Dollar Loss
FI Fiscal Intermediaries
FR Federal Register
FY Fiscal Year
HAVEN Home Assessment Validation and Entry System
HCC Hierarchical Condition Categories
HCIS Health Care Information System
HH Home Health
HHA Home Health Agency
HHCAHPS Home Health Care Consumer Assessment of Healthcare Providers 
and Systems Survey
HH PPS Home Health Prospective Payment System
HHRG Home Health Resource Group
HHVBP Home Health Value-Based Purchasing
HIPPS Health Insurance Prospective Payment System
HVBP Hospital Value-Based Purchasing
ICD-9-CM International Classification of Diseases, Ninth Revision, 
Clinical Modification
ICD-10-CM International Classification of Diseases, Tenth Revision, 
Clinical Modification
IH Inpatient Hospitalization
IMPACT Act Improving Medicare Post-Acute Care Transformation Act of 
2014 (P.L. 113-185)
IRF Inpatient Rehabilitation Facility
LEF Linear Exchange Function
LTCH Long-Term Care Hospital
LUPA Low-Utilization Payment Adjustment
MEPS Medical Expenditures Panel Survey
MMA Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003, Pub. L. 108-173, enacted December 8, 2003
MSA Metropolitan Statistical Area
MSS Medical Social Services
NQF National Quality Forum
NQS National Quality Strategy
NRS Non-Routine Supplies
OASIS Outcome and Assessment Information Set
OBRA Omnibus Budget Reconciliation Act of 1987, Pub. L. 100-2-3, 
enacted December 22, 1987
OCESAA Omnibus Consolidated and Emergency Supplemental 
Appropriations Act, Pub. L. 105-277, enacted October 21, 1998
OES Occupational Employment Statistics
OIG Office of Inspector General
OT Occupational Therapy
OMB Office of Management and Budget
MFP Multifactor productivity
PAMA Protecting Access to Medicare Act of 2014
PAC-PRD Post-Acute Care Payment Reform Demonstration
PEP Partial Episode Payment Adjustment
PT Physical Therapy
PY Performance Year
PRRB Provider Reimbursement Review Board
QAP Quality Assurance Plan
RAP Request for Anticipated Payment
RF Renal Failure
RFA Regulatory Flexibility Act, Pub. L. 96-354
RHHIs Regional Home Health Intermediaries
RIA Regulatory Impact Analysis
SAF Standard Analytic File
SLP Speech-Language Pathology
SN Skilled Nursing
SNF Skilled Nursing Facility
TPS Total Performance Score
UMRA Unfunded Mandates Reform Act of 1995.
VBP Value-Based Purchasing

I. Executive Summary

A. Purpose

    This proposed rule would update the payment rates for HHAs for 
calendar year (CY) 2016, as required under section 1895(b) of the 
Social Security Act (the Act). This would reflect the third year of the 
four-year phase-in of the rebasing adjustments to the national, 
standardized 60-day episode payment rate, the national per-visit rates, 
and the NRS conversion factor finalized in the CY 2014 HH PPS final 
rule (78 FR 72256), as required under section 3131(a) of the Patient 
Protection and Affordable Care Act of 2010 (Pub. L. 111-148), as 
amended by the Health Care and Education Reconciliation Act of 2010 
(Pub. L. 111-152) (collectively referred to as the ``Affordable Care 
Act'').
    This proposed rule also discusses our efforts to monitor the 
potential impacts of the rebasing adjustments mandated by section 
3131(a) of the Affordable Care Act. This rule proposes: Reductions to 
the national, standardized 60-day episode payment rate in CY 2016 and 
CY 2017 of 1.72 percent in each year to account for case-mix growth 
unrelated to increases in patient acuity (nominal case-mix growth) 
between CY 2012 and CY 2014 under the authority of section 
1895(b)(3)(B)(iv) of the Act; a HH Value-Based Purchasing (VBP) model, 
in which certain Medicare-certified HHAs would be required to 
participate beginning January 1, 2016, under the authority of section 
1115(A) of the Act; changes to the home health quality reporting 
program requirements under section 1895(b)(3)(B)(v)(II) of the Act; and 
minor technical regulations text changes in 42 CFR parts 409, 424, and 
484 to better align the payment requirements with recent statutory and 
regulatory changes for home health

[[Page 39842]]

services. Finally, this proposed rule would update the case-mix weights 
under section 1895(b)(4)(A)(i) and (b)(4)(B) of the Act and provide an 
update on the Report to Congress regarding the HH study required by 
section 3131(d) of the Affordable Care Act.

B. Summary of the Major Provisions

    As required by section 3131(a) of the Affordable Care Act, and 
finalized in the CY 2014 HH final rule, ``Medicare and Medicaid 
Programs; Home Health Prospective Payment System Rate Update for 2014, 
Home Health Quality Reporting Requirements, and Cost Allocation of Home 
Health Survey Expenses'' (78 FR 77256, December 2, 2013), we are 
implementing the third year of the four-year phase-in of the rebasing 
adjustments to the national, standardized 60-day episode payment 
amount, the national per-visit rates and the NRS conversion factor in 
section III.C.3. The rebasing adjustments for CY 2016 would reduce the 
national, standardized 60-day episode payment amount by $80.95, 
increase the national per-visit payment amounts by 3.5 percent of the 
national per-visit payment amounts in CY 2010 with the increases 
ranging from $1.79 for home health aide services to $6.34 for medical 
social services, and reduce the NRS conversion factor by 2.82 percent.
    This proposed rule also discusses our efforts to monitor the 
potential impacts of the rebasing adjustments in section III.A. In the 
CY 2015 HH PPS final rule (79 FR 66072), we finalized our proposal to 
recalibrate the case-mix weights every year with more current data. In 
section III.B.1 of this rule, we are recalibrating the HH PPS case-mix 
weights, using the most current cost and utilization data available, in 
a budget neutral manner. In addition, in section III.B.2 of this rule, 
we propose to reduce to the national, standardized 60-day episode 
payment rate in CY 2016 and CY 2017 by 1.72 percent in each year to 
account for estimated case-mix growth unrelated to increases in patient 
acuity (nominal case-mix growth) between CY 2012 and CY 2014. In 
section III.C.1 of this rule, we propose to update the payment rates 
under the HH PPS by the home health payment update percentage of 2.3 
percent (using the 2010-based Home Health Agency (HHA) market basket 
update of 2.9 percent, minus 0.6 percentage point for productivity as 
required by section 1895(b)(3)(B)(vi)(I) of the Act. In the CY 2015 
final rule (79 FR 66083 through 66087), we incorporated new geographic 
area designations, set out in a February 28, 2013 office of Management 
and Budget (OMB) bulletin, into the home health wage index. For CY 
2015, we implemented a wage index transition policy consisting of a 50/
50 blend of the old geographic area delineations and the new geographic 
area delineations. In section III.C.2 of this proposed rule, we propose 
to update the CY 2016 home health wage index using solely the new 
geographic area designations. In section III.D of this proposed rule, 
we discuss payments for high cost outliers. In section III.E, we 
propose to make several technical corrections in Sec.  409, 424, and 
Sec.  484 to better align the payment requirements with recent 
statutory and regulatory changes for home health services. The sections 
include Sec.  409.43(e), Sec.  424.22(a), Sec.  484.205(d), Sec.  
484.205(e), Sec.  484.220, Sec.  484.225, Sec.  484.230, Sec.  
484.240(b), Sec.  484.240(e), Sec.  484.240(f), Sec.  484.245. In 
section III.F, we discuss the Report to Congress on the home health 
study required by section 3131(d) of the Affordable Care Act and 
provide an update on subsequent research and analysis.
    In section IV of this proposed rule, we propose a HHVBP model to be 
implemented beginning January 1, 2016. Medicare-certified HHAs selected 
for inclusion in the HHVBP model would be required to compete for 
payment adjustments to their current PPS reimbursements based on 
quality performance. A competing Medicare-certified HHA is defined as 
an agency having a current Medicare certification and which is being 
reimbursed by CMS for home health care delivered within any of the nine 
states randomly selected under CMS' proposed selection methodology.
    This proposed rule also includes changes to the home health quality 
reporting program in section III.V, including the proposal of one new 
quality measure, the establishment of a minimum threshold for 
submission of Outcome and Assessment Information Set (OASIS) 
assessments for purposes of quality reporting compliance, and 
submission dates for Home Health Care Consumer Assessment of Healthcare 
Providers and Systems Survey (HHCAHPS) Survey through CY 2018.

C. Summary of Costs and Transfers

                 Table 1--Summary of Costs and Transfers
------------------------------------------------------------------------
     Provision description            Costs             Transfers
------------------------------------------------------------------------
CY 2016 HH PPS Payment Rate      ..............  The overall economic
 Update.                                          impact of the HH PPS
                                                  payment rate update is
                                                  an estimated -$350
                                                  million (-1.8 percent)
                                                  in payments to HHAs.
CY 2016 HHVBP Model............  ..............  The overall economic
                                                  impact of the HHVBP
                                                  model provision for CY
                                                  2018 through 2022 is
                                                  an estimated $380
                                                  million in total
                                                  savings from a
                                                  reduction in
                                                  unnecessary
                                                  hospitalizations and
                                                  SNF usage as a result
                                                  of greater quality
                                                  improvements in the HH
                                                  industry. As for
                                                  payments to HHAs,
                                                  there are no aggregate
                                                  increases or decreases
                                                  to the HHAs competing
                                                  in the model.
------------------------------------------------------------------------

II. 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 HH services. Section 4603 of the BBA mandated the development 
of the HH PPS. Until the implementation of the HH PPS on October 1, 
2000, 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

[[Page 39843]]

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 due to unusual variations in the type or amount of 
medically necessary care. Section 3131(b)(2) 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 year would not exceed 2.5 
percent of total payments projected or estimated. The provision also 
made 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 by 2 percentage points. In the November 9, 2006 Federal 
Register (71 FR 65884, 65935), we published a final rule to implement 
the pay-for-reporting requirement of the DRA, which was codified at 
Sec.  484.225(h) and (i) in accordance with the statute. The pay-for-
reporting requirement was implemented on January 1, 2007.
    The Affordable Care Act made additional changes to the HH PPS. One 
of the changes in section 3131 of the Affordable Care Act is the 
amendment to section 421(a) of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173, 
enacted on December 8, 2003) as amended by section 5201(b) of the DRA. 
Section 421(a) of the MMA, as amended by section 3131 of the Affordable 
Care Act, requires that the Secretary increase, by 3 percent, the 
payment amount otherwise made under section 1895 of the Act, for 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. Section 210 of the Medicare 
Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10) 
amended section 421(a) of the MMA to extend the rural add-on for two 
more years. Section 421(a) of the MMA, as amended by section 210 of the 
MACRA, requires that the Secretary increase, by 3 percent, the payment 
amount otherwise made under section 1895 of the Act, for HH services 
provided 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, 2018.

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 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 system 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 national per-
visit rates based on 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 Home Health Prospective Payment System

    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 HH PPS for CY 2008. The CY 2008 HH PPS final 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. Case-mix 
represents the variations in conditions of the patient population 
served by the

[[Page 39844]]

HHAs. Subsequently, a more detailed analysis was performed on the 2005 
case-mix data to evaluate if any portion of the 12.78 percent 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 therefore, 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, to the national, standardized 60-day episode payment 
rates. 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. 
In the CY 2011 HH PPS final rule (76 FR 68532), we updated our analyses 
of case-mix change and finalized a reduction of 3.79 percent, instead 
of 2.71 percent, for CY 2011 and deferred finalizing a payment 
reduction for CY 2012 until further study of the case-mix change data 
and methodology was completed.
    In the CY 2012 HH PPS final rule (76 FR 68526), we updated the 60-
day national episode rates and the national per-visit rates. In 
addition, as discussed in the CY 2012 HH PPS final rule (76 FR 68528), 
our analysis indicated that there was a 22.59 percent increase in 
overall case-mix from 2000 to 2009 and that only 15.76 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 19.03 percent 
nominal increase in case-mix. At that time, to fully account for the 
19.03 percent nominal case-mix growth identified from 2000 to 2009, we 
finalized a 3.79 percent payment reduction in CY 2012 and a 1.32 
percent payment reduction for CY 2013.
    In the CY 2013 HH PPS final rule (77 FR 67078), we implemented a 
1.32 percent reduction to the payment rates for CY 2013 to account for 
nominal case-mix growth from 2000 through 2010. When taking into 
account the total measure of case-mix change (23.90 percent) and the 
15.97 percent of total case-mix change estimated as real from 2000 to 
2010, we obtained a final nominal case-mix change measure of 20.08 
percent from 2000 to 2010 (0.2390 * (1-0.1597) = 0.2008). To fully 
account for the remainder of the 20.08 percent increase in nominal 
case-mix beyond that which was accounted for in previous payment 
reductions, we estimated that the percentage reduction to the national, 
standardized 60-day episode rates for nominal case-mix change would be 
2.18 percent. Although we considered proposing a 2.18 percent reduction 
to account for the remaining increase in measured nominal case-mix, we 
finalized the 1.32 percent payment reduction to the national, 
standardized 60-day episode rates in the CY 2012 HH PPS final rule (76 
FR 68532).
    Section 3131(a) of the Affordable Care Act requires that, beginning 
in CY 2014, we apply an adjustment to the national, standardized 60-day 
episode rate and other amounts that reflect factors such as changes in 
the number of visits in an episode, the mix of services in an episode, 
the level of intensity of services in an episode, the average cost of 
providing care per episode, and other relevant factors. Additionally, 
we must phase in any adjustment over a four-year period in equal 
increments, not to exceed 3.5 percent of the amount (or amounts) as of 
the date of enactment of the Affordable Care Act, and fully implement 
the rebasing adjustments by CY 2017. The statute specifies that the 
maximum rebasing adjustment is to be no more than 3.5 percent per year 
of the CY 2010 rates. Therefore, in the CY 2014 HH PPS final rule (78 
FR 72256) for each year, CY 2014 through CY 2017, we finalized a fixed-
dollar reduction to the national, standardized 60-day episode payment 
rate of $80.95 per year, increases to the national per-visit payment 
rates per year as reflected in Table 2, and a decrease to the NRS 
conversion factor of 2.82 percent per year. We also finalized three 
separate LUPA add-on factors for skilled nursing, physical therapy, and 
speech-language pathology and removed 170 diagnosis codes from 
assignment to diagnosis groups in the HH PPS Grouper. In the CY 2015 HH 
PPS final rule (79 FR 66032), we implemented the second year of the 
four-year phase-in of the rebasing adjustments to the HH PPS payment 
rates and made changes to the HH PPS case-mix weights. In addition, we 
simplified the face-to-face encounter regulatory requirements and the 
therapy reassessment timeframes.

  Table 2--Maximum Adjustments to the National Per-Visit Payment Rates
         [Not to Exceed 3.5 Percent of the Amount(s) in CY 2010]
------------------------------------------------------------------------
                                                             Maximum
                                        2010 National   adjustments  per
                                          per-visit       year (CY 2014
                                        payment rates   through CY 2017)
------------------------------------------------------------------------
Skilled Nursing.....................           $113.01             $3.96
Home Health Aide....................             51.18              1.79
Physical Therapy....................            123.57              4.32
Occupational Therapy................            124.40              4.35
Speech-Language Pathology...........            134.27              4.70
Medical Social Services.............            181.16              6.34
------------------------------------------------------------------------

D. Advancing Health Information Exchange

    HHS has a number of initiatives designed to encourage and support 
the adoption of health information technology and to promote nationwide 
health information exchange to improve health care. As discussed in the 
August 2013 Statement ``Principles and Strategies for Accelerating 
Health Information Exchange'' (available at http://www.healthit.gov/sites/default/files/acceleratinghieprinciples_strategy.pdf), HHS 
believes that all individuals, their families, their healthcare and 
social service providers, and payers should have consistent and timely 
access to health information in a standardized format that can be 
securely exchanged between the patient, providers, and others involved 
in the individual's care. Health IT that facilitates the secure, 
efficient and effective sharing and use of health-

[[Page 39845]]

related information when and where it is needed is an important tool 
for settings across the continuum of care, including home health. While 
home health providers are not eligible for the Medicare and Medicaid 
EHR Incentive Programs, effective adoption and use of health 
information exchange and health IT tools will be essential as these 
settings seek to improve quality and lower costs through initiatives 
such as value-based purchasing.
    The Office of the National Coordinator for Health Information 
Technology (ONC) has released a document entitled ``Connecting Health 
and Care for the Nation: A Shared Nationwide Interoperability Roadmap 
Draft Version 1.0 (draft Roadmap) (available at http://www.healthit.gov/sites/default/files/nationwide-interoperability-roadmap-draft-version-1.0.pdf) which describes barriers to 
interoperability across the current health IT landscape, the desired 
future state that the industry believes will be necessary to enable a 
learning health system, and a suggested path for moving from the 
current state to the desired future state. In the near term, the draft 
Roadmap focuses on actions that will enable a majority of individuals 
and providers across the care continuum to send, receive, find and use 
a common set of electronic clinical information at the nationwide level 
by the end of 2017. The Roadmap's goals also align with the IMPACT Act 
of 2014 which requires assessment data to be standardized and 
interoperable to allow for exchange of the data. Moreover, the vision 
described in the draft Roadmap significantly expands the types of 
electronic health information, information sources and information 
users well beyond clinical information derived from electronic health 
records (EHRs). This shared strategy is intended to reflect important 
actions that both public and private sector stakeholders can take to 
enable nationwide interoperability of electronic health information 
such as: (1) Establishing a coordinated governance framework and 
process for nationwide health IT interoperability; (2) improving 
technical standards and implementation guidance for sharing and using a 
common clinical data set; (3) enhancing incentives for sharing 
electronic health information according to common technical standards, 
starting with a common clinical data set; and (4) clarifying privacy 
and security requirements that enable interoperability.
    In addition, ONC has released the draft version of the 2015 
Interoperability Standards Advisory (available at http://www.healthit.gov/standards-advisory), which provides a list of the best 
available standards and implementation specifications to enable 
priority health information exchange functions. Providers, payers, and 
vendors are encouraged to take these ``best available standards'' into 
account as they implement interoperable health information exchange 
across the continuum of care, including care settings such as 
behavioral health, long-term and post-acute care, and home and 
community-based service providers.
    We encourage stakeholders to utilize health information exchange 
and certified health IT to effectively and efficiently help providers 
improve internal care delivery practices, engage patients in their 
care, support management of care across the continuum, enable the 
reporting of electronically specified clinical quality measures 
(eCQMs), and improve efficiencies and reduce unnecessary costs. As 
adoption of certified health IT increases and interoperability 
standards continue to mature, HHS will seek to reinforce standards 
through relevant policies and programs.

III. Proposed Provisions of the Home Health Prospective Payment System

A. Monitoring for Potential Impacts--Affordable Care Act Rebasing 
Adjustments

1. Analysis of FY 2013 HHA Cost Report Data
    As part of our efforts in monitoring the potential impacts of the 
rebasing adjustments finalized in the CY 2014 HH PPS final rule (78 FR 
72293), we continue to update our analysis of home health cost report 
and claims data. In the CY 2014 HH PPS final rule, using 2011 cost 
report and 2012 claims data, we estimated the 2013 60-day episode cost 
to be $2,565.51 (78 FR 72277). In that final rule, we stated that our 
analysis of 2011 cost report data and 2012 claims data indicated a need 
for a -3.45 percent rebasing adjustment to the national, standardized 
60-day episode payment rate each year for four years. However, as 
specified by statute, the rebasing adjustment is limited to 3.5 percent 
of the CY 2010 national, standardized 60-day episode payment rate of 
$2,312.94 (74 FR 58106), or $80.95. We stated that given that a -3.45 
percent adjustment for CY 2014 through CY 2017 would result in larger 
dollar amount reductions than the maximum dollar amount allowed under 
section 3131(a) of the Affordable Care Act of $80.95, we were limited 
to implementing a reduction of $80.95 (approximately 2.8 percent for CY 
2014) to the national, standardized 60-day episode payment amount each 
year for CY 2014 through CY 2017.
    In the CY 2015 HH PPS final rule, (79 FR 66032-66118) using 2012 
cost report and 2013 claims data, we estimated the 2013 60-day episode 
cost to be $2,485.24 (79 FR 66037). Similar to our discussion in the CY 
2014 HH PPS final rule, we stated that absent the Affordable Care Act's 
limit to rebasing, in order to align payments with costs, a -4.21 
percent adjustment would have been applied to the national, 
standardized 60-day episode payment amount each year for CY 2014 
through CY 2017.
    For this proposed rule, we analyzed 2013 HHA cost report data and 
2013 HHA claims data to determine whether the average cost per episode 
was higher using 2013 cost report data compared to the 2011 cost report 
and 2012 claims data used in calculating the rebasing adjustments. To 
determine the 2013 average cost per visit per discipline, we applied 
the same trimming methodology outlined in the CY 2014 HH PPS proposed 
rule (78 FR 40284) and weighted the costs per visit from the 2013 cost 
reports by size, facility type, and urban/rural location so the costs 
per visit were nationally representative according to 2013 claims data. 
The 2013 average number of visits was taken from 2013 claims data. We 
estimate the cost of a 60-day episode in CY 2013 to be $2,402.11 using 
2013 cost report data (Table 3). Our latest analysis of 2013 cost 
report and 2013 claims data suggests that an even larger reduction (-
5.02 percent) than the reduction described in the CY 2014 HH PPS final 
rule (-3.45 percent) or the reduction described in the CY 2015 HH PPS 
final rule (-4.21) would have been needed in order to align payments 
with costs.

[[Page 39846]]



                                    Table 3--2013 Estimated Cost per Episode
----------------------------------------------------------------------------------------------------------------
                                                                   2013 average    2013 average
                           Discipline                                costs per       number of      2013 60-day
                                                                       visit          visits       episode costs
----------------------------------------------------------------------------------------------------------------
Skilled Nursing.................................................         $131.43            9.28       $1,219.67
Home Health Aide................................................           59.87            2.41          144.29
Physical Therapy................................................          154.96            5.03          779.45
Occupational Therapy............................................          154.11            1.22          188.01
Speech-Language Pathology.......................................          164.59            0.25           41.15
Medical Social Services.........................................          211.02            0.14           29.54
                                                                 -----------------------------------------------
    Total.......................................................  ..............           18.33        2,402.11
----------------------------------------------------------------------------------------------------------------
Source: FY 2013 Medicare cost report data and 2013 Medicare claims data from the standard analytic file (as of
  June 30, 2014) for episodes (excluding low-utilization payment adjusted episodes and partial-episode-payment
  adjusted episodes) ending on or before December 31, 2013 for which we could link an OASIS assessment.

2. MedPAC Report to the Congress: Home Health Payment Rebasing
    Section 3131(a) of the Affordable Care Act required the Medicare 
Payment Advisory Commission (MedPAC) to assess, by January 1, 2015, the 
impact of the mandated rebasing adjustments on quality of and 
beneficiary access to home health care. As part of this assessment, the 
statute required MedPAC to consider the impact on care delivered by 
rural, urban, nonprofit, and for-profit home health agencies. MedPAC's 
Report to Congress noted that the rebasing adjustments are partially 
offset by the payment update each year and across all four years of the 
phase-in of the rebasing adjustments the cumulative net reduction would 
equal about 2 percent. MedPAC concluded that, as a result of the 
payment update offsets to the rebasing adjustments, HHA margins are 
likely to remain high under the current rebasing policy and quality of 
care and beneficiary access to care are unlikely to be negatively 
affected.\1\
---------------------------------------------------------------------------

    \1\ Medicare Payment Advisory Commission (MedPAC), ``Report to 
the Congress: Impact of Home Health Payment Rebasing on Beneficiary 
Access to and Quality of Care''. December 2014. Washington, DC. 
Accessed on 5/05/15 at: http://www.medpac.gov/documents/reports/dec14_homehealth_rebasing_report.pdf?sfvrsn=0.
---------------------------------------------------------------------------

    As we noted in the CY 2014 HH PPS final rule (78 FR 72291), 
MedPAC's past reviews of access to home health care found that access 
generally remained adequate during periods of substantial decline in 
the number of agencies. MedPAC stated that this is due in part to the 
low capital requirements for home health care services that allow the 
industry to react rapidly when the supply of agencies changes or 
contracts. As described in section III.A.3, the number of HHAs billing 
Medicare for home health services in CY 2013 is 80 percent higher than 
the number of HHAs billing Medicare for home health services in 2001. 
Even if some HHAs were to exit the program due to possible 
reimbursement concerns, the home health market would be expected to 
remain robust.
3. Analysis of CY 2014 HHA Claims Data
    In the CY 2014 HH PPS final rule (78 FR 72256), some commenters 
expressed concern that the rebasing of the HH PPS payment rates would 
result in HHA closures and would therefore diminish access to home 
health services. In addition to examining more recent cost report data, 
for this proposed rule we examined home health claims data from the 
first year of the four-year phase-in of the rebasing adjustments (CY 
2014), the first calendar year of the HH PPS (CY 2001), and claims data 
for the three years before implementation of the rebasing adjustments 
(CY 2011-2013). Preliminary analysis of CY 2014 home health claims data 
indicates that the number of episodes decreased by 3.8 percent between 
2013 and 2014. In addition, the number of home health users decreased 
by approximately 3 percent between 2013 and 2014, while the number of 
FFS beneficiaries has remained the same. Between 2013 and 2014 there 
appears to be a net decrease in the number of HHAs billing Medicare for 
home health services of 1.6 percent, driven mostly by decreases TX and 
FL, two of the six states with the highest utilization of Medicare home 
health (see Table 3 and Table 4). The HHAs that no longer billed 
Medicare for home health services in CY 2014 typically served 
beneficiaries that were nearly twice as likely to be dually-eligible 
for both Medicare and Medicaid in CY 2013 compared to the national 
average for all HHAs in CY 2013. We note that in CY 2014 there were 3.0 
HHAs per 10,000 FFS beneficiaries, the same number of HHAs per 10,000 
FFS beneficiaries as there was in 2011, but markedly higher than the 
1.9 HHAs per 10,000 FFS beneficiaries in 2001. If we were to exclude 
the six states with the highest home health utilization (see Table 5), 
the number of episodes amongst the remaining states (including Guam, 
Puerto Rico, and the Virgin Islands) decreased by 2.6 percent between 
2013 and 2014, the number of home health users decreased by 
approximately 2.4 percent between 2013 and 2014, and the number of HHAs 
billing Medicare for home health services remained virtually the same 
(a net decrease of only 1 HHA).
    We would note that preliminary data on hospital and skilled nursing 
facility discharges and days indicates that there was a decrease in 
hospital discharges of approximately 3 percent and a decrease in SNF 
days of approximately 2 percent in CY 2014. Any decreases in hospital 
discharges and skilled nursing facility days could, in turn, impact 
home health utilization as those settings serve as important sources of 
home health referrals.

                      Table 4--Home Health Statistics, CY 2001 and CY 2011 Through CY 2014
----------------------------------------------------------------------------------------------------------------
                                       2001            2011            2012            2013            2014
----------------------------------------------------------------------------------------------------------------
Number of episodes..............       3,896,502       6,821,459       6,727,875       6,708,923       6,451,283
Beneficiaries receiving at least       2,412,318       3,449,231       3,446,122       3,484,579       3,381,635
 1 episode (Home Health Users)..

[[Page 39847]]

 
Part A and/or B FFS                   34,899,167      37,686,526      38,224,640      38,505,609      38,506,534
 beneficiaries..................
Episodes per Part A and/or B FFS            0.11            0.18            0.18            0.17            0.17
 beneficiaries..................
Home health users as a                      6.9%            9.2%            9.0%            9.0%            8.8%
 percentage of Part A and/or B
 FFS beneficiaries..............
HHAs providing at least 1                  6,511          11,446          11,746          11,889          11,693
 episode........................
HHAs per 10,000 Part A and/or B              1.9             3.0             3.1             3.1             3.0
 FFS beneficiaries..............
----------------------------------------------------------------------------------------------------------------
Source: National claims history (NCH) data obtained from Chronic Condition Warehouse (CCW)--Accessed on May 14,
  2014 and August 19, 2014 for CY 2011, CY 2012, and CY 2013 data; and accessed on May 7, 2015 for CY 2001 and
  CY 2014 data. Medicare enrollment information obtained from the CCW Master Beneficiary Summary File.
  Beneficiaries are the total number of beneficiaries in a given year with at least 1 month of Part A and/or
  Part B Fee-for-Service coverage without having any months of Medicare Advantage coverage.
Note(s): These results include all episode types (Normal, PEP, Outlier, LUPA) and also include episodes from
  outlying areas (outside of 50 States and District of Columbia). Only episodes with a through date in the year
  specified are included. Episodes with a claim frequency code equal to ``0'' (``Non-payment/zero claims'') and
  ``2'' (``Interim--first claim'') are excluded. If a beneficiary is treated by providers from multiple states
  within a year the beneficiary is counted within each state's unique number of beneficiaries served.

    For the six states (TX, LA, OK, MS, FL, and IL) with the highest 
utilization of Medicare home health (as measured by the number of 
episodes per Part A and/or Part B FFS beneficiaries), the number of 
episodes decreased by 5.7 percent, the number of home health users 
decreased by 4.3 percent, and the number of HHAs billing Medicare 
decreased by 3.7 percent (5,280-5,085) between 2013 and 2014 (see Table 
5). A possible contributing factor to these decreases may be the 
temporary moratorium on the enrollment of new HHAs, effective July 31, 
2013, for Miami, FL and Chicago, IL and the temporary moratorium on 
enrollment of new HHAs, effective February 4, 2014, for Fort 
Lauderdale, FL; Detroit, MI; Dallas, TX; and Houston, TX. The temporary 
moratoria on enrollment of new HHAs in Miami, FL; Chicago, IL; Fort 
Lauderdale, FL; Detroit, MI; Dallas, TX; and Houston, TX were extended 
for 6 months on August 1, 2014 and again for 6 months effective January 
29, 2015 (80 FR 5551).

 Table 5--Home Health Statistics for the States with the Highest Number of Home Health Episodes per Part A and/or Part B FFS Beneficiaries, CY 2001 and
                                                                 CY 2011 Through CY 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Year         TX           FL           OK           MS           LA           IL
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Episodes.............................................       2001      285,710      284,579       77,149       73,353      124,789      162,686
                                                                      2011    1,107,605      701,426      203,112      153,983      249,479      433,117
                                                                      2012    1,054,244      691,255      196,887      148,516      230,115      423,462
                                                                      2013      995,555      689,269      196,713      143,428      215,590      421,309
                                                                      2014      941,815      651,940      189,421      141,293      196,495      389,850
--------------------------------------------------------------------------------------------------------------------------------------------------------
Beneficiaries Receiving at Least 1 Episode (Home Health Users).       2001      155,802      195,678       36,919       35,769       50,760      105,115
                                                                      2011      363,474      355,900       67,218       55,818       77,677      192,921
                                                                      2012      350,803      354,838       65,948       55,438       74,755      191,936
                                                                      2013      333,396      357,099       66,502       55,453       73,888      191,961
                                                                      2014      319,492      343,231       65,392       54,890       69,328      179,835
--------------------------------------------------------------------------------------------------------------------------------------------------------
Part A and/or Part B FFS Beneficiaries.........................       2001    2,132,310    2,246,313      480,556      436,751      528,287    1,543,158
                                                                      2011    2,597,406    2,454,124      549,687      476,497      561,531    1,785,278
                                                                      2012    2,604,458    2,451,790      558,500      480,218      568,483    1,812,241
                                                                      2013    2,535,611    2,454,216      568,815      483,439      574,654    1,836,862
                                                                      2014    2,564,292    2,464,748      580,267      491,482      575,832    1,674,935
--------------------------------------------------------------------------------------------------------------------------------------------------------
Episodes per Part A and/or Part B FFS beneficiaries............       2001         0.13         0.13         0.16         0.17         0.24         0.11
                                                                      2011         0.43         0.29         0.37         0.32         0.44         0.24
                                                                      2012         0.40         0.28         0.35         0.31         0.40         0.23
                                                                      2013         0.39         0.28         0.35         0.30         0.38         0.23
                                                                      2014         0.37         0.26         0.33         0.29         0.34         0.23
--------------------------------------------------------------------------------------------------------------------------------------------------------
Home Health Users as a Percentage of Part A and/or Part B FFS         2001         7.3%         8.7%         7.7%         8.2%         9.6%         6.8%
 Beneficiaries.................................................
                                                                      2011        14.0%        14.5%        12.2%        11.7%        13.8%        10.8%
                                                                      2012        13.5%        14.5%        11.8%        11.5%        13.2%        10.6%
                                                                      2013        13.2%        14.6%        11.7%        11.5%        12.9%        10.5%
                                                                      2014        12.5%        13.9%        11.3%        11.2%        12.0%        10.7%
--------------------------------------------------------------------------------------------------------------------------------------------------------
HHAs Providing at Least 1 Episode..............................       2001          799          330          180           61          242          273
                                                                      2011        2,472        1,426          252           51          216          743
                                                                      2012        2,549        1,430          254           48          213          783
                                                                      2013        2,600        1,357          262           48          210          803
                                                                      2014        2,558        1,230          262           46          205          784
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 39848]]

 
HHAs per 10,000 Part A and/or B FFS beneficiaries..............       2001          3.7          1.5          3.7          1.4          4.6          1.8
                                                                      2011          9.5          5.8          4.6          1.1          3.8          4.2
                                                                      2012          9.8          5.8          4.5          1.0          3.7          4.3
                                                                      2013         10.3          5.5          4.6          1.0          3.7          4.4
                                                                      2014         10.0          5.0          4.5          0.9          3.6          4.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: National claims history (NCH) data obtained from Chronic Condition Warehouse (CCW)--Accessed on May 14, 2014 and August 19, 2014 for CY 2011, CY
  2012, and CY 2013 data; and accessed on May 7, 2015 for CY 2001 and CY 2014 data. Medicare enrollment information obtained from the CCW Master
  Beneficiary Summary File. Beneficiaries are the total number of beneficiaries in a given year with at least 1 month of Part A and/or Part B Fee-for-
  Service coverage without having any months of Medicare Advantage coverage.
Note(s): These results include all episode types (Normal, PEP, Outlier, LUPA) and also include episodes from outlying areas (outside of 50 States and
  District of Columbia). Only episodes with a through date in the year specified are included. Episodes with a claim frequency code equal to ``0''
  (``Non-payment/zero claims'') and ``2'' (``Interim--first claim'') are excluded. If a beneficiary is treated by providers from multiple states within
  a year the beneficiary is counted within each state's unique number of beneficiaries served.

    In addition to examining home health claims data from the first 
year of the implementation of rebasing adjustments required by the 
Affordable Care Act and comparing utilization in that year (CY 2014) to 
the three years prior and to the first calendar year following the 
implementation of the HH PPS (CY 2001), we subsequently examined trends 
in home health utilization for all years starting in CY 2001 and up 
through CY 2014. Figure 1, displays the average number of visits per 
60-day episode of care and the average payment per visit. While the 
average payment per visit has steadily increased from approximately 
$116 in CY 2001 to $162 for CY 2014, the average total number of visits 
per 60-day episode of care has declined, most notably between CY 2009 
(21.7 visits per episode) and CY 2014 (18.0 visit per episode). As 
noted in section II.C, we implemented a series of reductions to the 
national, standardized 60-day episode payment rate to account for 
increases in nominal case-mix, starting in CY 2008. The reductions to 
the 60-day episode rate were: 2.75 percent each year for CY 2008, CY 
2009, and CY 2010; 3.79 percent for CY 2011and CY 2012; and a 1.32 
percent payment reduction for CY 2013. Figure 2 displays the average 
number of visits by discipline type for a 60-day episode of care and 
shows that while the number of therapy visits per 60-day episode of 
care has increased slightly, the number of skilled nursing and home 
health aide visits have decreased, between CY 2009 and CY 2014. Section 
III.F describes the results of the home health study required by 
section 3131(d) of the Affordable Care Act, which suggests that the 
current home health payment system may discourage HHAs from serving 
patients with clinically complex and/or poorly controlled chronic 
conditions who do not qualify for therapy but require a large number of 
skilled nursing visits. The home health study results seems to be 
consistent with the recent trend in the decreased number of visits per 
episode of care driven by decreases in skilled nursing and home health 
aide services evident in Figures 1 and 2.

[[Page 39849]]

[GRAPHIC] [TIFF OMITTED] TP10JY15.000


[[Page 39850]]


[GRAPHIC] [TIFF OMITTED] TP10JY15.001

    We will continue to monitor for potential impacts due to rebasing 
adjustments required by section 3131(a) of the Affordable Care Act and 
other policy changes in the future. Independent effects of any one 
policy may be difficult to discern in years where multiple policy 
changes occur in any given year.

B. CY 2016 HH PPS Case-Mix Weights and Proposed Reduction to the 
National, Standardized 60-Day Episode Payment Rate To Account for 
Nominal Case-Mix Growth

1. CY 2016 HH PPS Case-Mix Weights
    For CY 2014, as part of the rebasing effort mandated by the 
Affordable Care Act, we reset the HH PPS case-mix weights, lowering the 
average case-mix weight to 1.0000. To lower the HH PPS case-mix weights 
to 1.0000, each HH PPS case-mix weight was decreased by the same factor 
(1.3464), thereby maintaining the same relative values between the 
weights. This ``resetting'' of the HH PPS case-mix weights was done in 
a budget neutral manner by inflating the national, standardized 60-day 
episode rate by the same factor (1.3464) that was used to decrease the 
weights. For CY 2015, we finalized a policy to annually recalibrate the 
HH PPS case-mix weights--adjusting the weights relative to one 
another--using the most current, complete data available. To 
recalibrate the HH PPS case-mix weights for CY 2016, we propose to use 
the same methodology finalized in the CY 2008 HH PPS final rule (72 FR 
49762), the CY 2012 HH PPS final rule (76 FR 68526), and the CY 2015 HH 
PPS final rule (79 FR 66032). Annual recalibration of the HH PPS case-
mix weights ensures that the case-mix weights reflect, as accurately as 
possible, current home health resource use and changes in utilization 
patterns.
    To generate the proposed CY 2016 HH PPS case-mix weights, we used 
CY 2014 home health claims data (as of December 31, 2014) with linked 
OASIS data. These data are the most current and complete data available 
at this time. We will use CY 2014 home health claims data (as of June 
30, 2015) with linked OASIS data to generate the CY 2016 HH PPS case-
mix weights in the CY 2016 HH PPS final rule. The process

[[Page 39851]]

we used to calculate the HH PPS case-mix weights are outlined below.
    Step 1: Re-estimate the four-equation model to determine the 
clinical and functional points for an episode using wage-weighted 
minutes of care as our dependent variable for resource use. The wage-
weighted minutes of care are determined using the CY 2013 Bureau of 
Labor Statistics national hourly wage plus fringe rates for the six 
home health disciplines and the minutes per visit from the claim. The 
points for each of the variables for each leg of the model, updated 
with CY 2014 data, are shown in Table 6. The points for the clinical 
variables are added together to determine an episode's clinical score. 
The points for the functional variables are added together to determine 
an episode's functional score.

                                TABLE 6--Case-Mix Adjustment Variables and Scores
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
                                          Episode number within          1 or 2     1 or 2         3+         3+
                                           sequence of adjacent
                                           episodes.
                                          Therapy visits............       0-13        14+       0-13        14+
                                          EQUATION:.................          1          2          3          4
----------------------------------------------------------------------------------------------------------------
                                               CLINICAL DIMENSION
----------------------------------------------------------------------------------------------------------------
1.......................................  Primary or Other Diagnosis  .........  .........  .........  .........
                                           = Blindness/Low Vision.
2.......................................  Primary or Other Diagnosis  .........          6  .........          2
                                           = Blood disorders.
3.......................................  Primary or Other Diagnosis  .........          7  .........          7
                                           = Cancer, selected benign
                                           neoplasms.
4.......................................  Primary Diagnosis =         .........          7  .........          4
                                           Diabetes.
5.......................................  Other Diagnosis = Diabetes          1  .........  .........  .........
6.......................................  Primary or Other Diagnosis          3         15          1          8
                                           = Dysphagia.
                                          AND
                                          Primary or Other Diagnosis
                                           = Neuro 3--Stroke
7.......................................  Primary or Other Diagnosis          1          9          1          9
                                           = Dysphagia.
                                          AND
                                          M1030 (Therapy at home) =
                                           3 (Enteral)
8.......................................  Primary or Other Diagnosis  .........  .........  .........  .........
                                           = Gastrointestinal
                                           disorders.
9.......................................  Primary or Other Diagnosis  .........          6  .........          6
                                           = Gastrointestinal
                                           disorders.
                                          AND
                                          M1630 (ostomy) = 1 or 2
10......................................  Primary or Other Diagnosis  .........  .........  .........  .........
                                           = 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          1  .........  .........  .........
                                           = Heart Disease OR
                                           Hypertension.
12......................................  Primary Diagnosis = Neuro           3         11          7         11
                                           1--Brain disorders and
                                           paralysis.
13......................................  Primary or Other Diagnosis  .........          2  .........          2
                                           = Neuro 1--Brain
                                           disorders and paralysis.
                                          AND
                                          M1840 (Toilet transfer) =
                                           2 or more
14......................................  Primary or Other Diagnosis          2          7          1          5
                                           = Neuro 1--Brain
                                           disorders and paralysis
                                           OR Neuro 2--Peripheral
                                           neurological disorders.
                                          AND
                                          M1810 or M1820 (Dressing
                                           upper or lower body) = 1,
                                           2, or 3
15......................................  Primary or Other Diagnosis          3          9          2          2
                                           = Neuro 3--Stroke.
16......................................  Primary or Other Diagnosis  .........          4  .........          4
                                           = Neuro 3--Stroke AND.
                                          M1810 or M1820 (Dressing
                                           upper or lower body) = 1,
                                           2, or 3
17......................................  Primary or Other Diagnosis  .........  .........  .........  .........
                                           = Neuro 3--Stroke.
                                          AND
                                          M1860 (Ambulation) = 4 or
                                           more
18......................................  Primary or Other Diagnosis          3         10          7         10
                                           = Neuro 4--Multiple
                                           Sclerosis AND AT LEAST
                                           ONE OF THE FOLLOWING:.
                                          M1830 (Bathing) = 2 or
                                           more
                                          OR
                                          M1840 (Toilet transfer) =
                                           2 or more
                                          OR
                                          M1850 (Transferring) = 2
                                           or more
                                          OR
                                          M1860 (Ambulation) = 4 or
                                           more
19......................................  Primary or Other Diagnosis          8          1          8          1
                                           = Ortho 1--Leg Disorders
                                           or Gait Disorders.
                                          AND
                                          M1324 (most problematic
                                           pressure ulcer stage) =
                                           1, 2, 3 or 4
20......................................  Primary or Other Diagnosis          3  .........          3          6
                                           = Ortho 1--Leg OR Ortho
                                           2--Other orthopedic
                                           disorders.
                                          AND
                                          M1030 (Therapy at home) =
                                           1 (IV/Infusion) or 2
                                           (Parenteral)
21......................................  Primary or Other Diagnosis  .........  .........  .........  .........
                                           = Psych 1--Affective and
                                           other psychoses,
                                           depression.
22......................................  Primary or Other Diagnosis  .........  .........  .........  .........
                                           = Psych 2--Degenerative
                                           and other organic
                                           psychiatric disorders.
23......................................  Primary or Other Diagnosis  .........  .........  .........  .........
                                           = Pulmonary disorders.
24......................................  Primary or Other Diagnosis  .........  .........  .........  .........
                                           = Pulmonary disorders AND
                                           M1860 (Ambulation) = 1 or
                                           more.

[[Page 39852]]

 
25......................................  Primary Diagnosis = Skin            4         19          8         19
                                           1--Traumatic wounds,
                                           burns, and post-operative
                                           complications.
26......................................  Other Diagnosis = Skin 1--          6         15          8         13
                                           Traumatic wounds, burns,
                                           post-operative
                                           complications.
27......................................  Primary or Other Diagnosis          3  .........  .........  .........
                                           = Skin 1--Traumatic
                                           wounds, burns, and post-
                                           operative complications
                                           OR Skin 2--Ulcers and
                                           other skin conditions.
                                          AND
                                          M1030 (Therapy at home) =
                                           1 (IV/Infusion) or 2
                                           (Parenteral)
28......................................  Primary or Other Diagnosis          2         17          8         17
                                           = Skin 2--Ulcers and
                                           other skin conditions.
29......................................  Primary or Other Diagnosis          2         16          2         16
                                           = Tracheostomy.
30......................................  Primary or Other Diagnosis  .........         19  .........         11
                                           = Urostomy/Cystostomy.
31......................................  M1030 (Therapy at home) =           1         18          6         14
                                           1 (IV/Infusion) or 2
                                           (Parenteral).
32......................................  M1030 (Therapy at home) =   .........         14  .........          5
                                           3 (Enteral).
33......................................  M1200 (Vision) = 1 or more  .........  .........  .........  .........
34......................................  M1242 (Pain) = 3 or 4.....          2  .........          1  .........
35......................................  M1308 = Two or more                 5          5          5         14
                                           pressure ulcers at stage
                                           3 or 4.
36......................................  M1324 (Most problematic             4         19          7         16
                                           pressure ulcer stage) = 1
                                           or 2.
37......................................  M1324 (Most problematic             8         32         11         26
                                           pressure ulcer stage) = 3
                                           or 4.
38......................................  M1334 (Stasis ulcer                 4         12          8         12
                                           status) = 2.
39......................................  M1334 (Stasis ulcer                 7         17         10         17
                                           status) = 3.
40......................................  M1342 (Surgical wound               2          7          5         13
                                           status) = 2.
41......................................  M1342 (Surgical wound               1          7          5          7
                                           status) = 3.
42......................................  M1400 (Dyspnea) = 2, 3, or  .........          1  .........          1
                                           4.
43......................................  M1620 (Bowel Incontinence)  .........          4  .........          4
                                           = 2 to 5.
44......................................  M1630 (Ostomy) = 1 or 2...          4         12          2          7
45......................................  M2030 (Injectable Drug      .........  .........  .........  .........
                                           Use) = 0, 1, 2, or 3.
----------------------------------------------------------------------------------------------------------------
                                              FUNCTIONAL DIMENSION
----------------------------------------------------------------------------------------------------------------
46......................................  M1810 or M1820 (Dressing            2  .........          1  .........
                                           upper or lower body) = 1,
                                           2, or 3.
47......................................  M1830 (Bathing) = 2 or              6          2          5  .........
                                           more.
48......................................  M1840 (Toilet                       1          4          1          1
                                           transferring) = 2 or more.
49......................................  M1850 (Transferring) = 2            3          2          1  .........
                                           or more.
50......................................  M1860 (Ambulation) = 1, 2           7  .........          4  .........
                                           or 3.
51......................................  M1860 (Ambulation) = 4 or           7          9          6          7
                                           more.
----------------------------------------------------------------------------------------------------------------
Source: CY 2014 Medicare claims data for episodes ending on or before December 31, 2014 (as of December 31,
  2014) for which we had a linked OASIS assessment. LUPA episodes, outlier episodes, and episodes with SCIC or
  PEP adjustments were excluded.
Note(s): 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.

    In updating the four-equation model for CY 2016, using 2014 data 
(the last update to the four-equation model for CY 2015 used 2013 
data), there were few changes to the point values for the variables in 
the four-equation model. These relatively minor changes reflect the 
change in the relationship between the grouper variables and resource 
use between 2013 and 2014. The CY 2016 four-equation model resulted in 
130 point-giving variables being used in the model (as compared to the 
124 variables for the 2015 recalibration). There were nine variables 
that were added to the model and three variables that were dropped from 
the model due to the absence of additional resources associated with 
the variable. The points for 18 variables increased in the CY 2016 
four-equation model and the points for 43 variables decreased in the CY 
2016 4-equation model. There were 58 variables with the same point 
values.
    Step 2: Re-defining the clinical and functional thresholds so they 
are reflective of the new points associated with the CY 2016 four-
equation model. After estimating the points for each of the variables 
and summing the clinical and functional points for each episode, we 
look at the distribution of the clinical score and functional score, 
breaking the episodes into different steps. The categorizations for the 
steps are as follows:
     Step 1: First and second episodes, 0-13 therapy visits.
     Step 2.1: First and second episodes, 14-19 therapy visits.
     Step 2.2: Third episodes and beyond, 14-19 therapy visits.
     Step 3: Third episodes and beyond, 0-13 therapy visits.
     Step 4: Episodes with 20+ therapy visits
    We then divide the distribution of the clinical score for episodes 
within a step such that a third of episodes are classified as low 
clinical score, a third of episodes are classified as medium clinical 
score, and a third of episodes are classified as high clinical score. 
The same approach is then done looking at the functional score. It was 
not always possible to evenly divide the episodes within each step into 
thirds due to many episodes being clustered around one particular 
score.\2\ Also, we looked at the average resource use associated with 
each clinical and functional score and used that to guide where we 
placed our thresholds. We tried to group scores with similar average 
resource use within the same level (even if it meant that more or less 
than a third of episodes

[[Page 39853]]

were placed within a level). The new thresholds, based off of the CY 
2016 four-equation model points are shown in Table 7.
---------------------------------------------------------------------------

    \2\ For Step 1, 54% of episodes were in the medium functional 
level (All with score 15).
    For Step 2.1, 77.2% of episodes were in the low functional level 
(Most with score 2 and 4).
    For Step 2.2, 67.1% of episodes were in the low functional level 
(All with score 0).
    For Step 3, 60.9% of episodes were in the medium functional 
level (Most with score 10).
    For Step 4, 49.8% of episodes were in the low functional level 
(Most with score 2).

                                                   Table 7--CY 2016 Clinical and Functional Thresholds
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               1st and 2nd episodes                        3rd+ episodes                 All Episodes
                                                    ----------------------------------------------------------------------------------------------------
                                                       0 to 13 therapy     14 to 19 therapy     0 to 13 therapy    14 to 19 therapy
                                                            visits              visits              visits              visits        20+ therapy visits
--------------------------------------------------------------------------------------------------------------------------------------------------------
                   Grouping Step:                    1..................  2.1...............  3.................  2.2...............  4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Equation(s) used to calculate points: (see Table 6)  1..................  2.................  3.................  4.................  (2&4)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Dimension:                       Severity Level:
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Clinical...................     C1.............  0 to 1.............  0.................  0.................  0 to 3............  0 to 3
                                    C2.............  2 to 3.............  1 to 7............  1.................  4 to 12...........  4 to 16
                                    C3.............  4+.................  8+................  2+................  13+...............  17+
    Functional.................     F1.............  0 to 14............  0 to 6............  0 to 6............  0.................  0 to 2
                                    F2.............  15.................  7 to 13...........  7 to10............  1 to 7............  3 to 6
                                    F3.............  16+................  14+...............  11+...............  8+................  7+
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Step 3: Once the clinical and functional thresholds are determined 
and each episode is assigned a clinical and functional level, the 
payment regression is estimated with an episode's wage-weighted minutes 
of care as the dependent variable. Independent variables in the model 
are indicators for the step of the episode as well as the clinical and 
functional levels within each step of the episode. Like the four-
equation model, the payment regression model is also estimated with 
robust standard errors that are clustered at the beneficiary level. 
Table 8 shows the regression coefficients for the variables in the 
payment regression model updated with CY 2014 data. The R-squared value 
for the payment regression model is 0.4790 (an increase from 0.4680 for 
the CY 2015 recalibration).

                    TABLE 8--Payment Regression Model
------------------------------------------------------------------------
                                                           New payment
                 Variable Description                      regression
                                                          coefficients
------------------------------------------------------------------------
Step 1, Clinical Score Medium.........................            $23.43
Step 1, Clinical Score High...........................             57.50
Step 1, Functional Score Medium.......................             73.18
Step 1, Functional Score High.........................            110.39
Step 2.1, Clinical Score Medium.......................             42.51
Step 2.1, Clinical Score High.........................            163.27
Step 2.1, Functional Score Medium.....................             34.24
Step 2.1, Functional Score High.......................             88.01
Step 2.2, Clinical Score Medium.......................             58.37
Step 2.2, Clinical Score High.........................            210.67
Step 2.2, Functional Score Medium.....................             10.64
Step 2.2, Functional Score High.......................             65.24
Step 3, Clinical Score Medium.........................              9.87
Step 3, Clinical Score High...........................             89.22
Step 3, Functional Score Medium.......................             53.47
Step 3, Functional Score High.........................             83.07
Step 4, Clinical Score Medium.........................             70.04
Step 4, Clinical Score High...........................            231.22
Step 4, Functional Score Medium.......................             14.07
Step 4, Functional Score High.........................             63.20
Step 2.1, 1st and 2nd Episodes, 14 to 19 Therapy                  444.92
 Visits...............................................
Step 2.2, 3rd+ Episodes, 14 to 19 Therapy Visits......            485.03
Step 3, 3rd+ Episodes, 0-13 Therapy Visits............            -73.86
Step 4, All Episodes, 20+ Therapy Visits..............            889.81
Intercept.............................................            378.68
------------------------------------------------------------------------
Source: CY 2014 Medicare claims data for episodes ending on or before
  December 31, 2014 (as of December 31, 2014) for which we had a linked
  OASIS assessment.

    Step 4: We use the coefficients from the payment regression model 
to predict each episode's wage-weighted minutes of care (resource use). 
We then divide these predicted values by the mean of the dependent 
variable (that is, the average wage-weighted minutes of care across all 
episodes used in the payment regression). This division constructs the 
weight for each episode, which is simply the ratio of the episode's 
predicted wage-weighted minutes of

[[Page 39854]]

care divided by the average wage-weighted minutes of care in the 
sample. Each episode is then aggregated into one of the 153 home health 
resource groups (HHRGs) and the ``raw'' weight for each HHRG was 
calculated as the average of the episode weights within the HHRG.
    Step 5: The weights associated with 0 to 5 therapy visits are then 
increased by 3.75 percent, the weights associated with 14-15 therapy 
visits are decreased by 2.5 percent, and the weights associated with 
20+ therapy visits are decreased by 5 percent. These adjustments to the 
case-mix weights were finalized in the CY 2012 HH PPS final rule (76 FR 
68557) and were done to address MedPAC's concerns that the HH PPS 
overvalues therapy episodes and undervalues non-therapy episodes and to 
better aligned the case-mix weights with episode costs estimated from 
cost report data.\3\
---------------------------------------------------------------------------

    \3\ Medicare Payment Advisory Commission (MedPAC), Report to the 
Congress: Medicare Payment Policy. March 2011, P. 176.
---------------------------------------------------------------------------

    Step 6: After the adjustments in step 5 are applied to the raw 
weights, the weights are 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 are gradually increased. We do 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 use 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) are constant. This interpolation is the identical to 
the process finalized in the CY 2012 HH PPS final rule (76 FR 68555).
    Step 7: The interpolated weights are then adjusted so that the 
average case-mix for the weights is equal to 1.0000.\4\ This last step 
creates the CY 2016 case-mix weights shown in Table 9.
---------------------------------------------------------------------------

    \4\ When computing the average, we compute a weighted average, 
assigning a value of one to each normal episode and a value equal to 
the episode length divided by 60 for PEPs.

                                    Table 9--CY 2016 Case-Mix Payment Weights
----------------------------------------------------------------------------------------------------------------
                                                                Clinical and functional levels
          Payment group               Step (episode and/or        (1 = low;  2 = medium;  3=    CY 2016 case-mix
                                     therapy visit ranges)                  high)                    weights
----------------------------------------------------------------------------------------------------------------
10111...........................  1st and 2nd Episodes, 0 to   C1F1S1.........................            0.5969
                                   5 Therapy Visits.
10112...........................  1st and 2nd Episodes, 6      C1F1S2.........................            0.7216
                                   Therapy Visits.
10113...........................  1st and 2nd Episodes, 7 to   C1F1S3.........................            0.8462
                                   9 Therapy Visits.
10114...........................  1st and 2nd Episodes, 10     C1F1S4.........................            0.9708
                                   Therapy Visits.
10115...........................  1st and 2nd Episodes, 11 to  C1F1S5.........................            1.0954
                                   13 Therapy Visits.
10121...........................  1st and 2nd Episodes, 0 to   C1F2S1.........................            1.2201
                                   5 Therapy Visits.
10122...........................  1st and 2nd Episodes, 6      C1F2S2.........................            1.4237
                                   Therapy Visits.
10123...........................  1st and 2nd Episodes, 7 to   C1F2S3.........................            1.6273
                                   9 Therapy Visits.
10124...........................  1st and 2nd Episodes, 10     C1F2S4.........................            0.7123
                                   Therapy Visits.
10125...........................  1st and 2nd Episodes, 11 to  C1F2S5.........................            0.8240
                                   13 Therapy Visits.
10131...........................  1st and 2nd Episodes, 0 to   C1F3S1.........................            0.9357
                                   5 Therapy Visits.
10132...........................  1st and 2nd Episodes, 6      C1F3S2.........................            1.0474
                                   Therapy Visits.
10133...........................  1st and 2nd Episodes, 7 to   C1F3S3.........................            1.1591
                                   9 Therapy Visits.
10134...........................  1st and 2nd Episodes, 10     C1F3S4.........................            1.2708
                                   Therapy Visits.
10135...........................  1st and 2nd Episodes, 11 to  C1F3S5.........................            1.4643
                                   13 Therapy Visits.
10211...........................  1st and 2nd Episodes, 0 to   C2F1S1.........................            1.6578
                                   5 Therapy Visits.
10212...........................  1st and 2nd Episodes, 6      C2F1S2.........................            0.7709
                                   Therapy Visits.
10213...........................  1st and 2nd Episodes, 7 to   C2F1S3.........................            0.8868
                                   9 Therapy Visits.
10214...........................  1st and 2nd Episodes, 10     C2F1S4.........................            1.0027
                                   Therapy Visits.
10215...........................  1st and 2nd Episodes, 11 to  C2F1S5.........................            1.1186
                                   13 Therapy Visits.
10221...........................  1st and 2nd Episodes, 0 to   C2F2S1.........................            1.2345
                                   5 Therapy Visits.
10222...........................  1st and 2nd Episodes, 6      C2F2S2.........................            1.3504
                                   Therapy Visits.
10223...........................  1st and 2nd Episodes, 7 to   C2F2S3.........................            1.5410
                                   9 Therapy Visits.
10224...........................  1st and 2nd Episodes, 10     C2F2S4.........................            1.7316
                                   Therapy Visits.
10225...........................  1st and 2nd Episodes, 11 to  C2F2S5.........................            0.6339
                                   13 Therapy Visits.
10231...........................  1st and 2nd Episodes, 0 to   C2F3S1.........................            0.7637
                                   5 Therapy Visits.
10232...........................  1st and 2nd Episodes, 6      C2F3S2.........................            0.8935
                                   Therapy Visits.
10233...........................  1st and 2nd Episodes, 7 to   C2F3S3.........................            1.0234
                                   9 Therapy Visits.
10234...........................  1st and 2nd Episodes, 10     C2F3S4.........................            1.1532
                                   Therapy Visits.
10235...........................  1st and 2nd Episodes, 11 to  C2F3S5.........................            1.2830
                                   13 Therapy Visits.
10311...........................  1st and 2nd Episodes, 0 to   C3F1S1.........................            1.4994
                                   5 Therapy Visits.
10312...........................  1st and 2nd Episodes, 6      C3F1S2.........................            1.7157
                                   Therapy Visits.
10313...........................  1st and 2nd Episodes, 7 to   C3F1S3.........................            0.7492
                                   9 Therapy Visits.
10314...........................  1st and 2nd Episodes, 10     C3F1S4.........................            0.8661
                                   Therapy Visits.
10315...........................  1st and 2nd Episodes, 11 to  C3F1S5.........................            0.9830
                                   13 Therapy Visits.
10321...........................  1st and 2nd Episodes, 0 to   C3F2S1.........................            1.0999
                                   5 Therapy Visits.
10322...........................  1st and 2nd Episodes, 6      C3F2S2.........................            1.2169
                                   Therapy Visits.
10323...........................  1st and 2nd Episodes, 7 to   C3F2S3.........................            1.3338
                                   9 Therapy Visits.
10324...........................  1st and 2nd Episodes, 10     C3F2S4.........................            1.5400
                                   Therapy Visits.
10325...........................  1st and 2nd Episodes, 11 to  C3F2S5.........................            1.7461
                                   13 Therapy Visits.
10331...........................  1st and 2nd Episodes, 0 to   C3F3S1.........................            0.8079
                                   5 Therapy Visits.
10332...........................  1st and 2nd Episodes, 6      C3F3S2.........................            0.9290
                                   Therapy Visits.
10333...........................  1st and 2nd Episodes, 7 to   C3F3S3.........................            1.0501
                                   9 Therapy Visits.

[[Page 39855]]

 
10334...........................  1st and 2nd Episodes, 10     C3F3S4.........................            1.1712
                                   Therapy Visits.
10335...........................  1st and 2nd Episodes, 11 to  C3F3S5.........................            1.2923
                                   13 Therapy Visits.
21111...........................  1st and 2nd Episodes, 14 to  C1F1S1.........................            1.4134
                                   15 Therapy Visits.
21112...........................  1st and 2nd Episodes, 16 to  C1F1S2.........................            1.6167
                                   17 Therapy Visits.
21113...........................  1st and 2nd Episodes, 18 to  C1F1S3.........................            1.8200
                                   19 Therapy Visits.
21121...........................  1st and 2nd Episodes, 14 to  C1F2S1.........................            0.6876
                                   15 Therapy Visits.
21122...........................  1st and 2nd Episodes, 16 to  C1F2S2.........................            0.8424
                                   17 Therapy Visits.
21123...........................  1st and 2nd Episodes, 18 to  C1F2S3.........................            0.9973
                                   19 Therapy Visits.
21131...........................  1st and 2nd Episodes, 14 to  C1F3S1.........................            1.1522
                                   15 Therapy Visits.
21132...........................  1st and 2nd Episodes, 16 to  C1F3S2.........................            1.3071
                                   17 Therapy Visits.
21133...........................  1st and 2nd Episodes, 18 to  C1F3S3.........................            1.4619
                                   19 Therapy Visits.
21211...........................  1st and 2nd Episodes, 14 to  C2F1S1.........................            1.6962
                                   15 Therapy Visits.
21212...........................  1st and 2nd Episodes, 16 to  C2F1S2.........................            1.9304
                                   17 Therapy Visits.
21213...........................  1st and 2nd Episodes, 18 to  C2F1S3.........................            0.8029
                                   19 Therapy Visits.
21221...........................  1st and 2nd Episodes, 14 to  C2F2S1.........................            0.9449
                                   15 Therapy Visits.
21222...........................  1st and 2nd Episodes, 16 to  C2F2S2.........................            1.0868
                                   17 Therapy Visits.
21223...........................  1st and 2nd Episodes, 18 to  C2F2S3.........................            1.2288
                                   19 Therapy Visits.
21231...........................  1st and 2nd Episodes, 14 to  C2F3S1.........................            1.3707
                                   15 Therapy Visits.
21232...........................  1st and 2nd Episodes, 16 to  C2F3S2.........................            1.5127
                                   17 Therapy Visits.
21233...........................  1st and 2nd Episodes, 18 to  C2F3S3.........................            1.7368
                                   19 Therapy Visits.
21311...........................  1st and 2nd Episodes, 14 to  C3F1S1.........................            1.9609
                                   15 Therapy Visits.
21312...........................  1st and 2nd Episodes, 16 to  C3F1S2.........................            0.8616
                                   17 Therapy Visits.
21313...........................  1st and 2nd Episodes, 18 to  C3F1S3.........................            1.0077
                                   19 Therapy Visits.
21321...........................  1st and 2nd Episodes, 14 to  C3F2S1.........................            1.1539
                                   15 Therapy Visits.
21322...........................  1st and 2nd Episodes, 16 to  C3F2S2.........................            1.3000
                                   17 Therapy Visits.
21323...........................  1st and 2nd Episodes, 18 to  C3F2S3.........................            1.4462
                                   19 Therapy Visits.
21331...........................  1st and 2nd Episodes, 14 to  C3F3S1.........................            1.5923
                                   15 Therapy Visits.
21332...........................  1st and 2nd Episodes, 16 to  C3F3S2.........................            1.8135
                                   17 Therapy Visits.
21333...........................  1st and 2nd Episodes, 18 to  C3F3S3.........................            2.0347
                                   19 Therapy Visits.
22111...........................  3rd+ Episodes, 14 to 15      C1F1S1.........................            0.4805
                                   Therapy Visits.
22112...........................  3rd+ Episodes, 16 to 17      C1F1S2.........................            0.6403
                                   Therapy Visits.
22113...........................  3rd+ Episodes, 18 to 19      C1F1S3.........................            0.8001
                                   Therapy Visits.
22121...........................  3rd+ Episodes, 14 to 15      C1F2S1.........................            0.9599
                                   Therapy Visits.
22122...........................  3rd+ Episodes, 16 to 17      C1F2S2.........................            1.1197
                                   Therapy Visits.
22123...........................  3rd+ Episodes, 18 to 19      C1F2S3.........................            1.2795
                                   Therapy Visits.
22131...........................  3rd+ Episodes, 14 to 15      C1F3S1.........................            1.4633
                                   Therapy Visits.
22132...........................  3rd+ Episodes, 16 to 17      C1F3S2.........................            1.6471
                                   Therapy Visits.
22133...........................  3rd+ Episodes, 18 to 19      C1F3S3.........................            1.8309
                                   Therapy Visits.
22211...........................  3rd+ Episodes, 14 to 15      C2F1S1.........................            0.5648
                                   Therapy Visits.
22212...........................  3rd+ Episodes, 16 to 17      C2F1S2.........................            0.7109
                                   Therapy Visits.
22213...........................  3rd+ Episodes, 18 to 19      C2F1S3.........................            0.8570
                                   Therapy Visits.
22221...........................  3rd+ Episodes, 14 to 15      C2F2S1.........................            1.0031
                                   Therapy Visits.
22222...........................  3rd+ Episodes, 16 to 17      C2F2S2.........................            1.1492
                                   Therapy Visits.
22223...........................  3rd+ Episodes, 18 to 19      C2F2S3.........................            1.2952
                                   Therapy Visits.
22231...........................  3rd+ Episodes, 14 to 15      C2F3S1.........................            1.4806
                                   Therapy Visits.
22232...........................  3rd+ Episodes, 16 to 17      C2F3S2.........................            1.6659
                                   Therapy Visits.
22233...........................  3rd+ Episodes, 18 to 19      C2F3S3.........................            1.8512
                                   Therapy Visits.
22311...........................  3rd+ Episodes, 14 to 15      C3F1S1.........................            0.6114
                                   Therapy Visits.
22312...........................  3rd+ Episodes, 16 to 17      C3F1S2.........................            0.7644
                                   Therapy Visits.
22313...........................  3rd+ Episodes, 18 to 19      C3F1S3.........................            0.9173
                                   Therapy Visits.
22321...........................  3rd+ Episodes, 14 to 15      C3F2S1.........................            1.0703
                                   Therapy Visits.
22322...........................  3rd+ Episodes, 16 to 17      C3F2S2.........................            1.2232
                                   Therapy Visits.
22323...........................  3rd+ Episodes, 18 to 19      C3F2S3.........................            1.3761
                                   Therapy Visits.
22331...........................  3rd+ Episodes, 14 to 15      C3F3S1.........................            1.5581
                                   Therapy Visits.
22332...........................  3rd+ Episodes, 16 to 17      C3F3S2.........................            1.7401
                                   Therapy Visits.
22333...........................  3rd+ Episodes, 18 to 19      C3F3S3.........................            1.9222
                                   Therapy Visits.
30111...........................  3rd+ Episodes, 0 to 5        C1F1S1.........................            0.4961
                                   Therapy Visits.
30112...........................  3rd+ Episodes, 6 Therapy     C1F1S2.........................            0.6700
                                   Visits.
30113...........................  3rd+ Episodes, 7 to 9        C1F1S3.........................            0.8440
                                   Therapy Visits.
30114...........................  3rd+ Episodes, 10 Therapy    C1F1S4.........................            1.0180
                                   Visits.
30115...........................  3rd+ Episodes, 11 to 13      C1F1S5.........................            1.1920
                                   Therapy Visits.
30121...........................  3rd+ Episodes, 0 to 5        C1F2S1.........................            1.3660
                                   Therapy Visits.
30122...........................  3rd+ Episodes, 6 Therapy     C1F2S2.........................            1.5546
                                   Visits.
30123...........................  3rd+ Episodes, 7 to 9        C1F2S3.........................            1.7433
                                   Therapy Visits.
30124...........................  3rd+ Episodes, 10 Therapy    C1F2S4.........................            1.9320
                                   Visits.
30125...........................  3rd+ Episodes, 11 to 13      C1F2S5.........................            0.5803
                                   Therapy Visits.
30131...........................  3rd+ Episodes, 0 to 5        C1F3S1.........................            0.7406
                                   Therapy Visits.
30132...........................  3rd+ Episodes, 6 Therapy     C1F3S2.........................            0.9009
                                   Visits.

[[Page 39856]]

 
30133...........................  3rd+ Episodes, 7 to 9        C1F3S3.........................            1.0612
                                   Therapy Visits.
30134...........................  3rd+ Episodes, 10 Therapy    C1F3S4.........................            1.2214
                                   Visits.
30135...........................  3rd+ Episodes, 11 to 13      C1F3S5.........................            1.3817
                                   Therapy Visits.
30211...........................  3rd+ Episodes, 0 to 5        C2F1S1.........................            1.5719
                                   Therapy Visits.
30212...........................  3rd+ Episodes, 6 Therapy     C2F1S2.........................            1.7621
                                   Visits.
30213...........................  3rd+ Episodes, 7 to 9        C2F1S3.........................            1.9523
                                   Therapy Visits.
30214...........................  3rd+ Episodes, 10 Therapy    C2F1S4.........................            0.6270
                                   Visits.
30215...........................  3rd+ Episodes, 11 to 13      C2F1S5.........................            0.7941
                                   Therapy Visits.
30221...........................  3rd+ Episodes, 0 to 5        C2F2S1.........................            0.9612
                                   Therapy Visits.
30222...........................  3rd+ Episodes, 6 Therapy     C2F2S2.........................            1.1284
                                   Visits.
30223...........................  3rd+ Episodes, 7 to 9        C2F2S3.........................            1.2955
                                   Therapy Visits.
30224...........................  3rd+ Episodes, 10 Therapy    C2F2S4.........................            1.4626
                                   Visits.
30225...........................  3rd+ Episodes, 11 to 13      C2F2S5.........................            1.6495
                                   Therapy Visits.
30231...........................  3rd+ Episodes, 0 to 5        C2F3S1.........................            1.8364
                                   Therapy Visits.
30232...........................  3rd+ Episodes, 6 Therapy     C2F3S2.........................            2.0233
                                   Visits.
30233...........................  3rd+ Episodes, 7 to 9        C2F3S3.........................            0.6211
                                   Therapy Visits.
30234...........................  3rd+ Episodes, 10 Therapy    C2F3S4.........................            0.8152
                                   Visits.
30235...........................  3rd+ Episodes, 11 to 13      C2F3S5.........................            1.0093
                                   Therapy Visits.
30311...........................  3rd+ Episodes, 0 to 5        C3F1S1.........................            1.2034
                                   Therapy Visits.
30312...........................  3rd+ Episodes, 6 Therapy     C3F1S2.........................            1.3975
                                   Visits.
30313...........................  3rd+ Episodes, 7 to 9        C3F1S3.........................            1.5916
                                   Therapy Visits.
30314...........................  3rd+ Episodes, 10 Therapy    C3F1S4.........................            1.7826
                                   Visits.
30315...........................  3rd+ Episodes, 11 to 13      C3F1S5.........................            1.9736
                                   Therapy Visits.
30321...........................  3rd+ Episodes, 0 to 5        C3F2S1.........................            2.1647
                                   Therapy Visits.
30322...........................  3rd+ Episodes, 6 Therapy     C3F2S2.........................            0.7054
                                   Visits.
30323...........................  3rd+ Episodes, 7 to 9        C3F2S3.........................            0.8858
                                   Therapy Visits.
30324...........................  3rd+ Episodes, 10 Therapy    C3F2S4.........................            1.0662
                                   Visits.
30325...........................  3rd+ Episodes, 11 to 13      C3F2S5.........................            1.2466
                                   Therapy Visits.
30331...........................  3rd+ Episodes, 0 to 5        C3F3S1.........................            1.4269
                                   Therapy Visits.
30332...........................  3rd+ Episodes, 6 Therapy     C3F3S2.........................            1.6073
                                   Visits.
30333...........................  3rd+ Episodes, 7 to 9        C3F3S3.........................            1.7999
                                   Therapy Visits.
30334...........................  3rd+ Episodes, 10 Therapy    C3F3S4.........................            1.9924
                                   Visits.
30335...........................  3rd+ Episodes, 11 to 13      C3F3S5.........................            2.1850
                                   Therapy Visits.
40111...........................  All Episodes, 20+ Therapy    C1F1S1.........................            0.7521
                                   Visits.
40121...........................  All Episodes, 20+ Therapy    C1F2S1.........................            0.9393
                                   Visits.
40131...........................  All Episodes, 20+ Therapy    C1F3S1.........................            1.1265
                                   Visits.
40211...........................  All Episodes, 20+ Therapy    C2F1S1.........................            1.3138
                                   Visits.
40221...........................  All Episodes, 20+ Therapy    C2F2S1.........................            1.5010
                                   Visits.
40231...........................  All Episodes, 20+ Therapy    C2F3S1.........................            1.6882
                                   Visits.
40311...........................  All Episodes, 20+ Therapy    C3F1S1.........................            1.8774
                                   Visits.
40321...........................  All Episodes, 20+ Therapy    C3F2S1.........................            2.0667
                                   Visits.
40331...........................  All Episodes, 20+ Therapy    C3F3S1.........................            2.2559
                                   Visits.
----------------------------------------------------------------------------------------------------------------

    To ensure the changes to the HH PPS case-mix weights are 
implemented in a budget neutral manner, we would apply a case-mix 
budget neutrality factor to the CY 2016 national, standardized 60-day 
episode payment rate (see section III.B.1. of this proposed rule). The 
case-mix budget neutrality factor is calculated as the ratio of total 
payments when the CY 2016 HH PPS case-mix weights (developed using CY 
2014 claims data) are applied to CY 2014 utilization (claims) data to 
total payments when CY 2015 HH PPS case-mix weights (developed using CY 
2013 claims data) are applied to CY 2014 utilization data. This 
produces a case-mix budget neutrality factor for CY 2016 of 1.0141, 
based on CY 2014 claims data as of December 31, 2014.
2. Proposed Reduction to the National, Standardized 60-Day Episode 
Payment Rate To Account for Nominal Case-Mix Growth
    Section 1895(b)(3)(B)(iv) of the Act gives the Secretary the 
authority to implement payment reductions for nominal case-mix growth 
(that is, case-mix growth unrelated to changes in patient acuity). 
Previously, we accounted for nominal case-mix growth through case-mix 
reductions implemented from 2008 through 2013 (76 FR 68528-68543). As 
stated in the 2013 final rule, the goal of the reductions for nominal 
case-mix growth is to better align payment with real changes in patient 
severity (77 FR 67077). Our analysis of data from CY 2000 through CY 
2010 found that only 15.97 percent of the total case-mix change was 
real and 84.03 percent of total case-mix change was nominal (77 FR 
41553). In the CY 2015 HH PPS final rule (79 FR 66032), we estimated 
that total case-mix increased by 2.76 percent between CY 2012 and CY 
2013 and of that amount, we estimated that 2.32 percent was a result of 
nominal case-mix growth (2.76 - (2.76 x 0.1597)). However, for 2015, we 
did not implement a reduction to the 2015 national, standardized 60-day 
episode payment amount to account for nominal case-mix growth, but 
stated that we would continue to monitor case-mix growth and may 
consider proposing nominal case-mix reductions in the future. Since the 
publication of the CY 2015 HH PPS final rule (79 FR 66032),

[[Page 39857]]

MedPAC reported on their assessment of the impact of the mandated 
rebasing adjustments on quality of and beneficiary access to home 
health care as required by section 3131(a) of the Affordable Care Act. 
As noted in section III.A.2 of this proposed rule, MedPAC concluded 
that quality of care and beneficiary access to care are unlikely to be 
negatively affected by the rebasing adjustments. We further estimate 
that case-mix increased by an additional 1.41 percent between CY 2013 
and CY 2014 (as evidenced by the budget neutrality factor of 1.0141 
percent described in section III.B.1 above). In applying the 15.97 
percent estimate of real case-mix growth to the total estimated case-
mix growth from CY 2013 to CY 2014 (1.41 percent), we estimate that 
case-mix increased by 1.18 percent (1.41 - (1.41 x 0.1597)) as a result 
of nominal case-mix growth (that is, case-mix growth unrelated to 
changes in patient acuity). Given the observed nominal case-mix growth 
of 2.32 percent in 2013 and 1.18 percent in 2014, the reduction to 
offset the nominal case-mix growth for these 2 years would be 3.41 
percent (1 - 1/(1.0232 x 1.0118) = 0.0341).
    We are proposing to implement this 3.41 percent reduction in equal 
increments over 2 years. Specifically, in addition to continuing our 
third year of implementation of the rebasing adjustments required under 
section 3131(a) of the Affordable Care Act, we are proposing to apply a 
1.72 percent (1 - 1/(1.0232 x 1.0118)1/2 = 1.72 percent) 
reduction to the national, standardized 60-day episode payment rate 
each year for 2 years, CY 2016 and CY 2017, under the ongoing authority 
of section 1895(b)(3)(B)(iv) of the Act. These reductions would adjust 
the national, standardized 60-day episode payment rate to account for 
nominal case-mix growth between CY 2012 and CY 2014 built into the 
episode payment rate through the 2015 and 2016 budget neutrality 
factors. The reductions will result in Medicare paying more accurately 
for the delivery of home health services and are separate from the 
rebasing adjustments finalized in CY 2014 under section 
1895(b)(3)(A)(iii) of the Act, which were calculated using CY 2012 
claims and CY 2011 HHA cost report data (which was the most current, 
complete data at the time of the CY 2014 HH PPS proposed and final 
rules). We will continue to monitor case-mix growth and may consider 
whether to propose additional nominal case-mix reductions in future 
rulemaking.
    We invite comments on the proposed reduction to the national, 
standardized 60-day episode payment amount of 1.72 percent in CY 2016 
and 1.72 percent in CY 2017 to account for nominal case-mix growth from 
CY 2012 through CY 2014 and the associated changes in the regulations 
text at Sec.  484.220.

C. CY 2016 Home Health Rate Update

1. CY 2016 Home Health Market Basket Update
    Section 1895(b)(3)(B) of the Act requires that the standard 
prospective payment amounts for CY 2015 be increased by a factor equal 
to the applicable HH market basket update for those HHAs that submit 
quality data as required by the Secretary. The home health market 
basket was rebased and revised in CY 2013. A detailed description of 
how we derive the HHA market basket is available in the CY 2013 HH PPS 
final rule (77 FR 67080- 67090).
    Section 3401(e) of the Affordable Care Act, adding new section 
1895(b)(3)(B)(vi) to the Act, requires that, in CY 2015 (and in 
subsequent calendar years), the market basket percentage under the HHA 
prospective payment system as described in section 1895(b)(3)(B) of the 
Act be annually adjusted by changes in economy-wide productivity. The 
statute defines the productivity adjustment, described in section 
1886(b)(3)(B)(xi)(II) of the Act, to be equal to the 10-year moving 
average of change in annual economy-wide private nonfarm business 
multifactor productivity (MFP) (as projected by the Secretary for the 
10-year period ending with the applicable fiscal year, calendar year, 
cost reporting period, or other annual period) (the ``MFP 
adjustment''). The Bureau of Labor Statistics (BLS) is the agency that 
publishes the official measure of private nonfarm business MFP. Please 
see http://www.bls.gov/mfp to obtain the BLS historical published MFP 
data. We note that the proposed methodology for calculating and 
applying the MFP adjustment to the HHA payment update is similar to the 
methodology used in other Medicare provider payment systems as required 
by section 3401 of the Affordable Care Act.
    Multifactor productivity is derived by subtracting the contribution 
of labor and capital input growth from output growth. The projections 
of the components of MFP are currently produced by IGI, a nationally 
recognized economic forecasting firm with which CMS contracts to 
forecast the components of the market basket and MFP. As described in 
the CY 2015 HH PPS proposed rule (79 FR 38384 through 38386), in order 
to generate a forecast of MFP, IGI replicated the MFP measure 
calculated by the BLS using a series of proxy variables derived from 
IGI's U.S. macroeconomic models. In the CY 2015 HH PPS proposed rule, 
we identified each of the major MFP component series employed by the 
BLS to measure MFP as well as provided the corresponding concepts 
determined to be the best available proxies for the BLS series.
    Beginning with the CY 2016 rulemaking cycle, the MFP adjustment is 
calculated using a revised series developed by IGI to proxy the 
aggregate capital inputs. Specifically, IGI has replaced the Real 
Effective Capital Stock used for Full Employment GDP with a forecast of 
BLS aggregate capital inputs recently developed by IGI using a 
regression model. This series provides a better fit to the BLS capital 
inputs as measured by the differences between the actual BLS capital 
input growth rates and the estimated model growth rates over the 
historical time period. Therefore, we are using IGI's most recent 
forecast of the BLS capital inputs series in the MFP calculations 
beginning with the CY 2016 rulemaking cycle. A complete description of 
the MFP projection methodology is available on our Web site at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html. Although 
we discuss the IGI changes to the MFP proxy series in this proposed 
rule, in the future, when IGI makes changes to the MFP methodology, we 
will announce them on our Web site rather than in the annual 
rulemaking.
    Using IGI's first quarter 2015 forecast, the MFP adjustment for CY 
2016 (the 10-year moving average of MFP for the period ending CY 2016) 
is projected to be 0.6 percent. Thus, in accordance with section 
1895(b)(3)(B)(iii) of the Act, we propose to base the CY 2016 market 
basket update, which is used to determine the applicable percentage 
increase for the HH payments, on the most recent estimate of the 
proposed 2010-based HH market basket (currently estimated to be 2.9 
percent based on IGI's first quarter 2015 forecast). We propose to then 
reduce this percentage increase by the current estimate of the MFP 
adjustment for CY 2016 of 0.6 percentage point (the 10-year moving 
average of MFP for the period ending CY 2016 based on IGI's first 
quarter 2015 forecast), in accordance with 1895(b)(3)(B)(vi). 
Therefore, the current estimate of the CY 2016 HH update is 2.3 percent 
(2.9 percent market basket update, less 0.6 percentage point MFP 
adjustment). Furthermore, we note that if more recent data are 
subsequently

[[Page 39858]]

available (for example, a more recent estimate of the market basket and 
MFP adjustment), we would use such data to determine the CY 2016 market 
basket update and MFP adjustment in the final rule.
    Section 1895(b)(3)(B) of the Act requires that the home health 
update be decreased by 2 percentage points for those HHAs that do not 
submit quality data as required by the Secretary. For HHAs that do not 
submit the required quality data for CY 2016, the home health update 
would be 0.3 percent (2.3 percent minus 2 percentage points).
2. CY 2016 Home Health Wage Index
a. Background
    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 that account for area wage differences, 
using adjustment factors that reflect the relative level of wages and 
wage-related costs applicable to the furnishing of HH services. Since 
the inception of the HH PPS, we have used inpatient hospital wage data 
in developing a wage index to be applied to HH payments. We propose to 
continue this practice for CY 2016, as we continue to believe that, in 
the absence of HH-specific wage data, using inpatient hospital wage 
data is appropriate and reasonable for the HH PPS. Specifically, we 
propose to continue to use the pre-floor, pre-reclassified hospital 
wage index as the wage adjustment to the labor portion of the HH PPS 
rates. For CY 2016, the updated wage data are for hospital cost 
reporting periods beginning on or after October 1, 2011 and before 
October 1, 2012 (FY 2012 cost report data).
    We would 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). In the CY 2006 HH 
PPS final rule (70 FR 68132), we adopted revised labor market area 
definitions as discussed in the OMB Bulletin No. 03-04 (June 6, 2003). 
This bulletin announced revised definitions for MSAs and the creation 
of micropolitan statistical areas and core-based statistical areas 
(CBSAs). The bulletin is available online at www.whitehouse.gov/omb/bulletins/b03-04.html. In adopting the CBSA geographic designations, we 
provided a one-year transition in CY 2006 with a blended wage index for 
all sites of service. For CY 2006, the wage index for each geographic 
area consisted of a blend of 50 percent of the CY 2006 MSA-based wage 
index and 50 percent of the CY 2006 CBSA-based wage index. We referred 
to the blended wage index as the CY 2006 HH PPS transition wage index. 
As discussed in the CY 2006 HH PPS final rule (70 FR 68132), since the 
expiration of this one-year transition on December 31, 2006, we have 
used the full CBSA-based wage index values.
    In this proposed rule, we propose to continue to use the same 
methodology discussed in the CY 2007 HH PPS final rule (71 FR 65884) to 
address those geographic areas in which there are no inpatient 
hospitals, and thus, no hospital wage data on which to base the 
calculation of the CY 2015 HH PPS wage index. For rural areas that do 
not have inpatient hospitals, we would use the average wage index from 
all contiguous CBSAs as a reasonable proxy. For FY 2016, there are no 
rural geographic areas without hospitals for which we would apply this 
policy. For rural Puerto Rico, we would not apply this methodology due 
to the distinct economic circumstances that exist there (for example, 
due to the close proximity to one another of almost all of Puerto 
Rico's various urban and non-urban areas, this methodology would 
produce a wage index for rural Puerto Rico that is higher than that in 
half of its urban areas). Instead, we would continue to use the most 
recent wage index previously available for that area. For urban areas 
without inpatient hospitals, we would 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 2016, the only urban area without inpatient 
hospital wage data is Hinesville, GA (CBSA 25980).
b. Update
    On February 28, 2013, OMB issued Bulletin No. 13-01, announcing 
revisions to the delineations of MSAs, Micropolitan Statistical Areas, 
and CBSAs, and guidance on uses of the delineation of these areas. This 
bulletin is available online at http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf. This bulletin states that 
it ``provides the delineations of all Metropolitan Statistical Areas, 
Metropolitan Divisions, Micropolitan Statistical Areas, Combined 
Statistical Areas, and New England City and Town Areas in the United 
States and Puerto Rico based on the standards published on June 28, 
2010, in the Federal Register (75 FR 37246-37252) and Census Bureau 
data.''
    While the revisions OMB published on February 28, 2013 are not as 
sweeping as the changes made when we adopted the CBSA geographic 
designations for CY 2006, the February 28, 2013 bulletin does contain a 
number of significant changes. For example, there are new CBSAs, urban 
counties that have become rural, rural counties that have become urban, 
and existing CBSAs that have been split apart.
    In the CY 2015 HH PPS final rule (79 FR 66085 through 66087), we 
finalized changes to the HH PPS wage index based on the newest OMB 
delineations, as described in OMB Bulletin No. 13-01, beginning in CY 
2015, including a one-year transition with a blended wage index for CY 
2015. Because the one-year transition period expires at the end of CY 
2015, the proposed HH PPS wage index for CY 2016 is fully based on the 
revised OMB delineations adopted in CY 2015. The proposed CY 2016 wage 
index is available on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/Home-Health-Prospective-Payment-System-Regulations-and-Notices.html.
3. CY 2016 Annual Payment Update
a. Background
    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 payment rate. As set forth in 42 CFR 484.220, we adjust the 
national, standardized 60-day episode payment rate by a case-mix 
relative weight and a wage index value based on the site of service for 
the beneficiary.
    To provide appropriate adjustments to the proportion of the payment 
amount under the HH PPS to account for area wage differences, 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 would continue to be 78.535 percent and the non-labor-related 
share would continue to be 21.465 percent as set out in the CY 2013 HH 
PPS final rule (77 FR 67068). The CY 2016 HH PPS rates would use the 
same case-mix methodology as set forth in the CY 2008 HH PPS final rule 
with comment period (72 FR 49762) and would be adjusted as described in 
section III.C. of this rule. The following are the steps we take to 
compute the case-mix and wage-adjusted 60-day episode rate:

[[Page 39859]]

    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 (78.535 
percent) and a non-labor portion (21.465 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. Section 484.225 sets 
forth the specific annual percentage update methodology. In accordance 
with Sec.  484.225(i), for a HHA that does not submit HH 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 HH market basket index amount minus two 
percentage points. Any reduction of the percentage change would apply 
only to the calendar year involved and would not be considered in 
computing the prospective payment amount for a subsequent calendar 
year.
    Medicare pays the national, standardized 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 (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 adjustment (LUPA) is provided on 
a per-visit basis as set forth in Sec.  484.205(c) and Sec.  484.230.
     A partial episode payment (PEP) 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 CY 2016 National, Standardized 60-Day Episode Payment Rate
    Section 1895(3)(A)(i) of the Act required that the 60-day episode 
base rate and other applicable amounts be standardized in a manner that 
eliminates the effects of variations in relative case mix and area wage 
adjustments among different home health agencies in a budget neutral 
manner. To determine the CY 2016 national, standardized 60-day episode 
payment rate, we would apply a wage index standardization factor, a 
case-mix budget neutrality factor described in section III.B.1, a 
nominal case-mix growth adjustment described in section III.B.2, the 
rebasing adjustment described in section II.C, and the MFP-adjusted 
home health market basket update discussed in section III.C.1 of this 
proposed rule.
    To calculate the wage index standardization factor, henceforth 
referred to as the wage index budget neutrality factor, we simulated 
total payments for non-LUPA episodes using the 2016 wage index and 
compared it to our simulation of total payments for non-LUPA episodes 
using the 2015 wage index. By dividing the total payments for non-LUPA 
episodes using the 2016 wage index by the total payments for non-LUPA 
episodes using the 2015 wage index, we obtain a wage index budget 
neutrality factor of 1.0006. We would apply the wage index budget 
neutrality factor of 1.0006 to the CY 2016 national, standardized 60-
day episode rate.
    As discussed in section III.B.1 of this proposed rule, to ensure 
the changes to the case-mix weights are implemented in a budget neutral 
manner, we would apply a case-mix weight budget neutrality factor to 
the CY 2016 national, standardized 60-day episode payment rate. The 
case-mix weight budget neutrality factor is calculated as the ratio of 
total payments when CY 2016 case-mix weights are applied to CY 2014 
utilization (claims) data to total payments when CY 2015 case-mix 
weights are applied to CY 2014 utilization data. The case-mix budget 
neutrality factor for CY 2016 would be 1.0141 as described in section 
III.B.1 of this proposed rule.
    Next, as discussed in section III.B.2 of this proposed rule, we 
would apply a reduction of 1.72 percent to the national, standardized 
60-day episode payment rate in CY 2016 to account for nominal case-mix 
growth between CY 2012 and CY 2014. Then, we would apply the -$80.95 
rebasing adjustment finalized in the CY 2014 HH PPS final rule (78 FR 
72256) and discussed in section II.C. Lastly, we would update the 
payment rates by the CY 2016 HH payment update percentage of 2.3 
percent (MFP-adjusted home health market basket update) as described in 
section III.C.1 of this proposed rule. The CY 2016 national, 
standardized 60-day episode payment rate is calculated in Table 10.

                                      Table 10--CY 2016 60-Day National, Standardized 60-Day Episode Payment Amount
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                             CY 2016
                                                       Wage index        Case-mix      Nominal case-       CY 2016        CY 2016  HH       National,
  CY 2015 National,  standardized 60-day  episode        budget       weights budget     mix growth        Rebasing      Payment update    standardized
                      payment                          neutrality       neutrality     adjustment (1-     adjustment       percentage     60-day episode
                                                         factor           factor          0.0172)                                            payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
$2,961.38.........................................        x 1.0006         x 1.0141         x 0.9828          -$80.95          x 1.023        $2,938.37
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The CY 2016 national, standardized 60-day episode payment rate for 
an HHA that does not submit the required quality data is updated by the 
CY 2016 HH payment update (2.3 percent) minus 2 percentage points and 
is shown in Table 11.

[[Page 39860]]



                  Table 11--For HHAs That Do Not Submit the Quality Data--CY 2015 National, Standardized 60-Day Episode Payment Amount
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                          CY 2016  HH
                                                       Wage index        Case-mix      Nominal case-                     Payment update      CY 2016
   CY 2015 National, standardized 60-day episode         budget       weights budget     mix growth        CY 2016         percentage       National,
                      payment                          neutrality       neutrality     adjustment (1-      Rebasing         minus 2        standardized
                                                         factor           factor          0.0172)         adjustment       percentage     60-day episode
                                                                                                                             points          payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
$2,961.38.........................................        x 1.0006         x 1.0141         x 0.9828          -$80.95          x 1.003        $2,880.92
--------------------------------------------------------------------------------------------------------------------------------------------------------

c. CY 2016 National Per-Visit Rates
    The national per-visit rates are used to pay LUPAs (episodes with 
four or fewer visits) and are also used to compute imputed costs in 
outlier calculations. The per-visit rates are paid by type of visit or 
HH discipline. The six HH 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 (SLP).
    To calculate the CY 2016 national per-visit rates, we start with 
the CY 2015 national per-visit rates. We then apply a wage index budget 
neutrality factor to ensure budget neutrality for LUPA per-visit 
payments and increase each of the six per-visit rates by the maximum 
rebasing adjustments described in section II.C. of this rule. We 
calculate the wage index budget neutrality factor by simulating total 
payments for LUPA episodes using the 2016 wage index and comparing it 
to simulated total payments for LUPA episodes using the 2015 wage 
index. By dividing the total payments for LUPA episodes using the 2016 
wage index by the total payments for LUPA episodes using the 2015 wage 
index, we obtain a wage index budget neutrality factor of 1.0006. We 
would apply the wage index budget neutrality factor of 1.0006 to the CY 
2016 national per-visit rates.
    The LUPA per-visit rates are not calculated using case-mix weights. 
Therefore, there is no case-mix weights budget neutrality factor needed 
to ensure budget neutrality for LUPA payments. Finally, the per-visit 
rates for each discipline are updated by the CY 2016 HH payment update 
percentage of 2.3 percent. The national per-visit rates are adjusted by 
the wage index based on the site of service of the beneficiary. The 
per-visit payments for LUPAs are separate from the LUPA add-on payment 
amount, which is paid for episodes that occur as the only episode or 
initial episode in a sequence of adjacent episodes. The CY 2016 
national per-visit rates are shown in Tables 12 and 13.

                         Table 12--CY 2016 National Per-Visit Payment Amounts for HHAs That DO Submit the Required Quality Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        CY 2016 HH
                    HH Discipline type                     CY 2015 Per-visit  Wage index budget   CY 2016 Rebasing    Payment update   CY 2016 Per-visit
                                                                payment       neutrality factor      adjustment         percentage          payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Home Health Aide.........................................             $57.89           x 1.0006            + $1.79            x 1.023             $61.09
Medical Social Services..................................             204.91           x 1.0006             + 6.34            x 1.023             216.23
Occupational Therapy.....................................             140.70           x 1.0006             + 4.35            x 1.023             148.47
Physical Therapy.........................................             139.75           x 1.0006             + 4.32            x 1.023             147.47
Skilled Nursing..........................................             127.83           x 1.0006             + 3.96            x 1.023             134.90
Speech-Language Pathology................................             151.88           x 1.0006             + 4.70            x 1.023             160.27
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The CY 2016 per-visit payment rates for an HHA that does not submit 
the required quality data are updated by the CY 2016 HH payment update 
(2.3 percent) minus 2 percentage points and is shown in Table 13.

                       Table 13--CY 2016 National Per-Visit Payment Amounts for HHAs That DO NOT Submit the Required Quality Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                       CY 2016  HH
                                                                                                                     Payment  update
                    HH Discipline type                       CY 2015  Per-    Wage index budget   CY 2016 Rebasing   percentage minus    CY 2016  Per-
                                                              visit rates     neutrality factor      adjustment        2 percentage       visit rates
                                                                                                                          points
--------------------------------------------------------------------------------------------------------------------------------------------------------
Home Health Aide.........................................             $57.89           x 1.0006            + $1.79            x 1.003             $59.89
Medical Social Services..................................             204.91           x 1.0006             + 6.34            x 1.003             212.01
Occupational Therapy.....................................             140.70           x 1.0006             + 4.35            x 1.003             145.57
Physical Therapy.........................................             139.75           x 1.0006             + 4.32            x 1.003             144.59
Skilled Nursing..........................................             127.83           x 1.0006             + 3.96            x 1.003             132.26
Speech-Language Pathology................................             151.88           x 1.0006             + 4.70            x 1.003             157.14
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 39861]]

d. Low-Utilization Payment Adjustment (LUPA) Add-On Factors
    LUPA episodes that occur as the only episode or as an initial 
episode in a sequence of adjacent episodes are adjusted by applying an 
additional amount to the LUPA payment before adjusting for area wage 
differences. In the CY 2014 HH PPS final rule, we changed the 
methodology for calculating the LUPA add-on amount by finalizing the 
use of three LUPA add-on factors: 1.8451 for SN; 1.6700 for PT; and 
1.6266 for SLP (78 FR 72306). We multiply the per-visit payment amount 
for the first SN, PT, or SLP visit in LUPA episodes that occur as the 
only episode or an initial episode in a sequence of adjacent episodes 
by the appropriate factor to determine the LUPA add-on payment amount. 
For example, for LUPA episodes that occur as the only episode or an 
initial episode in a sequence of adjacent episodes, if the first 
skilled visit is SN, the payment for that visit would be $248.90 
(1.8451 multiplied by $134.90), subject to area wage adjustment.
e. CY 2016 Non-Routine Medical Supply (NRS) Payment Rates
    Payments for NRS are computed by multiplying the relative weight 
for a particular severity level by the NRS conversion factor. To 
determine the CY 2016 NRS conversion factor, we start with the 2015 NRS 
conversion factor ($53.23) and apply the -2.82 percent rebasing 
adjustment described in section II.C. of this rule (1-0.0282 = 0.9718). 
We then update the conversion factor by the CY 2016 HH payment update 
percentage (2.3 percent). We do not apply a standardization factor as 
the NRS payment amount calculated from the conversion factor is not 
wage or case-mix adjusted when the final claim payment amount is 
computed. The NRS conversion factor for CY 2016 is shown in Table 14.

            Table 14--CY 2016 NRS Conversion Factor for HHAs That DO Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                              CY 2016  HH
           CY 2015  NRS conversion factor              CY 2016  Rebasing    Payment  update      CY 2016  NRS
                                                          adjustment          percentage      conversion  factor
----------------------------------------------------------------------------------------------------------------
$53.23..............................................           x 0.9718             x 1.023              $52.92
----------------------------------------------------------------------------------------------------------------

    Using the CY 2015 NRS conversion factor, the payment amounts for 
the six severity levels are shown in Table 15.

             Table 15--CY 2016 NRS Payment Amounts for HHAs That DO Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                                                  CY 2016 NRS
               Severity level                       Points (scoring)         Relative weight    Payment amounts
----------------------------------------------------------------------------------------------------------------
1..........................................  0............................             0.2698             $14.28
2..........................................  1 to 14......................             0.9742              51.55
3..........................................  15 to 27.....................             2.6712             141.36
4..........................................  28 to 48.....................             3.9686             210.02
5..........................................  49 to 98.....................             6.1198             323.86
6..........................................  99+..........................            10.5254             557.00
----------------------------------------------------------------------------------------------------------------

    For HHAs that do not submit the required quality data, we again 
begin with the CY 2015 NRS conversion factor ($53.23) and apply the -
2.82 percent rebasing adjustment discussed in section II.C of this 
proposed rule (1-0.0282= 0.9718). We then update the NRS conversion 
factor by the CY 2016 HH payment update percentage (2.3 percent) minus 
2 percentage points. The CY 2016 NRS conversion factor for HHAs that do 
not submit quality data is shown in Table 16.

          Table 16--CY 2016 NRS Conversion Factor for HHAs That DO NOT Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                              CY 2016  HH
                                                       CY 2016  Rebasing    Payment  update      CY 2016  NRS
            CY 2015 NRS Conversion factor                 adjustment      percentage minus 2  Conversion  factor
                                                                           percentage points
----------------------------------------------------------------------------------------------------------------
$53.23..............................................           x 0.9718             x 1.003              $51.88
----------------------------------------------------------------------------------------------------------------

    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 17.

[[Page 39862]]



           Table 17--CY 2016 NRS Payment Amounts for HHAs That DO NOT Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                                                  CY 2016 NRS
               Severity level                       Points (scoring)         Relative weight    Payment amounts
----------------------------------------------------------------------------------------------------------------
1..........................................  0............................             0.2698             $14.00
2..........................................  1 to 14......................             0.9742              50.54
3..........................................  15 to 27.....................             2.6712             138.58
4..........................................  28 to 48.....................             3.9686             205.89
5..........................................  49 to 98.....................             6.1198             317.50
6..........................................  99+..........................            10.5254             546.06
----------------------------------------------------------------------------------------------------------------

f. Rural Add-On
    Section 421(a) of the MMA required, for HH services furnished in a 
rural areas (as defined in section 1886(d)(2)(D) of the Act), for 
episodes or visits ending on or after April 1, 2004, and before April 
1, 2005, that the Secretary increase the payment amount that otherwise 
would have been made under section 1895 of the Act for the services by 
5 percent.
    Section 5201 of the DRA amended section 421(a) of the MMA. The 
amended section 421(a) of the MMA required, for HH services furnished 
in a rural area (as defined in section 1886(d)(2)(D) of the Act), on or 
after January 1, 2006 and before January 1, 2007, that the Secretary 
increase the payment amount otherwise made under section 1895 of the 
Act for those services by 5 percent.
    Section 3131(c) of the Affordable Care Act amended section 421(a) 
of the MMA to provide an increase of 3 percent of the payment amount 
otherwise made under section 1895 of the Act for HH 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.
    Section 210 of the Medicare Access and CHIP Reauthorization Act of 
2015 (MACRA) (Pub. L. 114-10) amended section 421(a) of the MMA to 
extend the rural add-on by providing an increase of 3 percent of the 
payment amount otherwise made under section 1895 of the Act for HH 
services provided in a rural area (as defined in section 1886(d)(2)(D) 
of the Act), for episodes and visits ending before January 1, 2018.
    Section 421 of the MMA, as amended, 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 HH services 
furnished during a period to offset the increase in payments resulting 
in the application of this section of the statute.
    For CY 2016, home health payment rates for services provided to 
beneficiaries in areas that are defined as rural under the OMB 
delineations would be increased by 3 percent as mandated by section 210 
of the MACRA. The 3 percent rural add-on is applied to the national, 
standardized 60-day episode payment rate, national per visit rates, and 
NRS conversion factor when HH services are provided in rural (non-CBSA) 
areas. Refer to Tables 18 through 21 for these payment rates.

                               Table 18--CY 2016 Payment Amounts for 60-Day Episodes for Services Provided in a Rural Area
--------------------------------------------------------------------------------------------------------------------------------------------------------
                      For HHAs that DO submit quality data                                       For HHAs that DO NOT submit quality data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      CY 2016
                                                                       Rural                                                             CY 2016 Rural
                                                Multiply by the 3    national,                                      Multiply by the 3      national,
CY 2016 National, standardized  60-day episode  percent rural add- standardized  CY 2016 National, standardized 60- percent rural add-  standardized 60-
                 payment rate                           on            60-day          day episode payment rate              on            day episode
                                                                      episode                                                             payment rate
                                                                   payment rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
$2,938.37.....................................            x 1.03   $3,026.52     $2,880.92........................            x 1.03          $2,967.35
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                        Table 19--CY 2016 Per-Visit Amounts for Services Provided in a Rural Area
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      For HHAs that DO submit quality data                For HHAs that DO NOT submit quality data
                                            ------------------------------------------------------------------------------------------------------------
             HH Discipline type                                 Multiply by the                                        Multiply by the
                                               CY 2016  Per-    3 percent rural  CY 2016 Rural per-   CY 2016  Per-    3 percent rural    CY 2016 Rural
                                                visit rate          add-on          visit rates        visit rate          add-on        per-visit rates
--------------------------------------------------------------------------------------------------------------------------------------------------------
HH Aide....................................            $61.09            x 1.03            $62.92             $59.89            x 1.03            $61.69
MSS........................................            216.23            x 1.03            222.72             212.01            x 1.03            218.37
OT.........................................            148.47            x 1.03            152.92             145.57            x 1.03            149.94
PT.........................................            147.47            x 1.03            151.89             144.59            x 1.03            148.93
SN.........................................            134.90            x 1.03            138.95             132.26            x 1.03            136.23
SLP........................................            160.27            x 1.03            165.08             157.14            x 1.03            161.85
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 39863]]


                                      Table 20--CY 2016 NRS Conversion Factor for Services Provided in Rural Areas
--------------------------------------------------------------------------------------------------------------------------------------------------------
                     For HHAs that DO submit quality data                                       For HHAs that DO NOT submit quality data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      CY 2016
                                                 Multiply by the 3   Rural NRS                                      Multiply by the 3  CY 2016 Rural NRS
           CY 2016 Conversion factor             percent rural add- conversion       CY 2016 Conversion factor      percent rural add- conversion factor
                                                         on           factor                                                on
--------------------------------------------------------------------------------------------------------------------------------------------------------
$52.92.........................................            x 1.03   $54.51      $51.88............................            x 1.03             $53.44
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                       Table 21--CY 2016 NRS Payment Amounts for Services Provided in Rural Areas
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   For HHAs that DO submit quality        For HHAs that DO NOT submit
                                                                                 data (CY 2016 NRS conversion factor       quality data (CY 2016 NRS
                                                                                               = $54.51                   Conversion Factor = $53.44)
                Severity level                         Points (scoring)         ------------------------------------------------------------------------
                                                                                                      CY 2016 NRS                          CY 2016 NRS
                                                                                  Relative weight   Payment amounts    Relative weight   Payment amounts
                                                                                                    for rural areas                      for rural areas
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............................................  0...............................            0.2698            $14.71             0.2698            $14.42
2............................................  1 to 14.........................            0.9742             53.10             0.9742             52.06
3............................................  15 to 27........................            2.6712            145.61             2.6712            142.75
4............................................  28 to 48........................            3.9686            216.33             3.9686            212.08
5............................................  49 to 98........................            6.1198            333.59             6.1198            327.04
6............................................  99+.............................           10.5254            573.74            10.5254            562.48
--------------------------------------------------------------------------------------------------------------------------------------------------------

D. Payments for High-Cost Outliers Under the HH PPS

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 care needs. Prior to the 
enactment of the Affordable Care Act, section 1895(b)(5) of the Act 
stipulated that projected total outlier payments could not exceed 5 
percent of total projected or estimated HH payments in a given year. In 
the July 3, 2000 Medicare Program; Prospective Payment System for Home 
Health Agencies 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 HH 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 amount is the sum of the wage and case-mix 
adjusted PPS episode amount and wage-adjusted FDL amount. The 
proportion of additional costs over the outlier threshold amount paid 
as outlier payments is referred to as the loss-sharing ratio.
    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 
still exceeded the 5 percent target and, in the absence of corrective 
measures, would continue do to so. 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 implemented in concert with a reduced 
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 expenditure). For CY 2010, we first returned 
the 5 percent held for the previous target outlier pool to the 
national, standardized 60-day episode rates, the national per-visit 
rates, the LUPA add-on payment amount, and the 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.
    As we noted in the CY 2011 HH PPS final rule (75 FR 70397 through 
70399), section 3131(b)(1) of the Affordable Care Act amended section 
1895(b)(3)(C) of the Act, and requires the Secretary to reduce the HH 
PPS payment rates such that aggregate HH PPS payments are reduced by 5 
percent. In addition, section 3131(b)(2) of the Affordable Care Act 
amended section 1895(b)(5) of the Act by re-designating 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 for outlier episodes because of their unusual variation 
in the type or amount of medically necessary care. The total amount of 
the additional payments or payment adjustments for outlier episodes may 
not exceed 2.5 percent of the estimated total HH PPS payments for that 
year and outlier payments as a percent of total payments are capped for 
each HHA at 10 percent.
    As such, beginning in CY 2011, our HH PPS outlier policy is that we 
reduce payment rates by 5 percent and target up to 2.5 percent of total 
estimated HH PPS payments to be paid as outliers. To do so, we first 
returned the 2.5 percent held for the target CY 2010 outlier pool to 
the national, standardized 60-day episode rates, the national per visit 
rates, the LUPA add-on payment amount, and the NRS conversion factor 
for CY 2010. We then reduced the rates by 5 percent as required by 
section 1895(b)(3)(C) of the Act, as amended by section 3131(b)(1) of 
the Affordable Care Act. For CY 2011 and subsequent calendar years we 
target up to 2.5 percent of estimated total payments to

[[Page 39864]]

be paid as outlier payments, and apply a 10 percent agency-level 
outlier cap.
2. Fixed Dollar Loss (FDL) Ratio and Loss-Sharing 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 qualifying 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). 
Historically, we have used a value of 0.80 for the loss-sharing ratio 
which, we believe, 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 estimated costs 
above the 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, and we maintained that ratio in CY 
2012. Simulations based on CY 2010 claims data completed for the CY 
2013 HH PPS final rule showed that outlier payments were estimated to 
comprise approximately 2.18 percent of total HH PPS payments in CY 
2013, and as such, we lowered the FDL ratio from 0.67 to 0.45. We 
stated that lowering the FDL ratio to 0.45, while maintaining a loss-
sharing ratio of 0.80, struck an effective balance of compensating for 
high-cost episodes while allowing more episodes to qualify as outlier 
payments (77 FR 67080). The national, standardized 60-day episode 
payment amount is multiplied by the FDL ratio. That amount is wage-
adjusted to derive the wage-adjusted FDL amount, which is added to the 
case-mix and wage-adjusted 60-day episode payment amount to determine 
the outlier threshold amount that costs have to exceed before Medicare 
would pay 80 percent of the additional estimated costs.
    For this proposed rule, simulating payments using preliminary CY 
2014 claims data (as of December 31, 2014) and the CY 2015 payment 
rates (79 FR 66088 through 66092), we estimate that outlier payments in 
CY 2015 would comprise 2.02 percent of total payments. Based on 
simulations using CY 2014 claims data and the CY 2016 payments rates in 
section III.C.3 of this proposed rule, we estimate that outlier 
payments would comprise approximately 2.34 percent of total HH PPS 
payments in CY 2016, a percent change of almost 16 percent. This 
increase is attributable to the increase in the national per-visit 
amounts through the rebasing adjustments and the decrease in the 
national, standardized 60-day episode payment amount as a result of the 
rebasing adjustment and the nominal case-mix growth reduction. Given 
similar rebasing adjustments and case-mix growth reduction would also 
occur for 2017, and hence a similar anticipated increase in the outlier 
payments, we estimate that for CY 2017 outlier payments as a percent of 
total HH PPS payments would exceed 2.5 percent.
    At this time, we are not proposing a change to the FDL ratio or 
loss-sharing ratio for CY 2016 as we believe that maintaining an FDL of 
0.45 and a loss-sharing ratio of 0.80 are appropriate given the 
percentage of outlier payments is estimated to increase as a result of 
the increase in the national per-visit amounts through the rebasing 
adjustments and the decrease in the national, standardized 60-day 
episode payment amount as a result of the rebasing adjustment and 
nominal case-mix growth reduction. In the final rule, we will update 
our estimate of outlier payments as a percent of total HH PPS payments 
using the most current and complete year of HH PPS data (CY 2014 claims 
data as of June 30, 2015). We would continue to monitor the percent of 
total HH PPS payments paid as outlier payments to determine if future 
adjustments to either the FDL ratio or loss-sharing ratio are 
warranted.

E. Report to Congress on the Home Health Study Required by Section 
3131(d) of the Affordable Care Act and an Update on Subsequent Research 
and Analysis

    The current home health prospective payment system (HH PPS) pays a 
determined amount for a 60-day episode of care adjusted for case mix 
using 153 home health resource groups (HHRGs). The 153 HHRGs are 
determined based on the amount of therapy provided, the episode's 
timing in a sequence of episodes, and the patient's clinical and 
functional status determined from data reported on the Outcome and 
Assessment Information Set (OASIS). There has been criticism that home 
health providers have responded to Medicare's payment policy by 
altering the level of service provided to patients.\5\ A review of the 
literature increasingly indicates that the current HH PPS payment model 
drives HHA resource allocation and practice decisions.\6\ Specifically, 
research has highlighted the need to examine whether there are 
vulnerabilities present within the current HH PPS model that provide 
disincentives for serving the most clinically complex and vulnerable 
beneficiaries who receive home health care while incentivizing 
providers to provide more therapy service than needed to increase their 
reimbursement.\7\ There is increasing concern that the current home 
health payment system encourages home health providers to deliver the 
maximum volume of therapy services while restricting the number of 
skilled nursing and home health aide services because of the therapy 
payment thresholds.\8\
---------------------------------------------------------------------------

    \5\ Rosati, R., Russell, D., Peng, T., Brickner, C., Kurowski, 
D., Christopher, M.A., Sheehan, K. (2014). Medicare Home Health 
Payment Reform May Jeopardize Access for Clinically Complex and 
Socially Vulnerable Patients. Health Affairs. 33(6), 946-956. Doi: 
10.1377/hlthaff.2013.1159
    \6\ Cabin, W. (2009). Evidence-based Research Challenges Home 
Care PPS Patient Benefits, Costs, and Payment Structure. Home Health 
Care Management and Practice. 21(4), 240-245. Doi: 10.1177/
10848223088328325
    \7\ Ibid.
    \8\ Rosati, R., Russell, D., Peng, T., Brickner, C., Kurowski, 
D., Christopher, M.A., Sheehan, K. (2014). Medicare Home Health 
Payment Reform May Jeopardize Access for Clinically Complex and 
Socially Vulnerable Patients. Health Affairs. 33(6), 946-956. Doi: 
10.1377/hlthaff.2013.1159
---------------------------------------------------------------------------

    This raises the question whether there is a disparity in payment 
for those patients with clinically complex and/or poorly controlled 
chronic conditions who do not qualify for therapy but require a large 
number of skilled nursing visits.\9\
---------------------------------------------------------------------------

    \9\ Ibid.
---------------------------------------------------------------------------

    Section 3131(d) of the Affordable Care Act directed the Secretary 
to conduct a study on HHA costs involved with providing ongoing access 
to care to low-income Medicare beneficiaries or beneficiaries in 
medically underserved areas, and in treating beneficiaries with high 
levels of severity of illness.\10\ To examine access to Medicare home 
health services and payment, relative to cost, for the vulnerable 
patient populations, we awarded a contract to L&M Policy Research to 
perform extensive analysis of both survey and administrative data. 
Specifically, the L&M collected survey data from physicians and HHAs to 
examine factors associated with potential access to care issues. The 
surveys provided information on whether, and the reasons

[[Page 39865]]

as to why, patients were not placed or admitted for home health 
services or experienced delays in receiving home health services, and 
information on the characteristics of patients who may have experienced 
access issues. L&M also analyzed administrative data through 
descriptive and regression analyses to examine the relationship between 
patient characteristics and estimated financial margin (difference 
between payment and estimated cost). The study focused on margins 
because margin differences, particularly those associated with patient 
characteristics, indicate that financial incentives may exist in the HH 
PPS to provide home health care for certain types of patients over 
others. Lower margins, if systematically associated with care for 
vulnerable patient populations, may indicate financial disincentives 
for HHAs to admit these patients and may create access to care issues 
for them.
---------------------------------------------------------------------------

    \10\ http://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center.html
---------------------------------------------------------------------------

    The results of the survey revealed that over 80 percent of HHAs and 
over 90 percent of physicians reported that access to home health care 
for Medicare fee-for-service beneficiaries in their local area was 
excellent or good. When survey respondents reported access issues, 
specifically their inability to place or admit Medicare fee-for-service 
patients into home health, the most common reason reported was that the 
patients did not qualify for the Medicare home health benefit. HHAs and 
physicians also cited family or caregiver issues as an important 
contributing factor in the inability to admit or place patients. About 
17.2 percent of HHAs and 16.7 percent of physicians reported 
insufficient payment as an important contributing factor in the 
inability to admit or place patients. The survey results suggest that 
much of the variation in access to Medicare home health services is 
associated with social and personal conditions and therefore CMS' 
ability to improve access for certain vulnerable patient populations 
through payment policy may be limited.
    Analysis of CY 2010 HHA payment and cost data suggests that margins 
may differ substantially across the HH PPS case-mix groups. In 
addition, particular beneficiary characteristics appear to be strongly 
associated with margin, and thus may create financial incentives to 
select certain patients over others. Margins were estimated to be lower 
in CY 2010 for patients who required parenteral nutrition, who had 
traumatic wounds or ulcers, or required substantial assistance in 
bathing. Given that these variables are already included in the HH PPS 
case-mix system, the results indicate that modifications to the case-
mix system may be needed. Furthermore, in CY 2010, beneficiaries 
admitted after acute or post-acute stays or who had high Hierarchical 
Condition Category scores or certain poorly-controlled clinical 
conditions, such as poorly-controlled pulmonary disorders, were also 
associated with substantially lower home health margins. In addition, 
other characteristics, such as those describing assistance by informal 
caregivers for ADL needs and those describing socio- economic status, 
such as dual eligibility for Medicare and Medicaid, were strongly 
associated with lower margins. Exploration of potential payment 
methodology changes indicated that accounting for additional variables 
in HH PPS payment may decrease the difference in estimated margin 
between individuals in specific vulnerable subgroups and those not in 
the subgroups, thereby potentially decreasing financial incentives to 
select certain types of patients over others.
    CMS awarded a follow-on contract to Abt Associates to further 
explore margin differences across patient characteristics and possible 
payment methodology changes suggested by the results of the home health 
study. Additionally, we have heard from various stakeholders that the 
current payment system methodology is overly complex and does not fully 
reflect the range of services provided under the home health benefit, 
and thus this follow-on study would look at these aspects of the 
current payment system as well.
    Under the follow-on contract, Abt Associates convened a Clinical 
Workgroup meeting on June 25, 2014 to gain clinical insight from 
industry regarding the current HH PPS. Based upon the feedback provided 
during the Clinical Workgroup meeting, as well as CMS concerns about 
the current model given the findings from the Home Health Study, Abt 
Associates was tasked with developing model options for consideration 
and discussion. In September 2014, Abt Associates presented several 
payment model options for CMS consideration, which were also presented 
to a Technical Expert Panel meeting held on January 8, 2015.
     Diagnosis on Top Model:
    The first model option, referred to as the ``Diagnosis on Top'' 
(DOT) model, combines diagnosis groups with a regression model to 
create separate weights for patients with different diagnoses. For its 
``Studies in Home Health Case Mix'' project design report (January 7, 
2002), Abt had explored the possibility of a DOT model for the home 
health payment system. At that time, there was a decision that the 
potential gains in payment accuracy which would result from 
implementing a DOT model were offset by the added complexity and burden 
to providers that a DOT model could introduce by requiring providers to 
classify their patients with a single diagnosis that would be used to 
determine payment. For present reform efforts, Abt revisited the DOT 
model with more current data and in the context of other potential 
changes to the payment system which a DOT model might be able to 
complement. In this analysis, we are removing the therapy variable, 
allowing us to explore new ideas and re-explore previously rejected 
ideas to see how we can increase the statistical power of the model 
without the therapy variable. In this most recent analysis, each 
episode is grouped into the following diagnosis groups based on the 
primary ICD-9-CM diagnosis code reported on the OASIS: (1) Orthopedic; 
(2) neurological; (3) diabetes; (4) cancer; (5) skin wounds & lesions; 
(6) cardiovascular; (7) pulmonary; (8) gastrointestinal; (9) genito-
urinary; (10) mental/emotional disorders; (11) other diagnoses; (12) 
case-mix V-codes; and (13) non-case-mix V-codes. Unlike the current HH 
PPS case-mix system, the diagnosis on top model does not include any 
therapy thresholds. Under the diagnosis on top model, episodes are 
first divided into different diagnosis groups, prior to the 
determination of the clinical and functional levels, and payment model 
regressions would be run separately for each diagnosis group. This is 
intended to maximize the statistical performance of the payment system. 
The work conducted by Abt Associates also included OASIS and non-OASIS 
items (such as whether the patient was admitted from an acute or post-
acute care setting and hierarchical condition categories) not used in 
the current payment system, but shown to correlate with resource use. 
In many ways, the regression component of the diagnosis on top model is 
very similar to the current 4-equation model except that, in later 
versions of Abt's work on the diagnosis on top model, the clinical and 
functional levels are replaced with an overall severity level. This 
change allows the diagnosis on top model to account for a richer set of 
variables than the clinical and functional levels in the current 
payment system.
     Predicted Therapy Model:
    The second model option is referred to as the ``Predicted Therapy 
Model.'' The basic structure of this model is similar to that of the 
current payment model. In this model option, actual therapy visits used 
in the current HH PPS model are replaced with predicted therapy visits 
to develop case mix weights and payment amounts based on

[[Page 39866]]

the predicted number of visits. The weights are constructed via a two-
part model. The first part of the model uses a logistic regression to 
estimate whether or not the episode had any therapy visits. The second 
part of this predicted therapy model uses a truncated binomial 
regression (truncated at zero) to estimate the amount of therapy visits 
conditional on having any therapy visits. This ``hurdle'' model is 
commonly used in health economics to describe medical utilization or 
expenditures where observing zero health care use during the sample 
period is common.\11\ We also looked at estimating the two part model 
for each of the diagnosis groups in the diagnosis on top model 
referenced above. The predicted therapy model still includes the four-
equation model, the payment regression, and the 153 HHRGs as in the 
current payment model.
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    \11\ ``Modeling Health Care Costs and Counts,'' ASHE conference 
course by Partha Deb, Willard Manning and Edward Norton, http://web.harrisschool.uchicago.edu/sites/default/files/ASHE2012_Minicourse_Cost_Use_slides_corrected.pdf
---------------------------------------------------------------------------

     Home Health Groupings Model:
    The third model is referred to as the ``Home Health Groupings '' 
(HHG) model. The premise of this type of model is that it starts with a 
clinical foundation. This groupings model groups home health episodes 
by diagnoses and the expected types of home health interventions 
required. Using expert clinical judgment, each ICD-9 code is assigned 
to one of seven groups based on the intervention expected to be 
required. Those seven groups include: (1) Musculoskeletal 
Rehabilitation; (2) Neuro/Stroke Rehabilitation; (3) Skin/Non-Surgical 
Wound Care; (4) Post-Op Wound Aftercare; (5) Behavioral Health Care; 
(6) Complex Medical Care; and (7) Medication Management, Teaching, and 
Assessment. Unlike the current HH PPS case-mix system, the home health 
groupings model does not include any therapy thresholds. Abt Associates 
is currently in the process of further delineating the seven groups 
listed above using OASIS and non-OASIS items (such as whether the 
patient was admitted from an acute or post-acute care setting and 
hierarchical condition categories) not used in the current payment 
system, but shown to correlate with resource use. The HHG model groups 
home health episodes in a way that mirrors how clinicians would 
differentiate between different types of beneficiaries and would help 
explain why the beneficiary is receiving home health, something that 
the current HH PPS case-mix may be lacking. MedPAC noted that policy 
makers have faced challenges in defining the role of home health.\12\ 
We believe that the HHG model may be one way to better define the types 
of care that patients receive under the home health benefit and thus 
the role of home care.
---------------------------------------------------------------------------

    \12\ Medicare Payment Advisory Commission (MedPAC), ``Report to 
the Congress: Medicare Payment Policy''. March 2015. P. 219. 
Washington, DC. Accessed on 5/5/2015 at: http://medpac.gov/documents/reports/march-2015-report-to-the-congress-medicare-payment-policy.pdf?sfvrsn=0.
---------------------------------------------------------------------------

    To inform the model options discussed above, Abt Associates also 
reviewed other Medicare prospective payment systems to identify 
alternative methods used in classifying patients and to better 
understand components of each system. In the future, we plan to issue a 
technical report under our contract with Abt Associates that would 
further describe and analyze the three model options. We also plan to 
reconvene the Clinical Workgroup and the Technical Experts Panel in the 
near future to help further inform CMS on the various model options 
developed and next steps.

F. Technical Regulations Text Changes

    First, we propose to make several technical corrections in part 484 
to better align the payment requirements with recent statutory and 
regulatory changes for home health services. We propose to make changes 
to Sec.  484. 205(e) to state that estimated total outlier payments for 
a given calendar year are limited to no more than 2.5 percent of total 
outlays under the HHA PPS, rather than 5 percent of total outlays, as 
required by section 1895(b)(5)(A) of the Act as amended by section 
3131(b)(2)(B) of the Affordable Care Act. Similarly, we also propose to 
specify in Sec.  484.240(e) that the fixed dollar loss and the loss 
sharing amounts are chosen so that the estimated total outlier payment 
is no more than 2.5 percent of total payments under the HH PPS, rather 
than 5 percent of total payments under the HH PPS as required by 
section 1895(b)(5)(A) of the Act as amended by section 3131(b)(2)(B) of 
the Affordable Care Act. We also propose to describe in Sec.  
484.240(f) that the estimated total amount of outlier payments to an 
HHA in a given year may not exceed 10 percent of the estimated total 
payments to the specific agency under the HH PPS in a given year. This 
update aligns the regulations text at Sec.  484.240(f) with the 
statutory requirement in 1895(b)(5)(A) of the Act as amended by section 
3131(b)(2)(B) of the Affordable Care Act. Finally, we propose a minor 
editorial change in Sec.  484.240(b) to specify that the outlier 
threshold for each case-mix group is the episode payment amount for 
that group, or the PEP adjustment amount for the episode, plus a fixed 
dollar loss amount that is the same for all case-mix groups.
    Second, in addition to the proposed changes to the regulations text 
pertaining to outlier payments under the HH PPS, we also propose to 
amend Sec.  409.43(e)(iii) and to add language to Sec.  484.205(d) to 
clarify the frequency of review of the plan of care and the provision 
of Partial Episode Payments (PEP) under the HH PPS as a result of a 
regulations text change in Sec.  424.22(b) that was finalized in the CY 
2015 HH PPS final rule (79 FR 66032). Specifically, we propose to 
change the definition of an intervening event to include transfers and 
instances where a patient is discharged and return to home health 
during a 60-day episode, rather than a discharge and return to the same 
HHA during a 60-day episode. In Sec.  484.220, we propose to update the 
regulations text to reflect the downward adjustments to the 60-day 
episode payment rate due to changes in the coding or classification of 
different units of service that do not reflect real changes in case-mix 
(nominal case-mix growth) applied to calendar years 2012 and 2013, 
which were finalized in the CY 2012 HH PPS final rule (76 FR 68532). 
This also includes updating the CY 2011 adjustment to 3.79 percent as 
finalized in the CY 2011 HH PPS final rule (75 FR 70461). In Sec.  
484.225 we are proposing to eliminate references to outdated market 
basket index factors by removing paragraphs (b), (c), (d), (e), (f) and 
(g). In Sec.  484.230 we propose to delete the last sentence as a 
result of a change from a separate LUPA add-on amount to a LUPA add-on 
factor finalized in the CY 2014 HH PPS final rule (78 FR 72256). 
Finally, we are deleting and reserving Sec.  484.245 as we believe that 
this language is no longer applicable under the HH PPS, as it was meant 
to facilitate the transition to the original PPS established in CY 
2000.
    Lastly, we propose to make one technical correction in Sec.  424.22 
to re-designate paragraph (a)(1)(v)(B)(1) as (a)(2).
    We invite comments on these technical corrections and associated 
changes in the regulations at Sec.  409, Sec.  424, and Sec.  484.

IV. Proposed Home Health Value-Based Purchasing (HHVBP) Model

A. Background

    In the CY 2015 Home Health Prospective Payment System (HH PPS) 
final rule titled ``Medicare and Medicaid Programs; CY 2015 Home Health

[[Page 39867]]

Prospective Payment System Rate Update; Home Health Quality Reporting 
Requirements; and Survey and Enforcement Requirements for Home Health 
Agencies (79 FR 66032-66118), we indicated that we were considering the 
development of a home health value-based purchasing (HHVBP) model. We 
sought comments on a future HHVBP model, including elements of the 
model; size of the payment incentives and percentage of payments that 
would need to be placed at risk in order to spur home health agencies 
(HHAs) to make the necessary investments to improve the quality of care 
for Medicare beneficiaries; the timing of the payment adjustments; and, 
how performance payments should be distributed. We also sought comments 
on the best approach for selecting states for participation in this 
model. We noted that if the decision was made to move forward with the 
implementation of a HHVBP model in CY 2016, we would solicit additional 
comments on a more detailed model proposal to be included in future 
rulemaking.
    In the CY 2015 HH PPS final rule,\13\ we indicated that we received 
a number of comments related to the magnitude of the percentage payment 
adjustments; evaluation criteria; payment features; a beneficiary risk 
adjustment strategy; state selection methodology; and the approach to 
selecting Medicare-certified HHAs. A number of commenters supported the 
development of a value-based purchasing model in the home health 
industry in whole or in part with consideration of the design 
parameters provided. No commenters provided strong counterpoints or 
alternative design options which dissuaded CMS from moving forward with 
general design and framework of the HHVBP model as discussed in the CY 
2015 HH PPS proposed rule. All comments were considered in our decision 
to develop an HHVBP model for implementation beginning January 1, 2016. 
Therefore, in this proposed rule, we are proposing to implement a HHVBP 
model, which includes a randomized state selection methodology; the 
reporting framework; the payment adjustment methodology; payment 
adjustment schedule by performance year and payment adjustment 
percentage; the quality measures selection methodology, classifications 
and weighting, measures for performance year one, including the 
reporting of New Measures, and the framework for proposing to adopt 
measures for subsequent performance years; the performance scoring 
methodology, which includes performance based on achievement and 
improvement; the review and recalculation period; and the evaluation 
framework.
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    \13\ Medicare and Medicaid Programs; CY 2015 Home Health 
Prospective Payment System Rate Update; Home Health Quality 
Reporting Requirements; and Survey and Enforcement Requirements for 
Home Health Agencies, 79 FR 66105-66106 (November 6, 2014).
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    The basis for developing this proposed value-based purchasing (VBP) 
model, as described in the proposed regulations at Sec.  484.300 et 
seq., stems from several important areas of consideration. First, we 
expect that tying quality to payment through a system of value-based 
purchasing will improve the beneficiaries' experience and outcomes. In 
turn, we expect payment adjustments that both reward improved quality 
and penalize poor performance will incentivize quality improvement and 
encourage efficiency, leading to a more sustainable payment system.
    Second, section 3006(b) of the Affordable Care Act directed the 
Secretary of the Department of Health and Human Services (the 
Secretary) to develop a plan to implement a VBP program for payments 
under the Medicare Program for HHAs and the Secretary issued an 
associated Report to Congress in March of 2012 (2012 Report).\14\ The 
2012 Report included a roadmap for implementation of an HHVBP model and 
outlined the need to develop an HHVBP program that aligns with other 
Medicare programs and coordinates incentives to improve quality. The 
2012 Report also indicated that a HHVBP program should build on and 
refine existing quality measurement tools and processes. In addition, 
the 2012 Report indicated that one of the ways that such a program 
could link payment to quality would be to tie payments to overall 
quality performance.
---------------------------------------------------------------------------

    \14\ CMS, ``Report to Congress: Plan to Implement a Medicare 
Home Health Agency Value-Based Purchasing Program'' (March 15, 2012) 
available at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HomeHealthPPS/downloads/stage-2-NPRM.PDF.
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    Third, section 402(a)(1)(A) of the Social Security Amendments of 
1967 (as amended) (42 U.S.C. 1395b-1(a)(1)(A)), provided authority for 
us to conduct the Home Health Pay-for-Performance (HHPFP) Demonstration 
that ran from 2008 to 2010. The results of that Demonstration found 
modest quality improvement in certain measures after comparing the 
quality of care furnished by Demonstration participants to the quality 
of care furnished by the control group. One important lesson learned 
from the HHPFP Demonstration was the need to link the HHA's quality 
improvement efforts and the incentives. HHAs in three of the four 
regions generated enough savings to have incentive payments in the 
first year of the Demonstration, but the size of payments were unknown 
until after the conclusion of the Demonstration. Also, the time lag 
between quality performance and payment incentives was too long to 
provide a sufficient motivation for HHAs to take necessary steps to 
improve quality. The results of the Demonstration published in a 
comprehensive evaluation report \15\ suggest that future models could 
benefit from ensuring that incentives are reliable enough, of 
sufficient magnitude, and paid in a timely fashion to encourage HHAs to 
be fully engaged in the quality of care initiative.
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    \15\ ``CMS Report on Home Health Agency Value-Based Purchasing 
Program'' (February of 2012) available at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Reports/Downloads/HHP4P_Demo_Eval_Final_Vol1.pdf.
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    Furthermore, the President's FY 2015 and 2016 Budgets proposed that 
VBP should be extended to additional providers including skilled 
nursing facilities, home health agencies, ambulatory surgical centers, 
and hospital outpatient departments. The FY 2015 Budget called for at 
least 2 percent of payments to be tied to quality and efficiency of 
care on a budget neutral basis. The FY 2016 Budget outlines a program 
which would tie at least 2 percent of Medicare payments to the quality 
and efficiency of care in the first 2 years of implementation beginning 
in 2017, and at least 5 percent beginning in 2019 without any impact to 
the budget. We propose in this HHVBP model to also follow a graduated 
payment adjustment strategy within certain selected states beginning 
January 1, 2016.
    The Secretary has also set two overall delivery system reform goals 
for CMS. First, we seek to tie 30 percent of traditional, or fee-for-
service, Medicare payments to quality or value-based payments through 
alternative payment models by the end of 2016, and to tie 50 percent of 
payments to these models by the end of 2018. Second, we seek to tie 85 
percent of all traditional Medicare payments to quality or value by 
2016 and 90 percent by 2018.\16\ To support these efforts the Health 
Care Payment Learning and Action Network was recently launched to help 
advance the work being done across sectors to increase the adoption of 
value-based payments and alternative payment

[[Page 39868]]

models. We believe that testing the HHVBP model would support these 
goals.
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    \16\ Content of this announcement can be found at http://www.hhs.gov/news/press/2015pres/01/20150126a.html.
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    Finally, we have already successfully implemented the Hospital 
Value-Based Purchasing (HVBP) program, under which value-based 
incentive payments are made in a fiscal year to hospitals that meet 
performance standards established for a performance period with respect 
to measures for that fiscal year. The percentage of a participating 
hospital's base-operating DRG payment amount for FY 2015 discharges 
that is at risk, based on the hospital's performance under the program 
for that fiscal year, is 1.5 percent. That percentage will increase to 
2.0 by FY 2017. We are proposing an HHVBP model that builds on the 
lessons learned and guidance from the HVBP program and other applicable 
demonstrations as discussed above, as well as from the evaluation 
report discussed earlier.
    The proposed HHVBP model presents an opportunity to improve the 
quality of care furnished to Medicare beneficiaries and study what 
incentives are sufficiently significant to encourage HHAs to provide 
high quality care. The HHVBP model being proposed would offer both a 
greater potential reward for high performing HHAs as well as a greater 
potential downside risk for low performing HHAs. If implemented, the 
model would begin on January 1, 2016, and include an array of measures 
that would capture the multiple dimensions of care that HHAs furnish.
    The proposed model would be tested by CMS's Center for Medicare and 
Medicaid Innovation (CMMI) under section 1115A of the Act. Under 
section 1115A(d)(1) of the Act, the Secretary may waive such 
requirements of Titles XI and XVIII and of sections 1902(a)(1), 
1902(a)(13), and 1903(m)(2)(A)(iii) as may be necessary solely for 
purposes of carrying out section 1115A with respect to testing models 
described in section 1115A(b). The Secretary is not issuing any waivers 
of the fraud and abuse provisions in sections 1128A, 1128B, and 1877 of 
the SSA or any other Medicare or Medicaid fraud and abuse laws for this 
model. Thus, notwithstanding any other provisions of this proposed 
rule, all providers and suppliers participating in the HHVBP model must 
comply with all applicable fraud and abuse laws and regulations.
    We are proposing to use the section 1115A(d)(1) waiver authority to 
apply a reduction or increase of up to 8 percent to current Medicare 
payments to Medicare-certified HHAs delivering care to beneficiaries 
within the boundaries of certain states, depending on the HHA's 
performance on specified quality measures relative to its peers. 
Specifically, the HHVBP model proposes to utilize the waiver authority 
to adjust Medicare payment rates under section 1895(b) of the Act.\17\ 
In accordance with the authority granted to the Secretary in section 
1115A(d)(1) of the Act, we would waive section 1895(b)(4) of the Act 
only to the extent necessary to adjust payment amounts to reflect the 
value-based payment adjustments under this proposed model for Medicare-
certified HHAs in specified states selected in accordance with CMS's 
proposed selection methodology. We are not proposing to implement this 
model under the authority granted by the Affordable Care Act under 
section 3131 (``Payment Adjustments for Home Health Care'').
---------------------------------------------------------------------------

    \17\ 42 U.S.C. 1395fff.
---------------------------------------------------------------------------

    The defined population would include all Medicare beneficiaries 
being provided care by any Medicare-certified HHA delivering care 
within the selected states. Medicare-certified HHAs that are delivering 
care within the boundaries of selected states are considered `Competing 
Medicare-certified Home Health Agencies' within the scope of this HHVBP 
Model. If care is delivered outside of boundaries of selected states, 
or inside the boundaries of a non-selected state that does not have a 
reciprocal agreement with a selected state, payments for those 
beneficiaries would not be considered within the scope of the model 
because we are basing participation in the model on state specific CMS 
Certification Numbers (CCNs). Payment adjustments for each year of the 
model would be calculated based on a comparison of how well each 
competing Medicare-certified HHA performed during the performance 
period for that year (proposed below to be one year in length, starting 
in CY 2016) with its performance on the same measures in 2015 (proposed 
below to be the baseline data year).
    The first performance year would be CY 2016, the second would be CY 
2017, the third would be CY 2018, the fourth would be 2019, and the 
fifth would be CY 2020. Greater details on performance periods are 
outlined in further detail in section D--Performance Assessment and 
Payment Periods. This model would test whether being subject to 
significant payment adjustments to the Medicare payment amounts that 
would otherwise be made to competing Medicare-certified HHAs would 
result in statistically significant improvements in the quality of care 
being delivered to this specific population of Medicare beneficiaries.
    We propose to identify Medicare-certified HHAs for participation in 
this model using state borders as boundaries. We do so under the 
authority granted in section 1115A(a)(5) of the Act to elect to limit 
testing of a model to certain geographic areas. This decision is 
influenced by the 2012 Report to Congress mandated under section 
3006(b) of the Affordable Care Act. This Report stated that HHAs which 
participated in previous value-based purchasing demonstrations 
``uniformly believed that all Medicare-certified HHAs should be 
required to participate in future VBP programs so all agencies 
experience the potential burdens and benefits of the program'' and some 
HHAs expressed concern that absent mandatory participation, ``low-
performing agencies in areas with limited competition may not choose to 
pursue quality improvement.'' \18\
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    \18\ See the Recommendations section of the U.S. Department of 
Health and Human Services. Report to Congress: Plan to Implement a 
Medicare Home Health Agency Value-Based Purchasing Program.'' (March 
2012) p. 28.
---------------------------------------------------------------------------

    Section 1115A(b)(2)(A) of the Act requires that the Secretary 
select models to be tested where the Secretary determines that there is 
evidence that the model addresses a defined population for which there 
are deficits in care leading to poor clinical outcomes or potentially 
avoidable expenditures. The HHVBP model was developed to improve care 
for Medicare patients receiving care from HHAs based on evidence in the 
March 2014 MedPAC Report to Congress citing quality and cost concerns 
in the home health sector. According to MedPAC, ``about 29 percent of 
post-hospital home health stays result in readmission, and there is 
tremendous variation in performance among providers within and across 
geographic regions.'' \19\ The same report cited limited improvement in 
quality based on existing measures, and noted that the data on quality 
``are collected only for beneficiaries who do not have their home 
health care stays terminated by a hospitalization,'' skewing the 
results in favor of a healthier segment of the Medicare population.\20\ 
This model would test the use of adjustments to Medicare HH PPS rates 
by tying payment to quality performance with the goal of achieving the 
highest possible quality and efficiency.
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    \19\ See full citation at note 11. MedPAC Report to Congress 
(March 2014) p.215.
    \20\ MedPAC Report to Congress (March 2014) p.226.

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[[Page 39869]]

B. Overview

    In Sec.  484.305 we propose definitions for ``applicable percent'', 
``applicable measure'', ``benchmark'', ``home health prospective 
payment system'', ``larger-volume cohort'', ``linear exchange 
function'', ``Medicare-certified home health agency'', ``New 
Measures'', ``payment adjustment'', ``performance period'', ``smaller-
volume cohort'', ``selected states'', ``starter set'', ``Total 
Performance Score'', and ``value-based purchasing'' as they pertain to 
this subpart. The HHVBP model is being proposed to encompass five 
performance years and be implemented beginning January 1, 2016 and 
conclude on December 31, 2022. Payment and service delivery models are 
developed by CMMI in accordance with the requirements of section 1115A 
of the Act. During the development of new models, CMMI builds on the 
ideas received from internal and external stakeholders and consults 
with clinical and analytical experts.
    In this proposed rule, we are outlining an HHVBP model for public 
notice and comment that has an overall purpose of improving the quality 
of home health care and delivering it to the Medicare population in a 
more efficient manner. The specific goals of the proposed model are to:
    1. Incentivize HHAs to provide better quality care with greater 
efficiency;
    2. Study new potential quality and efficiency measures for 
appropriateness in the home health setting; and,
    3. Enhance current public reporting processes.
    We are proposing that the HHVBP model would adjust Medicare HHA 
payments over the course of the model by up to 8 percent depending on 
the applicable performance year and the degree of quality performance 
demonstrated by each competing Medicare-certified HHA. The proposed 
model would reduce the HH PPS final claim payment amount to an HHA for 
each episode in a calendar year by an amount up to the applicable 
percentage defined in proposed Sec.  484.305. The timeline of payment 
adjustments as they apply to each performance year is described in 
greater detail in the section entitled ``Payment Adjustment Timeline.''
    The model would apply to all Medicare-certified HHAs in each of the 
selected states, which means that all HHAs in the selected states would 
be required to compete. We propose to codify this policy at 42 CFR 
484.310. Furthermore, a competing Medicare-certified HHA would only be 
measured on performance for care delivered to Medicare beneficiaries 
within selected states (with rare exceptions given for care delivered 
when a reciprocal agreement exists between states). The distribution of 
payment adjustments would be based on quality performance, as measured 
by both achievement and improvement, across a proposed set of quality 
measures rigorously constructed to minimize burden as much as possible 
and improve care. Competing Medicare-certified HHAs that demonstrate 
they can deliver higher quality of care in comparison to their peers 
(as defined by the volume of services delivered within the selected 
state), or their own past performance, could have their payment for 
each episode of care adjusted higher than the amount that otherwise 
would be paid under section 1895 of the Act. Competing Medicare-
certified HHAs that do not perform as well as other competing Medicare-
certified HHAs of the same size in the same state might have their 
payments reduced and those competing Medicare-certified HHAs that 
perform similarly to others of similar size in the same state might 
have no payment adjustment made. This operational concept is similar in 
practice to what is used in the HVBP program.
    We expect that the risk of having payments adjusted in this manner 
would provide an incentive among all competing Medicare-certified HHAs 
delivering care within the boundaries of selected states to provide 
significantly better quality through improved planning, coordination, 
and management of care. The degree of the payment adjustment would be 
dependent on the level of quality achieved or improved from the 
baseline year, with the highest upward performance adjustments going to 
competing Medicare-certified HHAs with the highest overall level of 
performance based on either achievement or improvement in quality. The 
size of a Medicare-certified HHA's payment adjustment for each year 
under the model would be dependent upon that HHA's performance with 
respect to that calendar year relative to other competing Medicare-
certified HHAs of similar size in the same state and relative to its 
own performance during the baseline year.
    We are proposing that states would be selected randomly from nine 
regional groupings for model participation. A competing Medicare-
certified HHA is only measured on performance for care delivered to 
Medicare beneficiaries within boundaries of selected states and only 
payments for HHA services provided to Medicare beneficiaries within 
boundaries of selected states would be subject to adjustment under the 
proposed model. Requiring all Medicare-certified HHAs within the 
boundaries of selected states to compete in the model would ensure 
that: (1) There is no self-selection bias, (2) competing HHAs are 
representative of HHAs nationally, and (3) there is sufficient 
participation to generate meaningful results. We believe it is 
necessary to require all HHAs delivering care within boundaries of 
selected states to be included in the model because, in our experience, 
Medicare-providers are generally reluctant to participate voluntarily 
in models in which their Medicare payments could be subject to possible 
reduction. This reluctance to participate in voluntary models has been 
shown to cause self-selection bias in statistical assessments and thus, 
may present challenges to our ability to evaluate the model. In 
addition, state boundaries represent a natural demarcation in how 
quality is currently being assessed through OASIS measures on Home 
Health Compare (HHC).

C. Selection Methodology

1. Identifying a Geographic Demarcation Area
    We are proposing to adopt a methodology that uses state borders as 
boundaries for demarcating which Medicare-certified HHAs will be 
required to compete in the model. We are proposing to select nine 
states from nine geographically-defined groupings of five or six 
states. Groupings were also defined in order to ensure that the 
successful implementation of the model would produce robust and 
generalizable results, as discussed later in this section.
    We took into account five key factors when deciding to propose 
selection at the state-level for this model. First, if we required 
some, but not all, Medicare-certified HHAs that deliver care within the 
boundaries of a selected state to participate in the model, we believe 
the HHA market for the state could be disrupted because HHAs in the 
model would be competing against HHAs not in the model (herein 
referenced as either `non-model HHAs' or `non-competing HHAs'). Second, 
we wanted to ensure that the distribution of payment adjustments based 
on performance under the model could be extrapolated to the entire 
country. Statistically, the larger the sample to which payment 
adjustments are applied, the smaller the variance of the sampling 
distribution and the greater the likelihood that the distribution 
accurately predicts what would transpire if the methodology were 
applied to the full population of

[[Page 39870]]

HHAs. Third, we considered the need to align with other HHA quality 
program initiatives including HHC. The HHC Web site presently provides 
the public and HHAs a state- and national-level comparison of quality. 
We expect that aligning performance with the HHVBP benchmark and the 
achievement score would support how measures are currently being 
reported on HHC. Fourth, there is a need to align with CMS regulations 
which require that each HHA have a unique CMS Certification Number 
(CCN) for each state in which the HHA provides service. Fifth, we 
wanted to ensure sufficient sample size and the ability to meet the 
rigorous evaluation requirements for CMMI models. These five factors 
are important for the successful implementation and evaluation of this 
model.
    We expect that when there is a risk for a downside payment 
adjustment based on quality performance measures, the use of a self-
contained, mandatory cohort of HHA participants will create a stronger 
incentive to deliver greater quality among competing Medicare-certified 
HHAs. Specifically, it is possible the market would become distorted if 
non-model HHAs are delivering care within the same market as competing 
Medicare-certified HHAs because competition, on the whole, becomes 
unfair when payment is predicated on quality for one group and volume 
for the other group. In addition, we expect that evaluation efforts 
might be negatively impacted because some HHAs would be competing on 
quality and others on volume within the same market.
    We are proposing the use of state boundaries after careful 
consideration of several alternative selection approaches, including 
randomly selecting HHAs from all HHAs across the country, and requiring 
participation from smaller geographic regions including the county; the 
Combined Statistical Area (CSA); the Core-Based Statistical Area 
(CBSA); rural provider level; and the Hospital Referral Region (HRR) 
level.
    A methodology using a national sample of HHAs that are randomly 
selected from all HHAs across the country could be designed to include 
enough HHAs to ensure robust payment adjustment distribution and a 
sufficient sample size for the evaluation; however, this approach may 
present significant limitations when compared with the state boundaries 
selection methodology proposed in this model. Of primary concern with 
randomly selecting at the provider-level across the nation is the issue 
with market distortions created by having competing Medicare-certified 
HHAs operating in the same market as non-model HHAs.
    Using smaller geographic areas than states, such as counties, CSAs, 
CBSAs, rural, and HRRs, could also present challenges for this model. 
These smaller geographic areas were considered as alternate selection 
options; however, their use could result in too small of a sample size 
of potential competing HHAs. As a result, we expect the distribution of 
payment adjustments could become highly divergent among fewer HHA 
competitors. In addition, the ability to evaluate the model could 
become more complex and may be less generalizable to the full 
population of Medicare-certified HHAs and the beneficiaries they serve 
across the nation. Further, the use of smaller geographic areas than 
states could increase the proportion of Medicare-certified HHAs that 
could fall into groupings with too few agencies to generate a stable 
distribution of payment adjustments. Thus, if we were to define 
geographic areas based on CSAs, CBSAs, counties, or HRRs, we would need 
to develop an approach for consolidating smaller regions into larger 
regions.
    Home health care is a unique type of health care service when 
compared to other Medicare provider types. In general, the HHA's care 
delivery setting is in the beneficiaries' homes as opposed to other 
provider types that traditionally deliver care at a brick and mortar 
institution within beneficiaries' respective communities. As a result, 
the HHVBP model needs to be designed to account for the unique way that 
HHA care is provided in order to ensure that the results are 
generalizable to the population. HHAs are limited to providing care to 
beneficiaries in the state that they have a CCN however; HHAs are not 
restricted from providing service in a county, CSA, CBSA or HRR that 
they are not located in (as long as the other county/CBSA/HRR is in the 
same state in which the HHA is certified). As a result, using smaller 
geographic areas (than state boundaries) could result in similar market 
distortion and evaluation confounders as selecting providers from a 
randomized national sampling. The reason is that HHAs in adjacent 
counties/CSAs/CBSAs/HRRs may not be in the model but, would be directly 
competing for services in the same markets or geographic regions. 
Competing HHAs delivering care in the same market area as non-competing 
HHAs could generate a spillover effect where non-model HHAs would be 
vying for the same beneficiaries as competing HHAs. This spillover 
effect presents several issues for evaluation as the dependent variable 
(quality) becomes confounded by external influences created by these 
non-competing HHAs. These unintentional external influences on 
competing HHAs may be made apparent if non-competing HHAs become 
incentivized to generate greater volume at the expense of quality 
delivered to the beneficiaries they serve and at the expense of 
competing HHAs that are paid on quality instead of volume. Further, the 
ability to extrapolate these results to the full population of HHAs and 
the beneficiaries they serve becomes confounded by an artifact of the 
model and inferences would be limited from an inability to duplicate 
these results. While these concerns would decrease in some order of 
magnitude as larger regions are considered, the only way to eliminate 
these concerns entirely is to define participation among Medicare-
certified HHAs at the state level.
    In addition, home health quality data currently displayed on HHC 
allows users to compare HHA services furnished within a single state. 
Selecting HHAs using other geographic regions that are smaller and/or 
cross state lines could require the model to deviate from the 
established process for reporting quality. For these reasons, we 
believe a selection methodology based on the use of Medicare-certified 
HHAs delivering care within state boundaries would be the most 
appropriate for the successful implementation and evaluation of this 
model.
    While, for the reasons described above, we are proposing that the 
geographic basis of selection remain at the state-level, we 
nevertheless seek comment on potential alternatives that might use 
smaller geographic areas. With consideration of alternatives, the 
public should reference the five aforementioned key factors used to 
consider selection at the state-level for this model as they relate to 
the evaluative framework and operational feasibility of this model. In 
particular, one potential alternative would be to split states into 
sub-state regions using a combination of CSAs and metropolitan 
statistical areas (MSA), a type of CBSA. For example, regions might be 
defined using the following process:
     Step 1: Define one sub-state region corresponding to each 
CSA that contains an MSA (but not for CSAs that do not include an MSA) 
and one sub-state region corresponding to each MSA that is not part of 
a CSA. In cases where a CSA or MSA crossed state boundaries, only the 
portion of the CSA or MSA that falls inside the state boundaries would 
be included in the sub-state region.

[[Page 39871]]

     Step 2: Any portions of a state that were not included in 
a sub-state region based on a CSA or an MSA defined in Step 1 would be 
consolidated in a single ``remainder of state'' sub-state region.
     Step 3: To ensure that all sub-state regions have a 
sufficient number of HHAs to permit stable distribution of payment 
adjustments, sub-state regions based on CSAs or MSAs that contained 
fewer than 25 HHAs would be consolidated into the ``remainder of 
state'' sub-state region.
     Step 4: If a ``remainder of state'' sub-state region had 
fewer than 25 HHAs, that sub-state region would be consolidated with 
the geographically closest sub-state region based on a CSA or MSA.

We note that algorithms like this one may generate more than 100 total 
sub-state regions and over 200 unique competing cohorts of Medicare-
certified HHAs.
    We seek comment on advantages and disadvantages of this approach 
relative to defining regions based on state boundaries. In particular, 
we note that because this approach would generate a larger number of 
regions, it could increase the statistical power of the model 
evaluation, and might improve our ability to determine what effects the 
model has on the quality of home health care, as well as other outcomes 
of interest. However, we note that because regions would no longer line 
up with full states in most cases, the regions selected to participate 
in the model would no longer align directly with those displayed on HHC 
and therefore, quality data would have to be recalculated and displayed 
differently from what is currently being reported on HHC. In addition, 
using sub-state regions could, as noted above, lead to undesirable 
spillover effects between participating and non-participating HHAs. 
These spillover concerns would be mitigated by the fact that none of 
the sub-state regions defined under this approach would cross state 
lines and the fact that the sub-state regions would be larger than 
under some approaches to defining sub-state regions (for example, at 
the county level). Nevertheless, it is unclear how severe these 
evaluation and operational concerns would be in practice and how the 
extent of these concerns would depend on the different characteristics 
of the selected regions. We welcome public comment on these proposed 
state selection methodologies.
2. Overview of the Randomized Selection Methodology for States
    We are requesting comments on the following proposed methodology 
for selecting states. The selection methodology employed will need to 
provide the strongest evidence of producing meaningful results 
representative of the national population of Medicare-certified HHAs 
and, in turn, meet the evaluation requirements of section 1115A(b)(4) 
of the Act.
    The state selections listed in proposed Sec.  484.310 are based on 
the described proposed randomized selection methodology and are subject 
to change in the CY 2016 HH PPS final rule as a result of any changes 
that may be made to the proposed randomized methodology in response to 
comments. However, if the final methodology differs from what we are 
proposing here, we will apply the final methodology and identify the 
states selected under the final methodology in the final rule. We 
propose to group states by each state's geographic proximity to one 
another and by accounting for key evaluation characteristics (that is, 
proportionality of service utilization, proportionality of 
organizations with similar tax-exempt status and HHA size, and 
proportionality of beneficiaries that are dually-eligible for Medicare 
and Medicaid).
    Based on an analysis of OASIS quality data and Medicare claims 
data, we believe the use of nine geographic groupings is necessary to 
ensure that the model accounts for the diversity of beneficiary 
demographics, rural and urban status, cost and quality variations, 
among other criteria. To provide for comparable and equitable selection 
probabilities, these separate geographic groupings each include a 
comparable number of states. We are not proposing to adopt census-based 
geographic groupings or the CMS Medicare Administrative Contractor 
(MAC) jurisdictions because those groupings would not permit an equal 
opportunity of selection of Medicare-certified HHAs by state or an 
assurance that we would be able test the model among a diversity of 
agencies such as is found across the nation. Following this logic, 
under our proposed methodology, groupings are based on states' 
geographic proximity to one another, having a comparable number of 
states if randomized for an equal opportunity of selection, and 
similarities in key characteristics that would be considered in the 
evaluation study because the attributes represent different types of 
HHAs, regulatory oversight, and types of beneficiaries served. This is 
necessary to ensure that the evaluation study remains objective and 
unbiased and that the results of this study best represent the entire 
population of Medicare-certified HHAs across the nation.
    Several of the key characteristics we used for grouping state 
boundaries into clusters for selection into the model are also used in 
the impact analysis of our annual HHA payment updates, a fact that 
reinforces their relevance for evaluation. The additional proposed 
standards for grouping (level of utilization and socioeconomic status 
of patients) are also important to consider when evaluating the 
program, because of their current policy relevance. Large variations in 
the level of utilization of the home health benefit has received 
attention from policymakers concerned with achieving high-value health 
care and curbing fraud and abuse.\21\ Policymakers' concerns about the 
role of beneficiary-level characteristics as determinants of resource 
use and health care quality were highlighted in the Affordable Care 
Act, which mandated a study \22\ of access to home health care for 
vulnerable populations \23\ and, more recently, Improving Medicare 
Post-acute Care Transformation (IMPACT) Act of 2014 required the 
Secretary to study the relationship between individuals' socioeconomic 
status and resource use or quality.\24\ The parameters used to define 
each geographic grouping are further described in the next three 
sections.
---------------------------------------------------------------------------

    \21\ See MedPAC Report to Congress: Medicare Payment Policy 
(March 2014, Chapter 9) available at http://medpac.gov/documents/reports/mar14_entirereport.pdf. See also the Institute of Medicine 
Interim Report of the Committee on Geographic Variation in Health 
Care Spending and Promotion of High-Value Health Care: Preliminary 
Committee Observations (March 2013) available at http://iom.edu/Reports/2013/Geographic-Variation-in-Health-Care-Spending-and-Promotion-of-High-Care-Value-Interim-Report.aspx.
    \22\ This study can be accessed at http://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center.html.
    \23\ Section 3131(d) of the Affordable Care Act.
    \24\ Improving Medicare Post-acute Care Transformation (IMPACT) 
Act of 2014 (Public Law 113-185).
---------------------------------------------------------------------------

a. Geographic Proximity
    Under the proposed methodology, in order to ensure that the 
Medicare-certified HHAs that would be required to participate in the 
model are not all in one region of the country, the states in each 
grouping are adjacent to each other whenever possible while creating 
logical groupings of states based on common characteristics as 
described above. Specifically, analysis based on quality data and 
claims data found that HHAs in these neighboring states tend to hold 
certain characteristics in common. These include having similar; 
patterns of utilization, proportionality of non-profit agencies, and 
types of beneficiaries served (for example, severity and number, type 
of co-

[[Page 39872]]

morbidities, and socio-economic status). Therefore, the proposed 
groupings of states are delineated according to states' geographic 
proximity to one another and common characteristics as a means of 
permitting greater comparability. In addition, each of the groupings 
retains similar types of characteristics when compared to any other 
type of grouping of states.
b. Comparable Number of States in Each Grouping
    Under our proposed randomized selection methodology, each 
geographic region, or grouping, has a similar number of states. As a 
result, all states would have a 16.7 percent to 20 percent chance of 
being selected under our proposed methodology, and Medicare-certified 
HHAs would have a similar likelihood of being required to compete in 
the model by using this sampling design. We assert that this sampling 
design would ensure that no single entity is singled out for selection, 
since all states and Medicare-certified HHAs would have approximately 
the same chance of being selected. In addition, this sampling approach 
would mitigate the opportunity for HHAs to self-select into the model 
and thereby bias any results of the test.
c. Characteristics of State Groupings
    Without sacrificing an equal opportunity for selection, the 
proposed state groupings are intended to ensure that important 
characteristics of Medicare-certified HHAs that deliver care within 
state boundaries can be used to evaluate the primary intervention with 
greater generalizability and representativeness of the entire 
population of Medicare-certified HHAs in the nation. Data analysis of 
these characteristics employed the full data set of Medicare claims and 
OASIS quality data. Although some characteristics, such as beneficiary 
age and case-mix, yield some variations from one state to another, 
other important characteristics do vary substantially and could 
influence how HHAs respond to the incentives of the model. 
Specifically, home health services utilization rates, tax-exemption 
status of the provider, the socioeconomic status of beneficiaries (as 
measured by the proportion of dually-eligible beneficiaries), and 
agency size (as measured by average number of episodes of care per 
HHA), are important characteristics that could influence outcomes of 
the model. Subsequently, we intend to study the impacts of these 
characteristics for purposes of designing future value-based purchasing 
models and programs. These characteristics and expected variations must 
be considered in the evaluation study to enable us to avoid erroneous 
inferences about how different types of HHAs will respond to HHVBP 
incentives.
    Under this proposed state selection methodology, state groupings 
reflect regional variations that enhance the generalizability of the 
model. In line with this methodology, each grouping includes states 
that are similar in at least one important aforementioned 
characteristic while being geographically located in close proximity to 
one another. Using the criteria described above, the following 
geographic groupings were identified using Medicare claims-based data 
from calendar years 2013-2014. Each of the 50 states was assigned to 
one of the following geographic groups:
     Group #1: (VT, MA, ME, CT, RI, NH)
    States in this group tend to have larger HHAs and have average 
utilization relative to other states.
     Group #2: (DE, NJ, MD, PA, NY)
    States in this group tend to have larger HHAs, have lower 
utilization, and provide care to an average number of dually-eligible 
beneficiaries relative to other states.
     Group #3: (AL, GA, SC, NC, VA)
    States in this group tend to have larger HHAs, have average 
utilization rates, and provide care to a high proportion of minorities 
relative to other states.
     Group #4: (TX, FL, OK, LA, MS)
    States in this group have HHAs that tend to be for-profit, have 
very high utilization rates, and have a higher proportion of dually-
eligible beneficiaries relative to other states.
     Group #5: (WA, OR, AK, HI, WY, ID)
    States in this group tend to have smaller HHAs, have average 
utilization rates, and are more rural relative to other states.
     Group #6: (NM, CA, NV, UT, CO, AZ)
    States in this group tend to have smaller HHAs, have average 
utilization rates, and provide care to a high proportion of minorities 
relative to other states.
     Group #7: (ND, SD, MT, WI, MN, IA)
    States in this group tend to have smaller HHAs, have very low 
utilization rates, and are more rural relative to other states.
     Group #8: (OH, WV, IN, MO, NE., KS)
    States in this group tend to have HHAs that are of average size, 
have average utilization rates, and provide care to a higher proportion 
of dually-eligible beneficiaries relative to other states.
     Group #9: (IL, KY, AR, MI, TN)
    States in this group tend to have HHAs with higher utilization 
rates relative to other states.
d. Randomized Selection of States
    Upon the careful consideration of the aforementioned alternative 
selection methodologies, including selecting states on a non-random 
basis, we choose to propose the use of a selection methodology based on 
a randomized sampling of states within each of the nine regional 
groupings described above. We examined data on the evaluation elements 
listed in this section to determine if specific states could be 
identified in order to fulfill the needs of the evaluation. After 
careful review, we determined that each evaluation element could be 
measured by more than one state. As a result, we determined that it was 
necessary to apply a fair method of selection where each state would 
have a comparable opportunity of being selected and which would fulfill 
the need for a robust evaluation. The proposed nine groupings of states 
as described in this section permit the model to capture the essential 
elements of the evaluation including demographic, geographic, and 
market factors.
    The randomized sampling of states is without bias to any 
characteristics of any single state within any specific regional 
grouping, where no states are excluded, and no state appears more than 
once across any of the groupings. The randomized selection of states 
was completed using a scientifically-accepted computer algorithm 
designed for randomized sampling. The randomized selection of states 
was run on each of the previously described regional groupings using 
exactly the same process and, therefore, reflects a commonly accepted 
method of randomized sampling. This computer algorithm employs the 
aforementioned sampling parameters necessary to define randomized 
sampling and omits any human interaction once it runs.
    Based on this sampling methodology, SAS Enterprise Guide (SAS EG) 
5.1 software was used to run a computer algorithm designed to randomly 
select states from each grouping. SAS EG 5.1 and the computer algorithm 
were employed to conduct the randomized selection of states. SAS EG 5.1 
represents an industry-standard for generating advanced analytics and 
provided a rigorous, standardized tool by which to satisfy the 
requirements of randomized selection. The key SAS commands employed 
include a ``PROC

[[Page 39873]]

SURVEYSELECT'' statement coupled with the ``METHOD=SRS'' option used to 
specify simple random sampling as the sample selection method. A random 
number seed was generated by using the time of day from the computer's 
clock. The random number seed was used to produce random number 
generation. Note that no stratification was used within any of the nine 
geographically-diverse groupings to ensure there is an equal 
probability of selection within each grouping. For more information on 
this procedure and the underlying statistical methodology, please 
reference SAS support documentation at: http://support.sas.com/documentation/cdl/en/statug/63033/HTML/default/viewer.htm#statug_surveyselect_sect003.htm/.
    In Sec.  484.310, we propose to codify the names of the states 
selected utilizing this proposed methodology, where one state from each 
of the nine groupings was selected. For each of these groupings, we 
propose to use state borders to demarcate which Medicare certified HHAs 
would be required to compete in this model: Massachusetts was randomly 
selected from Group 1, Maryland was randomly selected from Group 2, 
North Carolina was randomly selected from Group 3, Florida was randomly 
selected from Group 4, Washington was randomly selected from Group 5, 
Arizona was randomly selected from Group 6, Iowa was randomly selected 
from Group 7, Nebraska was randomly selected from Group 8, and 
Tennessee was randomly selected from Group 9. Thus, if our methodology 
is finalized as proposed, all Medicare-certified HHAs that provide 
services in Massachusetts, Maryland, North Carolina, Florida, 
Washington, Arizona, Iowa, Nebraska, and Tennessee will be required to 
compete in this model.
    However, should the methodology we propose in this rule change as a 
result of comments received during the rulemaking process, it could 
result in different states being selected for the model. In such an 
event, we would apply the final methodology and announce the selected 
states in the final rule. We therefore seek comment from all interested 
parties in every state on the randomized selection methodology proposed 
above and codified at Sec.  484.310.
    Based on the comments received from this proposed rule, the 
selection methodology for participation in the model may change from 
state boundaries to an approach based on sub-state regions built from 
CSAs/MSAs, CBSAs, rural provider level or HRRs. In that case, the goals 
of the model will remain the same, and therefore, we would expect to 
take a broadly similar approach to selecting participating regions to 
the approach that would be taken when regions are defined based on 
state boundaries. Specifically, as with the selection methodology 
outlined above, we would anticipate grouping sub-state regions together 
based on geographic proximity and other characteristics into groups of 
approximately equal size and then selecting some number of sub-state 
regions to participate from each group. The number of selected 
participants will be dependent on the selection methodology. We welcome 
public comment on these proposed state selection methodologies.
e. Use of CMS Certification Numbers (CCNs)
    We are proposing that Total Performance Scores (TPS) and payment 
adjustments would be calculated based on an HHA's CCN \25\ and, 
therefore, based only on services provided in the selected states. The 
exception to this methodology is where an HHA provides service in a 
state that also has a reciprocal agreement with another state. Services 
being provided by the HHA to beneficiaries who reside in another state 
would be included in the TPS and subject to payment adjustments.\26\ 
The reciprocal agreement between states allows for an HHA to provide 
services to a beneficiary across state lines using its original CCN 
number. Reciprocal agreements are rare and, as identified using the 
most recent Medicare claims data from 2014, there was found to be less 
than 0.1 percent of beneficiaries that provided services that were 
being served by CCNs with reciprocal agreements across state lines. Due 
to the very low number of beneficiaries served across state borders as 
a result of these agreements, we expect there to be an inconsequential 
impact if we were to include these beneficiaries in the model.
---------------------------------------------------------------------------

    \25\ HHAs are required to report OASIS data and any other 
quality measures by its own unique CMS Certification Number (CCN) as 
defined under Title 42, Chapter IV, Subchapter G, Part Sec.  484.20 
Available at URL http://www.ecfr.gov/cgi-bin/text-idx?tpl=/ecfrbrowse/Title42/42cfr484_main_02.tpl.
    \26\ See Chapter 2 of the State Operations Manual (SOM), Section 
2184--Operation of HHAs Cross State Lines, stating ``When an HHA 
provides services across State lines, it must be certified by the 
State in which its CCN is based, and its personnel must be qualified 
in all States in which they provide services. The appropriate SA 
completes the certification activities. The involved States must 
have a written reciprocal agreement permitting the HHA to provide 
services in this manner.''
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D. Performance Assessment and Payment Periods

1. Performance Reports
    We are proposing the use of quarterly performance reports, annual 
payment adjustment reports, and annual publicly-available performance 
reports as a means of developing greater transparency of Medicare data 
on quality and aligning the competitive forces within the market to 
deliver care based on value over volume. The publicly-reported reports 
would inform home health industry stakeholders (consumers, physicians, 
hospitals) as well as all competing HHAs delivering care to Medicare 
beneficiaries within selected state boundaries on their level of 
quality relative to both their peers and their own past performance.
    Competing HHAs would be scored for the quality of care delivered 
under the model based on their performance on measures compared to both 
the performance of their peers, defined by the same size cohort (either 
smaller- or larger-volume cohorts as defined in Sec.  484.305), and 
their own past performance on the measures. We propose in Sec.  484.305 
to define larger-volume cohort to mean the group of Medicare-certified 
HHAs within the boundaries of a selected state that are participating 
in HHCAHPs in accordance with Sec.  484.250 and to define smaller-
volume cohort to mean the group of HHAs within the boundaries of a 
selected state that are exempt from participation in HHCAHPs in 
accordance with Sec.  484.250. Where there are too few HHAs in the 
smaller-volume cohort in each state to compete in a fair manner (that 
is, when there is only one or two HHAs competing within a specific 
cohort), these specific HHAs would be included in the larger-volume 
cohort [for purposes of calculating the total performance score and 
payment adjustment] without being measured on HHCAHPS. We are 
requesting comments on this proposed methodology.
    Quality performance scores and relative peer rankings would be 
determined through the use of a baseline year (calendar year 2015) and 
subsequent performance periods for each competing HHA. Further, these 
reports would provide competing HHAs with an opportunity to track their 
quality performance relative to their peers and their own past 
performance. Using these reports provides a convenient and timely means 
for competing HHAs to assess and track their own respective performance 
as capacity is developed to improve or sustain quality over time.

[[Page 39874]]

    Beginning with the data collected during the first quarter of CY 
2016 (that is, data for the period January 1, 2016 to March 31, 2016), 
and for every quarter of the model thereafter, we are proposing to 
provide each Medicare certified HHA with a quarterly report that 
contains information on their performance during the quarter. We expect 
to make the first quarterly report available in July 2016, and to make 
performance reports for subsequent quarters available in October, 
January and April. The final quarterly report would be made available 
in April 2021. The quarterly reports would include a competing HHA's 
model-specific performance results with a comparison to other competing 
HHAs within its cohort (larger- or smaller-volume) within the state 
boundary. These model-specific performance results would complement all 
quality data sources already being provided through the QIES system and 
any other quality tracking system possibly being employed by HHAs. We 
note that all performance measures that Medicare-certified HHAs will 
report through the QIES system are also already made available in the 
CASPER Reporting application. The primary difference between the two 
reports (CASPER reports and the model-specific performance report) is 
that the model-specific performance report we are proposing here 
consolidates the applicable performance measures used in the HHVBP 
model and provides a peer-ranking to other competing Medicare-certified 
HHAs within the same state and size-cohort. In addition, CASPER reports 
would provide quality data earlier than model-specific performance 
reports because CASPER reports are not limited by a quarterly run-out 
of data and a calculation of competing peer-rankings. For more 
information on the accessibility and functionality of the CASPER 
system, please reference the CASPER Provider Reporting Guide.\27\
---------------------------------------------------------------------------

    \27\ The Casper Reporting Guide is available at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/downloads/HHQICASPER.pdf).
---------------------------------------------------------------------------

    The model-specific quarterly performance report would be made 
available to each HHA through a dedicated CMMI model-specific platform 
for data dissemination and include each HHA's relative ranking amongst 
its peers along with measurement scores and overall performance 
rankings.
    We are proposing that a separate payment adjustment report would be 
provided once a year to each of the competing HHAs. This report would 
focus primarily on the payment adjustment percentage and include an 
explanation of when the adjustment would be applied and how this 
adjustment was determined relative to performance scores. Each 
competing HHA would receive its own payment adjustment report viewable 
only to that HHA.
    We are also proposing a separate, annual, publicly available 
quality report that would provide home health industry stakeholders, 
including providers and suppliers that refer their patients to HHAs, 
with an opportunity to ensure that the beneficiaries they are referring 
for home health services are being provided the best possible quality 
of care available. We seek public comment on the proposed reporting 
framework described above.
2. Payment Adjustment Timeline
    We propose at Sec.  484.325 that Medicare-certified HHAs will be 
subject to upward or downward payment adjustments based on performance 
on quality measures. We propose this model would consist of 5 
performance years, where each performance year would link performance 
to the opportunity and risk for payment adjustment up to an applicable 
percent as defined in proposed 42 CFR 484.305. The first performance 
year would transpire from January 1, 2016 through December 31, 2016, 
and subsequently, all other performance years would be assessed on an 
annual basis through 2020, unless modified through rulemaking. The 
first payment adjustment would begin January 1, 2018 applied to that 
calendar year based on 2016 performance data. Subsequently, all other 
payment adjustments would be made on an annual basis through the 
conclusion of the model, unless modified through rulemaking. We are 
proposing that payment adjustments will be increased incrementally over 
the course of the model with a maximum payment adjustment of (5 
percent) upward or downward in 2018 and 2019, a maximum payment 
adjustment of 6 percent (upward or downward) in 2020, and a maximum 
payment adjustment of 8 percent (upward or downward) in 2021 and 2022. 
We propose to implement this model over a total of 7 years beginning on 
January 1, 2016, and ending on December 31, 2022.
    The baseline year would run from January 1, 2015 through December 
31, 2015 and provide a basis from which each respective HHA's 
performance would be measured in each of the performance years. Data 
related to performance on quality measures would continue to be 
provided from the baseline year through the model's tenure using a 
dedicated HHVBP web-based platform specifically designed to disseminate 
data in this model (this ``portal'' would present and archive the 
previously described quarterly and annual quality reports). Further, 
HHAs will provide performance data on the four new quality measures 
through this platform as well. Any new measures employed through the 
model's tenure, subject to rulemaking, would use data from the previous 
calendar year as the baseline.
    New market entries (specifically, new Medicare-certified HHAs 
delivering care in the boundaries of selected states) would also be 
measured from their first full calendar year of services in the state, 
which would be treated as baseline data for subsequent performance 
years under this model. The delivery of services would be measured by 
the number of episodes of care for Medicare beneficiaries and used to 
determine whether an HHA falls into the smaller- or larger- volume 
cohort. Furthermore, these new market entries would be competing under 
the HHVBP model in the first full calendar year following the full 
calendar year baseline period.
    HHAs would be notified in advance of their first performance level 
and payment adjustment being finalized, based on the 2016 performance 
period (January 1, 2016 to December 31, 2016), with their first payment 
adjustment to be applied January 1, 2018 through December 31, 2018. 
Each HHA would be notified of this first pending payment adjustment on 
August 1, 2017 and a preview period would run for 10 days through 
August 11, 2017. This preview period would provide each competing HHA 
an opportunity to reconcile any performance assessment issues relating 
to the calculation of scores prior to the payment adjustment taking 
effect, in accordance with the process proposed in section H--Preview 
and Period to Request Recalculation. Once the preview period ends, any 
changes would be reconciled and a report finalized no later than 
November 1, 2017 (or 60 days prior to the payment adjustment taking 
affect).
    Subsequent payment adjustments would be calculated based on the 
applicable full calendar year of performance data from the quarterly 
reports, with HHAs notified and payments adjusted, respectively, every 
year thereafter. As a sequential example, the second payment adjustment 
would occur January 1, 2019 based on a full 12 months of the CY 2017 
performance period. Notification of the adjustment

[[Page 39875]]

would occur on August 1, 2018, along with the preview period 
transpiring through August 11, 2018 and followed by reconciliation 
through September 10, 2018. Subsequent payment adjustments would 
continue to follow a similar timeline and process. We seek public 
comment on this payment adjustment schedule.
    Beginning in CY 2019, we may consider revising this payment 
adjustment schedule and updating the payment adjustment more frequently 
than once each year if it is determined that a more timely application 
of the adjustment as it relates to performance improvement efforts that 
have transpired over the course of a calendar year would generate 
increased improvement in quality measures. Specifically, we would 
expect that having payment adjustments transpire closer together 
through more frequent performance periods would accelerate improvement 
in quality measures because HHAs would be able to justify earlier 
investments in quality efforts and be incentivized for improvements. In 
effect, this concept may be operationalized to create a smoothing 
effect where payment adjustments are based on overlapping 12-month 
performance periods that occur every 6 months rather than annually. As 
an example, the normal 12-month performance period occurring from 
January 1, 2020 to December 31, 2020 might have an overlapping 12-month 
performance period occurring from July 1, 2020 to June 30, 2021. 
Following the regularly scheduled January 1, 2022 payment adjustments, 
the next adjustments could be applied to payments beginning on July 1, 
2022 through December 31, 2022. Depending on if and when more frequent 
payment adjustments would be applied, performance would be calculated 
based on the applicable 12-months of performance data, HHAs notified, 
and payments adjusted, respectively, every six months thereafter, until 
the conclusion of the model. As a result, separate performance periods 
would have a 6-month overlap through the conclusion of the model. HHAs 
would be notified through rulemaking and be given the opportunity to 
comment on any proposed changes to the frequency of payment 
adjustments. We seek public comment on the proposed payment adjustment 
schedule described above.

E. Quality Measures

1. Objectives
    Initially, we propose the measures for the HHVBP model would be 
predominantly drawn from the current Outcome and Assessment Information 
Set (OASIS),\28\ which is familiar to the home health industry and 
readily available for utilization by the proposed model. In addition, 
the HHVBP model provides us with an opportunity to examine a broad 
array of quality measures that address critical gaps in care. A recent 
comprehensive review of the VBP experience over the past decade, 
sponsored by the Office of the Assistant Secretary for Planning and 
Evaluation (ASPE), identified several near- and long-term objectives 
for HHVBP measures.\29\ The recommended objectives emphasize measuring 
patient outcomes and functional status; appropriateness of care; and 
incentives for providers to build infrastructure to facilitate 
measurement within the quality framework.\30\ The following seven 
objectives derived from this study served as guiding principles for the 
selection of the proposed measures for the HHVBP model:
---------------------------------------------------------------------------

    \28\ For detailed information on OASIS see the official CMS 
OASIS web resource available at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/OASIS/index.html?redirect=/oasis. See also industry resource available at 
http://www.oasisanswers.com/index.htm, specifically updated OASIS 
component information available at www.oasisanswers.com/LiteratureRetrieve.aspx?ID=215074).
    \25\ U.S. Department of Health and Human Services. Office of the 
Assistant Seretary for Planning and Evaluation (ASPE) (2014) 
Measuring Success in Health Care Value-Based Purchasing Programs. 
Cheryl L. Damberg et. al. on behalf of RAND Health.
    \30\ Id.
---------------------------------------------------------------------------

    1. Use a broad measure set that captures the complexity of the HHA 
service provided;
    2. Incorporate the flexibility to include Improving Medicare Post-
Acute Care Transformation (IMPACT) Act of 2014 proposed measures that 
are cross-cutting amongst post-acute care settings;
    3. Develop second-generation measures of patient outcomes, health 
and functional status, shared decision making, and patient activation;
    4. Include a balance of process, outcome, and patient experience 
measures;
    5. Advance the ability to measure cost and value;
    6. Add measures for appropriateness or overuse; and,
    7. Promote infrastructure investments.
2. Proposed Methodology for Selection of Quality Measures
a. Direct Alignment With National Quality Strategy Priorities
    A central driver of the proposed measure selection process was 
incorporating innovative thinking from the field while simultaneously 
drawing on the most current evidence-based literature and documented 
best practices. Broadly, we propose measures that have a high impact on 
care delivery and support the combined priorities of HHS and CMS to 
improve health outcomes, quality, safety, efficiency, and experience of 
care for patients. To frame the selection process, we utilized the 
domains described in the CMS Quality Strategy that maps to the six 
National Quality Strategy (NQS) priority areas (see Figure 3 for CMS 
domains).\31\
---------------------------------------------------------------------------

    \3131\ The CMS Quality Strategy is discussed in broad terms at 
URL http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/CMS-Quality-Strategy.html. CMS Domains appear presentations by CMS (xxxxx) and 
ONC (available at http://www.cms.gov/eHealth/downloads/Webinar_eHealth_March25_eCQM101.pdf) and a CMS discussion of the NQS 
Domains can be found at URL http://www.cms.gov/Regulations-and-Guidance/Legislation/EHRIncentivePrograms/2014_ClinicalQualityMeasures.html.

---------------------------------------------------------------------------

[[Page 39876]]

[GRAPHIC] [TIFF OMITTED] TP10JY15.002

b. Referenced Quality Measure Authorities
    We propose at Sec.  484.315 that Medicare-certified HHAs would be 
evaluated using a starter set of quality measures (``starter set'' 
refers to the proposed quality measures for the first year of this 
model) designed to encompass multiple NQS domains, and provide future 
flexibility to incorporate and study newly developed measures over 
time. New and evolving measures would be considered for inclusion in 
subsequent years of this model and proposed through future rulemaking.
    To create the proposed starter set we began researching the current 
set of OASIS measures that are being used within the health home 
environment.\32\ Following that, we searched for endorsed quality 
measures using the National Quality Forum (NQF) Quality Positioning 
System (QPS),\33\ selecting measures that address all possible NQS 
domains. We further examined measures on the CMS-generated Measures 
Under Consideration (MUC) list,\34\ and reviewed other relevant 
measures used within the health care industry but not currently used in 
the home health setting, as well as proposed measures required by the 
IMPACT Act of 2014. Finally, we searched the National Quality Measures 
Clearinghouse (NQMS) to identify evidence-based measures and measure 
sets.
---------------------------------------------------------------------------

    \32\ All data for the starter set measures, not including New 
Measures, is currently collected from HHAs under Sec. Sec.  484.20 
and 484.210.
    \33\ The NQF Quality Positioning System is available at http://www.qualityforum.org/QPS.
    \34\ To review the MUC List see https://www.qualityforum.org/Setting_Priorities/Partnership/Measures_Under_Consideration_List_2014.aspx.
---------------------------------------------------------------------------

c. Key Policy Considerations and Data Sources
    To ensure proposed measures for the HHVBP model take a more 
holistic view of the patient beyond a particular disease state or care 
setting, we are proposing measures, which include outcome measures as 
well as process measures, that have the potential to follow patients 
across multiple settings, reflect a multi-faceted approach, and foster 
the intersection of health care delivery and population health. A key 
consideration behind this approach is to use in performance year one 
(PY1) of the model proven measures that are readily available and meet 
a high impact need, and in subsequent model years augment this starter 
set with innovative measures that have the potential to be impactful 
and fill critical measure gap areas. All substantive changes or 
additions to the proposed starter set or new measures would be proposed 
for inclusion in future rulemaking. This approach to quality measure 
selection aims to balance the burden of collecting data with the 
inclusion of new and important measures. We carefully considered the 
potential burden on HHAs to report the measure data when developing the 
proposed starter set, and prioritized proposed measures that would draw 
both from claims data and data already collected in OASIS.
    The majority of the proposed measures in this model would use OASIS 
data currently being reported to CMS and linked to state-specific CCNs 
for selected states in order to promote consistency and to reduce the 
data collection burden for providers. Utilizing primarily OASIS data 
would allow the model to leverage reporting structures already in place 
to evaluate performance and identify weaknesses in care delivery. This 
model would also afford the opportunity to study measures developed in 
other care settings and new to the home health industry (hereinafter 
referred to as ``New Measures''). Many of the proposed New Measures 
have been used in other health care settings and are readily applicable 
to the home health environment (for example, influenza vaccination 
coverage for health care personnel). Proposed New Measures for PY1 are 
described in detail below. We

[[Page 39877]]

propose in PY1 to collect data on these New Measures which have already 
been tested for validity, reliability, usability/feasibility, and 
sensitivity in other health care settings but have not yet been 
validated within the home health setting. HHVBP will study if their use 
in the home health setting meets validity, reliability, usability/
feasibility, and sensitivity to statistical variations criteria. For 
PY1, we propose HHA's would earn points to be included in the Total 
Performance Score (TPS) simply for reporting data on New Measures (see 
Section--Performance Scoring Methodology). To the extent we determine 
that one or more of the proposed New Measures is valid and reliable for 
the home health setting, we will consider proposing in future 
rulemaking to score Medicare-certified HHAs on their actual performance 
on the measure.
3. Proposed Measures
    The initial set of measures proposed for PY1 of the model utilizes 
data collected via OASIS, Medicare claims, HHCAHPS survey data, and 
data reported directly from the HHAs to CMS. In total there are 10 
process measures and 15 outcome measures (see Figure 4a) plus the four 
New Measures (see Figure 4b). Process measures evaluate the rate of HHA 
use of specific evidence-based processes of care based on the evidence 
available. Outcomes measures illustrate the end result of care 
delivered to HHA patients. When available, NQF endorsed measures would 
be used. This set of measures would be subject to change or retirement 
during subsequent model years and revised through the rulemaking 
process. For example, we may propose in future rulemaking to remove one 
or more of these measures if, based on the evidence, we conclude that 
it is no longer appropriate for the model because, for example, 
performance on it has topped-out. We would also consider proposing to 
update the measure set if new measures that address gaps within the NQS 
domains became available. We would also consider proposing adjustments 
to the measure set based on lessons learned during the course of the 
model. For instance, in light of the passage of the IMPACT Act of 2014, 
which mandates the collection and use of standardized post-acute care 
assessment data, we would consider proposing in future rulemaking to 
adopt measures that meet the requirements of the IMPACT Act as soon as 
they became available.
    We seek public comment on the methodology for constructing the 
proposed starter set of quality measures and on the proposed selected 
measures.

---------------------------------------------------------------------------

    \35\ For more detailed information on the proposed measures 
utilizing OASIS refer to the OASIS-C1/ICD-9, Changed Items & Data 
Collection Resources dated September 3, 2014 available at 
www.oasisanswers.com/LiteratureRetrieve.aspx?ID=215074. For NQF 
endorsed measures see The NQF Quality Positioning System available 
at http://www.qualityforum.org/QPS. For non-NQF measures using OASIS 
see links for data tables related to OASIS measures at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIQualityMeasures.html. For 
information on HHCAHPS measures see https://homehealthcahps.org/SurveyandProtocols/SurveyMaterials.aspx.

                                                          Figure 4a--PY1 Proposed Measures \35\
--------------------------------------------------------------------------------------------------------------------------------------------------------
          NQS domains              Measure title     Measure type       Identifier        Data source            Numerator              Denominator
--------------------------------------------------------------------------------------------------------------------------------------------------------
Clinical Quality of Care.......  Improvement in     Outcome.......  NQF0167..........  OASIS (M1860)....  Number of home health   Number of home health
                                  Ambulation-                                                              episodes of care        episodes of care
                                  Locomotion.                                                              where the value         ending with a
                                                                                                           recorded on the         discharge during the
                                                                                                           discharge assessment    reporting period,
                                                                                                           indicates less          other than those
                                                                                                           impairment in           covered by generic or
                                                                                                           ambulation/locomotion   measure-specific
                                                                                                           at discharge than at    exclusions.
                                                                                                           the start (or
                                                                                                           resumption) of care.
Clinical Quality of Care.......  Improvement in     Outcome.......  NQF0175..........  OASIS (M1850)....  Number of home health   Number of home health
                                  Bed Transferring.                                                        episodes of care        episodes of care
                                                                                                           where the value         ending with a
                                                                                                           recorded on the         discharge during the
                                                                                                           discharge assessment    reporting period,
                                                                                                           indicates less          other than those
                                                                                                           impairment in bed       covered by generic or
                                                                                                           transferring at         measure-specific
                                                                                                           discharge than at the   exclusions.
                                                                                                           start (or resumption)
                                                                                                           of care.
Clinical Quality of Care.......  Improvement in     Outcome.......  NQF0174..........  OASIS (M1830)....  Number of home health   Number of home health
                                  Bathing.                                                                 episodes of care        episodes of care
                                                                                                           where the value         ending with a
                                                                                                           recorded on the         discharge during the
                                                                                                           discharge assessment    reporting period,
                                                                                                           indicates less          other than those
                                                                                                           impairment in bathing   covered by generic or
                                                                                                           at discharge than at    measure-specific
                                                                                                           the start (or           exclusions.
                                                                                                           resumption) of care.
Clinical Quality of Care.......  Improvement in     Outcome.......  NA...............  OASIS (M1400)....  Number of home health   Number of home health
                                  Dyspnea.                                                                 episodes of care        episodes of care
                                                                                                           where the discharge     ending with a
                                                                                                           assessment indicates    discharge during the
                                                                                                           less dyspnea at         reporting period,
                                                                                                           discharge than at       other than those
                                                                                                           start (or resumption)   covered by generic or
                                                                                                           of care.                measure-specific
                                                                                                                                   exclusions.

[[Page 39878]]

 
Clinical Quality of Care.......  Timely Initiation  Process.......  NQF0526..........  OASIS (M0102;      Number of home health   Number of home health
                                  of Care.                                              M0030).            episodes of care in     episodes of care
                                                                                                           which the start or      ending with
                                                                                                           resumption of care      discharge, death, or
                                                                                                           date was either on      transfer to inpatient
                                                                                                           the Physician-          facility during the
                                                                                                           specified date or       reporting period,
                                                                                                           within 2 days of        other than those
                                                                                                           their referral date     covered by generic or
                                                                                                           or inpatient            measure-specific
                                                                                                           discharge date          exclusions.
                                                                                                           whichever is later.
                                                                                                           For resumption of
                                                                                                           care, per the
                                                                                                           Medicare Condition of
                                                                                                           Participation, the
                                                                                                           patient must be seen
                                                                                                           within 2 days of
                                                                                                           inpatient discharge,
                                                                                                           even if the physician
                                                                                                           specifies a later
                                                                                                           date.
Communication & Care             Discharged to      Outcome.......  NA...............  OASIS (M2420)....  Number of home health   Number of home health
 Coordination.                    Community.                                                               episodes where the      episodes of care
                                                                                                           assessment completed    ending with discharge
                                                                                                           at the discharge        or transfer to
                                                                                                           indicates the patient   inpatient facility
                                                                                                           remained in the         during the reporting
                                                                                                           community after         period, other than
                                                                                                           discharge.              those covered by
                                                                                                                                   generic or measure-
                                                                                                                                   specific exclusions.
Communication & Care             Care Management:   Process.......  NA...............  OASIS (M2102)....  Multiple data elements  Multiple data
 Coordination.                    Types and                                                                                        elements.
                                  Sources of
                                  Assistance.
Efficiency & Cost Reduction....  Acute Care         Outcome.......  NQF0171; NQF2380   CCW (Claims).....  Number of home health   Number of home health
                                  Hospitalization:                   (Under review                         stays for patients      stays that begin
                                  Unplanned                          for Home Health).                     who have a Medicare     during the 12-month
                                  Hospitalization                                                          claim for an            observation period.
                                  during first 60                                                          admission to an acute  A home health stay is
                                  days of Home                                                             care hospital in the    a sequence of home
                                  Health;                                                                  60 days following the   health payment
                                  Hospitalization                                                          start of the home       episodes separated
                                  during first 30                                                          health stay.            from other home
                                  days of Home                                                                                     health payment
                                  Health.                                                                                          episodes by at least
                                                                                                                                   60 days.
Efficiency & Cost Reduction....  Emergency          Outcome.......  NQF0173..........  CCW (Claims).....  Number of home health   Number of home health
                                  Department Use                                                           stays for patients      stays that begin
                                  without                                                                  who have a Medicare     during the 12-month
                                  Hospitalization.                                                         claim for outpatient    observation period.
                                                                                                           emergency department   A home health stay is
                                                                                                           use and no claims for   a sequence of home
                                                                                                           acute care              health payment
                                                                                                           hospitalization in      episodes separated
                                                                                                           the 60 days following   from other home
                                                                                                           the start of the home   health payment
                                                                                                           health stay.            episodes by at least
                                                                                                                                   60 days.
Patient Safety.................  Pressure Ulcer     Process.......  NQF0538..........  OASIS (M1300;      Number of home health   Number of home health
                                  Prevention and                                        M2400).            episodes during which   episodes of care
                                  Care.                                                                    interventions to        ending with
                                                                                                           prevent pressure        discharge, or
                                                                                                           ulcers were included    transfer to inpatient
                                                                                                           in the Physician-       facility during the
                                                                                                           ordered plan of care    reporting period,
                                                                                                           and implemented         other than those
                                                                                                           (since the previous     covered by generic or
                                                                                                           OASIS assessment).      measure-specific
                                                                                                                                   exclusions.
Patient Safety.................  Improvement in     Outcome.......  NQF0177..........  OASIS (M1242)....  Number of home health   Number of home health
                                  Pain Interfering                                                         episodes of care        episodes of care
                                  with Activity.                                                           where the value         ending with a
                                                                                                           recorded on the         discharge during the
                                                                                                           discharge assessment    reporting period,
                                                                                                           indicates less          other than those
                                                                                                           frequent pain at        covered by generic or
                                                                                                           discharge than at the   measure-specific
                                                                                                           start (or resumption)   exclusions.
                                                                                                           of care.

[[Page 39879]]

 
Patient Safety.................  Improvement in     Outcome.......  NQF0176..........  OASIS (M2020)....  Number of home health   Number of home health
                                  Management of                                                            episodes of care        episodes of care
                                  Oral Medications.                                                        where the value         ending with a
                                                                                                           recorded on the         discharge during the
                                                                                                           discharge assessment    reporting period,
                                                                                                           indicates less          other than those
                                                                                                           impairment in taking    covered by generic or
                                                                                                           oral medications        measure-specific
                                                                                                           correctly at            exclusions
                                                                                                           discharge than at
                                                                                                           start (or resumption)
                                                                                                           of care.
Patient Safety.................  Multifactor Fall   Process.......  NQF0537..........  OASIS (M1910)....  Number of home health   Number of home health
                                  Risk Assessment                                                          episodes in which       episodes of care
                                  Conducted for                                                            patients had a multi-   ending with
                                  All Patients who                                                         factor fall risk        discharge, death, or
                                  Can Ambulate.                                                            assessment at start/    transfer to inpatient
                                                                                                           resumption of care.     facility during the
                                                                                                                                   reporting period,
                                                                                                                                   other than those
                                                                                                                                   covered by generic or
                                                                                                                                   measure-specific
                                                                                                                                   exclusions.
Patient Safety.................  Prior Functioning  Outcome.......  NQF0430..........  OASIS (M1900)....  The number (or          All patients in a risk
                                  ADL/IADL.                                                                proportion) of a        adjusted diagnostic
                                                                                                           clinician's patients    category with a Daily
                                                                                                           in a particular risk    Activity goal for an
                                                                                                           adjusted diagnostic     episode of care Cases
                                                                                                           category who meet a     to be included in the
                                                                                                           target threshold of     denominator could be
                                                                                                           improvement in Daily    identified based on
                                                                                                           Activity (that is,      ICD-9 codes or
                                                                                                           ADL and IADL)           alternatively, based
                                                                                                           functioning.            on CPT codes relevant
                                                                                                                                   to treatment goals
                                                                                                                                   focused on Daily
                                                                                                                                   Activity function.
Patient & Caregiver-Centered     Care of Patients.  Outcome.......  .................  CAHPS............  NA....................  NA.
 Experience.
Patient & Caregiver-Centered     Communications     Outcome.......  .................  CAHPS............  NA....................  NA.
 Experience.                      between
                                  Providers and
                                  Patients.
Patient & Caregiver-Centered     Specific Care      Outcome.......  .................  CAHPS............  NA....................  NA.
 Experience.                      Issues.
Patient & Caregiver-Centered     Overall rating of  Outcome.......  .................  CAHPS............  NA....................  NA.
 Experience.                      home health care
                                  and.
Patient & Caregiver-Centered     Willingness to     Outcome.......  .................  CAHPS............  NA....................  NA.
 Experience.                      recommend the
                                  agency.
Population/Community Health....  Depression         Process.......  NQF0518..........  OASIS (M1730)....  Number of home health   Number of home health
                                  Assessment                                                               episodes in which       episodes of care
                                  Conducted.                                                               patients were           ending with
                                                                                                           screened for            discharge, death, or
                                                                                                           depression (using a     transfer to inpatient
                                                                                                           standardized            facility during the
                                                                                                           depression screening    reporting period,
                                                                                                           tool) at start/         other than those
                                                                                                           resumption of care.     covered by generic or
                                                                                                                                   measure-specific
                                                                                                                                   exclusions.
Population/Community Health....  Influenza Vaccine  Process.......  NA...............  OASIS (M1041)....  NA....................  NA.
                                  Data Collection
                                  Period: Does
                                  this episode of
                                  care include any
                                  dates on or
                                  between October
                                  1 and March 31?

[[Page 39880]]

 
Population/Community Health....  Influenza          Process.......  NQF0522..........  OASIS (M1046)....  Number of home health   Number of home health
                                  Immunization                                                             episodes during which   episodes of care
                                  Received for                                                             patients (a) received   ending with
                                  Current Flu                                                              vaccination from the    discharge, or
                                  Season.                                                                  HHA or (b) had          transfer to inpatient
                                                                                                           received vaccination    facility during the
                                                                                                           from HHA during         reporting period,
                                                                                                           earlier episode of      other than those
                                                                                                           care, or (c) was        covered by generic or
                                                                                                           determined to have      measure-specific
                                                                                                           received vaccination    exclusions.
                                                                                                           from another provider.
Population/Community Health....  Pneumococcal       Process.......  NQF0525..........  OASIS (M1051)....  Number of home health   Number of home health
                                  Polysaccharide                                                           episodes during which   episodes of care
                                  Vaccine Ever                                                             patients were           ending with discharge
                                  Received.                                                                determined to have      or transfer to
                                                                                                           ever received           inpatient facility
                                                                                                           Pneumococcal            during the reporting
                                                                                                           Polysaccharide          period, other than
                                                                                                           Vaccine (PPV).          those covered by
                                                                                                                                   generic or measure-
                                                                                                                                   specific exclusions.
Population/Community Health....  Reason             Process.......  NA...............  OASIS (M1056)....  NA....................  NA.
                                  Pneumococcal
                                  vaccine not
                                  received.
Clinical Quality of Care.......  Drug Education on  Process.......  NA...............  OASIS (M2015)....  Number of home health   Number of home health
                                  All Medications                                                          episodes of care        episodes of care
                                  Provided to                                                              during which patient/   ending with a
                                  Patient/                                                                 caregiver was           discharge or transfer
                                  Caregiver during                                                         instructed on how to    to inpatient facility
                                  all Episodes of                                                          monitor the             during the reporting
                                  Care.                                                                    effectiveness of drug   period, other than
                                                                                                           therapy, how to         those covered by
                                                                                                           recognize potential     generic or measure-
                                                                                                           adverse effects, and    specific exclusions.
                                                                                                           how and when to
                                                                                                           report problems
                                                                                                           (since the previous
                                                                                                           OASIS assessment).
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                          Figure 4b--PY1 Proposed New Measures
--------------------------------------------------------------------------------------------------------------------------------------------------------
          NQS domains              Measure title     Measure type       Identifier        Data source            Numerator              Denominator
--------------------------------------------------------------------------------------------------------------------------------------------------------
Patient Safety.................  Adverse Event for  Outcome.......  NA...............  Reported by HHAs   Number of home health   Number of home health
                                  Improper                                              through Web        episodes of care        episodes of care
                                  Medication                                            Portal.            where the discharge/    ending with a
                                  Administration                                                           transfer assessment     discharge during the
                                  and/or Side                                                              indicated the patient   reporting period,
                                  Effects.                                                                 required emergency      other than those
                                                                                                           treatment from a        covered by generic or
                                                                                                           hospital emergency      measure-specific
                                                                                                           department related to   exclusions.
                                                                                                           improper
                                                                                                           administration or
                                                                                                           medication side
                                                                                                           effects (adverse drug
                                                                                                           reactions).

[[Page 39881]]

 
Population/Community Health....  Influenza          Process.......  NQF0431 (Used in   Reported by HHAs   Healthcare personnel    Number of healthcare
                                  Vaccination                        other care         through Web        in the denominator      personnel who are
                                  Coverage for                       settings, not      Portal.            population who during   working in the
                                  Home Health Care                   Home Health).                         the time from October   healthcare facility
                                  Personnel.                                                               1 (or when the          for at least 1
                                                                                                           vaccine became          working day between
                                                                                                           available) through      October 1 and March
                                                                                                           March 31 of the         31 of the following
                                                                                                           following year: (a)     year, regardless of
                                                                                                           Received an influenza   clinical
                                                                                                           vaccination             responsibility or
                                                                                                           administered at the     patient contact.
                                                                                                           healthcare facility,
                                                                                                           or reported in
                                                                                                           writing or provided
                                                                                                           documentation that
                                                                                                           influenza vaccination
                                                                                                           was received
                                                                                                           elsewhere: Or (b)
                                                                                                           were determined to
                                                                                                           have a medical
                                                                                                           contraindication/
                                                                                                           condition of severe
                                                                                                           allergic reaction to
                                                                                                           eggs or to other
                                                                                                           components of the
                                                                                                           vaccine or history of
                                                                                                           Guillain-Barre
                                                                                                           Syndrome within 6
                                                                                                           weeks after a
                                                                                                           previous influenza
                                                                                                           vaccination; or (c)
                                                                                                           declined influenza
                                                                                                           vaccination; or (d)
                                                                                                           persons with unknown
                                                                                                           vaccination status or
                                                                                                           who do not otherwise
                                                                                                           meet any of the
                                                                                                           definitions of the
                                                                                                           above-mentioned
                                                                                                           numerator categories.
Population/Community Health....  Herpes zoster      Process.......  NA...............  Reported by HHAs   Total number of         Total number of
                                  (Shingles)                                            through Web        Medicare                Medicare
                                  vaccination: Has                                      Portal.            beneficiaries aged 60   beneficiaries aged 60
                                  the patient ever                                                         years and over who      years and over
                                  received the                                                             report having ever      receiving services
                                  shingles                                                                 received zoster         from the HHA.
                                  vaccination?.                                                            vaccine (shingles
                                                                                                           vaccine).
Communication & Care             Advanced Care      Process.......  NQF0326..........  Reported by HHAs   Patients who have an    All patients aged 65
 Coordination.                    Plan.                                                 through Web        advance care plan or    years and older.
                                                                                        Portal.            surrogate decision
                                                                                                           maker documented in
                                                                                                           the medical record or
                                                                                                           documentation in the
                                                                                                           medical record that
                                                                                                           an advanced care plan
                                                                                                           was discussed but the
                                                                                                           patient did not wish
                                                                                                           or was not able to
                                                                                                           name a surrogate
                                                                                                           decision maker or
                                                                                                           provide an advance
                                                                                                           care plan.
--------------------------------------------------------------------------------------------------------------------------------------------------------

4. Additional Information on HHCAHPS
    Figure 5 provides details on the elements of the Home Health Care 
Consumer Assessment of Healthcare Providers and Systems Survey 
(HHCAHPS) we propose to include in the PY1 starter set. The HHVBP model 
would not alter the HHCAHPS current scoring methodology or the 
participation requirements in any way. Details on participation 
requirements for HHCAHPS can be found at 42 CFR 484.250 \36\ and 
details on HHCAHPS scoring methodology are available at https://homehealthcahps.org/SurveyandProtocols/SurveyMaterials.aspx.\37\
---------------------------------------------------------------------------

    \36\ 76 FR 68606, Nov. 4, 2011, as amended at 77 FR 67164, Nov. 
8, 2012; 79 FR 66118, Nov. 6, 2014.
    \37\ Detailed scoring information is contained in the Protocols 
and Guidelines manual posted on the HHCAHPS Web site and available 
at https://homehealthcahps.org/Portals/0/PandGManual_NOAPPS.pdf.

[[Page 39882]]



 Figure 5--Home Health Care Consumer Assessment of Healthcare Providers
                 and Systems Survey (HHCAHPS) Composites
------------------------------------------------------------------------
                                                 Response categories
------------------------------------------------------------------------
Care of Patients:
    Q9. In the last 2 months of care, how   Never, Sometimes, Usually,
     often did home health providers from    Always.
     this agency seem informed and up-to-
     date about all the care or treatment
     you got at home?.
    Q16. In the last 2 months of care, how  Never, Sometimes, Usually,
     often did home health providers from    Always.
     this agency treat you as gently as
     possible?.
    Q19. In the last 2 months of care, how  Never, Sometimes, Usually,
     often did home health providers from    Always.
     this agency treat you with courtesy
     and respect?.
    Q24. In the last 2 months of care, did  Yes, No.
     you have any problems with the care
     you got through this agency?.
Communications Between Providers &
 Patients:
    Q2. When you first started getting      Yes, No.
     home health care from this agency,
     did someone from the agency tell you
     what care and services you would get?.
    Q15. In the past 2 months of care, how  Never, Sometimes, Usually,
     often did home health providers from    Always.
     this agency keep you informed about
     when they would arrive at your home?.
    Q17. In the past 2 months of care, how  Never, Sometimes, Usually,
     often did home health providers from    Always.
     this agency explain things in a way
     that was easy to understand?.
    Q18. In the past 2 months of care, how  Never, Sometimes, Usually,
     often did home health providers from    Always.
     this agency listen carefully to you?.
    Q22. In the past 2 months of care,      Yes, No.
     when you contacted this agency's
     office did you get the help or advice
     you needed?.
    Q23. When you contacted this agency's   Same day; 1 to 5 days; 6 to
     office, how long did it take for you    14 days; More than 14 days.
     to get the help or advice you needed?.
Specific Care Issues:
    Q3. When you first started getting      Yes, No.
     home health care from this agency,
     did someone from the agency talk with
     you about how to set up your home so
     you can move around safely?.
    Q4. When you started getting home       Yes, No.
     health care from this agency, did
     someone from the agency talk with you
     about all the prescription medicines
     you are taking?.
    Q5. When you started getting home       Yes, No.
     health care from this agency, did
     someone from the agency ask to see
     all the prescription medicines you
     were taking?.
    Q10. In the past 2 months of care, did  Yes, No.
     you and a home health provider from
     this agency talk about pain?.
    Q12. In the past 2 months of care, did  Yes, No.
     home health providers from this
     agency talk with you about the
     purpose for taking your new or
     changed prescription medicines?.
    Q13. In the last 2 months of care, did  Yes, No.
     home health providers from this
     agency talk with you about when to
     take these medicines?.
    Q14. In the last 2 months of care, did  Yes, No.
     home health providers from this
     agency talk with you about the
     important side effects of these
     medicines?.
Global Type Measures:
    What is your overall rating of your     Use a rating scale (1-10).
     home health care?.
    Would you be willing to recommend this  Never, Sometimes, Usually,
     home health agency to family and        Always.
     friends?.
------------------------------------------------------------------------

5. New Measures
    As discussed in the previous section, the New Measures we propose 
are not currently reported by Medicare-certified HHAs to CMS, but we 
believe fill gaps in the NQS Domains not completely covered by existing 
measures in the home health setting. All Medicare-certified HHAs in 
selected states, regardless of cohort size or number of episodes, will 
be required to submit data on the New Measures for all Medicare 
beneficiaries to whom they provide home health services within the 
state (unless an exception applies). We propose at Sec.  484.315 that 
HHAs will be required to report data on these New Measures. Competing 
Medicare-certified HHAs would submit data through a dedicated HHVBP 
web-based platform. This web-based platform would function as a means 
to collect and distribute information from and to competing Medicare-
certified HHAs. Also, for those HHAs with a sufficient number of 
episodes of care to be subject to a payment adjustment, New Measures 
scores included in the final TPS for PY1 are only based on whether the 
HHA has submitted data to the HHVBP web-based platform or not. We are 
proposing the following New Measures for competing Medicare-certified 
HHAs:
     Advance Care Planning;
     Adverse Event for Improper Medication Administration and/
or Side Effects;
     Influenza Vaccination Coverage for Home Health Care 
Personnel; and,
     Herpes Zoster (Shingles) Vaccination received by HHA 
patients.
a. Advance Care Planning
    Advance Care Planning is an NQF-endorsed process measure in the NQS 
domain of Person- and Caregiver-centered experience and outcomes (see 
Figure 3). This measure is currently endorsed at the group practice/
individual clinician level of analysis. We believe its adoption under 
the HHVBP model represents an opportunity to study this measure in the 
home health setting. This is an especially pertinent measure for home 
health care to ensure that the wishes of the patient regarding their 
medical, emotional, or social needs are met across care settings. The 
Advance Care Planning measure would focus on Medicare beneficiaries, 
including dually-eligible beneficiaries.
    The measure would be numerically expressed by a ratio whose 
numerator and denominator are as follows:
    Numerator: The measure would calculate the percentage of patients 
age 18 years and older served by the HHA that have an advance care plan 
or surrogate decision maker \38\ documented

[[Page 39883]]

in the clinical record or documentation in the clinical record that an 
advance care plan was discussed, but the patient did not wish or was 
not able to name a surrogate decision maker or provide an advance care 
plan.
---------------------------------------------------------------------------

    \38\ A surrogate decision maker, also known as a health care 
proxy or agent, advocates for patients who are unable to make 
decisions or speak for themselves about personal health care such 
that someone else must provide direction in decision-making, as the 
surrogate decision-maker.
---------------------------------------------------------------------------

    Denominator: All patients aged 65 years and older admitted to the 
HHA.
    Information on this numerator and denominator would be reported by 
HHAs through the HHVBP web-based platform, in addition to other 
information related to this measure as the Secretary deems appropriate.
    Advance care planning ensures that the health care plan is 
consistent with the patient's wishes and preferences. Therefore, 
studying this measure within the HHA environment allows for further 
analysis of planning for the ``what ifs'' that may occur during the 
patient's lifetime. In addition, the use of this measure is expected to 
result in an increase in the number of patients with advance care 
plans. Increased advance care planning among the elderly is expected to 
result in enhanced patient autonomy and reduced hospitalizations and 
in-hospital deaths.\39\
---------------------------------------------------------------------------

    \39\ Lauren Hersch Nicholas, Ph.D., MPP et al. Regional 
Variation in the Association Between Advance Directives and End-of-
Life Medicare Expenditures. JAMA. 2011; 306(13): 1447-1453. 
doi:10.1001/jama.2011.1410.
---------------------------------------------------------------------------

    We welcome public comments on this measure's proposed adoption 
under the HHVBP model.
b. Adverse Event for Improper Medication Administration and/or Side 
Effects
    Adverse Event for Improper Medication Administration and/or Side 
Effects is a measure that aligns with the NQS domain of Safety 
(specifically ``medication safety''--see Figure 3) with the goal of 
making care safer by reducing harm caused in the delivery of care.
    An adverse drug event (ADE) is an injury related to medication 
use.\40\ More specifically, it is ``an injury resulting from medical 
intervention related to a drug'' and ``encompasses harms that occur 
during medical care that are directly caused by the drug including but 
not limited to medication errors, adverse drug reactions and 
overdoses.'' \41\ A medication error is a mishap ``that occur[s] during 
prescribing, transcribing, dispensing, administering, adherence, or 
monitoring a drug'' and should be distinguished from an adverse drug 
reaction, which is harm directly caused by the drug at normal doses, 
during normal use.\42\ The National Quality Forum has included ADEs as 
a Serious Reportable Event (SRE) in the category of Care Management, 
defining said event as a ``patient death or serious injury associated 
with a medication error (for example, errors involving the wrong drug, 
wrong dose, wrong patient, wrong time, wrong rate, wrong preparation, 
or wrong route of administration)'', noting that ``. . . the high rate 
of medication errors resulting in injury and death makes this event 
important to endorse again.'' \43\
---------------------------------------------------------------------------

    \40\ Reporting of Adverse Drug Events: Examination of a Hospital 
Incident Reporting System. Radhika Desikan, Melissa J. Krauss, W. 
Claiborne Dunagan, Erin Christensen Rachmiel, Thomas Bailey, 
Victoria J. Fraser http://www.ahrq.gov/professionals/quality-patient-safety/patient-safety-resources/resources/advances-in-patient-safety/vol1/Desikan.pdf.
    \41\ The Office of Disease Prevention and Health Promotion 
(ODPHP), National Action Plan for ADE Prevention, available at: 
http://www.health.gov/hai/pdfs/ADE-Action-Plan-Executive-Summary.pdf, citing VA Center for Medication Safety And VHA Pharmacy 
Benefits Management Strategic Healthcare Group and the Medical 
Advisory Panel Adverse Drug Events, Adverse Drug Reactions and 
Medication Errors Frequently Asked Questions (November 2006), 
available at: http://www.va.gov/ms/professionals/medications/adverse_drug_reaction_faq.pdfhttp://www.va.gov/ms/professionals/medications/adverse_drug_reaction_faq.pdf.
    \42\ VA Center for Medication Safety And VHA Pharmacy Benefits 
Management Strategic Healthcare Group and the Medical Advisory Panel 
Adverse Drug Events, Adverse Drug Reactions and Medication Errors 
Frequently Asked Questions (November 2006), available at: http://www.va.gov/ms/professionals/medications/adverse_drug_reaction_faq.pdf.http://www.va.gov/ms/professionals/medications/adverse_drug_reaction_faq.pdf. Note that this VA 
document urges that the term Adverse Drug Reaction should generally 
be used rather than the term ``side effect'' because the latter '' 
tends to normalize the concept of injury from drugs. This approach 
has been adopted in the National Action Plan for ADE Prevention, in 
which the term ``side effects'' does not appear. See: The Office of 
Disease Prevention and Health Promotion (ODPHP), National Action 
Plan for ADE Prevention, available at: http://www.health.gov/hai/pdfs/ADE-Action-Plan-Executive-Summary.pdf.
    \43\ National Quality Forum, Serious Reportable Events in 
Healthcare-2011, at 9. (2011), available at: http://www.qualityforum.org/Publications/2011/12/Serious_Reportable_Events_in_Healthcare_2011.aspxhttp://www.qualityforum.org/Publications/2011/12/Serious_Reportable_Events_in_Healthcare_2011.aspx.
---------------------------------------------------------------------------

    The annual incidence of ADEs in health care in the United States is 
high; authoritative estimates indicate that each year 400,000 
preventable ADEs occur in hospitals, 800,000 in long term care settings 
and in excess of 500,000 among Medicare patients in outpatient 
settings.\44\ The cost of ADEs occurring in hospitals alone has been 
estimated at $5.6 billion.\45\ Older patients are particularly 
vulnerable to adverse drug reactions and are seven times as likely as 
younger persons to experience an adverse drug event requiring 
hospitalization.\46\ Further, we are specifically concerned that 
``Analyses of cost data indicate that Medicare patients experience 
significantly higher rates of ADEs than both privately insured and 
Medicaid-covered patients.'' \47\ Prevention of ADEs is a national 
Patient Safety Priority pursuant to the ADE National Action Plan, which 
focuses on vulnerable population groups, one of which is the elderly. 
Most work on ADEs has taken place in the hospital setting. There is 
little available data regarding the incidence and types of ADEs 
occurring in home health care for the elderly under Medicare. We 
believe there is a critical need for such information with regard to 
patient safety, and we are proposing this measure to address that need.
---------------------------------------------------------------------------

    \44\ The Institute of Medicine, Preventing Medication Errors 
(2006), at 5.). Available at: http://books.nap.edu/openbook.php?record_id=11623&page=5.
    \45\ National Quality Forum, NQF-Endorsed Measures for Patient 
Safety DRAFT REPORT FOR COMMENT (May 28, 2014), at 6. Available at: 
www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id.
    \46\ Emergency Hospitalizations for Adverse Drug Events in Older 
Americans Daniel S. Budnitz, M.D., M.P.H., Maribeth C. Lovegrove, 
M.P.H., Nadine Shehab, Pharm.D., M.P.H., and Chesley L. Richards, 
M.D., M.P.H.,N Engl J Med 2011; 365: 2002-2012 available at: http://www.nejm.org/doi/full/10.1056/NEJMsa1103053.
    \47\ The Office of Disease Prevention and Health Promotion 
(ODPHP), National Action Plan for ADE Prevention, available at: 
http://www.health.gov/hai/pdfs/ADE-Action-Plan-Executive-Summary.pdf.
---------------------------------------------------------------------------

    The measure would be numerically expressed by a ratio whose 
numerator and denominator are as follows:
    Numerator: Number of home health episodes of care where the 
discharge/transfer assessment indicated the patient required emergency 
treatment from a hospital emergency department related to improper 
administration or medication side effects (adverse drug reactions).
    Denominator: Number of home health episodes of care ending with a 
discharge during the performance period. Numbers to be specifically 
excluded from the ratio as a measure-specific exclusion are those 
relating to home health episodes of care for which emergency department 
use or the reason for emergency department use is unknown at transfer 
or discharge. Stated otherwise, the measure would be expressed by a 
ratio indicating the relationship between (i) the number of emergency 
treatments transferring or discharged patients sought or received for 
OASIS C M2310, ``1-Improper medication administration, adverse drug 
reactions, medication side effects, toxicity, anaphylaxis'' and (ii) 
the number of emergency treatments sought or received for one of the 
other reasons identified by OASIS-C M2310. Neither

[[Page 39884]]

number would include (a) incidents where the reason checked on M2310 is 
``UK-Reason unknown'' or (b) incidents where use of emergency 
department was unknown at transfer or discharge. Data for this measure 
would be reported by HHAs through the dedicated HHVBP web-based 
platform based on OASIS C/ICD 9/10 Items M2300 Emergent Care and M2310 
Reasons for Emergent Care, in addition to other information related to 
this measure as the Secretary deems appropriate.
    We welcome public comments on this measure's proposed adoption 
under the HHVBP model.
c. Influenza Vaccination Coverage for Home Health Care Personnel
    Staff Immunizations (Influenza Vaccination Coverage among Health 
Care Personnel) (NQF #0431) is an NQF-endorsed measure that addresses 
the NQS domain of Population Health (see Figure 3). The measure is 
currently endorsed in Ambulatory Care; Ambulatory Surgery Center (ASC), 
Ambulatory Care; Clinician Office/Clinic, Dialysis Facility, Hospital/
Acute Care Facility, Post-Acute/Long Term Care Facility; Inpatient 
Rehabilitation Facility, Post-Acute/Long Term Care Facility; Long Term 
Acute Care Hospital, and Post-Acute/Long Term Care Facility: Nursing 
Home/Skilled Nursing Facility. Home health care is among the only 
remaining settings for which the measure has not been endorsed. We 
believe the proposed HHVBP model presents an opportunity to study this 
measure in the home health setting. This measure is currently reported 
in multiple CMS quality reporting programs, including Ambulatory 
Surgical Center Quality Reporting, Hospital Inpatient Quality 
Reporting, and Long-Term Care Hospital Quality Reporting; we believe 
its adoption under the proposed HHVBP model presents an opportunity for 
alignment in our quality programs. The documentation of staff 
immunizations is also a standard required by many HHA accrediting 
organizations. We believe that this measure would be appropriate for 
HHVBP because it addresses total population health across settings of 
care by reducing the exposure of individuals to a potentially avoidable 
virus.
    The measure would be numerically expressed by a ratio whose 
numerator and denominator are as follows:
    Numerator: The measure would calculate the percentage of home 
health care personnel who receive the influenza vaccine, and document 
those who do not receive the vaccine in the articulated categories 
below:
    (1) Received an influenza vaccination administered at the health 
care agency, or reported in writing (paper or electronic) or provided 
documentation that influenza vaccination was received elsewhere; or
    (2) Were determined to have a medical contraindication/condition of 
severe allergic reaction to eggs or to other component(s) of the 
vaccine, or history of Guillain-Barr[eacute] Syndrome within 6 weeks 
after a previous influenza vaccination; or
    (3) Declined influenza vaccination; or
    (4) Persons with unknown vaccination status or who do not otherwise 
meet any of the definitions of the above-mentioned numerator 
categories.
    Each of the above groups would be divided by the number of health 
care personnel who are working in the HHA for at least one working day 
between October 1 and March 31 of the following year, regardless of 
clinical responsibility or patient contact.
    Denominator: This measure collects the number of home health care 
personnel who, during the flu season: \48\ Denominators are to be 
calculated separately for the following three groups:
---------------------------------------------------------------------------

    \48\ Flu season is generally October 1 (or when the vaccine 
became available) through March 31 of the following year. See URL 
http://www.cdc.gov/flu/about/season/flu-season.htm for detailed 
information.
---------------------------------------------------------------------------

    1. Employees: All persons who receive a direct paycheck from the 
reporting HHA (that is, on the agency's payroll);
    2. Licensed independent practitioners: Include physicians (MD, DO), 
advanced practice nurses, and physician assistants only who are 
affiliated with the reporting agency who do not receive a direct 
paycheck from the reporting HHA; and
    3. Adult students/trainees and volunteers: Include all adult 
students/trainees and volunteers who do not receive a direct paycheck 
from the reporting HHA.
    This proposed measure for the HHVBP model is expected to result in 
increased influenza vaccination among home health professionals. 
Reporting health care personnel influenza vaccination status would 
allow HHAs to better identify and target unvaccinated personnel. 
Increased influenza vaccination coverage among HHA personnel would be 
expected to result in reduced morbidity and mortality related to 
influenza virus infection among patients, especially elderly and 
vulnerable populations.\49\
---------------------------------------------------------------------------

    \49\ Carman W.F., Elder A.G., Wallace L.A., et al. Effects of 
influenza vaccination of health-care workers on mortality of elderly 
people in long-term care: A randomized controlled trial. Lancet 
2000; 355:93-97.
---------------------------------------------------------------------------

    Information on the above numerator and denominator would be 
reported by HHAs through the HHVBP web-based platform, in addition to 
other information related to this measure as the Secretary deems 
appropriate. We welcome public comments on this measure's proposed 
adoption under the HHVBP model.
d. Herpes Zoster Vaccine (Shingles Vaccine) for Patients
    We are proposing to adopt this measure for the HHVBP model because 
it aligns with the NQS Quality Strategy Goal to Promote Effective 
Prevention & Treatment of Chronic Disease. Currently this proposed 
measure is not endorsed by NQF or collected in OASIS. However, due to 
the severe physical consequences of symptoms associated with 
shingles,\50\ we view its adoption under the HHVBP model as an 
opportunity to perform further study on this measure. The results of 
this analysis could provide the necessary data to meet NQF endorsement 
criteria. The measure would calculate the percentage of home health 
patients who receive the Shingles vaccine, and collect the number of 
patients who did not receive the vaccine.
---------------------------------------------------------------------------

    \50\ For detailed information on Shingles incidences and known 
complications associated with this condition see CDC information 
available at http://www.cdc.gov/shingles/about/overview.html.
---------------------------------------------------------------------------

    Numerator: Equals the total number of Medicare beneficiaries aged 
60 years and over who report having ever received herpes zoster vaccine 
(shingles vaccine) during the home health episode of care.
    Denominator: Equals the total number of Medicare beneficiaries aged 
60 years and over receiving services from the HHA.
    The Food and Drug Administration (FDA) has approved the use of 
herpes zoster vaccine in adults age 50 and older. In addition, the 
Advisory Committee on Immunization Practices (ACIP) currently 
recommends that herpes zoster vaccine be routinely administered to 
adults, age 60 years and older.\51\ In 2013, 24.2 percent of adults 60 
years and older reported receiving herpes zoster vaccine to prevent 
shingles, an increase from the 20.1 percent in 2012,\52\ yet below the 
targets

[[Page 39885]]

recommended in the HHS Healthy People 2020 initiative.\53\
---------------------------------------------------------------------------

    \51\ CDC. Morbidity and Mortality Weekly Report 2011; 
60(44):1528.
    \52\ CDC. Morbidity and Mortality Weekly Report 2015; 64(04):95-
102.
    \53\ Healthy People 2020: Objectives and targets for 
immunization and infectious diseases. Available at https://www.healthypeople.gov/2020/topics-objectives/topic/immunization-and-infectious-diseases/objectives.
---------------------------------------------------------------------------

    The incidence of herpes zoster outbreak increases as people age, 
with a significant increase after age 50. Older people are more likely 
to experience the severe nerve pain known as post-herpetic neuralgia 
(PHN),\54\ the primary acute symptom of shingles infection, as well as 
non-pain complications, hospitalizations,\55\ and interference with 
activities of daily living.\56\ Studies have shown for adults aged 60 
years or older the vaccine's efficacy rate for the prevention of herpes 
zoster is 51.3 percent and 66.5 percent for the prevention of PHN for 
up to 4.9 years after vaccination.\57\ The Short-Term Persistence Sub 
study (STPS) followed patients 4 to 7 years after vaccination and found 
a vaccine efficacy of 39.6 percent for the prevention of herpes zoster 
and 60.1 percent for the prevention of PHN.\58\ The majority of 
patients reporting PHN are over age 70; vaccination of this older 
population would prevent most cases, followed by vaccination at age 60 
and then age 50.
---------------------------------------------------------------------------

    \54\ Yawn B.P., Saddier P., Wollen P.C., St Sauvier J.L., 
Kurland M.J., Sy L.S. A population-based study of the incidence and 
complication rate of herpes zoster before zoster vaccine 
introduction. Mayo Clinic Proc 2007; 82:1341-9.
    \55\ Lin F., Hadler J.L. Epidemiology of primary varicella and 
herpes zoster hospitalizations: The pre-varicella vaccine era. J 
Infect Dis 2000; 181:1897-905.
    \56\ Schmader K.E., Johnson G.R., Saddier P., et al. Effect of a 
zoster vaccine on herpes zoster-related interference with functional 
status and health-related quality-of-life measures in older adults. 
J Am Geriatr Soc 2010; 58:1634-41.
    \57\ Schmader K.E., Johnson G.R., Saddier P., et al. Effect of a 
zoster vaccine on herpes zoster0-related interference with 
functional status and health-related quality-of-life measures in 
older adults. J Am Geriatr Soc 2010; 58:1634-41.
    \58\ Schmader K.E., Oxman M.N., Levin M.J., Johnson G., Zhang 
J.H., Betts R., Morrison V.A., Gelb L., Guatelli J.C., Harbecke R., 
Pachucki C., Keay S., Menzies B., Griffin M.R., Kauffman C., Marques 
A., Toney J., Keller P.M., LI,X, Chan L.S.F., Annumziato P. 
Persistence of the Efficacy of Zoster Vaccine in the Shingles 
Prevention Study and the Short Term Persistence Substudy. Clinical 
Infectious Disease 2012; 55:1320-8.
---------------------------------------------------------------------------

    Studying this measure in the home health setting presents an ideal 
opportunity to address a population at risk which would benefit greatly 
from this vaccination strategy. For example, receiving the vaccine will 
often reduce the course and severity of the disease and reduce the risk 
of post herpetic neuralgia.
    Information on the above numerator and denominator would be 
reported by HHAs through the HHVBP web-based platform, in addition to 
other information related to this measure as the Secretary deems 
appropriate. We welcome public comments on this measure's proposed 
adoption under the HHVBP model.
6. HHVBP Model's Four Classifications
    As previously stated, the quality measures that we are proposing to 
use in the performance years are aligned with the six NQS domains: 
Patient and Caregiver-centered experience and outcomes; Clinical 
quality of care; Care coordination; Population Health; Efficiency and 
cost reduction; and, Safety (see Figure 6).
    We propose to filter these NQS domains and the proposed HHVBP 
quality measures into four classifications to align directly with the 
measure weighting utilized in calculating payment adjustments. The four 
HHVBP classifications we are proposing are: Clinical Quality of Care, 
Outcome and Efficiency, Person- and Caregiver-Centered Experience, and 
New Measures reported by the HHAs.
    These four classifications capture the multi-dimensional nature of 
health care provided by the HHA. These classifications are further 
defined as:
     Classification I--Clinical Quality of Care: Measures the 
quality of health care services provided by eligible professionals and 
paraprofessionals within the home health environment.
     Classification II--Outcome and Efficiency: Outcomes 
measure the end result of care provided to the beneficiary. 
Efficiencies measure maximizing quality and minimizing use of 
resources.
     Classification III--Person- and Caregiver-Centered 
Experience: Measures the beneficiary and their caregivers' experience 
of care.
     Classification IV--New Measures: Measures not currently 
reported by Medicare-certified HHAs to CMS, but that may fill gaps in 
the NQS Domains not completely covered by existing measures in the home 
health setting.
    We seek public comment on our proposed measure classifications for 
the HHVBP model.

[[Page 39886]]

[GRAPHIC] [TIFF OMITTED] TP10JY15.003

7. Weighting
    We propose that measures within each classification will be 
weighted the same for the purposes of payment adjustment. We are 
weighting at the individual measure level and not the classification 
level. Classifications are for organizational purposes only. We 
selected this approach since we did not want any one measure within a 
classification to be more important than another measure. This approach 
ensures that a measure's weight will remain the same even if some of 
the measures within a classification group have no available data. 
Weighting will be re-examined in subsequent years of the model and be 
subject to the rulemaking process.
    We welcome public comments on this proposed weighting methodology 
under the HHVBP model.

F. Performance Scoring Methodology

1. Performance Calculation Parameters
    The methodology we are proposing for assessing each HHA's total 
annual performance is based on a score calculated using the proposed 
starter set of quality measures that apply to the HHA (based on a 
minimum number of cases, as discussed herein). The methodology we 
propose would provide an assessment on a quarterly basis for each HHA 
and would result in an annual distribution of value-based payment 
adjustments among HHAs so that HHAs achieving the highest performance 
scores would receive the largest upward payment adjustment. The 
methodology we are proposing includes three primary features:
     The HHA's Total Performance Score (TPS) would be 
determined using the higher of an HHA's achievement or improvement 
score for each measure;
     All measures in the Clinical Quality of Care, Outcome and 
Efficiency, and Person and Caregiver-Centered Experience 
classifications will have equal weight and will account for 90 percent 
of the TPS (see section 2 below) regardless of the number of measures 
in the three classifications. Points for New Measures are awarded for 
submission of data on the New Measures via the HHVBP web-based 
platform, and withheld if data is not submitted. Data reporting for 
each New Measure will have equal weight and will account for 10 percent 
of the TPS for the first performance year; and,
     The HHA performance score would reflect all of the 
measures that apply to the HHA based on a minimum number of cases 
defined below.
2. Considerations for Calculating the Total Performance Score
    In Sec.  484.320 we propose to calculate the TPS by adding together 
points awarded to Medicare-certified HHAs on the starter set of 
measures, including the New Measures. We considered several factors 
when developing the proposed performance scoring methodology for the 
HHVBP model. First, we believe it is important that the performance 
scoring methodology be straightforward and transparent to HHAs, 
patients, and other stakeholders. HHAs must be able to clearly 
understand performance scoring methods and performance expectations to 
maximize quality improvement efforts. The public must understand 
performance score methods to utilize publicly-reported information when 
choosing HHAs.
    Second, we believe the proposed performance scoring methodology for 
the HHVBP model should be aligned appropriately with the quality 
measurements adopted for other Medicare value-based purchasing programs 
including those introduced in the hospital and skilled nursing home 
settings. This alignment would facilitate the public's understanding of 
quality measurement information disseminated in these programs and 
foster more informed consumer decision-making about their health care 
choices.
    Third, we believe that differences in performance scores must 
reflect true differences in quality performance. To ensure that this 
point is addressed in the proposed performance scoring methodology for 
the HHVBP model, we assessed quantitative characteristics of the 
measures, including the current

[[Page 39887]]

state of measure development, number of measures, and the number and 
grouping of measure classifications.
    Fourth, we believe that both quality achievement and improvement 
must be measured appropriately in the performance scoring methodology 
for the HHVBP model. The proposed methodology specifies that 
performance scores under the HHVBP model are calculated utilizing the 
higher of achievement or improvement scores for each measure. The 
impact of performance scores utilizing achievement and improvement on 
HHAs' behavior and the resulting payment implications was also 
considered. Using the higher of achievement or improvement scores 
allows the model to recognize HHAs that have made great improvements, 
though their measured performance score may still be relatively lower 
in comparison to other HHAs.
    Fifth, through careful measure selection we intend to eliminate, or 
at least control for, unintended consequences such as undermining 
better outcomes to patients or rewarding inappropriate care. As 
discussed above, when available, NQF endorsed measures would be used. 
In addition we propose to adopt measures that we believe are closely 
associated with better outcomes in the HHA setting in order to 
incentivize genuine improvements and sustain positive achievement while 
retaining the integrity of the model.
    Sixth, we intend to ensure the model utilizes the most currently 
available data to assess HHA performance. We recognize that these data 
would not be available instantaneously due to the time required to 
process quality measurement information accurately; however, we intend 
to make every effort to process data in the timeliest fashion. Using 
more current data would result in a more accurate performance score 
while recognizing that HHAs need time to report measure data.
3. Additional Considerations for the Proposed HHVBP Total Performance 
Scores
    Many of the key elements of the proposed HHVBP model performance 
scoring methodology would be aligned with the scoring methodology of 
the Hospital Value-Based Purchasing Program (HVBP) in order to leverage 
the rigorous analysis and review underpinning that Program's approach 
to value-based purchasing in the hospital sector. The HVBP Program 
includes as one of its core elements the scoring methodology included 
in the 2007 Report to Congress ``Plan to Implement a Medicare Hospital 
Value-Based Purchasing Program'' (hereinafter referred to as ``The 2007 
HVBP Report'').\59\ The 2007 HVBP Report describes a Performance 
Assessment Model with core elements that can easily be replicated for 
other value-based purchasing programs or models, including the HHVBP.
---------------------------------------------------------------------------

    \59\ The 2007 HVBP Report is available at the CMS Web site at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/downloads/HospitalVBPPlanRTCFINALSUBMITTED2007.pdf.
---------------------------------------------------------------------------

    In the HVBP Program, the Performance Assessment Model aggregates 
points on the individual quality measures across different quality 
measurement domains to calculate a hospital's TPS. Similarly, the 
proposed HHVBP model would aggregate points on individual measures 
across four measure classifications derived from the 6 CMS/NQS domains 
as described above (see Figure 3) to calculate the HHA's TPS. In 
addition, the proposed HHVBP payment methodology is also aligned with 
the HVBP Program with respect to evaluating an HHA's performance on 
each quality measure based on the higher of an achievement or 
improvement score in the performance period. The proposed model is not 
only designed to provide incentives for HHAs to provide the highest 
level of quality, but also to provide incentives for HHAs to improve 
the care they provide to Medicare beneficiaries. By rewarding HHAs that 
provide high quality and/or high improvement, we believe the proposed 
HHVBP model would ensure that all HHAs would be incentivized to commit 
the resources necessary to make the organizational changes that would 
result in better quality.
    Under the proposed model an HHA would be awarded points only for 
``applicable measures.'' An ``applicable measure'' is one for which the 
HHA has provided 20 home health episodes of care per year. Points 
awarded for each applicable measure would be aggregated to generate a 
TPS. As described in the benchmark section below, HHAs would have the 
opportunity to receive 0 to 10 points for each measure in the Clinical 
Quality of Care, Outcome and Efficiency, and Person and Caregiver-
Centered Experience classifications. Each measure would have equal 
weight regardless of the total number of measures in each of the first 
three classifications. In contrast, we propose to score the New 
Measures in a different way. For each New Measure, HHAs would receive 
10 points if they report the New Measure or 0 points if they do not 
report the measure during the performance year. In total, the New 
Measures would account for 10 percent of the TPS regardless of the 
number of measures applied to an HHA in the other three 
classifications.
    We propose to calculate the TPS for the HHVBP methodology similarly 
to the TPS calculation that has been finalized under the HVBP program. 
The performance scoring methodology for the HHVBP model would include 
determining performance standards (benchmarks and thresholds) using the 
2015 baseline period performance year's quality measure data, scoring 
HHAs based on their achievement and/or improvement with respect to 
those performance standards, and weighting each of the classifications 
by the number of measures employed, as presented in further detail in 
Section G below.
4. Setting Performance Benchmarks and Thresholds
    For scoring HHAs' performance on measures in the proposed Clinical 
Quality of Care, Outcome and Efficiency, and Person and Caregiver-
Centered Experience classifications, we propose that the HHVBP model 
would adopt an approach using several key elements from the scoring 
methodology set forth in the 2007 HVBP Report and the successfully 
implemented HVBP Program \60\ including allocating points based on 
achievement or improvement, and calculating those points based on 
industry benchmarks and thresholds.
---------------------------------------------------------------------------

    \60\ For detailed information on HVBP scoring see http://www.medicare.gov/hospitalcompare/data/hospital-vbp.html.
---------------------------------------------------------------------------

    In determining the achievement points for each measure, HHAs would 
receive points along an achievement range, which is a scale between the 
achievement threshold and a benchmark. We propose to calculate the 
achievement threshold as the median of all HHAs' performance on the 
specified quality measure during the baseline period and to calculate 
the benchmark as the mean of the top decile of all HHAs' performance on 
the specified quality measure during the baseline period. Unlike the 
HVBP Program that uses a national sample, this model would calculate 
both the achievement threshold and the benchmark separately for each 
selected state and for HHA cohort size. Under this proposed 
methodology, we would have benchmarks and achievement

[[Page 39888]]

thresholds for both the larger-volume cohort and for the smaller-volume 
cohort of HHAs (defined in each state based on a baseline period and 
proposed to run from January 1, 2015 through December 31, 2015). 
Another way HHVBP differs from the Hospital VBP is this model only uses 
2015 as the baseline year for the measures included in the proposed 
starter set. For the starter set used in the model, 2015 will 
consistently be used as the baseline period in order to evaluate the 
degree of change that may occur over the multiple years of the model. 
In determining improvement points for each measure, we propose that 
HHAs would receive points along an improvement range, which is a scale 
indicating change between an HHA's performance during the performance 
period and the baseline period. In addition, as in the achievement 
calculation, the benchmark and threshold would be calculated separately 
for each state and for HHA cohort size to ensure that HHAs would only 
be competing with those HHAs in their state and their size cohort. 
Grouping HHAs by state and size is another way that the HHVBP payment 
methodology differs from the HVBP.
5. Calculating Achievement and Improvement Points
a. Achievement Scoring
    We are proposing that achievement scoring under the HHVBP model 
would be based on the Performance Assessment Model set forth in the 
2007 HVBP Report and as implemented under the HVBP Program. An HHA 
would earn 0-10 points for achievement for each measure in the Clinical 
Quality of Care, Outcome and Efficiency, and Person and Caregiver-
Centered Experience classifications based on where its performance 
during the performance period falls relative to the achievement 
threshold and the benchmark, according to the following formula:
[GRAPHIC] [TIFF OMITTED] TP10JY15.004

    All achievement points would be rounded up or down to the nearest 
point (for example, an achievement score of 4.555 would be rounded to 
5). HHAs would receive an achievement score as follows:
     An HHA with performance equal to or higher than the 
benchmark would receive the maximum of 10 points for achievement.
     An HHA with performance equal to or greater than the 
achievement threshold (but below the benchmark) would receive 1-9 
points for achievement, by applying the formula above.
     An HHA with performance less than the achievement 
threshold would receive 0 points for achievement.
    We welcome public comment on this proposed methodology for scoring 
HHAs on achievement under the proposed HHVBP model.
b. Improvement Scoring
    In keeping with the approach used by the HVBP program, we propose 
that an HHA would earn 0-10 points based on how much its performance 
during the performance period improved from its performance on each 
measure in the proposed Clinical Quality of Care, Outcome and 
Efficiency, and Person and Caregiver-Centered Experience 
classifications during the baseline period. A unique improvement range 
for each measure would be established for each HHA that defines the 
difference between the HHA's baseline period score and the same state 
and size level benchmark for the measure used in the achievement 
scoring calculation described previously, according to the following 
formula:
[GRAPHIC] [TIFF OMITTED] TP10JY15.005

All improvement points would be rounded to the nearest point. If an 
HHA's performance on the measure during the performance period was:
     Equal to or higher than the benchmark score, the HHA would 
receive an improvement score of 10 points;
     Greater than its baseline period score but below the 
benchmark (within the improvement range), the HHA would receive an 
improvement score of 0-10, based on the formula above; or
     Equal to or lower than its baseline period score on the 
measure, the HHA would receive 0 points for improvement.
    We welcome public comments on this proposed methodology for scoring 
HHAs on improvement under the proposed HHVBP model.
c. Examples of Calculating Achievement and Improvement Scores
    For illustrative purposes we present the following examples of how 
the proposed performance scoring methodology would be applied in the 
context of the proposed measures in the proposed Clinical Quality of 
Care, Outcome and Efficiency, and Person and Caregiver-Centered 
Experience classifications. These HHA examples were selected from an 
empirical database created from 2013/2014 data from the Home Health 
Compare archived data, claims data and enrollment data to support the 
development of the HHVBP permutation of the Performance Assessment 
Model, and all performance scores are calculated for the pneumonia 
measure, with respect to the number of individuals assessed and 
administered the pneumococcal vaccine.
    Figure 7 shows the scoring for HHA `A', as an example. The 
benchmark calculated for the pneumonia measure in this case was 0.87 
(the mean value of the top decile in 2013), and the achievement 
threshold was 0.47 (the performance of the median or the 50th 
percentile among HHAs in 2013). HHA A's 2014 performance rate of 0.91 
during the performance period for this measure exceeds the benchmark, 
so HHA A would earn 10 (the maximum)

[[Page 39889]]

points for its achievement score. The HHA's performance rate on a 
measure is expressed as a decimal. In the illustration, HHA A's 
performance rate of 0.91 means that 91 percent of the applicable 
patients that were assessed were given the pneumococcal vaccine. In 
this case, HHA A has earned the maximum number of 10 possible 
achievement points for this measure and thus, its improvement score is 
irrelevant in the calculation.
    Figure 7 also shows the scoring for HHA `B'. As referenced below, 
HHA B's performance on this measure went from 0.21 (which was below the 
achievement threshold) in the baseline period to 0.70 (which is above 
the achievement threshold) in the performance period. Applying the 
achievement scale, HHA B would earn 6 points for achievement, 
calculated as follows: [9 * ((0.70 - 0.47)/(0.87 - 0.47))] + 0.5 = 
5.675, and then rounded to 6 points.
    Checking HHA B's improvement score yields the following result: 
Based on HHA B's period-to-period improvement, from 0.21 in the 
baseline year to 0.70 in the performance year, HHA B would earn 7 
points, calculated as follows: [10 * ((0.70 - 0.21)/(0.87 - 0.21))] - 
0.5 = 6.92, rounded to 7 points. Because the higher of the achievement 
and improvement scores is used, HHA B would receive 7 points for this 
measure.
[GRAPHIC] [TIFF OMITTED] TP10JY15.006

    In Figure 8, HHA `C' yielded a decline in performance on the 
pneumonia measure, falling from 0.57 to 0.46 (a decline of 0.11 
points). HHA C's performance during the performance period is lower 
than the achievement threshold of 0.47 and, as a result, receives 0 
points based on achievement. It also receives 0 points for improvement, 
because its performance during the performance period is lower than its 
performance during the baseline period.

[[Page 39890]]

[GRAPHIC] [TIFF OMITTED] TP10JY15.007

6. Proposed Scoring Methodology for New Measures
    The HHVBP model provides us with the opportunity to study new 
quality measures. The four New Measures that we have proposed to adopt 
for the model for PY1 would be reported directly by the HHA and would 
account for 10 percent of the TPS regardless of the number of measures 
in the other three classifications. We are proposing that HHAs that 
report on these measures would receive 10 points out of a maximum of 10 
points for each of the 4 measures in the New Measure classification. 
Hence a HHA that reports on all four measures would receive 40 points 
out of a maximum of 40. An HHA would receive 0 points for each measure 
that it fails to report on. If an HHA reports on all four measures, it 
would receive 40 points for the classification and 10 points (40/40 * 
10 points) would be added to its TPS because the New Measure 
classification has a maximum weight of 10 percent. If an HHA reports on 
3 of 4 measures, it would receive 30 points of 40 points available for 
the classification and 7.5 points (30/40 * 10 points) added to its TPS. 
If an HHA reports on 2 of 4 measures, they would receive 20 points of 
40 points available for the classification and 5.0 points (20/40 * 10 
points) added to their TPS. If an HHA reports on 0 of 4 measures, they 
would receive 0 points and have no points added to their TPS. We intend 
to update these measures through future rulemaking to allow us to study 
newer, leading-edge measures as well as retire measures that no longer 
require such analysis. We request comment on this proposed scoring 
methodology for new measures.
7. Minimum Number of Cases for Outcome and Clinical Quality Measures
    While no HHA in a selected state would be exempt from the HHVBP 
model, there may be periods when an HHA does not receive a payment 
adjustment because there are not an adequate number of episodes of care 
to generate sufficient quality measure data. The minimum threshold for 
an HHA to receive a score on a given measure is 20 home health episodes 
of care per year for HHAs that have been certified for at least 6-
months. If an HHA does not meet this threshold to generate scores on 
five or more of the Clinical Quality of Care, Outcome and Efficiency, 
and Person and Caregiver-Centered Experience measures, no payment 
adjustment will be made, and the Medicare-certified HHA would be paid 
for HHA services in an amount equivalent to the amount it would have 
been paid under section 1895 of the Act.\61\
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    \61\ HHVBP would follow the Home Health Compare Web site policy 
not to report measures on HHAs that have less than 20 observations 
for statistical reasons concerning the power to detect reliable 
differences in the quality of care.
---------------------------------------------------------------------------

    HHAs with very low volumes will either increase their volume in 
later performance years and be subject to future payment adjustment, or 
the HHAs' volume will remain very low and the HHAs would continue to 
not have their payment adjusted in future years. Based on the most 
recent data available at this time, a very small number of HHAs are 
reporting on less than five of the total number of measures included in 
the Clinical Quality of Care, Outcome and Efficiency, and Person and 
Caregiver-Centered Experience classifications and account for less than 
0.5 percent of the claims made over 1,900 HHAs delivering care within 
the nine proposed selected states. We expect very little impact of very 
low service volume HHAs on the model due to the low number of low 
volume HHAs and because it is unlikely that a HHA will reduce the 
amount of service to such a low level to avoid a payment adjustment. 
Although these HHAs would not be subject to payment adjustments, they 
would remain in the model and have access to the same technical 
assistance as all other HHAs in the model, and would receive quality 
reports on any measures for which they do have 20 episodes of care, and 
a future opportunity to compete for payment adjustments.
    We propose the HHA's TPS would be based on all the Clinical Quality 
of Care, Outcome and Efficiency, Person and Caregiver-Centered 
Experience measures and the New Measures that apply to the HHA. As 
described above, each measure in the Clinical Quality of Care, Outcome 
and Efficiency and Person and Caregiver-Centered

[[Page 39891]]

Experience classifications would be weighted equally. Each measure 
would have an equal weight relative to the total score of the three 
classifications regardless of the number of measures that are 
applicable.
    As an example, HHA ``A'' has at least 20 episodes of care in a 12-
month period for only 9 quality measures out of a possible 25 measures 
from three of the four classifications (except the New Measures). Under 
the proposed scoring methodology outlined above, HHA A would be awarded 
0, 0, 3, 4, 5, 7, 7, 9, and 10 points, respectively, for these 
measures. HHA A's total earned points for the three classifications 
would be calculated by adding together all the points awarded to HHA A, 
resulting in a total of 45 points. HHA A's total possible points would 
be calculated by multiplying the total number of measures for which the 
HHA reported on least 20 episodes (nine) by the maximum number of 
points for those measures (10), yielding a total of 90 possible points. 
HHA A's score for the three classifications would be the total earned 
points (45) divided by the total possible points (90) multiplied by 90 
because as mentioned in section E7, the Clinical Quality of Care, 
Outcome and Efficiency, and Person and Caregiver-Centered Experience 
classifications account for 90 percent of the TPS and the New Measures 
classification accounts for 10 percent of the TPS, which yields a 
result of 45. In this example, HHAs also reported all four numbers and 
would receive the full 10 points for the new measure. As a result, the 
TPS for HHA A would be 55 (45 plus 10). In addition, as specified in 
Section E:7--Weighting, all measures have equal weights regardless of 
their classification (except for New Measures) and the total earned 
points for the three classifications can be calculated by adding the 
points awarded for each such measure together. We seek public comment 
on our proposal of the minimum number of cases for outcome and clinical 
quality measures.

G. The Payment Adjustment Methodology

    We propose to codify at 42 CFR 484.330 a methodology for applying 
value-based payment adjustments to home health services under the HHVBP 
model. Payment adjustments would be made to the HH PPS final claim 
payment amount as calculated in accordance with Sec.  484.205 using a 
linear exchange function (LEF) similar to the methodology utilized by 
the HVBP Program. The LEF is used to translate an HHA's TPS into a 
percentage of the value-based payment adjustment earned by each HHA 
under the HHVBP model. The LEF was identified by the HVBP Program as 
the simplest and most straightforward option to provide the same 
marginal incentives to all hospitals, and we believe the same to be 
true for HHAs. We propose the function's intercept at zero percent, 
meaning those HHAs that have a TPS that is average in relationship to 
other HHAs in their cohort (a zero percent), would not receive any 
payment adjustment. Payment adjustments for each HHA with a score above 
zero percent would be determined by the slope of the LEF. In addition 
we propose to set the slope of the LEF for the first performance year, 
CY 2016, so that the estimated aggregate value-based payment 
adjustments for CY 2016 are equal to 5 percent of the estimated 
aggregate base operating episode payment amount for CY 2018. The 
estimated aggregate base operating episode payment amount is the total 
amount of episode payments made to all the HHAs by Medicare in each 
individual state in the larger- and smaller-volume cohorts respectively 
(we are proposing nine states, which would create 18 separate aggregate 
base operating episode payment amounts).
    Figure 9 provides an example of how the LEF is calculated and how 
it is applied to calculate the percentage payment adjustment to a HHA's 
TPS. For this example, we applied the 8 percent payment adjustment 
level that is proposed for the final two years of the HHVBP model. The 
proposed rate for the payment adjustments for other years would be 
proportionally less.
    Step #1 involves the calculation of the `Prior Year Aggregate HHA 
Payment Amount' (See C2 in Figure 9) that each HHA was paid in the 
prior year. From claims data, all payments are summed together for each 
HHA for CY 2015, the year prior to the HHVBP Model.
    Step #2 involves the calculation of the `8 percent Payment 
Reduction Amount' (C3 of Figure 9) for each HHA. The `Prior Year 
Aggregate HHA Payment Amount' is multiplied by the `8 percent Payment 
Reduction Rate'. The aggregate of the `8-percent Payment Reduction 
Amount' is the numerator of the LEF.
    Step #3 involves the calculation of the `Final TPS Adjusted 
Reduction Amount' (C4 of Figure 9) by multiplying the `8-percent 
Payment Reduction Amount' from Step #2 by the TPS (C1) divided by 100. 
The aggregate of the `TPS Adjusted Reduction Amount' is the denominator 
of the LEF.
    Step #4 involves calculating the LEF (C5 of Figure 9) by dividing 
the aggregate `8 percent Payment Reduction Amount' by the aggregate 
`TPS Adjusted Reduction Amount'.
    Step #5 involves the calculation of the `Final TPS Adjusted Payment 
Amount' (C6 of Figure 9) by multiplying the `TPS Adjusted Reduction 
Amount' (C4) by the LEF (C5). This is an intermediary value used to 
calculate `Quality Adjusted Payment Rate'.
    Step #6 involves the calculation of the `Quality Adjusted Payment 
Rate' (C7 of Figure 9) that the HHA would receive instead of the 8 
percent reduction in payment. This is an intermediary step to 
determining the payment adjustment rate. For CYs 2021 and 2022, the 
payment adjustment in this column would range from 0 percent to 16 
percent depending on the quality of care provided.
    Step #7 involves the calculation of the `Final Percent Payment 
Adjustment' (C8 of Figure 9) that would be applied to the HHA payments 
after the performance period. It simply involves the CY payment 
adjustment percent (in 2018, 5 percent; in 2019, 5 percent; in 2020, 6 
percent; in 2021, 8 percent; and in 2022, 8 percent). In this example, 
we use the maximum eight-percent (8 percent) subtraction to the 
`Quality Adjusted Payment Rate'. Note that the payment adjustment 
percentage is capped at no more than plus or minus 8 percent for each 
respective performance period and the payment adjustment would occur on 
the final claim payment amount.
    We invite public comments on this proposed payment adjustment 
methodology.

[[Page 39892]]



                                                          Figure 9--8-Percent Reduction Sample
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Step 1          Step 2          Step 3          Step 4          Step 5          Step 6          Step 7
                                         ---------------------------------------------------------------------------------------------------------------
                                                                                              Linear
              HHA                  TPS      Prior year       8-Percent     TPS adjusted      exchange        Final TPS        Quality      Final percent
                                          aggregate  HHA      payment        reduction    function (LEF)     adjusted        adjusted         payment
                                             payment *       reduction      amount (C1/   (Sum of C3/Sum      payment      payment rate   adjustment +/-
                                                          amount (C2*8%)      100)*C3         of C4)      amount (C4*C5)  (C6/C2) *100 %     (C7-8%) %
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    (C1)            (C2)            (C3)            (C4)            (C5)            (C6)            (C7)            (C8)
--------------------------------------------------------------------------------------------------------------------------------------------------------
HHA1...........................       38       $ 100,000         $ 8,000         $ 3,040            1.93         $ 5,867             5.9            -2.1
HHA2...........................       55         145,000          11,600           6,380            1.93          12,313             8.5             0.5
HHA3...........................       22         800,000          64,000          14,080            1.93          27,174             3.4            -4.6
HHA4...........................       85         653,222          52,258          44,419            1.93          85,729            13.1             5.1
HHA5...........................       50         190,000          15,200           7,600            1.93          14,668             7.7            -0.3
HHA6...........................       63         340,000          27,200          17,136            1.93          33,072             9.7             1.7
HHA7...........................       74         660,000          52,800          39,072            1.93          75,409            11.4             3.4
HHA8...........................       25         564,000          45,120          11,280            1.93          21,770             3.9            -4.1
                                ------------------------------------------------------------------------------------------------------------------------
    Sum........................  .......  ..............         276,178         143,007  ..............         276,002  ..............  ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Example cases.

H. Preview and Period To Request Recalculation

    We are proposing to provide HHAs two separate opportunities to 
review scoring information under the HHVBP model. First, HHAs will have 
the opportunity to review their quarterly quality reports following 
each quarterly posting; second, Medicare-certified HHAs will have the 
opportunity to review their TPS and payment adjustment calculations, 
and request a recalculation if a discrepancy is identified due to a CMS 
error as described in this section. These processes would also help 
educate and inform each competing Medicare-certified HHA on the direct 
relation between the payment adjustment and performance measure scores.
    The proposed model design calls for us to inform HHA quarterly of 
their performance on each of the individual quality measures used to 
calculate the TPS. We propose that HHAs will have 10 days after the 
quarterly reports are provided to request a recalculation of a measure 
scores if it believes there is evidence of a discrepancy. We would 
adjust the score if it is determined that the discrepancy in the 
calculated measure scores was the result of our failure to follow 
measurement calculation protocols.
    In addition, the proposed model design also calls for us to inform 
each Medicare-certified HHA of the TPS and payment adjustment amount in 
an annual report. We propose that these annual reports be provided to 
Medicare-certified HHAs each August prior to the calendar year for 
which the payment adjustment would be applied. Similar to quarterly 
reports, HHAs will have 10 days to request a recalculation of their TPS 
and payment adjustment amount from the date information is made 
available. For both the quarterly reports and the annual report 
containing the TPS and payment adjustments, Medicare-certified HHAs 
will only be permitted to request scoring recalculations, and must 
include a specific basis for the requested recalculation. We will not 
be responsible for providing HHAs with the underlying source data 
utilized to generate performance measure scores. Each HHA has access to 
this data via the QIES system. The final TPS and payment adjustment 
would then be provided to competing Medicare-certified HHAs in a final 
report no later than 60 days in advance of the payment adjustment 
taking effect.
    The TPS from the annual performance report would be calculated 
based on the calculation of performance measures contained in the 
quarterly reports that have already been provided and reviewed by the 
HHAs. As a result, we believe that quarterly reviews would provide 
substantial opportunity to identify and correct errors and resolve 
discrepancies, thereby minimizing the challenges to the annual 
performance scores linked to payment adjustment.
    As described above, a quarterly performance report would be 
provided to all Medicare-certified HHAs within the selected states 
beginning with the first quarter of CY 2016 being reported in July 
2016. We propose that HHAs would submit recalculation requests for both 
quarterly quality performance measure reports and for the TPS and 
payment adjustment reports via an email link provided on the model-
specific Web page. The request form would be entered by a person who 
has authority to sign on behalf of the HHA and be submitted within 10 
days of receiving the quarterly data report or the annual TPS and 
payment adjustment report.
    Requests for both quarterly report measure score recalculations or 
TPS and payment adjustment recalculations would contain the following 
information:
     The provider's name, address associated with the services 
delivered, and CMS Certification Number (CCN);
     The basis for requesting recalculation to include the 
specific quality measure data that the HHA believes is inaccurate or 
the calculation the HHA believes is incorrect;
     Contact information for a person at the HHA with whom CMS 
or its agent can communicate about this request, including name, email 
address, telephone number, and mailing address (must include physical 
address, not just a post office box); and,
     A copy of any supporting documentation the HHA wishes to 
submit in electronic form via the model-specific Web page.
    Following receipt of a request for quarterly report measure score 
recalculations or a request for TPS and payment adjustment 
recalculation, CMS or its agent would:
    + Provide an email acknowledgement, using the contact information 
provided in the recalculation request, to the HHA contact notifying the 
HHA that the request has been received;
    + Review the request to determine validity, and determine whether 
the requested recalculation would result in a score change altering 
performance measure scores or the HHA's TPS;

[[Page 39893]]

    + If recalculation would result in a performance measure score or 
TPS change, conduct a review of quality data and if an error is found, 
recalculate the TPS using the corrected performance data; and,
    + Provide a formal response to the HHA contact, using the contact 
information provided in the recalculation request, notifying the HHA of 
the outcome of the review and recalculation process.
    Recalculation and subsequent communication of the results of these 
determinations would occur as soon as administratively feasible 
following the submission of requests. We request comment on our 
proposed quarterly quality report measure review, TPS preview period, 
and our proposed process for requesting recalculation of the quarterly 
performance measure scores, and the TPS and payment adjustment. We 
intend to codify these processes in regulation text in future 
rulemaking.
    Additionally, we will develop and adopt an appeals mechanism under 
the model through future rulemaking in advance of the application of 
any payment adjustments.

I. Evaluation

    We propose to codify at 484.315(c) that HHAs in selected states 
would be required to collect and report information to CMS necessary 
for the purposes of monitoring and evaluating this model as required by 
statute.\62\ We plan to conduct an evaluation of the proposed HHVBP 
model in accordance with section 1115A(b)(4) of the Act, which requires 
the Secretary to evaluate each model tested by CMMI. We consider an 
independent evaluation of the model to be necessary to understand its 
impacts on care quality in the home health setting. The evaluation 
would be focused primarily on understanding how successful the model is 
in achieving quality improvement as evidenced by HHAs' performance on 
clinical care process measures, clinical outcome measures (for example, 
functional status), utilization/outcome measures (for example, hospital 
readmission rates, emergency room visits), access to care, and 
patient's experience of care, and Medicare costs. We also intend to 
examine the likelihood of unintended consequences. We intend to select 
an independent evaluation contractor to perform this evaluation. 
However, because the procurement for the selection of the evaluation 
contractor is in progress and is subject to the finalization of the 
proposed model, we cannot provide a detailed description of the 
evaluation methodology here.
---------------------------------------------------------------------------

    \62\ See 1115A(b)(4) of the Act (42 U.S.C. 1315a).
---------------------------------------------------------------------------

    We intend to use a multilevel approach to evaluation. Here, we 
intend to conduct analyses at the state, HHA, and patient levels. Based 
on the state groupings discussed in the section on selection of 
Medicare certified HHAs, we believe there are several ways in which we 
can draw comparison groups and remain open to scientifically-sound, 
rigorous methods for evaluating the effect of the model intervention.
    The evaluation effort may require of HHAs participating in the 
Model additional data specifically for evaluation purposes. Such 
requirements for additional data to carry out model evaluation would be 
in compliance with 42 CFR 403.1105 which, as of January 1, 2015, 
requires entities participating in the testing of a model under section 
1115A to collect and report such information, including protected 
health information (as defined at 45 CFR 160.103), as the Secretary 
determines is necessary to monitor and evaluate the model. We would 
consider all Medicare-certified HHAs providing services within a state 
selected for the Model to be participating in the testing of this model 
because the competing HHAs would be receiving payment from CMS under 
the model.\63\
---------------------------------------------------------------------------

    \63\ 79 FR 67751 through 67755.
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    We invite public comments on this proposed evaluation plan.

V. Proposed Provisions of the Home Health Care Quality Reporting 
Program (HH QRP)

A. Background and Statutory Authority

    Section 1895(b)(3)(B)(v)(II) of the Act requires that for 2007 and 
subsequent years, each HHA submit to the Secretary in a form and 
manner, and at a time, specified by the Secretary, such data that the 
Secretary determines are appropriate for the measurement of health care 
quality. To the extent that an HHA does not submit data in accordance 
with this clause, the Secretary is directed to reduce the home health 
market basket percentage increase applicable to the HHA for such year 
by 2 percentage points. As provided at section 1895(b)(3)(B)(vi) of the 
Act, depending on the market basket percentage for a particular year, 
the 2 percentage point reduction under section 1895(b)(3)(B)(v)(I) of 
the Act may result in this percentage increase, after application of 
the productivity adjustment under section 1895(b)(3)(B)(vi)(I) of the 
Act, being less than 0.0 percent for a year, and may result in payment 
rates under the Home Health PPS for a year being less than payment 
rates for the preceding year.
    Section 2(a) of the Improving Medicare Post-Acute Care 
Transformation Act of 2014 (the IMPACT Act) (Pub. L. 113-185, enacted 
on Oct. 6, 2014) amended Title XVIII of the Act, in part, by adding a 
new section 1899B, which imposes new data reporting requirements for 
certain post-acute care (PAC) providers, including HHAs. New section 
1899B of the Act is titled, ``Standardized Post-Acute Care (PAC) 
Assessment Data for Quality, Payment, and Discharge Planning''. Under 
section 1899B(a)(1) of the Act, certain post-acute care (PAC) providers 
(defined in section 1899B(a)(2)(A) of the Act to include HHAs, SNFs, 
IRFs, and LTCHs) must submit standardized patient assessment data in 
accordance with section 1899B(b) of the Act, data on quality measures 
required under section 1899B(c)(1) of the Act, and data on resource 
use, and other measures required under section 1899B(d)(1) of the Act. 
The Act also sets out specified application dates for each of the 
measures. The Secretary must specify the quality, resource use, and 
other measures no later than the applicable specified application date 
defined in section 1899B(a)(2)(E) of the Act.
    Section 1899B(b) of the Act describes the standardized patient 
assessment data that PAC providers are required to submit in accordance 
with section 1899B(b)(1) of the Act; requires the Secretary, to the 
extent practicable, to match claims data with standardized patient 
assessment data in accordance with section 1899B(b)(2) of the Act; and 
requires the Secretary, as soon as practicable, to revise or replace 
existing patient assessment data to the extent that such data duplicate 
or overlap with standardized patient assessment data, in accordance 
with section 1899B(b)(3) of the Act.
    Sections 1899B(c)(1) and (d)(1) of the Act direct the Secretary to 
specify measures that relate to at least five stated quality domains 
and three stated resource use and other measure domains. Section 
1899B(c)(1) of the Act provides that the quality measures on which PAC 
providers, including HHAs, are required to submit standardized patient 
assessment data and other necessary data specified by the Secretary 
must be in accordance with, at least, the following domains:
     Functional status, cognitive function, and changes in 
function and cognitive function;
     Skin integrity and changes in skin integrity;
     Medication reconciliation;

[[Page 39894]]

     Incidence of major falls; and
     Accurately communicating the existence of and providing 
for the transfer of health information and care preferences of an 
individual to the individual, family caregiver of the individual, and 
providers of services furnishing items and services to the individual 
when the individual transitions (1) from a hospital or Critical Access 
Hospital (CAH) to another applicable setting, including a PAC provider 
or the home of the individual, or (2) from a PAC provider to another 
applicable setting, including a different PAC provider, hospital, CAH, 
or the home of the individual.
    Section 1899B(c)(2)(A) provides that, to the extent possible, the 
Secretary must require such reporting through the use of a PAC 
assessment instrument and modify the instrument as necessary to enable 
such use.
    Section 1899B(d)(1) of the Act provides that the resource use and 
other measures on which PAC providers, including HHAs, are required to 
submit any necessary data specified by the Secretary, which may include 
standardized assessment data in addition to claims data, must be in 
accordance with, at least, the following domains:
     Resource use measures, including total estimated Medicare 
spending per beneficiary;
     Discharge to community; and
     Measures to reflect all-condition risk-adjusted 
potentially preventable hospital readmission rates.
    Sections 1899B(c) and (d) of the Act indicate that data satisfying 
the eight measure domains in the IMPACT Act is the minimum data 
reporting requirement. Therefore, the Secretary may specify additional 
measures and additional domains.
    Section 1899B(e)(1) of the Act requires that the Secretary 
implement the quality, resource use, and other measures required under 
sections 1899B(c)(1) and (d)(1) of the Act in phases consisting of 
measure specification, data collection, and data analysis; the 
provision of feedback reports to PAC providers in accordance with 
section 1899B(f) of the Act; and public reporting of PAC providers' 
performance on such measures in accordance with section 1899B(g) of the 
Act. Section 1899B(e)(2) of the Act generally requires that each 
measure specified by the Secretary under section 1899B of the Act be 
NQF-endorsed, but authorizes an exception under which the Secretary may 
select non-NQF-endorsed quality measures in the case of specified areas 
or medical topics determined appropriate by the Secretary for which a 
feasible or practical measure has not been endorsed by the NQF, as long 
as due consideration is given to measures that have been endorsed or 
adopted by a consensus organization identified by the Secretary. 
Section 1899B(e)(3) of the Act provides that the pre-rulemaking process 
required by section 1890A of the Act applies to quality, resource use, 
and other measures specified under sections 1899B(c)(1) and (d)(1) of 
the Act, but authorizes exceptions under which the Secretary may (1) 
use expedited procedures, such as ad hoc reviews, as necessary in the 
case of a measure required with respect to data submissions during the 
1-year period before the applicable specified application date, or (2) 
alternatively, waive section 1890A of the Act in the case of such a 
measure if applying section 1890A of the Act (including through the use 
of expedited procedures) would result in the inability of the Secretary 
to satisfy any deadline specified under section 1899B of the Act with 
respect to the measure.
    Section 1899B(f)(1) of the Act requires the Secretary to provide 
confidential feedback reports to PAC providers on the performance of 
such PAC providers with respect to quality, resource use, and other 
measures required under sections 1899B(c)(1) and (d)(1) of the Act 
beginning 1 year after the applicable specified application date.
    Section 1899B(g) of the Act requires the Secretary to establish 
procedures for making available to the public information regarding the 
performance of individual PAC providers with respect to quality, 
resource use, and other measures required under sections 1899B(c)(1) 
and (d)(1) beginning not later than 2 years after the applicable 
specified application date. The procedures must ensure, including 
through a process consistent with the process applied under section 
1886(b)(3)(B)(viii)(VII) for similar purposes, that each PAC provider 
has the opportunity to review and submit corrections to the data and 
information that are to be made public with respect to the PAC provider 
prior to such data being made public.
    Section 1899B(h) of the Act sets out requirements for removing, 
suspending, or adding quality, resource use, and other measures 
required under sections 1899B(c)(1) and (d)(1) of the Act. In addition, 
section 1899B(j) of the Act requires the Secretary to allow for 
stakeholder input, such as through town halls, open door forums, and 
mailbox submissions, before the initial rulemaking process to implement 
section 1899B of the Act.
    Section 2(c)(1) of the IMPACT Act amended section 1895 of the Act 
to address the payment consequences for HHAs with respect to the 
additional data which HHAs are required to submit under section 1899B 
of the Act. These changes include the addition of a new section 
1895(3)(B)(v)(IV), which requires HHAs to submit the following 
additional data: (1) For the year beginning on the applicable specified 
application date and subsequent years, data on the quality, resource 
use, and other measures required under sections 1899B(c)(1) and (d)(1) 
of the Act; and (2) for 2019 and subsequent years, the standardized 
patient assessment data required under section 1899B(b)(1) of the Act. 
Such data must be submitted in the form and manner, and at the time, 
specified by the Secretary.
    As stated above, the IMPACT Act adds a new section 1899B that 
imposes new data reporting requirements for certain post-acute care 
(PAC) providers, including HHAs. Sections 1899B(c)(1) and 1899B(d)(1) 
collectively require that the Secretary specify quality measures and 
resource use and other measures with respect to certain domains not 
later than the specified application date that applies to each measure 
domain and PAC provider setting. Section 1899B(a)(2)(E) delineates the 
specified application dates for each measure domain and PAC provider. 
The IMPACT Act also amends other sections of the Act, including section 
1895(b)(3)(B)(v), to require the Secretary to reduce the otherwise 
applicable PPS payment to a PAC provider that does not report the new 
data in a form and manner, and at a time, specified by the Secretary. 
For HHAs, amended section 1895(b)(3)(B)(v) would require the Secretary 
to reduce the payment update for any HHA that does not satisfactorily 
submit the new required data.
    Under the current HH QRP, the general timeline and sequencing of 
measure implementation occurs as follows: Specification of measures; 
proposal and finalization of measures through notice-and-comment 
rulemaking; HHA submission of data on the adopted measures; analysis 
and processing of the submitted data; notification to HHAs regarding 
their quality reporting compliance with respect to a particular year; 
consideration of any reconsideration requests; and imposition of a 
payment reduction in a particular year for failure to satisfactorily 
submit data with respect to that year. Any payment reductions that are 
taken with respect to a year begin approximately 1 year after the end 
of the data submission period for that

[[Page 39895]]

year and approximately 2 years after we first adopt the measure.
    To the extent that the IMPACT Act could be interpreted to shorten 
this timeline, so as to require us to reduce HH PPS payment for failure 
to satisfactorily submit data on a measure specified under section 
1899B(c)(1) or (d)(1) of the IMPACT Act beginning with the same year as 
the specified application date for that measure, such a timeline would 
not be feasible. The current timeline discussed above reflects 
operational and other practical constraints, including the time needed 
to specify and adopt valid and reliable measures, collect the data, and 
determine whether a HHA has complied with our quality reporting 
requirements. It also takes into consideration our desire to give HHAs 
enough notice of new data reporting obligations so that they are 
prepared to timely start reporting data. Therefore, we intend to follow 
the same timing and sequence of events for measures specified under 
sections 1899B(c)(1) and (d)(1) of the Act that we currently follow for 
other measures specified under the HH QRP. We intend to specify each of 
these measures no later than the specified application dates set forth 
in section 1899B(a)(2)(E) of the Act and propose to adopt them 
consistent with the requirements in the Act and Administrative 
Procedure Act. To the extent that we finalize a proposal to adopt a 
measure for the HH QRP that satisfies an IMPACT Act measure domain, we 
intend to require HHAs to report data on the measure for the year that 
begins 2 years after the specified application date for that measure. 
Likewise, we intend to require HHAs to begin reporting any other data 
specifically required under the IMPACT Act for the year that begins 2 
years after we adopt requirements that would govern the submission of 
that data.
    Lastly, on April 1, 2014, the Congress passed the Protecting Access 
to Medicare Act of 2014 (PAMA) (Pub. L. 113-93), which stated the 
Secretary may not adopt ICD-10 prior to October 1, 2015. On August 4, 
2014, HHS published a final rule titled ``Administrative 
Simplification: Change to the Compliance Date for the International 
Classification of Diseases, 10th Revision (ICD-10-CM and ICD-10-PCS 
Medical Data Code Sets'' (79 FR 45128), which announced October 1, 2015 
as the new compliance date. The OASIS-C1 data item set had been 
previously approved by the Office of Management and Budget (OMB) on 
February 6, 2014 and scheduled for implementation on October 1, 2014. 
We intended to use the OASIS-C1 to coincide with the original 
implementation date of the ICD-10. The approved OASIS-C1 included 
changes to accommodate coding of diagnoses using the ICD-10-CM coding 
set and other important stakeholder concerns such as updating clinical 
concepts, and revised item wording and response categories to improve 
item clarity. This version included five (5) data items that required 
the use of ICD-10 codes.
    Since OASIS-C1 was revised to incorporate ICD-10 coding, it is not 
feasible to implement the OASIS-C1/ICD-10 version prior to October 1, 
2015, when ICD-10 is scheduled to be implemented. Due to this delay, we 
had to ensure the collection and submission of OASIS data continued, 
until ICD-10 could be implemented. Therefore, we have made interim 
changes to the OASIS-C1 data item set to allow use with ICD-9 until 
ICD-10 is adopted. The OASIS-C1/ICD-9 version was submitted to OMB for 
approval until the OASIS-C1/ICD-10 version could be implemented. A 6-
month emergency approval was granted on October 7, 2014 and CMS 
subsequently applied for an extension. The extension of the OASIS-C1/
ICD-9 version was reapproved under OMB control number 0938-0760 with a 
current expiration date of March 31, 2018. It is important to note, 
that this version of the OASIS will be discontinued once the OASIS-C1/
ICD-10 version is approved and implemented. In addition, to facilitate 
the reporting of OASIS data as it relates to the planned implementation 
of ICD-10 on October 1, 2015, we submitted a new request for approval 
to OMB for the OASIS-C1/ICD-10 version under the Paperwork Reduction 
Act (PRA) process. We are requesting a new OMB control number for the 
proposed revised OASIS item as announced in the 30-day Federal Register 
notice (80 FR 15797). The new information collection request is 
currently pending OMB approval. Information regarding the OASIS-C1 can 
be located at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/OASIS-C1.html. Additional 
information regarding the adoption of ICD-10 can be located at http://www.cms.gov/Medicare/Coding/ICD10/index.html?redirect=/icd10.

B. General Considerations Used for the Selection of Quality Measures 
for the HH QRP

    We strive to promote high quality and efficiency in the delivery of 
health care to the beneficiaries we serve. Performance improvement 
leading to the highest quality health care requires continuous 
evaluation to identify and address performance gaps and reduce the 
unintended consequences that may arise in treating a large, vulnerable, 
and aging population. Quality reporting programs, coupled with public 
reporting of quality information, are critical to the advancement of 
health care quality improvement efforts.
    We seek to adopt measures for the HH QRP that promotes better, 
safer, and more efficient care. Valid, reliable, relevant quality 
measures are fundamental to the effectiveness of our quality reporting 
programs. Therefore, selection of quality measures is a priority for 
CMS in all of its quality reporting programs.
    The measures selected would address the measure domains as 
specified in the IMPACT Act and would be in alignment with the CMS 
Quality Strategy, which is framed using the three broad aims of the 
National Quality Strategy:
     Better Care: Improve the overall quality of care by making 
healthcare more patient-centered, reliable, accessible, and safe.
     Healthy People, Healthy Communities: Improve the health of 
the U.S. population by supporting proven interventions to address 
behavioral, social, and environmental determinants of health in 
addition to delivering higher-quality care.
     Affordable Care: Reduce the cost of quality healthcare for 
individuals, families, employers, and government.
    In addition, our measure selection activities for the HH QRP take 
into consideration input we receive from the Measure Applications 
Partnership (MAP), convened by the NQF, as part of the established CMS 
pre-rulemaking process required under section 1890A of the Act. The MAP 
is a public-private partnership comprised of multi-stakeholder groups 
convened for the primary purpose of providing input to us on the 
selection of certain categories of quality and efficiency measures, as 
required by section 1890A(a)(3) of the Social Security Act (the Act). 
By February 1st of each year, the NQF must provide that input to us. 
Input from the MAP is located at http://www.qualityforum.org/Setting_Priorities/Partnership/Measure_Applications_Partnership.aspx. 
In addition, we take into account national priorities, such as those 
established by the National Priorities Partnership at http://www.qualityforum.org/npp/, and the HHS Strategic Plan at http://www.hhs.gov/secretary/about/priorities/priorities.html.
    We initiated an Ad Hoc MAP process for the review of the measures 
under consideration for implementation in

[[Page 39896]]

preparation of the measures for adoption into the HH QRP that we must 
propose through this fiscal year's rule, in order to begin implementing 
such measures by 2017. We included under the List of Measures under 
Consideration (MUC List) a list of measures that the Secretary must 
make available to the public, as part of the pre-rulemaking process, as 
described in section 1890A(a)(2) of the Act. The MAP Off-Cycle Measures 
under Consideration for PAC-LTC Settings can be accessed on the 
National Quality Forum Web site at: http://www.qualityforum.org/map/. 
The NQF MAP met in February 2015 and provided input to us as required 
under section 1890A(a)(3) of the Act. The MAP issued a pre-rulemaking 
report on March 6, 2015 entitled MAP Off-Cycle Deliberations 2015: 
Measures under Consideration to Implement Provisions of the IMPACT 
Act--Final Report, which is available for download at: http://www.qualityforum.org/Publications/2015/03/MAP_Off-Cycle_Deliberations_2015_-_Final_Report.aspx. The MAP's input for the 
proposed measure is discussed in this section.
    To meet the first specified application date applicable to HHAs 
under section 1899B(a)(2)(E) of the Act, which is October 1, 2017, we 
have focused on measures that:
     Correspond to a measure domain in sections 1899B(c)(1) or 
(d)(1) of the Act and are setting-agnostic: For example falls with 
major injury and the incidence of pressure ulcers;
     Are currently adopted for 1 or more of our PAC quality 
reporting programs, are already either NQF-endorsed and in use or 
finalized for use, or already previewed by the Measure Applications 
Partnership (MAP) with support;
     Minimize added burden on HHAs;
     Minimize or avoid, to the extent feasible, revisions to 
the existing items in assessment tools currently in use (for example, 
the OASIS); and
     Where possible, the avoidance duplication of existing 
assessment items.
    In our selection and specification of measures, we employ a 
transparent process in which we seek input from stakeholders and 
national experts and engage in a process that allows for pre-rulemaking 
input on each measure, as required by section 1890A of the Act. This 
process is based on a private public partnership, and it occurs via the 
MAP. The MAP is composed of multistakeholder groups convened by the 
NQF, our current contractor under section 1890 of the Act, to provide 
input on the selection of quality and efficiency measures described in 
section 1890(b)(7)(B). The NQF must convene these stakeholders and 
provide us with the stakeholders' input on the selection of such 
measures. We, in turn, must take this input into consideration in 
selecting such measures. In addition, the Secretary must make available 
to the public by December 1 of each year a list of such measures that 
the Secretary is considering under Title XVIII of the Act. As discussed 
in section V.A. of this proposed rule 1899B(e)(3) provides that the 
pre-rulemaking process required by section 1890A of the Act applies to 
the measures required under section 1899B, subject to certain 
exceptions for expedited procedures or, alternatively, waiver of 
section 1890A. We initiated an ad hoc MAP process for the review of the 
quality measures under consideration for proposal, in preparation for 
adoption of those quality measures into the HH QRP that are required by 
the IMPACT Act, and that must be implemented by January 1, 2017. The 
List of Measures under Consideration (MUC List) under the IMPACT Act 
was made public on February 5, 2015. Under the IMPACT Act, these 
measures must be standardized so they can be applied across PAC 
settings and must correspond to measure domains specified in sections 
1899B(c)(1) and (d)(1) of the IMPACT Act. The MAP reviewed each IMPACT 
Act-related quality measure proposed in this proposed rule for the HH 
QRP, in light of its intended cross-setting use. We refer to sections 
V.A. and V.C. of this proposed rule for more information on the MAP's 
recommendations. The MAP's final report, MAP Off-Cycle Deliberations 
2015: Measures under Consideration to Implement Provisions of the 
IMPACT Act: Final Report, is available at http://www.qualityforum.org/
Setting_Priorities/Partnership/MAP_Final_Reports.aspx. As discussed in 
section V.A. of this proposed rule, section 1899B(j) of the Act, 
requires that we allow for stakeholder input, such as through town 
halls, open door forums, and mailbox submissions, before the initial 
rulemaking process to implement section 1899B. To meet this 
requirement, we provided the following opportunities for stakeholder 
input: (a) We convened a technical expert panel (TEP) that included 
stakeholder experts and patient representatives on February 3, 2015; 
(b) we provided two separate listening sessions on February 10th and 
March 24, 2015; (c) we sought public input during the February 2015 ad 
hoc MAP process regarding the measures under consideration with respect 
to IMPACT Act domains; (d) we sought public comment as part of our 
measure maintenance work; and (e) we implemented a public mail box for 
the submission of comments in January, 2015 located at 
[email protected]. The CMS public mailbox can be 
accessed on our post-acute care quality initiatives Web site: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014-and-Cross-Setting-Measures.html. Lastly, we held a National Stakeholder 
Special Open Door Forum to seek input on the measures on February 25, 
2015.
    In the absence of NQF endorsement on measures for the home health 
setting, or measures that are not fully supported by the MAP for the HH 
QRP, we intend to propose for adoption measures that most closely align 
with the national priorities discussed above and for which the MAP 
supports the measure concept. Further discussion as to the importance 
and high-priority status of these measures in the HH setting is 
included under each quality measure proposal in this proposed rule. In 
addition, for measures not endorsed by the NQF, we have sought, to the 
extent practicable, to adopt measures that have been endorsed or 
adopted by a national consensus organization, recommended by multi-
stakeholder organizations, and/or developed with the input of 
providers, purchasers/payers, and other stakeholders.

C. HH QRP Quality Measures and Measures Under Consideration for Future 
Years

    In the CY 2014 HH PPS final rule, (78 FR 72256-72320), we finalized 
a proposal to add two claims-based measures to the HH QRP, and stated 
that we would begin reporting the data from these measures to HHAs 
beginning in CY 2014. These claims based measures are: (1) 
Rehospitalization during the first 30 days of HH; and (2) Emergency 
Department Use without Hospital Readmission during the first 30 days of 
HH. In an effort to align with other updates to Home Health Compare, 
including the transition to quarterly provider preview reports, we have 
made the decision to delay the reporting of data from these measures 
until July 2015 (http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQISpotlight.html). Also in that rule, we finalized our proposal to 
reduce the number of process measures reported on the Certification and 
Survey Provider Enhanced Reporting (CASPER) reports by eliminating the 
stratification by

[[Page 39897]]

episode length for nine (9) process measures. The removal of these 
measures from the CASPER folders occurred in October 2014. The CMS Home 
Health Quality Initiative Web site identifies the current HH QRP 
measures located at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIQualityMeasures.html. In addition, as stated in the CY 2012 and CY 
2013 HH PPS final rules (76 FR 68575 and 77 FR 67093, respectively), we 
finalized that we will also use measures derived from Medicare claims 
data to measure home health quality. This effort ensures that providers 
do 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 are avoided.
    (a) We are proposing one standardized cross-setting new measure for 
CY 2016 to meet the requirements of the IMPACT Act. The proposed 
quality measure that addresses the domain of skin integrity and changes 
in skin integrity is the National Quality Forum (NQF)-endorsed measure: 
Percent of Residents or Patients with Pressure Ulcers That Are New or 
Worsened (Short Stay) (NQF #0678) (http://www.qualityforum.org/QPS/0678).
    The IMPACT Act requires the specification of a quality measure to 
address skin integrity and changes in skin integrity in the home health 
setting by January 1, 2017. We are proposing the implementation of the 
quality measure NQF #0678, Percent of Residents or Patients with 
Pressure Ulcers that are New or Worsened (Short Stay) in the HH QRP as 
a cross-setting quality measure to meet the requirements of the IMPACT 
Act for the CY 2018 payment determination and subsequent years. This 
measure reports the percent of patients with Stage 2 through 4 pressure 
ulcers that are new or worsened since the beginning of the episode of 
care.
    Pressure ulcers are high-volume in post-acute care settings and 
high-cost adverse events. According to the 2014 Prevention and 
Treatment Guidelines published by the National Pressure Ulcer Advisory 
Panel, European Pressure Ulcer Advisory Panel, and Pan Pacific Pressure 
Injury Alliance, pressure ulcer care is estimated to cost approximately 
$11 billion annually, and between $500 and $70,000 per individual 
pressure ulcer.\64\ Pressure ulcers are a serious medical condition 
that result in pain, decreased quality of life, and increased mortality 
in aging populations.65 66 67 68 Pressure ulcers typically 
are the result of prolonged periods of uninterrupted pressure on the 
skin, soft tissue, muscle, and bone.69 70 71 Elderly 
individuals are prone to a wide range of medical conditions that 
increase their risk of developing pressure ulcers. These include 
impaired mobility or sensation, malnutrition or undernutrition, 
obesity, stroke, diabetes, dementia, cognitive impairments, circulatory 
diseases, dehydration, bowel or bladder incontinence, the use of 
wheelchairs, the use of medical devices, polypharmacy, and a history of 
pressure ulcers or a pressure ulcer at 
admission.72 73 74 75 76 77 78 79 80 81 82
---------------------------------------------------------------------------

    \64\ National Pressure Ulcer Advisory Panel, European Pressure 
Ulcer Advisory Panel and Pan Pacific Pressure Injury Alliance. 
Prevention and Treatment of Pressure Ulcers: Clinical Practice 
Guideline. Emily Haesler (Ed.) Cambridge Media; Osborne Park, 
Western Australia; 2014.
    \65\ Casey, G. (2013). ``Pressure ulcers reflect quality of 
nursing care.'' Nurs N Z 19(10): 20-24.
    \66\ Gorzoni, M. L., and S. L. Pires (2011). ``Deaths in nursing 
homes.'' Rev Assoc Med Bras 57(3): 327-331.
    \67\ Thomas, J. M., et al. (2013). ``Systematic review: health-
related characteristics of elderly hospitalized adults and nursing 
home residents associated with short-term mortality.'' J Am Geriatr 
Soc 61(6): 902-911.
    \68\ White-Chu, E. F., et al. (2011). ``Pressure ulcers in long-
term care.'' Clin Geriatr Med 27(2): 241-258.
    \69\ Bates-Jensen BM. Quality indicators for prevention and 
management of pressure ulcers in vulnerable elders. Ann Int Med. 
2001;135 (8 Part 2), 744-51.
    \70\ Institute for Healthcare Improvement (IHI). Relieve the 
pressure and reduce harm. May 21, 2007. Available from http://www.ihi.org/IHI/Topics/PatientSafety/SafetyGeneral/ImprovementStories/FSRelievethePressureandReduceHarm.htm.
    \71\ Russo CA, Steiner C, Spector W. Hospitalizations related to 
pressure ulcers among adults 18 years and older, 2006 (Healthcare 
Cost and Utilization Project Statistical Brief No. 64). December 
2008. Available from http://www.hcupus.ahrq.gov/reports/statbriefs/sb64.pdf.
    \72\ Agency for Healthcare Research and Quality (AHRQ). Agency 
news and notes: pressure ulcers are increasing among hospital 
patients. January 2009. Available from http://www.ahrq.gov/research/jan09/0109RA22.htm.=.
    \73\ Bates-Jensen BM. Quality indicators for prevention and 
management of pressure ulcers in vulnerable elders. Ann Int Med. 
2001;135 (8 Part 2), 744-51.
    \74\ Cai, S., et al. (2013). ``Obesity and pressure ulcers among 
nursing home residents.'' Med Care 51(6): 478-486.
    \75\ Casey, G. (2013). ``Pressure ulcers reflect quality of 
nursing care.'' Nurs N Z 19(10): 20-24.
    \76\ Hurd D, Moore T, Radley D, Williams C. Pressure ulcer 
prevalence and incidence across post-acute care settings. Home 
Health Quality Measures & Data Analysis Project, Report of Findings, 
prepared for CMS/OCSQ, Baltimore, MD, under Contract No. 500-2005-
000181 TO 0002. 2010.
    \77\ MacLean DS. Preventing & managing pressure sores. Caring 
for the Ages. March 2003;4(3):34-7. Available from http://www.amda.com/publications/caring/march2003/policies.cfm.
    \78\ Michel, J. M., et al. (2012). ``As of 2012, what are the 
key predictive risk factors for pressure ulcers? Developing French 
guidelines for clinical practice.'' Ann Phys Rehabil Med 55(7): 454-
465.
    \79\ National Pressure Ulcer Advisory Panel (NPUAP) Board of 
Directors; Cuddigan J, Berlowitz DR, Ayello EA (Eds). Pressure 
ulcers in America: prevalence, incidence, and implications for the 
future. An executive summary of the National Pressure Ulcer Advisory 
Panel Monograph. Adv Skin Wound Care. 2001;14(4):208-15.
    \80\ Park-Lee E, Caffrey C. Pressure ulcers among nursing home 
residents: United States, 2004 (NCHS Data Brief No. 14). 
Hyattsville, MD: National Center for Health Statistics, 2009. 
Available from http://www.cdc.gov/nchs/data/databriefs/db14.htm.
    \81\ Reddy, M. (2011). ``Pressure ulcers.'' Clin Evid (Online) 
2011.
    \82\ Teno, J. M., et al. (2012). ``Feeding tubes and the 
prevention or healing of pressure ulcers.'' Arch Intern Med 172(9): 
697-701.
---------------------------------------------------------------------------

    The IMPACT Act requires the specification of quality measures that 
are harmonized across PAC settings. This requirement is consistent with 
the NQF Steering Committee report, which stated that to understand the 
impact of pressure ulcers across settings, quality measures addressing 
prevention, incidence, and prevalence of pressure ulcers must be 
harmonized and aligned.\83\ NQF #0678, Percent of Residents or Patients 
with Pressure Ulcers That Are New or Worsened (Short Stay) is NQF-
endorsed and has been successfully implemented using a harmonized set 
of data elements in IRF, LTCH, and SNF settings. A new item, M1309 was 
added to the OASIS-C1/ICD-9 version to collect data on new and worsened 
pressure ulcers in home health patients to support harmonization with 
NQF #0678; data collection for this item began January 1, 2015. A new 
measure, based on this item, was included in the 2014 MUC list and 
received conditional endorsement from the National Quality Forum. That 
measure was harmonized with NQF #0678, but differed in the 
consideration of unstageable pressure ulcers. In this rule, we are 
proposing a HH measure that is fully-standardized with NQF #0678.
---------------------------------------------------------------------------

    \83\ National Quality Forum. National voluntary consensus 
standards for developing a framework for measuring quality for 
prevention and management of pressure ulcers. April 2008. Available 
from http://www.qualityforum.org/Projects/Pressure_Ulcers.aspx.
---------------------------------------------------------------------------

    A TEP convened by our measure development contractor provided input 
on the technical specifications of this quality measure, including the 
feasibility of implementing the measure across PAC settings. The TEP 
was supportive of the implementation of this measure across PAC 
settings and applauded CMS's efforts to standardize this measure for 
cross-setting development. Additionally, the NQF MAP met on February 9, 
2015 and

[[Page 39898]]

February 27, 2015 and provided input to CMS. The MAP supported the use 
of NQF #0678, Percent of Residents or Patients with Pressure Ulcers 
that are New or Worsened (Short Stay) in the HH QRP as a cross-setting 
quality measure implemented under the IMPACT Act. More information 
about the MAPs recommendations for this measure is available at http://www.qualityforum.org/map/.
    We propose that data for the standardized quality measure would be 
collected using the OASIS-C1 with submission through the Quality 
Improvement and Evaluation System (QIES) Assessment Submission and 
Processing (ASAP) system. HHAs began submitting data in January 2015 
for the OASIS items used to calculate NQF #0678, the Percent of 
Residents, or Patients with Pressure Ulcers That Are New or Worsened 
(Short Stay), as part of the Home Health Quality Initiative to assess 
the number of new or worsened pressure ulcers in January 2015. By 
building on the existing reporting and submission infrastructure for 
HHAs, we intend to minimize the administrative burden related to data 
collection and submission for this measure under the HH QRP. For more 
information on HH reporting using the QIES ASAP system, refer to: 
http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIOASISUserManual.html and http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/OASIS/index.html?redirect=/oasis/.
    Data collected through the OASIS-C1 would be used to calculate this 
quality measure. Data items in the OASIS-C1 include M1308 (Current 
Number of Unhealed Pressure Ulcers at Each Stage or Unstageable) and 
M1309 (Worsening in Pressure Ulcer Status Since SOC/ROC). Data 
collected through the OASIS-C1 would be used for risk adjustment of 
this measure. We anticipate risk adjustment items would include, but is 
not limited to M1850 (Activities of Daily Living Assistance, 
Transferring), and M1620 (Bowel Incontinence Frequency). OASIS C1 items 
M1016 (Diagnoses Requiring Medical or Treatment Change Within past 14 
Days), M1020 (Primary Diagnoses) and M1022 (Other Diagnoses) would be 
used to identify patients with a diagnosis of peripheral vascular 
disease, diabetes, or malnutrition. More information about the OASIS 
items is available in the OASIS Manual http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIOASISUserManual.html.
    The calculation of the proposed measure would be based on the items 
M1308 (Current Number of Unhealed Pressure Ulcers at Each Stage or 
Unstageable) and M1309 (Worsening in Pressure Ulcer Status Since SOC/
ROC). The specifications and data items for NQF #0678, the Percent of 
Residents or Patients with Pressure Ulcers that are New or Worsened 
(Short Stay), are available at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/PAC-Quality-Initiatives.html.
    We invite public comment on our proposal to adopt NQF #0678 Percent 
of Residents or Patients with Pressure Ulcers that are New or Worsened 
(Short Stay) for the HH QRP to fulfill the timeline requirements for 
implementation under the IMPACT Act, for CY2018 HH payment 
determination and subsequent years.
    As part of our ongoing measure development efforts, we are 
considering a future update to the numerator of the quality measure NQF 
#0678, Percent of Residents or Patients with Pressure Ulcers that are 
New or Worsened (Short Stay). This update would hold providers 
accountable for the development of unstageable pressure ulcers and 
suspected deep tissue injuries (sDTIs). Under this proposed change the 
numerator of the quality measure would be updated to include 
unstageable pressure ulcers, including sDTIs that are new/developed 
while the patient is receiving home health care, as well as Stage 1 or 
2 pressure ulcers that become unstageable due to slough or eschar 
(indicating progression to a full thickness [that is, stage 3 or 4] 
pressure ulcer) after admission. This would be consistent with the 
specifications of the ``New and Worsened Pressure Ulcer'' measure for 
HH patients presented to the MAP on the 2014 MUC list. At this time, we 
are not proposing the implementation of this change (that is, including 
sDTIs and unstageable pressure ulcers in the numerator) in the HH QRP, 
but are soliciting public feedback on this potential area of measure 
development.
    Our measure development contractor convened a cross-setting 
pressure ulcer TEP that strongly recommended that CMS hold providers 
accountable for the development of new unstageable pressure ulcers and 
sDTIs by including these pressure ulcers in the numerator of the 
quality measure. Although the TEP acknowledged that unstageable 
pressure ulcers and sDTIs cannot and should not be assigned a numeric 
stage, panel members recommended that these be included in the 
numerator of NQF #0678, the Percent of Residents, or Patients with 
Pressure Ulcers That Are New or Worsened (Short Stay), as a new 
pressure ulcer if developed during a home health episode. The TEP also 
recommended that a Stage 1 or 2 pressure ulcer that becomes unstageable 
due to slough or eschar should be considered worsened because the 
presence of slough or eschar indicates a full thickness (equivalent to 
Stage 3 or 4) wound.84 85 These recommendations were 
supported by technical and clinical advisors and the National Pressure 
Ulcer Advisory Panel.\86\ Additionally, exploratory data analysis 
conducted by our measure development contractor suggests that the 
addition of unstageable pressure ulcers, including sDTIs, would 
increase the observed incidence of new or worsened pressure ulcers at 
the agency level and may improve the ability of the quality measure to 
discriminate between poor- and high-performing facilities.
---------------------------------------------------------------------------

    \84\ Schwartz, M., Nguyen, K.H., Swinson Evans, T.M., Ignaczak, 
M.K., Thaker, S., and Bernard, S.L.: Development of a Cross-Setting 
Quality Measure for Pressure Ulcers: OY2 Information Gathering, 
Final Report. Centers for Medicare & Medicaid Services, November 
2013. Available: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/Development-of-a-Cross-Setting-Quality-Measure-for-Pressure-Ulcers-Information-Gathering-Final-Report.pdf
    \85\ Schwartz, M., Ignaczak, M.K., Swinson Evans, T.M., Thaker, 
S., and Smith, L.: The Development of a Cross-Setting Pressure Ulcer 
Quality Measure: Summary Report on November 15, 2013, Technical 
Expert Panel Follow-Up Webinar. Centers for Medicare & Medicaid 
Services, January 2014. Available: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/Development-of-a-Cross-Setting-Pressure-Ulcer-Quality-Measure-Summary-Report-on-November-15-2013-Technical-Expert-Pa.pdf
    \86\ Schwartz, M., Nguyen, K.H., Swinson Evans, T.M., Ignaczak, 
M.K., Thaker, S., and Bernard, S.L.: Development of a Cross-Setting 
Quality Measure for Pressure Ulcers: OY2 Information Gathering, 
Final Report. Centers for Medicare & Medicaid Services, November 
2013. Available: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/Development-of-a-Cross-Setting-Quality-Measure-for-Pressure-Ulcers-Information-Gathering-Final-Report.pdf
---------------------------------------------------------------------------

    In addition, we are also considering whether body mass index (BMI) 
should be used as a covariate for risk-adjusting NQF #0678 in the home 
health setting, as is done in other post-acute care settings. We invite 
public feedback to inform our direction to include unstageable pressure 
ulcers and sDTIs in the numerator of the quality measure NQF #0678 
Percent of Residents or Patients with Pressure Ulcers that are New or 
Worsened (Short Stay), as well as on the possible collection of height

[[Page 39899]]

and weight data for risk-adjustment, as part of our future measure 
development efforts.
    (b) We have also identified four future, cross-setting measure 
constructs to potentially meet requirements of the IMPACT Act domains 
of: (1) All-condition risk-adjusted potentially preventable hospital 
readmission rates; (2) resource use, including total estimated Medicare 
spending per beneficiary; (3) discharge to community; and (4) 
medication reconciliation. These are shown in Table 22; we would like 
to solicit public feedback to inform future measure development of 
these constructs as it relates to meeting the IMPACT Act requirements 
in these areas.

      Table 22--Future Cross-Setting Measure Constructs Under Consideration To Meet IMPACT Act Requirements
                           [Home Health Timeline for Implementation--January 1, 2017]
----------------------------------------------------------------------------------------------------------------
                                                                      Measures to reflect all-condition risk-
                        IMPACT Act domain                            adjusted potentially preventable hospital
                                                                                 readmission rates
----------------------------------------------------------------------------------------------------------------
Measures.........................................................  Application of (NQF #2510): Skilled Nursing
                                                                    Facility 30-Day All-Cause Readmission
                                                                    Measure (SNFRM) CMS is the steward.
                                                                   Application of the LTCH/IRF All-Cause
                                                                    Unplanned Readmission Measure for 30 Days
                                                                    Post Discharge from LTCHs/IRFs.
IMPACT Act Domain................................................  Resource Use, including total estimated
                                                                    Medicare spending per beneficiary.
Measure..........................................................  Payment Standardized Medicare Spending Per
                                                                    Beneficiary (MSPB).
IMPACT Act Domain................................................  Discharge to community.
Measure..........................................................  Percentage residents/patients at discharge
                                                                    assessment, who discharged to a higher level
                                                                    of care versus to the community.
IMPACT Act Domain................................................  Medication Reconciliation.
Measure..........................................................  Percent of patients for whom any needed
                                                                    medication review actions were completed.
----------------------------------------------------------------------------------------------------------------

    (c) We are working with our measure development and maintenance 
contractor to identify setting-specific measure concepts for future 
implementation in the HH QRP that align with or complement current 
measures and new measures to meet domains specified in the IMPACT Act. 
In identifying priority areas for future measure enhancement and 
development, we take into consideration results of environmental scans 
and resulting gaps analysis for relevant home health quality measure 
constructs, along with input from numerous stakeholders, including the 
Measures Application Partnership (MAP), the Medicare Payment Advisory 
Commission (MedPAC), Technical Expert Panels, and national priorities, 
such as those established by the National Priorities Partnership, the 
HHS Strategic Plan, the National Strategy for Quality Improvement in 
Healthcare, and the CMS Quality Strategy. Based on input from 
stakeholders, CMS has identified several high priority concept areas 
for future measure development in Table 23.

Table 23--Future Setting-Specific Measure Constructs Under Consideration
------------------------------------------------------------------------
 National quality strategy domain             Measure construct
------------------------------------------------------------------------
Safety............................  Falls risk composite process
                                     measure: Percentage of home health
                                     patients who were assessed for
                                     falls risk and whose care plan
                                     reflects the assessment, and which
                                     was implemented appropriately.
Effective Prevention and Treatment  Nutrition assessment composite
                                     measure: Percentage of home health
                                     patients who were assessed for
                                     nutrition risk with a validated
                                     tool and whose care plan reflects
                                     the assessment, and which was
                                     implemented appropriately.
                                    Improvement in Dyspnea in Patients
                                     with a Primary Diagnosis of
                                     Congestive Heart Failure (CHF),
                                     Chronic Obstructive Pulmonary
                                     Disease (COPD), and/or Asthma:
                                     Percentage of home health episodes
                                     of care during which a patient with
                                     a primary diagnosis of CHF, asthma
                                     and/or COPD became less short of
                                     breath or dyspneic.
                                    Improvement in Patient-Reported
                                     Interference due to Pain: Percent
                                     of home health patients whose self-
                                     reported level of pain interference
                                     on the Patient-Reported Objective
                                     Measurement Information System
                                     (PROMIS) tool improved.
                                    Improvement in Patient-Reported Pain
                                     Intensity: Percent of home health
                                     patients whose self-reported level
                                     of pain severity on the PROMIS tool
                                     improved.
                                    Improvement in Patient-Reported
                                     Fatigue: Percent of home health
                                     patients whose self-reported level
                                     of fatigue on the PROMIS tool
                                     improved.
                                    Stabilization in 3 or more
                                     Activities of Daily Living (ADLs):
                                     Percent of home health patients
                                     whose functional scores remain the
                                     same between admission and
                                     discharge for at least 3 ADLs.
------------------------------------------------------------------------

    These measure concepts are under development, and details regarding 
measure definitions, data sources, data collection approaches, and 
timeline for implementation would be communicated in future rulemaking. 
We invite feedback about these seven high priority concept areas for 
future measure development.

D. Form, Manner, and Timing of OASIS Data Submission and OASIS Data for 
Annual Payment Update

1. Regulatory Authority
    The HH conditions of participation (CoPs) at Sec.  484.55(d) 
require that the

[[Page 39900]]

comprehensive assessment must be updated and revised (including the 
administration of the OASIS) no less frequently than: (1) The last 5 
days of every 60 days beginning with the start of care date, unless 
there is a beneficiary-elected transfer, significant change in 
condition, or discharge and return to the same HHA during the 60-day 
episode; (2) within 48 hours of the patient's return to the home from a 
hospital admission of 24-hours or more for any reason other than 
diagnostic tests; and (3) at discharge.
    It is important to note that to calculate quality measures from 
OASIS data, there must be a complete quality episode, which requires 
both a Start of Care (initial assessment) or Resumption of Care OASIS 
assessment and a Transfer or Discharge OASIS assessment. Failure to 
submit sufficient OASIS assessments to allow calculation of quality 
measures, including transfer and discharge assessments, is a failure to 
comply with the CoPs.
    HHAs do not need to submit OASIS data for those patients who are 
excluded from the OASIS submission requirements. As described in the 
December 23, 2005 Medicare and Medicaid Programs: Reporting Outcome and 
Assessment Information Set Data as Part of the Conditions of 
Participation for Home Health Agencies final rule (70 FR 76202), we 
defined the exclusion as those patients:
     Receiving only non-skilled services;
     For whom neither Medicare nor Medicaid is paying for HH 
care (patient receiving care under a Medicare or Medicaid Managed Care 
Plan are not excluded from the OASIS reporting requirement);
     Receiving pre- or post-partum services; or
     Under the age of 18 years.
    As set forth in the CY 2008 HH PPS final rule (72 FR 49863), HHAs 
that become Medicare certified on or after May 31 of the preceding year 
are not subject to the OASIS quality reporting requirement nor any 
payment penalty for quality reporting purposes for the following year. 
For example, HHAs certified on or after May 31, 2014 are not subject to 
the 2 percentage point reduction to their market basket update for CY 
2015. These exclusions only affect quality reporting requirements and 
do not affect the HHAs' reporting responsibilities as announced in the 
December 23, 2005 final rule, Medicare and Medicaid Programs; Reporting 
Outcome and Assessment Information Set Data as Part of the Conditions 
of Participation for Home Health Agencies (70 FR 76202).
2. Home Health Quality Reporting Program Requirements for CY 2016 
Payment and Subsequent Years
    In the CY 2014 HH PPS Final rule (78 FR 72297), we finalized a 
proposal to consider OASIS assessments submitted by HHAs to CMS in 
compliance with HH CoPs and Conditions for Payment for episodes 
beginning on or after July 1, 2012, and before July 1, 2013 as 
fulfilling one portion of the quality reporting requirement for CY 
2014.
    In addition, we finalized a proposal to continue this pattern for 
each subsequent year beyond CY 2014. OASIS assessments submitted for 
episodes beginning on July 1st of the calendar year 2 years prior to 
the calendar year of the Annual Payment Update (APU) effective date and 
ending June 30th of the calendar year one year prior to the calendar 
year of the APU effective date, fulfill the OASIS portion of the HH QRP 
requirement.
3. Previously Established Pay-for-Reporting Performance Requirement for 
Submission of OASIS Quality Data
    Section 1895(b)(3)(B)(v)(I) of the Act states that for 2007 and 
each subsequent year, the home health market basket percentage increase 
applicable under such clause for such year shall be reduced by 2 
percentage points if a home health agency does not submit data to the 
Secretary in accordance with subclause (II) with respect to such a 
year. This pay-for-reporting requirement was implemented on January 1, 
2007. In the CY 2015 HH PPS Final rule (79 FR 38387), we finalized a 
proposal to define the quantity of OASIS assessments each HHA must 
submit to meet the pay-for-reporting requirement.
    We believe that defining a more explicit performance requirement 
for the submission of OASIS data by HHAs would better meet section 
5201(c)(2) of the Deficit Reduction Act of 2005 (DRA), which requires 
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 the CY 2015 HH PPS Final rule (79 FR 38387), we reported 
information on a study performed by the Department of Health & Human 
Services, Office of the Inspector General (OIG) in February 2012 to: 
(1) Determine the extent to which HHAs met federal reporting 
requirements for the OASIS data; (2) to determine the extent to which 
states met federal reporting requirements for OASIS data; and (3) to 
determine the extent to which CMS was overseeing the accuracy and 
completeness of OASIS data submitted by HHAs. Based on the OIG report 
we proposed a performance requirement for submission of OASIS quality 
data, which would be responsive to the recommendations of the OIG.
    In response to these requirements and the OIG report, we designed a 
pay-for-reporting performance system model that could accurately 
measure the level of an HHA's submission of OASIS data. The performance 
system is based on the principle that each HHA is expected to submit a 
minimum set of two matching assessments for each patient admitted to 
their agency. These matching assessments together create what is 
considered a quality episode of care, consisting ideally of a Start of 
Care (SOC) or Resumption of Care (ROC) assessment and a matching End of 
Care (EOC) assessment. However, it was determined that there are 
several scenarios that could meet this matching assessment requirement 
of the new pay-for-reporting performance requirement. These scenarios 
or quality assessments are defined as assessments that create a quality 
episode of care during the reporting period or could create a quality 
episode if the reporting period were expanded to an earlier reporting 
period or into the next reporting period.
    Seven types of assessments submitted by an HHA fit this definition 
of a quality assessment. These are:
    1. A Start of Care (SOC; M0100 = `01') or Resumption of Care (ROC; 
M0100 = `03') assessment that can be matched to an End of Care (EOC; 
M0100 = `06', `07', `08', or `09') assessment. These SOC/ROC 
assessments are the first assessment in the pair of assessments that 
create a standard quality of care episode describe in the previous 
paragraph.
    2. An End of Care (EOC) assessment that can be matched to a Start 
of Care (SOC) or Resumption of Care (ROC) assessment. These EOC 
assessments are the second assessment in the pair of assessments that 
create a standard quality of care episode describe in the previous 
paragraph.
    3. A SOC/ROC assessment that could begin an episode of care, but 
the assessment occurs in the last 60 days of the performance period. 
This is labeled as a Late SOC/ROC quality assessment. The assumption is 
that the EOC assessment will occur in the next reporting period.
    4. An EOC assessment that could end an episode of care that began 
in the previous reporting period, (that is, an EOC that occurs in the 
first 60 days of the performance period). This is labeled as an Early 
EOC quality assessment. The

[[Page 39901]]

assumption is that the matching SOC/ROC assessment occurred in the 
previous reporting period.
    5. A SOC/ROC assessment that is followed by one or more follow-up 
assessments, the last of which occurs in the last 60 days of the 
performance period. This is labeled as an SOC/ROC Pseudo Episode 
quality assessment.
    6. An EOC assessment is preceded by one or more follow-up 
assessments, the first of which occurs in the first 60 days of the 
performance period. This is labeled an EOC Pseudo Episode quality 
assessment.
    7. A SOC/ROC assessment that is part of a known one-visit episode. 
This is labeled as a One-Visit episode quality assessment. This 
determination is made by consulting HH claims data.
    SOC, ROC, and EOC assessments that do not meet any of these 
definitions are labeled as Non-Quality assessments. Follow-up 
assessments (that is, where the M0100 Reason for Assessment = `04' or 
`05') are considered Neutral assessments and do not count toward or 
against the pay-for-reporting performance requirement.
    Compliance with this performance requirement can be measured 
through the use of an uncomplicated mathematical formula. This pay-for-
reporting performance requirement metric has been titled as the 
``Quality Assessments Only'' (QAO) formula because only those OASIS 
assessments that contribute, or could contribute, to creating a quality 
episode of care are included in the computation.
    The formula based on this definition is as follows:
    [GRAPHIC] [TIFF OMITTED] TP10JY15.008
    
    Our ultimate goal is to require all HHAs to achieve a pay-for-
reporting performance requirement compliance rate of 90 percent or 
more, as calculated using the QAO metric illustrated above. In the CY 
2015 HH PPS final rule (79 FR 66074), we proposed implementing a pay-
for-reporting performance requirement over a three-year period. After 
consideration of the public comments received, we adopted as final our 
proposal to establish a pay-for-reporting performance requirement for 
assessments submitted on or after July 1, 2015 and before June 30, 2016 
with appropriate start of care dates, HHAs must score at least 70 
percent on the QAO metric of pay-for-reporting performance requirement 
or be subject to a 2 percentage point reduction to their market basket 
update for CY 2017.
    HHAs have been statutorily required to report OASIS for a number of 
years and therefore should have many years of experience with the 
collection of OASIS data and transmission of this data to CMS. Given 
the length of time that HHAs have been mandated to report OASIS data 
and based on preliminary analyses that indicate that the majority of 
HHAs are already achieving the target goal of 90 percent on the QAO 
metric, we believe that HHAs would adapt quickly to the implementation 
of the pay-for-reporting performance requirement, if phased in over a 
three-year period.
    In the CY2015 rule, we did not finalize a proposal to increase the 
reporting requirement in 10 percent increments over a two-year period 
until the maximum rate of 90 percent is reached, but instead proposed 
to analyze historical data to set the reporting requirements. To set 
the threshold for the 2nd year, we analyzed the most recently available 
data, from 2013 and 2014, to make a determination about what the pay-
for-reporting performance requirement should be. Specifically, we 
reviewed OASIS data from this time period simulating the pay-for-
reporting performance 70 percent submission requirement to determine 
the hypothetical performance of each HHA as if the pay-for-reporting 
performance requirement were in effect during the reporting period 
preceding its implementation. This analysis indicated a nominal 
increase of 10 percent each year would provide the greatest opportunity 
for successful implementation versus an increase of 20 percent from 
year 1 to year 2.
    Based on this analysis, we propose to set the performance threshold 
at 80 percent for the reporting period from July 1, 2016 through June 
30, 2017. For the reporting period from July 1, 2017 through June 30, 
2018 and thereafter, we propose the performance threshold would be 90 
percent.
    We provided a report to each HHA of their hypothetical performance 
under the pay-for-reporting performance requirement during the 2014-
2015 pre-implementation reporting period in June 2015. On January 1, 
2015, the data submission process for OASIS converted from the current 
state-based OASIS submission system to a new national OASIS submission 
system known as the Assessment Submission and Processing (ASAP) System. 
On July 1, 2015, when the pay-for-reporting performance requirement of 
70 percent goes into effect, providers would be required to submit 
their OASIS assessment data into the ASAP system. Successful submission 
of an OASIS assessment would consist of the submission of the data into 
the ASAP system with a receipt of no fatal error messages. Error 
messages received during submission can be an indication of a problem 
that occurred during the submission process and could also be an 
indication that the OASIS assessment was rejected. Successful 
submission can be verified by ascertaining that the submitted 
assessment data resides in the national database after the assessment 
has met all of the quality standards for completeness and accuracy 
during the submission process. Should one or more OASIS assessments 
submitted by a HHA be rejected due to an IT/servers issue caused by 
CMS, we may, at our discretion, excuse the non-submission of OASIS 
data. We anticipate that such a scenario would rarely, if ever, occur. 
In the event that a HHA believes, they were unable to submit OASIS 
assessments due to an IT/server issue on the part of CMS, the HHA 
should be prepared to provide any documentation or proof available, 
which demonstrates that no fault on their part contributed to the 
failure of the OASIS records to transmit to CMS.
    The initial performance period for the pay-for-reporting 
performance requirement would be July 1, 2015 through June 30, 2016. 
Prior to and during this performance period, we have scheduled Open 
Door Forums and webinars to educate HHA personnel as needed about the 
pay-for-reporting performance requirement program and the pay-for- 
reporting performance QAO metric, and distributed individual provider 
preview reports. Additionally, OASIS Education Coordinators (OECs) 
would be trained to provide state-level instruction on this program and 
metric. We have already posted a report, which provides a detailed 
explanation of the methodology for this pay-for-reporting QAO 
methodology. To view this report, go to: http://www.cms.gov/Medicare/
Quality-Initiatives-Patient-Assessment-

[[Page 39902]]

Instruments/HomeHealthQualityInits/Home-Health-Quality-Reporting-
Requirements.html. Training announcements and additional educational 
information related to the pay-for-reporting performance requirement 
would be provided on the HH Quality Initiatives Web page. We invite 
public comment on our proposal to implement an 80 percent Pay-for-
Reporting Performance Requirement for Submission of OASIS Quality Data 
for Year 2 reporting period July 1, 2016 to June 30, 2017 as described 
previously, for the HH QRP.

E. Home Health Care CAHPS Survey (HHCAHPS)

    In the CY 2015 HH PPS final rule (79 FR 66031), we stated that the 
home health quality measures reporting requirements for Medicare-
certified agencies include the Home Health Care CAHPS[supreg] (HHCAHPS) 
Survey for the CY 2015 Annual Payment Update (APU). We maintained the 
stated HHCAHPS data requirements for CY 2015 set out in previous rules, 
for the continuous monthly data collection and quarterly data 
submission of HHCAHPS data.
1. Background and Description of HHCAHPS
    As part of the HHS Transparency Initiative, we implemented a 
process to measure and publicly report patient experiences with home 
health care, using a survey developed by the Agency for Healthcare 
Research and Quality's (AHRQ's) Consumer Assessment of Healthcare 
Providers and Systems (CAHPS[supreg]) program and originally endorsed 
by the NQF in March 2009 (NQF Number 0517) and recently NQF re-endorsed 
in 2015. 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 HHCAHPS Survey is approved under OMB Control Number 
0938-1066 through May 31, 2017. The Home Health Care CAHPS[supreg] 
(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 the HHCAHPS survey, there was no national standard for 
collecting information about patient experiences that enabled valid 
comparisons across all HHAs. The history and development process for 
HHCAHPS has been described in previous rules and is also available on 
the official HHCAHPS Web site at https://homehealthcahps.org and in the 
annually-updated HHCAHPS Protocols and Guidelines Manual, which is 
downloadable from https://homehealthcahps.org.
    For public reporting purposes, we report five measures from the 
HHCAHPS Survey--three composite measures and two global ratings of care 
that are derived from the questions on the HHCAHPS survey. The publicly 
reported data are adjusted for differences in patient mix across HHAs. 
We update the HHCAHPS data on Home Health Compare on www.medicare.gov 
quarterly. HHCAHPS data was first publicly reported in April 2012 on 
Home Health Compare. Each HHCAHPS composite measure consists of four or 
more individual survey items 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); and
     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 (Q20), and the patient's willingness to recommend 
the HHA to family and friends (Q25).
    The HHCAHPS survey is currently available in English, Spanish, 
Chinese, Russian, and Vietnamese. The OMB number on these surveys is 
the same (0938-1066). All of these surveys are on the Home Health Care 
CAHPS[supreg] Web site, https://homehealthcahps.org. If you need 
additional language translations of the HHCAHPS Survey, please contact 
us at [email protected].
    All of the requirements about home health patient eligibility for 
the HHCAHPS survey and conversely, which home health patients are 
ineligible for the HHCAHPS survey are delineated and detailed in the 
HHCAHPS Protocols and Guidelines Manual, which is downloadable at 
https://homehealthcahps.org. We update the HHCAHPS Protocols and 
Guidelines Manual annually, and the current version is 7.0. Home health 
patients are eligible for HHCAHPS if they received at least two skilled 
home health visits in the past 2 months, which are paid for by Medicare 
or Medicaid.
    Home health patients are ineligible for inclusion in HHCAHPS 
surveys if one of these conditions pertains to them:
     Are under the age of 18;
     Are deceased prior to the date the sample is pulled;
     Receive hospice care;
     Receive routine maternity care only;
     Are not considered survey eligible because the state in 
which the patient lives restricts release of patient information for a 
specific condition or illness that the patient has; or
     No Publicity patients, defined as patients who on their 
own initiative at their first encounter with the HHAs make it very 
clear that no one outside of the agencies can be advised of their 
patient status, and no one outside of the HHAs can contact them for any 
reason.
    We stated in previous rules that Medicare-certified HHAs are 
required to contract with an approved HHCAHPS survey vendor. This 
requirement continues, and Medicare-certified agencies also must 
provide on a monthly basis a list of all their survey-eligible home 
health care patients served to their respective HHCAHPS survey vendors. 
Agencies are not allowed to influence at all how their patients respond 
to the HHCAHPS survey.
    As previously required, 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. Update training is required annually for all 
approved HHCAHPS survey vendors. We have approximately 30 approved 
HHCAHPS survey vendors. The most current list of approved HHCAHPS 
survey vendors is available at https://homehealthcahps.org.
2. HHCAHPS Oversight Activities
    We stated in prior final rules that all approved HHCAHPS survey 
vendors are 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 
approved HHCAHPS survey vendors follow the HHCAHPS Protocols and 
Guidelines Manual. As stated previously in the six prior final rules to 
this proposed rule, all HHCAHPS approved survey vendors must develop a 
Quality Assurance Plan (QAP) for survey administration in accordance 
with the HHCAHPS Protocols and Guidelines Manual. An HHCAHPS survey 
vendor's first QAP must be submitted within 6 weeks of the data 
submission deadline date 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 must include the following:
     Organizational Background and Staff Experience;
     Work Plan;
     Sampling Plan;

[[Page 39903]]

     Survey Implementation Plan;
     Data Security, Confidentiality and Privacy Plan; and
     Questionnaire Attachments.
    As part of the oversight activities, the HHCAHPS Survey 
Coordination Team conducts on-site visits to all approved HHCAHPS 
survey vendors. The purpose of the site visits is to allow the HHCAHPS 
Coordination Team to observe the entire HHCAHPS Survey implementation 
process, from the sampling stage through file preparation and 
submission, as well as to assess data security and storage. The HHCAHPS 
Survey Coordination Team reviews the HHCAHPS survey vendor's survey 
systems, and assesses administration protocols based on the HHCAHPS 
Protocols and Guidelines Manual posted at https://homehealthcahps.org. 
The systems and program site visit review includes, but is not limited 
to the following:
     Survey management and data systems;
     Printing and mailing materials and facilities;
     Telephone call center facilities;
     Data receipt, entry and storage facilities; and
     Written documentation of survey processes.
    After the site visits, HHCAHPS survey vendors are given a defined 
time period in which to correct any identified issues and provide 
follow-up documentation of corrections for review. HHCAHPS survey 
vendors are subject to follow-up site visits on an as-needed basis.
    In the CY 2013 HH PPS final rule (77 FR 67094, 67164), we codified 
the current guideline that all approved HHCAHPS survey vendors fully 
comply with all HHCAHPS oversight activities. We included this survey 
requirement at Sec.  484.250(c)(3).
3. HHCAHPS Requirements for the CY 2016 APU
    In the CY 2015 HH PPS final rule (79 FR 66031), we stated that for 
the CY 2016 APU, we would require continued monthly HHCAHPS data 
collection and reporting for four quarters. The data collection period 
for CY 2016, APU includes the second quarter 2014 through the first 
quarter 2015 (the months of April 2014 through March 2015). Although 
these dates are past, we wished to state them in this proposed rule so 
that HHAs are again reminded of what months constituted the 
requirements for the CY 2016 APU. HHAs are required to submit their 
HHCAHPS data files to the HHCAHPS Data Center for the HHCAHPS data from 
the first quarter of 2015 data by 11:59 p.m., EST on July 16, 2015. 
This deadline is firm; no exceptions are permitted.
    For the CY 2016 APU, we required that all HHAs that had fewer than 
60 HHCAHPS-eligible unduplicated or unique patients in the period of 
April 1, 2013 through March 31, 2014 are exempted from the HHCAHPS data 
collection and submission requirements for the CY 2016 APU, upon 
completion of the CY 2016 HHCAHPS Participation Exemption Request form, 
and upon CMS verification of the HHA patient counts. Agencies with 
fewer than 60 HHCAHPS-eligible, unduplicated or unique patients in the 
period of April 1, 2013, through March 31, 2014, were required to 
submit their patient counts on the HHCAHPS Participation Exemption 
Request form for the CY 2016 APU posted on https://homehealthcahps.org 
by 11:59 p.m., EST on March 31, 2015. This deadline was firm, as are 
all of the quarterly data submission deadlines for the HHAs that 
participate in HHCAHPS.
    We automatically exempt HHAs receiving Medicare certification after 
the period in which HHAs do their patient counts. HHAs receiving 
Medicare certification on or after April 1, 2014 are exempt from the 
HHCAHPS reporting requirement for the CY 2016 APU. These newly-
certified HHAs did not need to complete a HHCAHPS Participation 
Exemption Request form for the CY 2016 APU.
4. HHCAHPS Requirements for the CY 2017 APU
    For the CY 2017 APU, we require continued monthly HHCAHPS data 
collection and reporting for four quarters. The data collection period 
for the CY 2017, APU includes the second quarter 2015 through the first 
quarter 2016 (the months of April 2015 through March 2016). HHAs would 
be required to submit their HHCAHPS data files to the HHCAHPS Data 
Center for the second quarter 2015 by 11:59 p.m., EST on October 15, 
2015; for the third quarter 2015 by 11:59 p.m., EST on January 21, 
2016; for the fourth quarter 2015 by 11:59 p.m., EST on April 21, 2016; 
and for the first quarter 2016 by 11:59 p.m., EST on July 21, 2016. 
These deadlines will be firm; no exceptions will be permitted.
    For the CY 2017 APU, we require that all HHAs that have fewer than 
60 HHCAHPS-eligible unduplicated or unique patients in the period of 
April 1, 2014 through March 31, 2015 are exempted from the HHCAHPS data 
collection and submission requirements for the CY 2017 APU, upon 
completion of the CY 2017 HHCAHPS Participation Exemption Request form, 
and upon CMS verification of the HHA patient counts. Agencies with 
fewer than 60 HHCAHPS-eligible, unduplicated or unique patients in the 
period of April 1, 2014 through March 31, 2015, are required to submit 
their patient counts on the HHCAHPS Participation Exemption Request 
form for the CY 2017 APU posted on https://homehealthcahps.org by 11:59 
p.m., EST on March 31, 2016. This deadline is firm, as are all of the 
quarterly data submission deadlines for the HHAs that participate in 
HHCAHPS.
    We automatically exempt HHAs receiving Medicare certification after 
the period in which HHAs do their patient counts. HHAs receiving 
Medicare certification on or after April 1, 2015 are exempt from the 
HHCAHPS reporting requirement for the CY 2017 APU. These newly-
certified HHAs did not need to complete a HHCAHPS Participation 
Exemption Request form for the CY 2017 APU.
5. HHCAHPS Requirements for the CY 2018 APU
    For the CY 2018 APU, we require continued monthly HHCAHPS data 
collection and reporting for four quarters. The data collection period 
for the CY 2018, APU includes the second quarter 2016 through the first 
quarter 2017 (the months of April 2016 through March 2017). HHAs would 
be required to submit their HHCAHPS data files to the HHCAHPS Data 
Center for the second quarter 2016 by 11:59 p.m., EST on October 20, 
2016; for the third quarter 2016 by 11:59 p.m., EST on January 19, 
2017; for the fourth quarter 2016 by 11:59 p.m., EST on April 20, 2017; 
and for the first quarter 2017 by 11:59 p.m., EST on July 20, 2017. 
These deadlines will be firm; no exceptions will be permitted.
    For the CY 2018 APU, we require that all HHAs that have fewer than 
60 HHCAHPS-eligible unduplicated or unique patients in the period of 
April 1, 2015 through March 31, 2016 are exempted from the HHCAHPS data 
collection and submission requirements for the CY 2018 APU, upon 
completion of the CY 2018 HHCAHPS Participation Exemption Request form, 
and upon CMS verification of the HHA patient counts. Agencies with 
fewer than 60 HHCAHPS-eligible, unduplicated or unique patients in the 
period of April 1, 2015 through March 31, 2016, are required to submit 
their patient counts on the HHCAHPS Participation Exemption Request 
form for the CY 2018 APU posted on https://homehealthcahps.org by 11:59 
p.m., EST on March 31, 2017. This deadline is firm, as are all of the 
quarterly data

[[Page 39904]]

submission deadlines for the HHAs that participate in HHCAHPS.
    We automatically exempt HHAs receiving Medicare certification after 
the period in which HHAs do their patient counts. HHAs receiving 
Medicare Certification on or after April 1, 2016 are exempt from the 
HHCAHPS reporting requirement for the CY 2018 APU. These newly-
certified HHAs did not need to complete a HHCAHPS Participation 
Exemption Request form for the CY 2018 APU.
6. HHCAHPS Reconsiderations and Appeals Process
    HHAs should monitor their respective HHCAHPS survey vendors to 
ensure that vendors submit their HHCAHPS data on time, by accessing 
their HHCAHPS Data Submission Reports on https://homehealthcahps.org. 
This would help HHAs ensure that their data are submitted in the proper 
format for data processing to the HHCAHPS Data Center.
    We will continue HHCAHPS oversight activities as finalized in the 
CY 2014 rule. In the CY 2013 HH PPS final rule (77 FR 6704, 67164), we 
codified the current guideline that all approved HHCAHPS survey vendors 
must fully comply with all HHCAHPS oversight activities. We included 
this survey requirement at Sec.  484.250(c)(3).
    We propose to continue the OASIS and HHCAHPS reconsiderations and 
appeals process that we have finalized and that we have used for prior 
periods for the CY 2012, CY 2013, CY 2014, and CY 2015 APU 
determinations. We have described the reconsiderations process 
requirements in the CMS Technical Direction Letter that we sent to the 
affected HHAs, on or in late September. HHAs have 30 days from their 
receipt of the Technical Direction Letter informing them that they did 
not meet the OASIS and HHCAHPS requirements for the CY period, to send 
all documentation that supports their requests for reconsideration to 
CMS. It is important that the affected HHAs send in comprehensive 
information in their reconsideration letter/package because we would 
not contact the affected HHAs to request additional information or to 
clarify incomplete or inconclusive information. If clear evidence to 
support a finding of compliance is not present, the 2 percent reduction 
in the APU would be upheld. If clear evidence of compliance is present, 
the 2 percent reduction for the APU would be reversed. We notify 
affected HHAs by December 31st annually for the APU period that begins 
on January 1st. If we determine to uphold the 2 percent reduction, the 
HHA may further appeal the 2 percent reduction via the Provider 
Reimbursement Review Board (PRRB) appeals process. The PRRB contact 
information is provided to the HHAs receiving letters in December about 
the CMS reconsideration decisions.
    Providers who wish to submit a reconsideration request should 
continue to follow the reconsideration and appeals process as finalized 
in the CY 2012, CY 2013, CY 2014, and CY 2015 Home Health Prospective 
Payment System Rate Update Final Rules.
7. Summary
    We are not proposing any changes to the participation requirements, 
or to the requirements pertaining to the implementation of the Home 
Health CAHPS[supreg] Survey (HHCAHPS). We only updated the information 
to reflect the dates in the future APU years. We again strongly 
encourage HHAs to keep up-to-date about the HHCAHPS by regularly 
viewing the official Web site for the HHCAHPS at https://homehealthcahps.org. HHAs can also send an email to the HHCAHPS Survey 
Coordination Team at [email protected], or telephone toll-free (1-866-
354-0985) for more information about HHCAHPS.

F. Public Display of Home Health Quality Data for the HH QRP

    Section 1895(b)(3)(B)(v)(III) of the Act and section 1899B(f) of 
the IMPACT Act states the Secretary shall establish procedures for 
making data submitted under subclause (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. We recognize that 
public reporting of quality data is a vital component of a robust 
quality reporting program and are fully committed to ensuring that the 
data made available to the public be meaningful and that comparing 
performance across home health agencies requires that measures be 
constructed from data collected in a standardized and uniform manner. 
We also recognize the need to ensure that each home health agency has 
the opportunity to review the data before publication. Medicare home 
health regulations, as codified at Sec.  484.250(a), requires HHAs to 
submit OASIS assessments and Home Health Care Consumer Assessment of 
Healthcare Providers and Systems Survey[supreg] (HHCAHPS) data to meet 
the quality reporting requirements of section 1895(b)(3)(B)(v) of the 
Act.
    In addition, beginning April 1, 2015 HHAs began to receive Provider 
Preview Reports (for all Process Measures and Outcome Measures) on a 
quarterly, rather than annual, basis. The opportunity for providers to 
review their data and to submit corrections prior to public reporting 
aligns with the other quality reporting programs and the requirement 
for provider review under the IMPACT Act. We provide quality measure 
data to HHAs via the Certification and Survey Provider Enhanced Reports 
(CASPER reports), which are available through the CMS Health Care 
Quality Improvement and Evaluation System (QIES).
    As part of our ongoing efforts to make healthcare more transparent, 
affordable, and accountable, the HH QRP has developed a CMS Compare Web 
site for home health agencies, which identifies home health providers 
based on the areas they serve. Consumers can search for all Medicare-
certified home health providers that serve their city or ZIP code and 
then find the agencies offering the types of services they need. A 
subset of the HH quality measures has been publicly reported on the 
Home Health Compare (HH Compare) Web site since 2003. The selected 
measures that are made available to the public can be viewed on the HH 
Compare Web site located at http://www.medicare.gov/HHCompare/Home.asp.
    The Affordable Care Act calls for transparent, easily understood 
information on provider quality to be publicly reported and made widely 
available. To provide home health care consumers with a summary of 
existing quality measures in an accessible format, we plan to publish a 
star rating based on the quality of care measures for home health 
agencies on Home Health Compare starting in July 2015. This is part of 
our plan to adopt star ratings across all Medicare.gov Compare Web 
sites. Star ratings are currently publicly displayed on Nursing Home 
Compare, Physician Compare, the Medicare Advantage Plan Finder, and 
Dialysis Facility Compare, and they are scheduled to be displayed on 
Hospital Compare in 2015.
    The Quality of Patient Care star rating methodology assigns each 
home health agency a rating between one (1) and five (5) stars, using 
half stars for adjustment and reporting. All Medicare-certified home 
health agencies are eligible to receive a Quality of Patient Care star 
rating providing that they have quality data reported on at least 5 out 
of the 9 quality measures that are included in the calculation.
    Home health agencies would continue to have prepublication access 
to their agency's quality data, which enables each agency to know how 
it is

[[Page 39905]]

performing before public posting of the data on the Compare Web site. 
Starting in April 2015, HHAs are receiving quarterly preview reports 
showing their Quality of Patient Care star rating and how it was 
derived well before public posting, and they have several weeks to 
review and provide feedback.
    The Quality of Patient Care star ratings methodology was developed 
through a transparent process the included multiple opportunities for 
stakeholder input, which was subsequently the basis for refinements to 
the methodology. An initial proposed methodology for calculating the 
Quality of Patient Care star ratings was posted on the CMS.gov Web site 
in December 2014. CMS then held two Special Open Door Forums (SODFs) on 
December 17, 2014 and February 5, 2015 to present the proposed 
methodology and solicit input. At each SODF, stakeholders provided 
immediate input, and were invited to submit additional comments via the 
Quality of Patient Care star ratings Help Desk mailbox: 
[email protected]. CMS refined the methodology, 
based on comments received and additional analysis. The final 
methodology report is posted on the new star ratings Web page: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIHomeHealthStarRatings.html. A 
Frequently-Asked-Questions (FAQ) document is also posted on the same 
Web page, addressing the issues raised in the comments that were 
received. We tested the Web site language used to present the Quality 
of Patient Care star ratings with Medicare beneficiaries to assure that 
it allowed them to accurately understand the significance of the 
various star ratings.
    Additional information regarding the Quality of Patient Care star 
rating would be posted on the star ratings Web page at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIHomeHealthStarRatings.html. 
Additional communications regarding the Quality of Patient Care star 
ratings would be announced via regular HH QRP communication channels.

VI. Collection of Information Requirements

    While this proposed rule contains information collection 
requirements, this rule does not add new, nor revise any of the 
existing information collection requirements, or burden estimate. The 
information collection requirements discussed in this rule for the 
OASIS-C1 data item set had been previously approved by the Office of 
Management and Budget (OMB) on February 6, 2014 and scheduled for 
implementation on October 1, 2014. The extension of OASIS-C1/ICD-9 
version was reapproved under OMB control number 0938-0760 with a 
current expiration date of March 31, 2018. This version of the OASIS 
will be discontinued once the OASIS-C1/ICD-10 version is approved and 
implemented. In addition, to facilitate the reporting of OASIS data as 
it relates to the implementation of ICD-10 on October 1, 2015, CMS 
submitted a new request for approval to OMB for the OASIS-C1/ICD-10 
version under the Paperwork Reduction Act (PRA) process. CMS is 
requesting a new OMB control number for the proposed revised OASIS item 
as announced in the 30-day Federal Register notice (80 FR 15797). The 
new information collection request is currently pending OMB approval.

VII. 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.

VIII. Regulatory Impact Analysis

A. Statement of Need

    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)(3)(B)(iv) of the Act provides the Secretary with 
the authority to implement adjustments to the standard prospective 
payment amount (or amounts) for subsequent years to eliminate the 
effect of changes in aggregate payments during a previous year or years 
that was the result of changes in the coding or classification of 
different units of services that do not reflect real changes in case-
mix. Section 1895(b)(5) of the Act provides the Secretary with 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.
    Section 421(a) of the MMA requires that HH services furnished in a 
rural area, for episodes and visits ending on or after April 1, 2010, 
and before January 1, 2016, receive an increase of 3 percent of the 
payment amount otherwise made under section 1895 of the Act. Section 
210 of the MACRA amended section 421(a) of the MMA to extend the 3 
percent increase to the payment amounts for serviced furnished in rural 
areas for episodes and visits ending before January 1, 2018.
    Section 3131(a) of the Affordable Care Act mandates that starting 
in CY 2014, the Secretary must apply an adjustment to the national, 
standardized 60-day episode payment rate and other amounts applicable 
under section 1895(b)(3)(A)(i)(III) of the Act to reflect factors such 
as changes in the number of visits in an episode, the mix of services 
in an episode, the level of intensity of services in an episode, the 
average cost of providing care per episode, and other relevant factors. 
In addition, section 3131(a) of the Affordable Care Act mandates that 
rebasing must be phased-in over a 4-year period in equal increments, 
not to exceed 3.5 percent of the amount (or amounts) as of the date of 
enactment (2010) under section 1895(b)(3)(A)(i)(III) of the Act, and be 
fully implemented in CY 2017.
    The proposed HHVBP model would apply a payment adjustment based on

[[Page 39906]]

an HHA's performance on quality measures to test the effects on quality 
and costs of care. This proposed HHVBP model was developed based on the 
experiences we gained from the implementation of the Home Health Pay-
for-Performance (HHPP) demonstration as well as the successful 
implementation of the HVBP program. The model design was also developed 
from the public comments received on the discussion of a HHVBP model 
being considered in the CY 2015 HH PPS proposed and final rules. Value-
based purchasing programs have also been included in the President's 
budget for most providers types, including Home Health.

B. Overall Impact

    We have examined the impacts 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 (UMRA, March 22, 1995; Pub. L. 
104-4), Executive Order 13132 on Federalism (August 4, 1999), 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. The net transfer impacts related to the proposed changes 
in payments under the HH PPS for CY 2016 are estimated to be -$350 
million. The savings impacts related to the proposed HHVBP model are 
estimated at a total projected 5-year gross savings of $380 million 
assuming a very conservative savings estimate of a 6 percent annual 
reduction in hospitalizations and a 1.0 percent annual reduction in SNF 
admissions. In accordance with the provisions of Executive Order 12866, 
this regulation was reviewed by the Office of Management and Budget.
1. HH PPS
    The update set forth in this rule applies to Medicare payments 
under HH PPS in CY 2016. Accordingly, the following analysis describes 
the impact in CY 2016 only. We estimate that the net impact of the 
proposals in this rule is approximately $350 million in decreased 
payments to HHAs in CY 2016. We applied a wage index budget neutrality 
factor and a case-mix weights budget neutrality factor to the rates as 
discussed in section III.C.3 of this proposed rule; therefore, the 
estimated impact of the 2016 wage index proposed in section III.C.3 of 
this proposed rule and the recalibration of the case-mix weights for 
2016 proposed in section III.B. of this proposed rule is zero. The -
$350 million impact reflects the distributional effects of the 2.3 
percent HH payment update percentage ($420 million increase), the 
effects of the third year of the four-year phase-in of the rebasing 
adjustments to the national, standardized 60-day episode payment 
amount, the national per-visit payment rates, and the NRS conversion 
factor for an impact of -2.5 percent ($470 million decrease), and the 
effects of the -1.72 percent adjustment for nominal case-mix growth 
($300 million decrease). The $350 million in decreased payments is 
reflected in the last column of the first row in Table 24 as a 0.1 
percent decrease in expenditures when comparing CY 2015 payments to 
estimated CY 2016 payments.
    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 $7.5 million to $38.5 million in any one year. 
For the purposes of the RFA, we estimate that almost all HHAs are small 
entities as that term is used in the RFA. Individuals and states are 
not included in the definition of a small entity. The economic impact 
assessment is based on estimated Medicare payments (revenues) and HHS's 
practice in interpreting the RFA is to consider effects economically 
``significant'' only if greater than 5 percent of providers reach a 
threshold of 3 to 5 percent or more of total revenue or total costs. 
The majority of HHAs' visits are Medicare-paid visits and therefore the 
majority of HHAs' revenue consists of Medicare payments. Based on our 
analysis, we conclude that the policies proposed in this rule will 
result in an estimated total impact of 3 to 5 percent or more on 
Medicare revenue for greater than 5 percent of HHAs. Therefore, the 
Secretary has determined that this HH PPS proposed rule will have a 
significant economic impact on a substantial number of small entities. 
Further detail is presented in Table 24, by HHA type and location.
    With regards to options for regulatory relief, we note that in the 
CY 2014 HH PPS final rule we finalized rebasing adjustments to the 
national, standardized 60-day episode rate, non-routine supplies (NRS) 
conversion factor, and the national per-visit payment rates for each 
year, 2014 through 2017 as described in section II.C and III.C.3 of 
this proposed rule. Since the rebasing adjustments are mandated by 
section 3131(a) of the Affordable Care Act, we cannot offer HHAs relief 
from the rebasing adjustments for CY 2016. For the proposed reduction 
to the national, standardized 60-day episode payment amount of 1.72 
percent for CY 2016 described in section III.B.2 of this proposed rule, 
we believe it is appropriate to reduce the national, standardized 60-
day episode payment amount to account for the estimated increase in 
nominal case-mix in order to move towards more accurate payment for the 
delivery of home health services where payments better align with the 
costs of providing such services. In the alternatives considered 
section below, we note that we considered proposing the full 3.41 
percent reduction to the 60-day episode rate in CY 2016 to account for 
nominal case-mix growth between CY 2012 and CY 2014. However, we 
instead proposed to reduce the 60-day episode rate by 1.72 percent in 
CY 2016 and 1.72 percent in CY 2017 to account for estimated nominal 
case-mix growth between CY 2012 and CY 2014.
    Executive Order 13563 specifies, to the extent practicable, 
agencies should assess the costs of cumulative regulations. However, 
given potential utilization pattern changes, wage index changes, 
changes to the market basket forecasts, and unknowns regarding future 
policy changes, we believe it is neither practicable nor appropriate to 
forecast the cumulative impact of the rebasing adjustments on Medicare 
payments to HHAs for future years at this time. 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 would make it difficult to predict accurately the full scope of 
the impact upon HHAs for future years

[[Page 39907]]

beyond CY 2016. We note that the rebasing adjustments to the national, 
standardized 60-day episode payment rate and the national per-visit 
rates are capped at the statutory limit of 3.5 percent of the CY 2010 
amounts (as described in the preamble in section II.C. of this proposed 
rule) for each year, 2014 through 2017. The NRS rebasing adjustment 
will be -2.82 percent in each year, 2014 through 2017.
    In addition, section 1102(b) of the Act requires us to prepare a 
RIA 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 the HH PPS proposed rule will not have a 
significant economic impact on the operations of small rural hospitals.
2. Proposed HHVBP Model
    To test the impact of upside and downside value-based payment 
adjustments, beginning in calendar year 2018 and in each succeeding 
calendar year through calendar year 2022, the proposed model would 
adjust the final claim payment amount for a home health agency for each 
episode in a calendar year by an amount equal to the applicable 
percent. For purposes of this proposed rule, we have limited our 
analysis of the economic impacts to the value-based incentive payment 
adjustments. Under the proposed model design, the incentive payment 
adjustments would be limited to the total payment reductions to home 
health agencies included in the model and would be no less than the 
total amount available for value-based incentive payment adjustment. 
Overall, the distributive impact of this proposed rule is estimated at 
$380 million for CY 2018-2022. Therefore, this proposed rule is 
economically significant and thus a major rule under the Congressional 
Review Act. The proposed model would test the effect on quality and 
costs of care by applying payment adjustments based on HHAs' 
performance on quality measures. This proposed rule was developed based 
on extensive research and experience with value-based purchasing 
models.
    Guidance issued by the Department of Health and Human Services 
interpreting the Regulatory Flexibility Act considers the effects 
economically `significant' only if greater than 5 percent of providers 
reach a threshold of 3 to 5 percent or more of total revenue or total 
costs. Among the over 1900 HHAs in the selected states that would be 
expected to be included in the proposed HHVBP model, we estimate that 
the maximum percent payment adjustment resulting from this proposed 
rule will only be greater than -5 percent for 10 percent of the HHAs 
included in the model (using the 8 percent maximum payment adjustment 
threshold applied in CY2021 and CY2022). As a result, only 2 percent of 
all HHA providers nationally would be significantly impacted, falling 
well below the RFA threshold. In addition, only HHAs that are impacted 
with lower payments are those providers that provide the poorest 
quality which is the main tenet of the model. This falls well below the 
threshold for economic significance established by HHS for requiring a 
more detailed impact assessment under the RFA. Thus, we are not 
preparing an analysis under the RFA because the Secretary has 
determined that this proposed rule would not have a significant 
economic impact on a substantial number of small entities.
    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 HHAs. This 
analysis must conform to the provisions of section 603 of the RFA. For 
purposes of section 1102(b) of the Act, we have identified less than 5 
percent of HHAs included in the proposed selected states that primarily 
serve beneficiaries that reside in rural areas (greater than 50 percent 
of beneficiaries served). We are not preparing an analysis under 
section 1102(b) of the Act because the Secretary has determined that 
the proposed HHVBP model would not have a significant impact on the 
operations of a substantial number of small rural HHAs.
    Section 202 of the Unfunded Mandates Reform Act of 1995 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 2015, that 
threshold is approximately $144 million. This rule will have no 
consequential effect on state, local, or tribal governments or on the 
private sector.
    Executive Order 13132 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. Since this regulation does not impose any costs on state 
or local governments, the requirements of Executive Order 13132 are not 
applicable.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

C. Detailed Economic Analysis

1. HH PPS
    This proposed rule sets forth updates for CY 2016 to the HH PPS 
rates contained in the CY 2015 HH PPS final rule (79 FR 66032 through 
66118). 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 HH benefit, based primarily 
on preliminary Medicare claims data from 2014. 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 24 represents how HHA revenues are likely to be affected by 
the policy changes proposed in this rule. For this analysis, we used an 
analytic file with linked CY 2014 HH claims data (as of December 31, 
2014) for dates of service that ended on or before December 31, 2014, 
and OASIS assessments. The first column of Table 24 classifies HHAs 
according to a number of characteristics including provider type, 
geographic region, and urban and rural locations. The second column 
shows the number of facilities in the impact analysis. The third column 
shows the payment effects of proposed CY 2016 wage index. The fourth 
column shows the payment

[[Page 39908]]

effects of the proposed CY 2016 case-mix weights. The fifth column 
shows the effects the proposed reduction of 1.72 percent to the 
national, standardized 60-day episode payment amount to account for 
nominal case-mix growth. The sixth column shows the effects of the 
rebasing adjustments to the national, standardized 60-day episode 
payment rate, the national per-visit payment rates, and NRS conversion 
factor. For CY 2016, the average impact for all HHAs due to the effects 
of rebasing is an estimated 2.5 percent decrease in payments. The 
seventh column shows the effects of the CY 2016 home health payment 
update percentage (the home health market basket update adjusted for 
multifactor productivity as discussed in section III.C.1. of this 
proposed rule).
    The last column shows the combined effects of all the proposed 
policies for HH PPS. Overall, it is projected that aggregate payments 
in CY 2016 will decrease by 1.8 percent. As illustrated in Table 24, 
the combined effects of all of the changes vary by specific types of 
providers and by location. We note that some individual HHAs within the 
same group may experience different impacts on payments than others due 
to the distributional impact of the CY 2016 wage index, the extent to 
which HHAs had episodes in case-mix groups where the case-mix weight 
decreased for CY 2016 relative to CY 2015, the percentage of total HH 
PPS payments that were subject to the low-utilization payment 
adjustment (LUPA) or paid as outlier payments, and the degree of 
Medicare utilization.

                            TABLE 24--Estimated Home Health Agency Impacts by Facility Type and Area of the Country, CY 2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              60-day
                                                           CY 2016 wage   CY 2016  case-   episode rate                     HH payment
                                              Number of      index \1\     mix  weights    nominal case-   Rebasing \3\       update           Total
                                               agencies      (percent)    \2\  (percent)   mix reduction     (percent)    percentage \4\     (percent)
                                                                                             (percent)                       (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Agencies...............................       11,432             0.0             0.0            -1.6            -2.5             2.3            -1.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Facility Type and Control
--------------------------------------------------------------------------------------------------------------------------------------------------------
Free-Standing/Other Vol/NP.................        1,054             0.2            -0.2            -1.6            -2.5             2.3            -1.8
Free-Standing/Other Proprietary............        8,917             0.0             0.0            -1.6            -2.5             2.3            -1.8
Free-Standing/Other Government.............          379            -0.2            -0.1            -1.6            -2.5             2.3            -2.1
Facility-Based Vol/NP......................          741             0.1            -0.2            -1.6            -2.5             2.3            -1.9
Facility-Based Proprietary.................          116            -0.3            -0.1            -1.6            -2.5             2.3            -2.2
Facility-Based Government..................          225            -0.2            -0.2            -1.6            -2.5             2.3            -2.2
Subtotal: Freestanding.....................       10,350             0.0             0.0            -1.6            -2.5             2.3            -1.8
Subtotal: Facility-based...................        1,082             0.0            -0.2            -1.6            -2.5             2.3            -2.0
Subtotal: Vol/NP...........................        1,795             0.1            -0.2            -1.6            -2.5             2.3            -1.9
Subtotal: Proprietary......................        9,033             0.0             0.0            -1.6            -2.5             2.3            -1.8
Subtotal: Government.......................          604            -0.2            -0.1            -1.6            -2.5             2.3            -2.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Facility Type and Control: Rural
--------------------------------------------------------------------------------------------------------------------------------------------------------
Free-Standing/Other Vol/NP.................          188            -0.8            -0.2            -1.6            -2.4             2.3            -2.7
Free-Standing/Other Proprietary............          143            -0.2            -0.1            -1.6            -2.5             2.3            -2.1
Free-Standing/Other Government.............          448            -0.5            -0.1            -1.6            -2.5             2.3            -2.4
Facility-Based Vol/NP......................          231            -0.6            -0.2            -1.6            -2.5             2.3            -2.6
Facility-Based Proprietary.................           25             0.0            -0.2            -1.6            -2.5             2.3            -2.0
Facility-Based Government..................          136            -0.4            -0.1            -1.6            -2.5             2.3            -2.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Facility Type and Control: Urban
--------------------------------------------------------------------------------------------------------------------------------------------------------
Free-Standing/Other Vol/NP.................          912             0.2            -0.2            -1.6            -2.5             2.3            -1.8
Free-Standing/Other Proprietary............        8,604             0.0             0.0            -1.6            -2.5             2.3            -1.8
Free-Standing/Other Government.............          152            -0.4            -0.1            -1.6            -2.5             2.3            -2.3
Facility-Based Vol/NP......................          510             0.2            -0.2            -1.6            -2.5             2.3            -1.8
Facility-Based Proprietary.................           91            -0.3            -0.1            -1.6            -2.4             2.3            -2.1
Facility-Based Government..................           89            -0.1            -0.2            -1.6            -2.5             2.3            -2.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Facility Location: Urban or Rural
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rural......................................        1,074            -0.5            -0.1            -1.6            -2.5             2.3            -2.4
Urban......................................       10,358             0.1             0.0            -1.6            -2.5             2.3            -1.7
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 39909]]

 
                                                        Facility Location: Region of the Country
--------------------------------------------------------------------------------------------------------------------------------------------------------
Northeast..................................          837             0.2            -0.1            -1.6            -2.4             2.3             2.3
Midwest....................................        3,044            -0.1             0.0            -1.6            -2.5             2.3            -1.9
South......................................        5,623            -0.1             0.0            -1.6            -2.5             2.3            -1.9
West.......................................        1,837             0.4            -0.1            -1.6            -2.5             2.3            -1.5
Other......................................           91             0.4             0.1            -1.6            -2.5             2.3            -1.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                Facility Location: Region of the Country (Census Region)
--------------------------------------------------------------------------------------------------------------------------------------------------------
New England................................          296             0.2            -0.1            -1.6            -2.4             2.3             2.3
Mid Atlantic...............................          541             0.3            -0.1            -1.6            -2.5             2.3            -1.6
East North Central.........................        2,407            -0.1             0.0            -1.6            -2.6             2.3            -2.0
West North Central.........................          637             0.0             0.0            -1.6            -2.5             2.3            -1.8
South Atlantic.............................        1,826             0.2             0.1            -1.6            -2.5             2.3            -1.5
East South Central.........................          444            -0.4             0.0            -1.6            -2.6             2.3            -2.3
West South Central.........................        3,353            -0.2            -0.1            -1.6            -2.5             2.3            -2.1
Mountain...................................          602             0.2             0.0            -1.6            -2.5             2.3            -1.6
Pacific....................................        1,235             0.5            -0.2            -1.6            -2.5             2.3            -1.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Facility Size (Number of 1st Episodes)
--------------------------------------------------------------------------------------------------------------------------------------------------------
< 100 episodes.............................        3,171             0.1            -0.1            -1.6            -2.5             2.3             2.3
100 to 249.................................        2,861             0.1             0.0            -1.6            -2.5             2.3            -1.7
250 to 499.................................        2,425             0.1             0.0            -1.6            -2.5             2.3            -1.7
500 to 999.................................        1,679             0.0             0.0            -1.6            -2.5             2.3            -1.8
1,000 or More..............................        1,296             0.0            -0.1            -1.6            -2.5             2.3            -1.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: CY 2014 Medicare claims data for episodes ending on or before December 31, 2014 (as of December 31, 2014) for which we had a linked OASIS
  assessment.
 
\1\ The impact of the proposed CY 2016 home health wage index is offset by the wage index budget neutrality factor described in section III.C.3 of this
  proposed rule.
\2\ The impact of the proposed CY 2016 home health case-mix weights reflects the recalibration of the case-mix weights as outlined in section III.B.1 of
  this proposed rule offset by the case-mix weights budget neutrality factor described in section III.C.3 of this proposed rule.
\3\ The impact of rebasing includes the rebasing adjustments to the national, standardized 60-day episode payment rate (-2.74 percent after the CY 2016
  payment rate was adjusted for the wage index and case-mix weight budget neutrality factors and the nominal case-mix reduction), the national per-visit
  rates (+2.9 percent), and the NRS conversion factor (-2.82 percent). The estimated impact of the NRS conversion factor rebasing adjustment is an
  overall -0.01 percent decrease in estimated payments to HHAs
\4\ The CY 2016 home health payment update percentage reflects the home health market basket update of 2.9 percent, reduced by a 0.6 percentage point
  multifactor productivity (MFP) adjustment as required under section 1895(b)(3)(B)(vi)(I) of the Act, as described in section III.C.1 of this proposed
  rule.
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;
Other=Guam, Puerto Rico, Virgin Islands

2. Proposed HHVBP Model
    Table 25 displays our analysis of the distribution of possible 
payment adjustments at the 5 percent, 6 percent and 8 percent rates 
that are being proposed in the model based on 2013-2014 data, providing 
information on the estimated impact of this proposed rule. We note that 
this impact analysis is based on the aggregate value of all 9 states 
identified in section IV.C.2. of this proposed rule by applying the 
proposed state selection methodology.
    Table 26 displays our analysis of the distribution of possible 
payment adjustments based on 2013-2014 data, providing information on 
the estimated impact of this proposed rule. We note that this impact 
analysis is based on the aggregate value of all nine states (identified 
in section IV.C.2. of this proposed rule) by applying the proposed 
state selection methodology.
    If our methodology is finalized as proposed, all Medicare-certified 
HHAs that provide services in Massachusetts, Maryland, North Carolina, 
Florida, Washington, Arizona, Iowa, Nebraska, and Tennessee will be 
required to compete in this model. However, should the methodology we 
propose in this rule change as a result of comments received during the 
rulemaking process, it could result in different states being selected 
for the model. In such an event, we would apply the final methodology 
and announce the selected states in the final rule. The estimates 
presented here may also change accordingly.
    Value-based incentive payment adjustments for the estimated 1,900 
plus HHAs in the proposed selected states that would compete in the 
HHVBP model are stratified by the size as defined in section F. For 
example, Arizona has 31 HHAs that do not provide services to enough 
beneficiaries to be required to complete CAHPS

[[Page 39910]]

surveys and therefore are considered lower-volume under the proposed 
model. Using 2013-2014 data and the highest payment adjustment of 5 
percent (which we propose to be applied in CYs 2021 and 2022), based on 
10 process and outcome measures currently available on home health 
compare, the small HHAs in Arizona would have a mean payment adjustment 
of positive 0.64 percent. Only 10 percent of home health agencies would 
be subject to downward payment adjustments of more than -3.3 percent.
    The next columns provide the distribution of scores by percentile; 
we see that the value-based incentive percentage payments for home 
health agencies in Arizona range from -3.3 percent at the 10th 
percentile to +5.0 percent at the 90th percentile, while the value-
based incentive payment at the 50th percentile is 0.56 percent.
    The smaller-volume HHA cohorts table identifies that some 
consideration will have to be made for MD, WA and TN where there are 
too few HHAs in the smaller-volume cohort and would be included in the 
larger-volume cohort without being measured on HHCAHPS.
    Table 27 provides the payment adjustment distribution based on 
proportion of dual-eligible beneficiaries, average case mix (using HCC 
scores), proportion that reside in rural areas, as well as HHA 
organizational status. Besides the observation that higher proportion 
of dually-eligible beneficiaries serviced is related to better 
performance, the payment adjustment distribution is consistent with 
respect to these four categories.
    The TPS score and the payment methodology at the state and size 
level were calculated so that each home health agency's payment 
adjustment was calculated as it would be in the model. Hence, the 
values of each separate analysis in the tables are representative of 
what they would be if the baseline year was 2013 and the performance 
year was 2014.
    There were 1,931 HHAs in the nine selected states out of 1,991 HHAs 
that were found in the HHA data sources which yielded the sufficient 
measures to be included in the model. It is expected that a certain 
number of HHAs will not be subject to the payment adjustment because 
they may be servicing too small of a population to report on an 
adequate number of measures to calculate a TPS.

          Table 25--Adjustment Distribution by Percentile level of Quality Total Performance Score at Different Model Payment Adjustment Rates
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Lowest quality providers                         Highest quality providers
                                                      --------------------------------------------------------------------------------------------------
     Payment adjustment  distribution         Range      Lowest                                                                                 Highest
                                                          10th       20th       30th       40th       50th       60th       70th       80th       10th
                                                        pctile*    pctile*    pctile*    pctile*    pctile*    pctile*    pctile*    pctile*    pctile*
--------------------------------------------------------------------------------------------------------------------------------------------------------
5% Payment Adjustment for Year 1 and Year        7.69      -2.98      -2.04      -1.23      -0.54       0.15       0.83       1.74       3.08       4.71
 2 of Model...............................
6% Payment Adjustment for Year 3 of Model.       9.24      -3.60      -2.46      -1.50      -0.66       0.18       1.02       2.10       3.72       5.64
8% Payment Adjustment for Year 4 and Year       12.31      -4.77      -3.27      -1.97      -0.86       0.25       1.33       2.78       4.92       7.54
 5 of Model...............................
--------------------------------------------------------------------------------------------------------------------------------------------------------
*pctile = percentile


                                             Table 26--HHA Cohort Payment Adjustment Distributions by State
                                                        [Based on a 5 percent payment adjustment]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Average
                                     Number of      payment
               State                   HHAs       adjustment       10%       20%       30%       40%       50%       60%       70%       80%       90%
                                                      (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Smaller-Volume HHA Cohort by State
--------------------------------------------------------------------------------------------------------------------------------------------------------
AZ................................          31            0.64     -3.33     -2.72     -2.17     -0.82      0.56      1.31      3.36      4.75      5.00
FL................................         353            0.44     -3.01     -1.76     -1.00     -0.39      0.21      0.94      1.84      3.04      4.38
IA................................          23            0.17     -3.14     -2.53     -2.01     -1.41     -0.97      0.31      2.74      3.25      5.00
MA................................          29            0.39     -3.68     -1.75     -0.70     -0.10      0.39      0.79      1.33      2.46      4.68
MD................................           2           -0.47     -2.71     -2.71     -2.71     -2.71     -0.47      1.78      1.78      1.78      1.78
NC................................           9            0.72     -2.38     -1.84     -1.41     -1.23     -0.68      0.34      3.67      5.00      5.00
NE................................          16           -0.51     -2.26     -1.80     -1.64     -1.43     -1.13     -0.44      0.40      0.42      1.46
TN................................           2            2.48     -0.05     -0.05     -0.05     -0.05      2.48      5.00      5.00      5.00      5.00
WA................................           1            0.00      0.00      0.00      0.00      0.00      0.00      0.00      0.00      0.00      0.00
                                   ---------------------------------------------------------------------------------------------------------------------
                                                       Larger-volume HHA Cohort by State
--------------------------------------------------------------------------------------------------------------------------------------------------------
AZ................................          82            0.39     -3.31     -2.75     -2.19     -0.81      0.56      1.31      3.38      4.75      5.00
FL................................         672            0.41     -3.00     -1.75     -1.60     -0.38      0.19      0.94      1.81      3.06      4.38
IA................................         129           -0.31     -3.13     -2.31     -2.70     -1.13     -0.56      0.13      0.56      1.19      3.50
MA................................         101            0.64     -2.88     -2.19     -1.50     -0.38      0.63      1.25      2.06      3.81      4.88
MD................................          50            0.41     -2.75     -2.06     -2.30     -0.88      0.00      0.81      2.38      2.94      4.13
NC................................         163            0.65     -2.75     -1.56     -1.30     -0.06      0.38      0.94      1.88      3.06      4.88
NE................................          48            0.37     -2.63     -2.19     -1.40     -0.56     -0.19      0.50      1.31      2.31      5.00

[[Page 39911]]

 
TN................................         134            0.39     -2.56     -1.81     -2.00     -0.63     -0.06      0.81      1.44      2.50      4.69
WA................................          55            0.39     -2.75     -1.63     -2.00     -0.94     -0.19      0.69      1.94      3.31      4.06
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                              Table 27--Payment Adjustment Distributions by Characteristics
                                                        [based on a 5 percent payment adjustment]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Number of
            Percentage Dually-eligible                 HHAs        10%       20%       30%       40%       50%       60%       70%       80%       90%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Low % Dually-eligible.............................         498     -3.21     -2.57     -1.86     -1.29     -0.60      0.12      0.78      2.13      3.97
Medium % Dually-eligible..........................         995     -2.91     -2.10     -1.33     -0.63      0.01      0.67      1.39      2.47      4.12
High % Dually-eligible............................         498     -2.46     -1.04     -0.24      0.59      1.29      2.34      3.38      4.53      5.00
Acuity (HCC):
    Low Acuity....................................         499     -2.83     -1.76     -0.94     -0.23      0.46      1.16      2.03      3.40      5.00
    Middle acuity.................................         993     -3.05     -2.08     -1.24     -0.50      0.19      0.90      1.71      2.81      4.51
    High Acuity...................................         499     -3.04     -2.04     -1.29     -0.51      0.26      1.06      2.00      3.16      4.91
% Rural Beneficiaries:
    All non-rural.................................         800     -2.81     -1.51     -0.66      0.08      0.78      1.54      2.64      3.94      5.00
    Up to 35% rural...............................         925     -3.12     -2.37     -1.71     -1.01     -0.42      0.32      1.18      2.24      3.97
    over 35% rural................................         250     -2.91     -2.01     -1.17     -0.62     -0.11      0.56      1.32      2.86      4.58
Organizational Type:
    Church........................................          62     -2.92     -2.04     -1.33     -0.46      0.12      0.64      1.30      2.58      4.22
    Private Not-For-Profit........................         194     -2.78     -1.74     -0.97     -0.42      0.27      0.85      1.77      2.89      4.55
    Other.........................................          93     -2.62     -1.68     -0.95     -0.38      0.36      1.08      1.86      3.09      4.63
    Private For-Profit............................        1538     -3.09     -2.08     -1.27     -0.53      0.24      1.02      1.88      3.02      4.83
    Federal.......................................          83     -2.44     -1.61     -0.67      0.01      0.53      1.13      1.80      3.09      4.58
    State.........................................           5     -3.03     -1.11      -.37     -0.01      0.24      0.42      1.66      2.96      3.24
    Local.........................................          61     -2.30     -1.28     -0.48      0.16      0.98      1.91      2.88      4.11      5.00
--------------------------------------------------------------------------------------------------------------------------------------------------------

D. Alternatives Considered

    As described in section III.B.2 of this proposed rule, we 
considered proposing to reduce the national, standardized 60-day 
episode payment rate by 3.41 percent in CY 2016 to account for nominal 
case-mix growth between CY 2012 and CY 2014. If we were to reduce the 
national, standardized 60-day episode payment rate by 3.41 percent, we 
estimate that the aggregate impact would be a net decrease of $650 
million in payments to HHAs, resulting from a $470 million decrease (-
2.5 percent) due to the third year of the Affordable Care Act mandated 
rebasing adjustments, a $420 million increase (2.3 percent) due to the 
home health payment update percentage, and a $600 million decrease due 
to reducing the national, standardized 60-day episode payment rate by 
3.41 percent. However, instead of proposing a one-time reduction in the 
national, standardized 60-day episode payment rate of 3.41 percent in 
CY 2016 to account for nominal case-mix growth from CY 2012 through CY 
2014, we proposed to reduce the national, standardized 60-day episode 
payment rate by 1.72 percent in CY 2016 and 1.72 percent in CY 2017 to 
account for nominal case-mix growth from CY 2012 through CY 2014 as 
outlined in section III.B.2 of this proposed rule.
    Section 3131(a) of the Affordable Care Act mandates that starting 
in CY 2014, the Secretary must apply an adjustment to the national, 
standardized 60-day episode payment rate and other amounts applicable 
under section 1895(b)(3)(A)(i)(III) of the Act to reflect factors such 
as changes in the number of visits in an episode, the mix of services 
in an episode, the level of intensity of services in an episode, the 
average cost of providing care per episode, and other relevant factors. 
In addition, section 3131(a) of the Affordable Care Act mandates that 
rebasing must be phased-in over a 4-year period in equal increments, 
not to exceed 3.5 percent of the amount (or amounts) as of the date of 
enactment (2010) under section 1895(b)(3)(A)(i)(III) of the Act, and be 
fully implemented in CY 2017. Therefore, in the CY 2014 HH PPS final 
rule (78 FR 77256), we finalized rebasing adjustments to the national, 
standardized 60-day episode payment amount, the national per-visit 
rates and the NRS conversion factor. As we noted in the CY 2014 HH PPS 
final rule, because section 3131(a) of the Affordable Care Act requires 
a four year phase-in of rebasing, in equal increments, to start in CY 
2014 and be fully implemented in CY 2017, we do not have the discretion 
to delay, change, or eliminate the rebasing adjustments once we have 
determined that rebasing is necessary (78 FR 72283).
    Section 1895(b)(3)(B) of the Act requires that the standard 
prospective payment amounts for CY 2016 be increased by a factor equal 
to the applicable HH market basket update for those HHAs that submit 
quality data as required by the Secretary. For CY 2016, section 3401(e) 
of the Affordable Care Act, requires that, in CY 2015 (and in 
subsequent calendar years), the market basket update under the HHA 
prospective payment system, as described in section 1895(b)(3)(B) of 
the Act, be annually adjusted by changes in economy-wide productivity. 
Beginning in CY 2015, section 1895(b)(3)(B)(vi)(I) of the Act, as 
amended by section 3401(e) of the Affordable Care Act, requires the 
application of the productivity adjustment described in section 
1886(b)(3)(B)(xi)(II) of the Act to the HHA PPS for CY 2015 and each 
subsequent CY. The -0.6 percentage point productivity adjustment to the

[[Page 39912]]

proposed CY 2016 home health market basket update (2.9 percent), is 
discussed in the preamble of this rule and is not discretionary as it 
is a requirement in section 1895(b)(3)(B)(vi)(I) of the Act (as amended 
by the Affordable Care Act).
    We invite comments on the alternatives discussed in this analysis.

E. Accounting Statement and Table

    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars_a004_a-4), in Table 27, we have 
prepared an accounting statement showing the classification of the 
transfers and costs associated with the HH PPS provisions of this 
proposed rule. Table 27 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 for the HH PPS provisions.

   Table 27--Accounting Statement: HH PPS Classification of Estimated
            Transfers and Costs, From the CYs 2015 to 2016 *
------------------------------------------------------------------------
                 Category                             Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............  -$350 million.
From Whom to Whom?........................  Federal Government to HHAs.
------------------------------------------------------------------------
* The estimates reflect 2016 dollars.

    Table 28 provides our best estimate of the decrease in Medicare 
payments under the proposed HHVBP model.

 Table 28--Accounting Statement: HHVBP Model Classification of Estimated
                  Transfers and Costs for CY 2018-2022
------------------------------------------------------------------------
                 Category                             Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............  -$380 million.
From Whom to Whom?........................  Federal Government to
                                             Hospitals and SNFs.
------------------------------------------------------------------------

F. Conclusion

1. HH PPS
    In conclusion, we estimate that the net impact of the HH PPS 
proposals in this rule is a decrease in Medicare payments to HHAs of 
$350 million for CY 2016. The $350 million decrease in estimated 
payments to HHAs for CY 2016 reflects the distributional effects of the 
2.3 percent CY 2016 HH payment update percentage ($420 million 
increase), the proposed reduction to the national, standardized 60-day 
episode payment rate in CY 2016 of 1.72 percent to account for nominal 
case-mix growth ($300 million decrease), and the third year of the 4-
year phase-in of the rebasing adjustments required by section 3131(a) 
of the Affordable Care Act of -2.5 percent ($470 million decrease). 
This analysis, together with the remainder of this preamble, provides 
an initial Regulatory Flexibility Analysis.
2. Proposed HHVBP Model
    In conclusion, we estimate there will be no net impact of the 
proposals in this rule in Medicare payments to HHAs for CY 2016. 
However, the overall economic impact of the HHVBP model provision is an 
estimated $380 million in total savings from a reduction in unnecessary 
hospitalizations and SNF usage as a result of greater quality 
improvements in the HH industry over the life of the proposed model.

IX. Federalism Analysis

    Executive Order 13132 on Federalism (August 4, 1999) establishes 
certain requirements that an agency must meet when it promulgates a 
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 will 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, and Reporting and recordkeeping requirements.

42 CFR Part 484

    Health facilities, Health professions, Medicare, and Reporting and 
recordkeeping requirements.

    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services proposes to amend 42 CFR chapter IV as set forth 
below:

PART 409--HOSPITAL INSURANCE BENEFITS

0
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).

0
2. Section 409.43 is amended by revising paragraph (e)(1)(iii) to read 
as follows:


Sec.  409.43  Plan of care requirements.

* * * * *
    (e) * * *
    (1) * * *
    (iii) Discharge with goals met and/or no expectation of a return to 
home health care and the patient returns to home health care during the 
60 day episode.
* * * * *

PART 424--CONDITIONS FOR MEDICARE PAYMENT

0
3. 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).


Sec.  424.22  [Amended]

0
4. Section 424.22 is amended by redesignating paragraph (a)(1)(v)(B)(1) 
as paragraph (a)(2) and by removing reserved paragraph (a)(1)(v)(B)(2).

PART 484--HOME HEALTH SERVICES

0
5. 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)) unless otherwise indicated.

0
6. Section 484.205 is amended by revising paragraphs (d) and (e) to 
read as follows:


Sec.  484.205  Basis of payment.

* * * * *
    (d) Partial episode payment adjustment. (1) An HHA receives a 
national 60-day episode payment of a predetermined rate for home health 
services unless CMS determines an intervening event, defined as a 
beneficiary elected transfer or discharge with goals met or no 
expectation of return to home health and the beneficiary returned to 
home health during the 60-day episode, warrants a new 60-day episode 
for purposes of payment. A start of care OASIS assessment and physician 
certification of the new plan of care are required.
    (2) The PEP adjustment will not apply in situations of transfers 
among HHAs of common ownership. Those situations will be considered 
services provided under arrangement on behalf of the originating HHA by 
the receiving HHA with the common ownership interest for the balance of 
the 60-day episode. The common ownership exception to the transfer PEP 
adjustment does not apply if the beneficiary moves to a different MSA 
or Non-MSA during the 60-day

[[Page 39913]]

episode before the transfer to the receiving HHA. The transferring HHA 
in situations of common ownership not only serves as a billing agent, 
but must also exercise professional responsibility over the arranged-
for services in order for services provided under arrangements to be 
paid.
    (3) If the intervening event warrants a new 60-day episode payment 
and a new physician certification and a new plan of care, the initial 
HHA receives a partial episode payment adjustment reflecting the length 
of time the patient remained under its care. A partial episode payment 
adjustment is determined in accordance with Sec.  484.235.
    (e) Outlier payment. An HHA receives a national 60-day episode 
payment of a predetermined rate for a home health service, unless the 
imputed cost of the 60-day episode exceeds a threshold amount. The 
outlier payment is defined to be a proportion of the imputed costs 
beyond the threshold. An outlier payment is a payment in addition to 
the national 60-day episode payment. The total of all outlier payments 
is limited to no more than 2.5 percent of total outlays under the HHA 
PPS. An outlier payment is determined in accordance with Sec.  484.240.
0
7. Section 484.220 is amended by revising paragraph (a)(3) and adding 
paragraphs (a)(4) through (6) to read as follows:


Sec.  484.220  Calculation of the adjusted national prospective 60-day 
episode payment rate for case-mix and area wage levels.

* * * * *
    (a) * * *
    (3) For CY 2011, the adjustment is 3.79 percent.
    (4) For CY 2012, the adjustment is 3.79 percent.
    (5) For CY 2013, the adjustment is 1.32 percent.
    (6) For CY 2016 and CY 2017, the adjustment is 1.72 percent in each 
year.
* * * * *
0
8. Section 484.225 is revised to read as follows:


Sec.  484.225  Annual update of the unadjusted national prospective 60-
day episode payment rate.

    (a) CMS updates the unadjusted national 60-day episode payment rate 
on a fiscal year basis (as defined in section 1895(b)(1)(B) of the 
Act).
    (b) For 2007 and subsequent calendar years, in accordance with 
section 1895(b)(3)(B)(v) of the Act, in the case of a home health 
agency that submits 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.
    (c) For 2007 and subsequent calendar years, in accordance with 
section 1895(b)(3)(B)(v) of the Act, in the case of a home health 
agency 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 2 percentage 
points. Any reduction of the percentage change will apply only to the 
calendar year involved and will not be taken into account in computing 
the prospective payment amount for a subsequent calendar year.


Sec.  484.230  [Amended]

0
9. Section 484.230 is amended by removing the last sentence.
0
10. Section 484.240 is amended by revising paragraphs (b) and (e) and 
adding paragraph (f) to read as follows:


Sec.  484.240  Methodology used for the calculation of the outlier 
payment.

* * * * *
    (b) The outlier threshold for each case-mix group is the episode 
payment amount for that group, or the PEP adjustment amount for the 
episode, plus a fixed dollar loss amount that is the same for all case-
mix groups
* * * * *
    (e) The fixed dollar loss amount and the loss sharing proportion 
are chosen so that the estimated total outlier payment is no more than 
2.5 percent of total payment under home health PPS.
    (f) The total amount of outlier payments to a specific home health 
agency for a year may not exceed an amount equal to 10 percent of the 
total payments to the specific agency under home health PPS for the 
year.


Sec.  484.245  [Removed and Reserved]

0
11. Section 484.245 is removed and reserved.


Sec.  484.250  [Amended]

0
12. Section Sec.  484.250(a)(2) is amended by removing the reference 
``Sec.  484.225(i)'' and adding in its place the reference ``Sec.  
484.225(c)''.
0
13. Subpart F is added to read as follows:
Subpart F--Home Health Value-Based Purchasing (HHVBP) Model Components 
for Medicare-Certified Home Health Agencies Within State Boundaries
Sec.
484.300 Basis and scope of subpart.
484.305 Definitions.
484.310 Applicability of the Home Health Value-Based Purchasing 
(HHVBP) model.
484.315 Data reporting for measures and evaluation under the Home 
Health Value-Based Purchasing (HHVBP) model.
484.320 Calculation of the Total Performance Score.
484.325 Payments for home health services under Home Health Value-
Based Purchasing (HHVBP) model.
484.330 Process for determining and applying the value-based payment 
adjustment under the Home Health Value-Based Purchasing (HHVBP) 
model.

Subpart F--Home Health Value-Based Purchasing (HHVBP) Model 
Components for Medicare-Certified Home Health Agencies Within State 
Boundaries


Sec.  484.300  Basis and scope of subpart.

    This subpart is established under section 1115A(a)(1) of the Act 
(42 U.S.C. 1315a), which authorizes the Secretary to test innovative 
payment and service delivery models to improve coordination, quality, 
and efficiency of health care services furnished under Title XVIII.


Sec.  484.305  Definitions.

    As used in this subpart--
    Applicable measure means a measure for which the Medicare-certified 
HHA has provided 20 home health episodes of care per year.
    Applicable percent means a maximum upward or downward adjustment 
for a given performance year, not to exceed the following:
    (1) For CY 2018 and 2019, 5 percent.
    (2) For CY 2020, 6 percent.
    (3) For CY 2021 and 2022, 8 percent.
    Benchmark refers to the mean of the top decile of Medicare-
certified HHA performance on the specified quality measure during the 
baseline period, calculated separately for the larger-volume and 
smaller-volume cohorts within each state.
    Home health prospective payment system (HH PPS) refers to the basis 
of payment for home health agencies as set forth in Sec. Sec.  484.200 
through 484.245.
    Larger-volume cohort means the group of Medicare-certified home 
health agencies within the boundaries of selected states that are 
participating in HHCAHPs in accordance with Sec.  484.250.
    Linear exchange function is the means to translate a Medicare-
certified HHA's Total Performance Score into a value-based payment 
adjustment percentage.
    Medicare-certified home health agency means an agency:

[[Page 39914]]

    (1) That has a current Medicare certification; and,
    (2) Is being reimbursed by CMS for home health care delivered 
within any of the states specified in accordance with CMS's selection 
methodology.
    New measures means those measures to be reported by Medicare-
certified HHAs under the HHVBP model that are not otherwise reported by 
Medicare-certified HHAs to CMS and were identified to fill gaps to 
cover National Quality Strategy Domains not completely covered by 
existing measures in the home health setting.
    Payment adjustment means the amount by which a Medicare-certified 
HHA's final claim payment amount under the HH PPS is changed in 
accordance with the methodology described in Sec.  484.325.
    Performance period means the time period during which data are 
collected for the purpose of calculating a Medicare-certified HHA's 
performance on measures.
    Selected state(s) means those nine states that were randomly 
selected to compete/participate in the HHVBP model via a computer 
algorithm designed for random selection.
    Smaller-volume cohort means the group of Medicare-certified home 
health agencies within the boundaries of selected states that are 
exempt from participation in HHCAHPs in accordance with Sec.  484.250.
    Starter set means the quality measures selected for the first year 
of this model.
    Total Performance Score means the numeric score ranging from 0 to 
100 awarded to each Medicare-certified HHA based on its performance 
under the HHVBP model.
    Value-based purchasing means measuring, reporting, and rewarding 
excellence in health care delivery that takes into consideration 
quality, efficiency, and alignment of incentives. Effective health care 
services and high performing health care providers may be rewarded with 
improved reputations through public reporting, enhanced payments 
through differential reimbursements, and increased market share through 
purchaser, payer, and/or consumer selection.


Sec.  484.310  Applicability of the Home Health Value-Based Purchasing 
(HHVBP) model.

    (a) General rule. The HHVBP model applies to all Medicare-certified 
home health agencies (HHAs) in selected states.
    (b) Nine states are selected in accordance with CMS's selection 
methodology. All Medicare-certified HHAs that provide services in 
Massachusetts, Maryland, North Carolina, Florida, Washington, Arizona, 
Iowa, Nebraska, and Tennessee will be required to compete in this 
model.


Sec.  484.315  Data reporting for measures and evaluation under the 
Home Health Value-Based Purchasing (HHVBP) model.

    (a) Medicare-certified home health agencies will be evaluated using 
a starter set of quality measures.
    (b) Medicare-certified home health agencies in selected states will 
be required to report information on New Measures, as determined 
appropriate by the Secretary, to CMS in the form, manner, and at a time 
specified by the Secretary.
    (c) Medicare-certified home health agencies in selected states will 
be required to collect and report such information as the Secretary 
determines is necessary for purposes of monitoring and evaluating the 
HHVBP model under section 1115A(b)(4) of the Act (42 U.S.C. 1315a).


Sec.  484.320  Calculation of the Total Performance Score.

    A Medicare-certified home health agency's Total Performance Score 
for a model year is calculated as follows:
    (a) CMS will award points to the Medicare-certified home health 
agency for performance on each of the applicable measures in the 
starter set, other than New Measures.
    (b) CMS will award points to the Medicare-certified home health 
agency for reporting on each of the New Measures in the starter set, 
worth up to ten percent of the Total Performance Score.
    (c) CMS will sum all points awarded for each applicable measure in 
the starter set, weighted equally at the individual measure level, to 
calculate a value worth up to 90 percent of the Total Performance 
Score.
    (d) The sum of the points awarded to a Medicare-certified HHA for 
each applicable measure in the starter set and the points awarded to a 
Medicare-certified HHA for reporting data on each New Measure is the 
Medicare-certified HHA's Total Performance Score for the calendar year.


Sec.  484.325  Payments for home health services under Home Health 
Value-Based Purchasing (HHVBP) model.

    CMS will determine a payment adjustment up to the maximum 
applicable percentage, upward or downward, under the HHVBP model for 
each Medicare-certified home health agency based on the agency's Total 
Performance Score using a linear exchange function. Payment adjustments 
made under the HHVBP model will be calculated as a percentage of 
otherwise-applicable payments for home health services provided under 
section 1895 of the Act (42 U.S.C. 1395fff).


Sec.  484.330  Process for determining and applying the payment 
adjustment under the Home Health Value-Based Purchasing (HHVBP) model.

    (a) General. Medicare-certified home health agencies will be ranked 
within the larger-volume and smaller-volume cohorts in selected states 
based on the performance standards that apply to the HHVBP model for 
the baseline year, and CMS will make value-based payment adjustments to 
the Medicare-certified HHAs as specified in this section.
    (b) Calculation of the value-based payment adjustment amount. The 
value-based payment adjustment amount is calculated by multiplying the 
Home Health Prospective Payment final claim payment amount as 
calculated in accordance with Sec.  484.205 by the payment adjustment 
percentage.
    (c) Calculation of the payment adjustment percentage. The payment 
adjustment percentage is calculated as the product of: The applicable 
percent as defined in Sec.  484.320, the Medicare-certified HHA's Total 
Performance Score divided by 100, and the linear exchange function 
slope.

    Dated: June 25, 2015.
Andrew M. Slavitt,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: June 26, 2015.
Sylvia M. Burwell,
Secretary.
[FR Doc. 2015-16790 Filed 7-6-15; 4:15 pm]
 BILLING CODE 4120-01-P