[Federal Register Volume 81, Number 128 (Tuesday, July 5, 2016)]
[Proposed Rules]
[Pages 43714-43788]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-15448]



[[Page 43713]]

Vol. 81

Tuesday,

No. 128

July 5, 2016

Part II





Department of Health and Human Services





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





Centers for Medicare & Medicaid Services





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





42 CFR Parts 409 and 484





Medicare and Medicaid Programs; CY 2017 Home Health Prospective Payment 
System Rate Update; Home Health Value-Based Purchasing Model; and Home 
Health Quality Reporting Requirements; Proposed Rule

  Federal Register / Vol. 81 , No. 128 / Tuesday, July 5, 2016 / 
Proposed Rules  

[[Page 43714]]


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

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 409 and 484

[CMS-1648-P]
RIN 0938-AS80


Medicare and Medicaid Programs; CY 2017 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.

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

SUMMARY: This proposed rule would update the Home Health Prospective 
Payment System (HH PPS) payment rates, including the national, 
standardized 60-day episode payment rates, the national per-visit 
rates, and the non-routine medical supply (NRS) conversion factor, 
effective for home health episodes of care ending on or after January 
1, 2017. This proposed rule also: Implements the last year of the 4-
year phase-in of the rebasing adjustments to the HH PPS payment rates; 
updates the HH PPS case-mix weights using the most current, complete 
data available at the time of rulemaking; implements the 2nd-year of a 
3-year phase-in of a reduction to the national, standardized 60-day 
episode payment to account for estimated case-mix growth unrelated to 
increases in patient acuity (that is, nominal case-mix growth) between 
CY 2012 and CY 2014; proposes changes to the methodology used to 
calculate outlier payments (with regards to payments made under the HH 
PPS for high-cost ``outlier'' episodes of care (that is, episodes of 
care with unusual variations in the type or amount of medically 
necessary care)); proposes changes in payment for Negative Pressure 
Wound Therapy (NPWT) performed using a disposable device for patient's 
under a home health plan of care; discusses our efforts to monitor the 
potential impacts of the rebasing adjustments mandated; includes an 
update on subsequent research and analysis as a result of the findings 
from the home health study; solicits comments on a potential process 
for grouping HH PPS claims centrally during claims processing; and 
proposes changes to the Home Health Value-Based Purchasing (HHVBP) 
Model, which was implemented on January 1, 2016; and proposes updates 
to the Home Health Quality Reporting Program (HH QRP).

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on August 26, 2016.

ADDRESSES: In commenting, please refer to file code CMS-1648-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-1648-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-1648-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: For general information about the HH 
PPS, please send your inquiry via email to: 
[email protected].
    For information about the HHVBP Model, please send your inquiry via 
email to: [email protected].
    Michelle Brazil, (410) 786-1648 for information about the HH 
quality reporting program.
    Lori Teichman, (410) 786-6684, for information about HHCAHPS.

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 at 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
III. Proposed Provisions of the Home Health Prospective Payment 
System
    A. Monitoring for Potential Impacts--Affordable Care Act 
Rebasing Adjustments
    B. Proposed CY 2017 HH PPS Case-Mix Weights
    C. Proposed CY 2017 Home Health Rate Update
    1. Proposed CY 2017 Home Health Market Basket Update

[[Page 43715]]

    2. Proposed CY 2017 Home Health Wage Index
    3. Proposed CY 2017 Annual Payment Update
    D. Payments for High-Cost Outliers Under the HH PPS
    1. Background
    2. Proposed Changes to the Methodology Used To Estimate Episode 
Cost
    3. Proposed Fixed Dollar Loss (FDL) Ratio
    E. Proposed Payment Policies for Negative Pressure Wound Therapy 
Using a Disposable Device
    F. Update on Subsequent Research and Analysis Related to Section 
3131(d) of the Affordable Care Act
    G. Update on Future Plans to Group HH PPS Claims Centrally 
During Claims Processing
IV. Proposed Provisions of the Home Health Value-Based Purchasing 
(HHVBP) Model
    A. Background
    B. Smaller- and Larger-Volume Cohorts
    C. Quality Measures
    D. Appeals Process
    E. Discussion of the Public Display of Total Performance Scores
V. Proposed Updates to 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. Policy for Retaining HH QRP Quality Measures Adopted for 
Future Payment Determination
    D. Process for Adoption of Changes to HH QRP Measures
    E. HH QRP Quality, Resource Use, and Other Measures for CY 2018 
Payment Determination and Subsequent Years
    1. Proposal To Address the IMPACT Act Domain of Resource Use and 
Other Measures: MSPB-PAC HH QRP
    2. Proposal To Address the IMPACT Act Domain of Resource Use and 
Other Measures: Discharge to Community--Post Acute Care Home Health 
Quality Reporting Program
    3. Proposal To Address the IMPACT Act of 2014 Domain of Resource 
Use and Other Measures: Potentially Preventable 30-Day Post-
Discharge Readmission Measure for Post-Acute Care Home Health 
Quality Reporting Program.
    4. Proposal To Address the IMPACT Act Domain of Medication 
Reconciliation: Drug Regimen Review Conducted With Follow-Up for 
Identified Issues-Post-Acute Care Home Health Quality Reporting 
Program.
    F. HH QRP Quality Measures and Measure Concepts Under 
Consideration for Future Years
    G. Form Manner and Timing of OASIS Data Submission and OASIS 
Data for Annual Payment Update
    1. Regulatory Authority
    2. Home Health Quality Reporting Program Requirements for CY 
2017 Payment and Subsequent Years
    3. Previously Established Pay-for-Reporting Performance 
Requirement for Submission of OASIS Quality Data
    4. Proposed Timeline and Data Submission Mechanisms for Measures 
Proposed for the CY 2018 Payment Determination and Subsequent Years
    5. Proposed Timeline and Data Submission Mechanisms for the CY 
2018 Payment Determination and Subsequent Years for New HH QRP 
Assessment-Based Quality Measure
    6. Data Collection Timelines and Requirements for the CY 2019 
Payment Determinations and Subsequent Years
    7. Proposed Data Review and Correction Timeframes for Data 
Submitted Using the OASIS Instrument
    H. Public Display of Quality Measure Data and Opportunity for 
Providers To Review and Correct Data and Information to be Made 
Public
    I. Mechanism for Providing Feedback Reports to HHAs
    J. Home Health Care CAHPS[supreg] Survey (HHCAHPS)
    1. Background and Description of HHCAHPS
    2. HHCAHPS Oversight Activities
    3. HHCAHPS Requirements for the CY 2017 APU
    4. HHCAHPS Requirements for the CY 2018 APU
    5. HHCAHPS Requirements for the CY 2019 APU
    6. HHCAHPS Requirements for the CY 2020 APU
    7. HHCAHPS Reconsideration and Appeals Process
    8. Summary
VI. Collection of Information Requirements
VII. Response to Comments
VIII. Regulatory Impact Analysis
IX. Federalism Analysis
Regulations Text

Acronyms

    In addition, because of the many terms to which we refer by 
abbreviation in this proposed rule, we are listing these abbreviations 
and their 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
FISS Fiscal Intermediary Shared System
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 (Pub. 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

[[Page 43716]]

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 home health 
agencies (HHAs) for calendar year (CY) 2017, as required under section 
1895(b) of the Social Security Act (the Act). This would reflect the 
final year of the 4-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 would update the case-mix weights under section 
1895(b)(4)(A)(i) and (b)(4)(B) of the Act and includes a reduction to 
the national, standardized 60-day episode payment rate in CY 2017 of 
0.97 percent, 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. With 
regards to payments made under the HH PPS for high-cost ``outlier'' 
episodes of care (that is, episodes of care with unusual variations in 
the type or amount of medically necessary care), this rule proposes 
changes to the methodology used to calculate outlier payments under the 
authority of section 1895(b)(5) of the Act. Also, in accordance with 
section 1834(s)(1) of the Act, as amended by the Consolidated 
Appropriations Act of 2016 (Pub. L. 114-113), this rule proposes 
changes in payment for Negative Pressure Wound Therapy (NPWT) performed 
using a disposable device for patient's under a home health plan of 
care for which payment would otherwise be made under section 1895(b) of 
the Act. This proposed rule also discusses our efforts to monitor for 
potential impacts of the rebasing adjustments mandated by section 
3131(a) of the Affordable Care Act, provides an update on subsequent 
research and analysis as a result of the findings from the home health 
study required by section 3131(d) of the Affordable Care Act, and 
provides and update and solicits comments on a process to group HH PPS 
claims centrally during claims processing. Additionally, this rule 
proposes changes to the HHVBP Model, in which Medicare-certified HHAs 
in certain states are required to participate as of January 1, 2016, 
under the authority of section 1115A of the Act; and proposes changes 
to the home health quality reporting program requirements under the 
authority of section 1895(b)(3)(B)(v)(II) of the 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 PPS final rule (78 FR 77256, December 2, 
2013), we are implementing the final year of the 4-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 2017 will 
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. 
In addition, in section III.C.3 of this rule, we are implementing a 
reduction to the national, standardized 60-day episode payment rate in 
CY 2017 of 0.97 percent to account for estimated case-mix growth 
unrelated to increases in patient acuity (that is, nominal case-mix 
growth) between CY 2012 and CY 2014. This reduction was finalized in 
the CY 2016 HH PPS final rule (80 FR 68624). Section III.A of this 
proposed rule discusses our efforts to monitor for potential impacts 
due to the rebasing adjustments mandated by section 3131(a) of the 
Affordable Care Act.
    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 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 2.8 percent, 
minus 0.5 percentage point for productivity), as required by section 
1895(b)(3)(B)(vi)(I) of the Act, and in section III.C.2 of this rule, 
we propose to update the CY 2017 home health wage index using more 
current hospital wage data. In section III.D, we are proposing to 
revise the current methodology used to estimate the cost of an episode 
of care to determine whether the episode of care would receive an 
outlier payment. The methodology change includes calculating the cost 
of an episode of care using a cost-per-unit calculation, which takes 
into account visit length, rather than the current methodology that 
uses a cost-per-visit calculation. In section III.E of this proposed 
rule, as a result of the Consolidated Appropriations Act of 2016 (Pub. 
L. 114-113), we are proposing changes in payment for when Negative 
Pressure Wound Therapy (NPWT) is performed using a disposable device 
for a patient under a home health plan of care and for which payment is 
otherwise made under the HH PPS. In section III.F of this rule, we 
provide an update on our recent research and analysis pertaining to the 
home health study required by section 3131(d) of the Affordable Care 
Act. Finally, in section III.G of this proposed rule, we provide an 
update and solicit comments on a process for grouping the HH PPS claims 
centrally during claims processing.
    In section IV of this rule, we are proposing the following changes 
to the HHVBP Model implemented January 1, 2016. We propose to remove 
the definition for ``starter set''; propose to revise the definition 
for ``benchmark''; propose to calculate benchmarks and achievement 
thresholds at the state level; propose a minimum requirement of eight 
HHAs in a cohort; propose to increase the time frame for submitting New 
Measure data; propose to remove four measures from the set of 
applicable measures; propose to adjust the reporting period and 
submission date for one of the New Measures; propose to add an appeals 
process that includes the existing recalculation process; and we are 
providing an update on the progress towards developing public reporting 
of performance under the HHVBP Model.
    This proposed rule also proposes updates to the Home Health Quality 
Reporting Program in section V, including the adoption of four new 
quality measures, the removal of a number of measures, data submission 
requirements, and data review and correction policies.

C. Summary of Costs and Transfers

[[Page 43717]]



                                     Table 1--Summary of Costs and Transfers
----------------------------------------------------------------------------------------------------------------
          Provision description                 Costs                            Transfers
----------------------------------------------------------------------------------------------------------------
CY 2017 HH PPS Payment Rate Update.......  ..............  The overall economic impact of the HH PPS payment
                                                            rate update is an estimated -$180 million (-1.0
                                                            percent) in payments to HHAs.
CY 2017 HHVBP Model......................  ..............  The overall economic impact of the HHVBP Model
                                                            provision for CY 2018 through 2022 is an estimated
                                                            $378 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 
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, to 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 is to be adjusted to account for the effects 
of case-mix and wage levels among HHAs.
    Section 1895(b)(3)(B) of the Act requires an 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, respectively. 
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 set out in section 3131 of the Affordable Care Act was 
an 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 2 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

[[Page 43718]]

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.
    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. Under section 
1899B(a)(1) of the Act, certain post-acute care (PAC) providers 
(defined in section 1899B(a)(2)(A) of the Act as 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 requires the Secretary to specify these measures insofar as they 
are respect to certain domains no later than the applicable specified 
application date that applies to each domain. The specific specified 
application dates that apply to each PAC provider type and domain are 
described in section 1899B(a)(2)(E) of the Act.

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 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 also required 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 were required to phase in any 
adjustment 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 of the 
Affordable Care Act, and fully implement the rebasing adjustments by CY 
2017. The statute specified that the maximum rebasing adjustment was to

[[Page 43719]]

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 2nd year of the 4 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 per-  adjustments per
                                      visit payment      year (CY 2014
                                          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
------------------------------------------------------------------------

    In the CY 2016 HH PPS final rule (80 FR 68624), we implemented the 
3rd year of the 4-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 (as outlined above).
    In the CY 2016 HH PPS final rule, we also recalibrated the HH PPS 
case-mix weights, using the most current cost and utilization data 
available, in a budget neutral manner, and finalized reductions to the 
national, standardized 60-day episode payment rate in CY 2016, CY 2017, 
and CY 2018 of 0.97 percent in each year to account for estimated case-
mix growth unrelated to increases in patient acuity (that is, nominal 
case-mix growth) between CY 2012 and CY 2014. Finally, we continued to 
apply the payment increase of 3 percent for HH services provided in 
rural areas (as defined in section 1886(d)(2)(D) of the Act) to 
episodes or visits ending before January 1, 2018.

III. Proposed Provisions of the Home Health Prospective Payment System

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

1. Analysis of FY 2014 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 4 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 of the 
standardized payment amount 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.
    In the CY 2016 HH PPS proposed rule (80 FR 39846-39866), using 2013 
cost report and 2013 claims data, we estimated the 2013 60-day episode 
cost to be $2,402.11 (80 FR 39846). Similar to our discussion in the CY 
2014 HH PPS final rule and the CY 2015 HH PPS final rule, we stated 
that absent the Affordable Care Act's limit to rebasing, in order to 
align payments with costs, a -5.02 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 2014 HHA cost report data and 
2014 HHA claims data to determine whether the average cost per episode 
was higher using 2014 cost report data compared to the 2011 cost report 
and 2012 claims da006used in calculating the rebasing adjustments. To 
determine the 2014 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 2014 cost 
reports by size, facility type, and urban/rural location so the costs 
per visit were nationally representative according to 2014 claims data. 
The 2014 average number of visits was taken from 2014 claims data. We 
estimate the cost of a 60-day episode in CY 2014 to be $2,373.87 using 
2014 cost report data (Table 3). Our latest analysis of 2014 cost 
report and 2014 claims data suggests that an even larger reduction (-
5.30 percent) than the reduction described in the CY 2014 HH PPS final 
rule (-3.45 percent) or the reductions described in the CY 2015 HH PPS 
final rule and the CY 2016 HH PPS proposed rule (-4.21 and -5.02 
percent,

[[Page 43720]]

respectively) would have been needed in order to align payments with 
costs. The decrease in the estimated 60-day episode cost from $2,402.11 
in CY 2013 to $2,373.87 in CY 2014 was due to both a lower average cost 
per visit for skilled nursing and home health aide services in 2014 
compared to 2013 and lower average number of visits for skilled nursing 
and home health aide services per episode in 2014 compared to 2013.

                                    Table 3--2014 Estimated Cost per Episode
----------------------------------------------------------------------------------------------------------------
                                                                   2014 Average    2014 Average
                           Discipline                                costs per       number of      2014 60-Day
                                                                       visit          visits       episode costs
----------------------------------------------------------------------------------------------------------------
Skilled Nursing.................................................         $128.68            9.09       $1,169.70
Home Health Aide................................................           56.59            2.19          123.93
Physical Therapy................................................          155.90            5.18          807.56
Occupational Therapy............................................          153.69            1.30          199.80
Speech-Language Pathology.......................................          166.98            0.26           43.41
Medical Social Services.........................................          210.48            0.14           29.47
                                                                 -----------------------------------------------
    Total.......................................................  ..............           18.16        2,373.87
----------------------------------------------------------------------------------------------------------------
Source: FY 2014 Medicare cost report data and 2014 Medicare claims data from the standard analytic file (as of
  June 30, 2015) for episodes (excluding low-utilization payment adjusted episodes and partial-episode-payment
  adjusted episodes) ending on or before December 31, 2014 for which we could link an OASIS assessment.

2. Analysis of CY 2015 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 2 years (CY 2014 and CY 2015) of the 4-year phase-in of the 
rebasing adjustments (CY 2014 through CY 2017), the first calendar year 
of the HH PPS (CY 2001), and claims data for the 3 years before 
implementation of the rebasing adjustments (CY 2011-2013). Preliminary 
analysis of CY 2015 home health claims data indicates that the number 
of episodes decreased by 3.8 percent from 2013 to 2014, and decreased 
by 1.7 percent from 2014 to 2015. In addition, the number of home 
health users that received at least one episode of care decreased by 
2.95 percent between 2013 and 2014, and decreased slightly by 0.5 
percent from 2014 to 2015.The number of FFS beneficiaries has remained 
the relatively constant between 2013 and 2015. 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, and a continued 
decrease of 2.7 percent from 2014 to 2015. We note that in CY 2015 
there were 2.9 HHAs per 10,000 FFS beneficiaries, which is still 
markedly higher than the 1.9 HHAs per 10,000 FFS beneficiaries before 
the implementation of the HH PPS methodology in 2001. The number of 
home health users, as a percentage of FFS beneficiaries, has been 
decreasing since 2011, from 9.2 percent to 8.7 percent in 2015. We 
would note that preliminary FFS data on per-enrollee hospital and 
skilled nursing facility discharges and days indicates that there was a 
decrease in hospital discharges of approximately 0.7 percent and a 
decrease in SNF days of approximately 0.9 percent in CY 2015. 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 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2001            2011            2012            2013            2014            2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of episodes......................................       3,896,502       6,821,459       6,727,875       6,708,923       6,451,283       6,340,932
Beneficiaries receiving at least 1 episode (Home Health        2,412,318       3,449,231       3,446,122       3,484,579       3,381,635       3,365,512
 Users).................................................
Part A and/or B FFS beneficiaries.......................      34,899,167      37,686,526      38,224,640      38,505,609      38,506,534      38,592,533
Episodes per Part A and/or B FFS beneficiaries..........            0.11            0.18            0.18            0.17            0.17            0.16
Home health users as a percentage of Part A and/or B FFS            6.9%            9.2%            9.0%            9.0%            8.8%            8.7%
 beneficiaries..........................................
HHAs providing at least 1 episode.......................           6,511          11,446          11,746          11,889          11,693          11,381
HHAs per 10,000 Part A and/or B FFS beneficiaries.......             1.9             3.0             3.1             3.1             3.0             2.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
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; accessed on May 7, 2015 for CY 2001 and CY 2014 data, and accessed on April 7, 2016 for CY 2015 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 2 
years of the implementation of rebasing adjustments required by the 
Affordable Care Act and comparing utilization in those years (CY 2014 & 
CY 2015) to the 3 years prior to

[[Page 43721]]

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 2015. 
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 $166 
for CY 2015, 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 2010 (19.8 visits per episode), which was the first 
year that the 10 percent agency-level cap on HHA outlier payments was 
implemented. As noted in section II.C, we also 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 2011 and 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 steadily, the number of skilled nursing 
and home health aide visits have decreased, between CY 2009 and CY 
2015. 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 seem 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.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP05JY16.000


[[Page 43722]]


[GRAPHIC] [TIFF OMITTED] TP05JY16.001

BILLING CODE 4120-01-C
    As part of our monitoring efforts, we also examined the trends in 
episode timing and service use over time. Currently, the first two 60-
day episodes of care are considered ``early'' and third or later 60-day 
episodes of care are considered ``late'', as long as there is no more 
than a 60-day gap in care between one episode and the next. 
Specifically, we examined the percentage of early episodes with 0 to 19 
therapy visits, late episodes with 0 to 19 therapy visits, and episodes 
with 20+ therapy visits from CY 2008 to CY 2015. In CY 2008, we 
implemented refinements to the HH PPS case-mix system. As part of those 
refinements, we added additional therapy thresholds and differentiated 
between early and late episodes for those episodes with less than 20+ 
therapy visits. Table 5 shows that the percentage of early and late 
episodes from CY 2008 to CY 2015 has remained relatively stable over 
time. There has been a slight decrease in the percentage of early 
episodes with 0 to 19 therapy visits from 65.9 percent in CY 2008 to 
59.8 percent in CY 2015 and a slight increase in the percentage of late 
episodes with 0 to 19 therapy visits from 29.5 percent in CY 2008 to 
33.5 percent in CY 2015. From CY 2014 to CY 2015, there was a slight 
decrease in the percentage of early and late episodes with 0 to 19 
therapy visits and there was a slight increase in the percentage of 
episodes with 20+ therapy visits. In 2015, the case-mix weights for the 
third and later episodes of care with 0 to 19 therapy visits decreased 
as a result of the CY 2015 recalibration of the case-mix weights. 
Despite the decreases in the case-mix weights for the later episodes, 
the percentage of later episodes with 0 to 19 therapy visits did not 
change substantially.

[[Page 43723]]



                                        Table 5--Home Health Episodes by Episode Timing, CY 2008 Through CY 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Number of
                                                               early        % of early    Number of late     % of late
                                                             episodes        episodes         episodes       episodes        Number of     % of episodes
                  Year                     All episodes     (excluding      (excluding      (excluding      (excluding     episodes with     with 20+
                                                           episodes with   episodes with   episodes with   episodes with    20+ visits        visits
                                                            20+ visits)     20+ visits)     20+ visits)     20+ visits)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2008....................................       5,423,037       3,571,619            65.9       1,600,587            29.5         250,831             4.6
2009....................................       6,530,200       3,701,652            56.7       2,456,308            37.6         372,240             5.7
2010....................................       6,877,598       3,872,504            56.3       2,586,493            37.6         418,601             6.1
2011....................................       6,857,885       3,912,982            57.1       2,564,859            37.4         380,044             5.5
2012....................................       6,767,576       3,955,207            58.4       2,458,734            36.3         353,635             5.2
2013....................................       6,733,146       4,023,486            59.8       2,347,420            34.9         362,240             5.4
2014....................................       6,616,875       3,980,151            60.2       2,263,638            34.2         373,086             5.6
2015....................................       6,340,931       3,789,676            59.8       2,123,485            33.5         427,770             6.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: National claims history (NCH) data obtained from Chronic Condition Warehouse (CCW)--Accessed on April 7, 2016.
Note(s): 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.

    We also examined trends in admission source for home health 
episodes over time. Specifically, we examined the admission source for 
the ``first or only'' episodes of care (first episodes in a sequence of 
adjacent episodes of care or the only episode of care) from CY 2008 
through CY 2015 (Figure 3). The percentage of first or only episodes 
with an acute admission source, defined as episodes with an inpatient 
hospital stay within the 14 days prior to a home health episode, has 
decreased from 38.6 percent in CY 2008 to 33.9 percent in CY 2015. The 
percentage of first or only episodes with a post-acute admission 
source, defined as episodes which had a stay at a skilled nursing 
facility (SNF), inpatient rehabilitation facility (IRF), or long term 
care hospital (LTCH) within 14 days prior to the home health episode, 
slightly increased from 16.5 percent in CY 2008 to 18.1 percent in CY 
2015. The percentage of first or only episodes with a community 
admission source, defined as episodes which did not have an acute or 
post-acute stay in the 14 days prior to the home health episode, 
increased from 37.4 percent in CY 2008 to 41.9 percent in CY 2015. Our 
findings on the trends in admission source are consistent to MedPAC's 
as outlined in their 2015 Report to the Congress.\1\ However, MedPAC 
examined admission source trends from 2002 up through 2013 and 
concluded that ``there has been tremendous growth in the use of home 
health for patients residing in the community, episodes not preceded by 
a prior hospitalization. The high rates of volume growth for these 
types of episodes, which have more than doubled since 2001, suggest 
there is significant potential for overuse, particularly since Medicare 
does not currently require any cost sharing for home health care.''
---------------------------------------------------------------------------

    \1\ Medicare Payment Advisory Commission (MedPAC), ``Report to 
the Congress: Medicare Payment Policy''. March 2015. P. 214. 
Washington, DC. Accessed on 4/21/2016 at http://medpac.gov/documents/reports/march-2015-report-to-the-congress-medicare-payment-policy.pdf?sfvrsn=0.

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

[[Page 43724]]

[GRAPHIC] [TIFF OMITTED] TP05JY16.002

    We will continue to monitor for potential impacts due to the 
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. Proposed CY 2017 HH PPS Case-Mix Weights

    In the CY 2015 HH PPS final rule (79 FR 66072), 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 2017, 
we will 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 2017 HH PPS case-mix weights, we used 
CY 2015 home health claims data (as of December 31, 2015) with linked 
OASIS data. These data are the most current and complete data available 
at this time. We will use CY 2015 home health claims data (as of June 
30, 2016) with linked OASIS data to generate the CY 2017 HH PPS case-
mix weights in the CY 2017 HH PPS final rule. The process 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 2014 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 2015 home health claims 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.
BILLING CODE 4120-01-P

[[Page 43725]]

[GRAPHIC] [TIFF OMITTED] TP05JY16.003


[[Page 43726]]


[GRAPHIC] [TIFF OMITTED] TP05JY16.004


[[Page 43727]]


[GRAPHIC] [TIFF OMITTED] TP05JY16.005

BILLING CODE 4120-01-C
    In updating the four-equation model for CY 2017, using 2015 home 
health claims data (the last update to the four-equation model for CY 
2016 used CY 2014 home health claims 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 CY 2014 and CY 2015. The 
CY 2017 four-equation model resulted in 110 point-giving variables 
being used in the model (as compared to the 124 variables for the CY 
2016 recalibration). There were ten variables that were added to the 
model and 24 variables that were dropped from the model due to the 
absence of additional resources associated with the variable. Of the 
variables that were in both the four-equation model for CY 2016 and the 
four-equation model for CY 2017, the points for 37 variables increased 
in the CY 2017 four-equation model and the points for 38 variables 
decreased in the CY 2017 4-equation model. There were 25 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 2017 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

[[Page 43728]]

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 as a 
guide for setting our thresholds. We grouped scores with similar 
average resource use within the same level (even if it meant that more 
or less than a third of episodes were placed within a level). The new 
thresholds, based off of the CY 2017 four-equation model points are 
shown in Table 7.
---------------------------------------------------------------------------

    \2\ For Step 1, 62% of episodes were in the medium functional 
level (All with score 14).
    For Step 2.1, 71.0% of episodes were in the low functional level 
(Most with score 6).
    For Step 2.2, 83.2% of episodes were in the medium functional 
level (Most with score 2 or 3).
    For Step 3, 51.3% of episodes were in the medium functional 
level (Most with score 10).
    For Step 4, 54.4% of episodes were in the medium functional 
level (Most with score 6).

                                                                       TABLE 7--CY 2017 Clinical and Functional Thresholds
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          1st and 2nd Episodes                                       3rd+ Episodes                            All episodes
                                                        ----------------------------------------------------------------------------------------------------------------------------------------
                                                           0 to 13  therapy visits    14 to 19  therapy visits    0 to 13  therapy visits    14 to 19  therapy 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..............
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    ,s,nClinical..................  C1.................  0 to 1....................  0 to 1....................  0........................  0 to 1...................  0 to 3.
                                    C2.................  2 to 3....................  2 to 7....................  1........................  2 to 9...................  4 to 17.
                                    C3.................  4+........................  8+........................  2+.......................  10+......................  18+.
    Functional....................  F1.................  0 to 13...................  0 to 7....................  0 to 6...................  0........................  0 to 2.
                                    F2.................  14........................  8 to 13...................  7 to 10..................  1 to 11..................  3 to 6.
                                    F3.................  15+.......................  14+.......................  11+......................  12+......................  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 2015 home health claims data. 
The R-squared value for the payment regression model is 0.4919 (an 
increase from 0.4822 for the CY 2016 recalibration).

                    Table 8--Payment Regression Model
------------------------------------------------------------------------
                                                            New payment
                  Variable description                      regression
                                                           coefficients
------------------------------------------------------------------------
Step 1, Clinical Score Medium...........................          $25.75
Step 1, Clinical Score High.............................           60.84
Step 1, Functional Score Medium.........................           71.60
Step 1, Functional Score High...........................          108.83
Step 2.1, Clinical Score Medium.........................           53.35
Step 2.1, Clinical Score High...........................          129.94
Step 2.1, Functional Score Medium.......................           11.54
Step 2.1, Functional Score High.........................           67.03
Step 2.2, Clinical Score Medium.........................           33.94
Step 2.2, Clinical Score High...........................          188.53
Step 2.2, Functional Score Medium.......................            0.31
Step 2.2, Functional Score High.........................           63.34
Step 3, Clinical Score Medium...........................            9.35
Step 3, Clinical Score High.............................           95.01
Step 3, Functional Score Medium.........................           56.44
Step 3, Functional Score High...........................           88.01
Step 4, Clinical Score Medium...........................           76.63
Step 4, Clinical Score High.............................          261.74
Step 4, Functional Score Medium.........................           22.89
Step 4, Functional Score High...........................           73.10
Step 2.1, 1st and 2nd Episodes, 14 to 19 Therapy Visits.          498.19
Step 2.2, 3rd+ Episodes, 14 to 19 Therapy Visits........          515.73
Step 3, 3rd+ Episodes, 0-13 Therapy Visits..............          -73.96
Step 4, All Episodes, 20+ Therapy Visits................          906.64
Intercept...............................................          393.43
------------------------------------------------------------------------
Source: CY 2015 Medicare claims data for episodes ending on or before
  December 31, 2015 (as of December 31, 2015) 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 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 raw weights associated with 0 to 5 therapy visits are 
then

[[Page 43729]]

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 align 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 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 proposed CY 2017 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--Proposed CY 2017 Case-Mix Payment Weights
----------------------------------------------------------------------------------------------------------------
                                                                 Clinical and functional  levels
          Payment group                Step  (episode and/or        (1 = low;  2 = medium;  3 =     Proposed CY
                                       therapy visit ranges)                  high)                2017 weights
----------------------------------------------------------------------------------------------------------------
10111............................  1st and 2nd Episodes, 0 to 5  C1F1S1                                   0.5972
                                    Therapy Visits.
10112............................  1st and 2nd Episodes, 6       C1F1S2                                   0.7322
                                    Therapy Visits.
10113............................  1st and 2nd Episodes, 7 to 9  C1F1S3                                   0.8671
                                    Therapy Visits.
10114............................  1st and 2nd Episodes, 10      C1F1S4                                   1.0021
                                    Therapy Visits.
10115............................  1st and 2nd Episodes, 11 to   C1F1S5                                   1.1370
                                    13 Therapy Visits.
10121............................  1st and 2nd Episodes, 0 to 5  C1F2S1                                   0.7059
                                    Therapy Visits.
10122............................  1st and 2nd Episodes, 6       C1F2S2                                   0.8224
                                    Therapy Visits.
10123............................  1st and 2nd Episodes, 7 to 9  C1F2S3                                   0.9389
                                    Therapy Visits.
10124............................  1st and 2nd Episodes, 10      C1F2S4                                   1.0554
                                    Therapy Visits.
10125............................  1st and 2nd Episodes, 11 to   C1F2S5                                   1.1719
                                    13 Therapy Visits.
10131............................  1st and 2nd Episodes, 0 to 5  C1F3S1                                   0.7624
                                    Therapy Visits.
10132............................  1st and 2nd Episodes, 6       C1F3S2                                   0.8835
                                    Therapy Visits.
10133............................  1st and 2nd Episodes, 7 to 9  C1F3S3                                   1.0045
                                    Therapy Visits.
10134............................  1st and 2nd Episodes, 10      C1F3S4                                   1.1255
                                    Therapy Visits.
10135............................  1st and 2nd Episodes, 11 to   C1F3S5                                   1.2466
                                    13 Therapy Visits.
10211............................  1st and 2nd Episodes, 0 to 5  C2F1S1                                   0.6363
                                    Therapy Visits.
10212............................  1st and 2nd Episodes, 6       C2F1S2                                   0.7787
                                    Therapy Visits.
10213............................  1st and 2nd Episodes, 7 to 9  C2F1S3                                   0.9210
                                    Therapy Visits.
10214............................  1st and 2nd Episodes, 10      C2F1S4                                   1.0634
                                    Therapy Visits.
10215............................  1st and 2nd Episodes, 11 to   C2F1S5                                   1.2057
                                    13 Therapy Visits.
10221............................  1st and 2nd Episodes, 0 to 5  C2F2S1                                   0.7450
                                    Therapy Visits.
10222............................  1st and 2nd Episodes, 6       C2F2S2                                   0.8689
                                    Therapy Visits.
10223............................  1st and 2nd Episodes, 7 to 9  C2F2S3                                   0.9928
                                    Therapy Visits.
10224............................  1st and 2nd Episodes, 10      C2F2S4                                   1.1167
                                    Therapy Visits.
10225............................  1st and 2nd Episodes, 11 to   C2F2S5                                   1.2406
                                    13 Therapy Visits.
10231............................  1st and 2nd Episodes, 0 to 5  C2F3S1                                   0.8015
                                    Therapy Visits.
10232............................  1st and 2nd Episodes, 6       C2F3S2                                   0.9300
                                    Therapy Visits.
10233............................  1st and 2nd Episodes, 7 to 9  C2F3S3                                   1.0584
                                    Therapy Visits.
10234............................  1st and 2nd Episodes, 10      C2F3S4                                   1.1868
                                    Therapy Visits.
10235............................  1st and 2nd Episodes, 11 to   C2F3S5                                   1.3153
                                    13 Therapy Visits.
10311............................  1st and 2nd Episodes, 0 to 5  C3F1S1                                   0.6896
                                    Therapy Visits.
10312............................  1st and 2nd Episodes, 6       C3F1S2                                   0.8431
                                    Therapy Visits.
10313............................  1st and 2nd Episodes, 7 to 9  C3F1S3                                   0.9967
                                    Therapy Visits.
10314............................  1st and 2nd Episodes, 10      C3F1S4                                   1.1502
                                    Therapy Visits.
10315............................  1st and 2nd Episodes, 11 to   C3F1S5                                   1.3038
                                    13 Therapy Visits.
10321............................  1st and 2nd Episodes, 0 to 5  C3F2S1                                   0.7983
                                    Therapy Visits.
10322............................  1st and 2nd Episodes, 6       C3F2S2                                   0.9334
                                    Therapy Visits.
10323............................  1st and 2nd Episodes, 7 to 9  C3F2S3                                   1.0685
                                    Therapy Visits.
10324............................  1st and 2nd Episodes, 10      C3F2S4                                   1.2036
                                    Therapy Visits.
10325............................  1st and 2nd Episodes, 11 to   C3F2S5                                   1.3387
                                    13 Therapy Visits.
10331............................  1st and 2nd Episodes, 0 to 5  C3F3S1                                   0.8548
                                    Therapy Visits.
10332............................  1st and 2nd Episodes, 6       C3F3S2                                   0.9944
                                    Therapy Visits.
10333............................  1st and 2nd Episodes, 7 to 9  C3F3S3                                   1.1341
                                    Therapy Visits.
10334............................  1st and 2nd Episodes, 10      C3F3S4                                   1.2737
                                    Therapy Visits.
10335............................  1st and 2nd Episodes, 11 to   C3F3S5                                   1.4133
                                    13 Therapy Visits.

[[Page 43730]]

 
21111............................  1st and 2nd Episodes, 14 to   C1F1S1                                   1.2720
                                    15 Therapy Visits.
21112............................  1st and 2nd Episodes, 16 to   C1F1S2                                   1.4503
                                    17 Therapy Visits.
21113............................  1st and 2nd Episodes, 18 to   C1F1S3                                   1.6287
                                    19 Therapy Visits.
21121............................  1st and 2nd Episodes, 14 to   C1F2S1                                   1.2884
                                    15 Therapy Visits.
21122............................  1st and 2nd Episodes, 16 to   C1F2S2                                   1.4719
                                    17 Therapy Visits.
21123............................  1st and 2nd Episodes, 18 to   C1F2S3                                   1.6554
                                    19 Therapy Visits.
21131............................  1st and 2nd Episodes, 14 to   C1F3S1                                   1.3676
                                    15 Therapy Visits.
21132............................  1st and 2nd Episodes, 16 to   C1F3S2                                   1.5480
                                    17 Therapy Visits.
21133............................  1st and 2nd Episodes, 18 to   C1F3S3                                   1.7283
                                    19 Therapy Visits.
21211............................  1st and 2nd Episodes, 14 to   C2F1S1                                   1.3481
                                    15 Therapy Visits.
21212............................  1st and 2nd Episodes, 16 to   C2F1S2                                   1.5366
                                    17 Therapy Visits.
21213............................  1st and 2nd Episodes, 18 to   C2F1S3                                   1.7251
                                    19 Therapy Visits.
21221............................  1st and 2nd Episodes, 14 to   C2F2S1                                   1.3645
                                    15 Therapy Visits.
21222............................  1st and 2nd Episodes, 16 to   C2F2S2                                   1.5582
                                    17 Therapy Visits.
21223............................  1st and 2nd Episodes, 18 to   C2F2S3                                   1.7518
                                    19 Therapy Visits.
21231............................  1st and 2nd Episodes, 14 to   C2F3S1                                   1.4437
                                    15 Therapy Visits.
21232............................  1st and 2nd Episodes, 16 to   C2F3S2                                   1.6342
                                    17 Therapy Visits.
21233............................  1st and 2nd Episodes, 18 to   C2F3S3                                   1.8247
                                    19 Therapy Visits.
21311............................  1st and 2nd Episodes, 14 to   C3F1S1                                   1.4573
                                    15 Therapy Visits.
21312............................  1st and 2nd Episodes, 16 to   C3F1S2                                   1.6952
                                    17 Therapy Visits.
21313............................  1st and 2nd Episodes, 18 to   C3F1S3                                   1.9330
                                    19 Therapy Visits.
21321............................  1st and 2nd Episodes, 14 to   C3F2S1                                   1.4738
                                    15 Therapy Visits.
21322............................  1st and 2nd Episodes, 16 to   C3F2S2                                   1.7168
                                    17 Therapy Visits.
21323............................  1st and 2nd Episodes, 18 to   C3F2S3                                   1.9597
                                    19 Therapy Visits.
21331............................  1st and 2nd Episodes, 14 to   C3F3S1                                   1.5530
                                    15 Therapy Visits.
21332............................  1st and 2nd Episodes, 16 to   C3F3S2                                   1.7928
                                    17 Therapy Visits.
21333............................  1st and 2nd Episodes, 18 to   C3F3S3                                   2.0326
                                    19 Therapy Visits.
22111............................  3rd+ Episodes, 14 to 15       C1F1S1                                   1.2970
                                    Therapy Visits.
22112............................  3rd+ Episodes, 16 to 17       C1F1S2                                   1.4670
                                    Therapy Visits.
22113............................  3rd+ Episodes, 18 to 19       C1F1S3                                   1.6370
                                    Therapy Visits.
22121............................  3rd+ Episodes, 14 to 15       C1F2S1                                   1.2974
                                    Therapy Visits.
22122............................  3rd+ Episodes, 16 to 17       C1F2S2                                   1.4779
                                    Therapy Visits.
22123............................  3rd+ Episodes, 18 to 19       C1F2S3                                   1.6584
                                    Therapy Visits.
22131............................  3rd+ Episodes, 14 to 15       C1F3S1                                   1.3873
                                    Therapy Visits.
22132............................  3rd+ Episodes, 16 to 17       C1F3S2                                   1.5611
                                    Therapy Visits.
22133............................  3rd+ Episodes, 18 to 19       C1F3S3                                   1.7349
                                    Therapy Visits.
22211............................  3rd+ Episodes, 14 to 15       C2F1S1                                   1.3454
                                    Therapy Visits.
22212............................  3rd+ Episodes, 16 to 17       C2F1S2                                   1.5348
                                    Therapy Visits.
22213............................  3rd+ Episodes, 18 to 19       C2F1S3                                   1.7242
                                    Therapy Visits.
22221............................  3rd+ Episodes, 14 to 15       C2F2S1                                   1.3458
                                    Therapy Visits.
22222............................  3rd+ Episodes, 16 to 17       C2F2S2                                   1.5457
                                    Therapy Visits.
22223............................  3rd+ Episodes, 18 to 19       C2F2S3                                   1.7455
                                    Therapy Visits.
22231............................  3rd+ Episodes, 14 to 15       C2F3S1                                   1.4358
                                    Therapy Visits.
22232............................  3rd+ Episodes, 16 to 17       C2F3S2                                   1.6289
                                    Therapy Visits.
22233............................  3rd+ Episodes, 18 to 19       C2F3S3                                   1.8220
                                    Therapy Visits.
22311............................  3rd+ Episodes, 14 to 15       C3F1S1                                   1.5659
                                    Therapy Visits.
22312............................  3rd+ Episodes, 16 to 17       C3F1S2                                   1.7676
                                    Therapy Visits.
22313............................  3rd+ Episodes, 18 to 19       C3F1S3                                   1.9692
                                    Therapy Visits.
22321............................  3rd+ Episodes, 14 to 15       C3F2S1                                   1.5664
                                    Therapy Visits.
22322............................  3rd+ Episodes, 16 to 17       C3F2S2                                   1.7785
                                    Therapy Visits.
22323............................  3rd+ Episodes, 18 to 19       C3F2S3                                   1.9906
                                    Therapy Visits.
22331............................  3rd+ Episodes, 14 to 15       C3F3S1                                   1.6563
                                    Therapy Visits.
22332............................  3rd+ Episodes, 16 to 17       C3F3S2                                   1.8617
                                    Therapy Visits.
22333............................  3rd+ Episodes, 18 to 19       C3F3S3                                   2.0671
                                    Therapy Visits.
30111............................  3rd+ Episodes, 0 to 5         C1F1S1                                   0.4850
                                    Therapy Visits.
30112............................  3rd+ Episodes, 6 Therapy      C1F1S2                                   0.6474
                                    Visits.
30113............................  3rd+ Episodes, 7 to 9         C1F1S3                                   0.8098
                                    Therapy Visits.
30114............................  3rd+ Episodes, 10 Therapy     C1F1S4                                   0.9722
                                    Visits.
30115............................  3rd+ Episodes, 11 to 13       C1F1S5                                   1.1346
                                    Therapy Visits.
30121............................  3rd+ Episodes, 0 to 5         C1F2S1                                   0.5706
                                    Therapy Visits.
30122............................  3rd+ Episodes, 6 Therapy      C1F2S2                                   0.7160
                                    Visits.
30123............................  3rd+ Episodes, 7 to 9         C1F2S3                                   0.8614
                                    Therapy Visits.
30124............................  3rd+ Episodes, 10 Therapy     C1F2S4                                   1.0067
                                    Visits.
30125............................  3rd+ Episodes, 11 to 13       C1F2S5                                   1.1521
                                    Therapy Visits.
30131............................  3rd+ Episodes, 0 to 5         C1F3S1                                   0.6186
                                    Therapy Visits.
30132............................  3rd+ Episodes, 6 Therapy      C1F3S2                                   0.7723
                                    Visits.
30133............................  3rd+ Episodes, 7 to 9         C1F3S3                                   0.9261
                                    Therapy Visits.
30134............................  3rd+ Episodes, 10 Therapy     C1F3S4                                   1.0798
                                    Visits.

[[Page 43731]]

 
30135............................  3rd+ Episodes, 11 to 13       C1F3S5                                   1.2336
                                    Therapy Visits.
30211............................  3rd+ Episodes, 0 to 5         C2F1S1                                   0.4992
                                    Therapy Visits.
30212............................  3rd+ Episodes, 6 Therapy      C2F1S2                                   0.6684
                                    Visits.
30213............................  3rd+ Episodes, 7 to 9         C2F1S3                                   0.8377
                                    Therapy Visits.
30214............................  3rd+ Episodes, 10 Therapy     C2F1S4                                   1.0069
                                    Visits.
30215............................  3rd+ Episodes, 11 to 13       C2F1S5                                   1.1761
                                    Therapy Visits.
30221............................  3rd+ Episodes, 0 to 5         C2F2S1                                   0.5848
                                    Therapy Visits.
30222............................  3rd+ Episodes, 6 Therapy      C2F2S2                                   0.7370
                                    Visits.
30223............................  3rd+ Episodes, 7 to 9         C2F2S3                                   0.8892
                                    Therapy Visits.
30224............................  3rd+ Episodes, 10 Therapy     C2F2S4                                   1.0414
                                    Visits.
30225............................  3rd+ Episodes, 11 to 13       C2F2S5                                   1.1936
                                    Therapy Visits.
30231............................  3rd+ Episodes, 0 to 5         C2F3S1                                   0.6328
                                    Therapy Visits.
30232............................  3rd+ Episodes, 6 Therapy      C2F3S2                                   0.7934
                                    Visits.
30233............................  3rd+ Episodes, 7 to 9         C2F3S3                                   0.9540
                                    Therapy Visits.
30234............................  3rd+ Episodes, 10 Therapy     C2F3S4                                   1.1146
                                    Visits.
30235............................  3rd+ Episodes, 11 to 13       C2F3S5                                   1.2752
                                    Therapy Visits.
30311............................  3rd+ Episodes, 0 to 5         C3F1S1                                   0.6292
                                    Therapy Visits.
30312............................  3rd+ Episodes, 6 Therapy      C3F1S2                                   0.8165
                                    Visits.
30313............................  3rd+ Episodes, 7 to 9         C3F1S3                                   1.0039
                                    Therapy Visits.
30314............................  3rd+ Episodes, 10 Therapy     C3F1S4                                   1.1912
                                    Visits.
30315............................  3rd+ Episodes, 11 to 13       C3F1S5                                   1.3786
                                    Therapy Visits.
30321............................  3rd+ Episodes, 0 to 5         C3F2S1                                   0.7149
                                    Therapy Visits.
30322............................  3rd+ Episodes, 6 Therapy      C3F2S2                                   0.8852
                                    Visits.
30323............................  3rd+ Episodes, 7 to 9         C3F2S3                                   1.0555
                                    Therapy Visits.
30324............................  3rd+ Episodes, 10 Therapy     C3F2S4                                   1.2258
                                    Visits.
30325............................  3rd+ Episodes, 11 to 13       C3F2S5                                   1.3961
                                    Therapy Visits.
30331............................  3rd+ Episodes, 0 to 5         C3F3S1                                   0.7628
                                    Therapy Visits.
30332............................  3rd+ Episodes, 6 Therapy      C3F3S2                                   0.9415
                                    Visits.
30333............................  3rd+ Episodes, 7 to 9         C3F3S3                                   1.1202
                                    Therapy Visits.
30334............................  3rd+ Episodes, 10 Therapy     C3F3S4                                   1.2989
                                    Visits.
30335............................  3rd+ Episodes, 11 to 13       C3F3S5                                   1.4776
                                    Therapy Visits.
40111............................  All Episodes, 20+ Therapy     C1F1S1                                   1.8071
                                    Visits.
40121............................  All Episodes, 20+ Therapy     C1F2S1                                   1.8389
                                    Visits.
40131............................  All Episodes, 20+ Therapy     C1F3S1                                   1.9087
                                    Visits.
40211............................  All Episodes, 20+ Therapy     C2F1S1                                   1.9136
                                    Visits.
40221............................  All Episodes, 20+ Therapy     C2F2S1                                   1.9454
                                    Visits.
40231............................  All Episodes, 20+ Therapy     C2F3S1                                   2.0152
                                    Visits.
40311............................  All Episodes, 20+ Therapy     C3F1S1                                   2.1709
                                    Visits.
40321............................  All Episodes, 20+ Therapy     C3F2S1                                   2.2027
                                    Visits.
40331............................  All Episodes, 20+ Therapy     C3F3S1                                   2.2725
                                    Visits.
----------------------------------------------------------------------------------------------------------------

    To ensure the changes to the HH PPS case-mix weights are 
implemented in a budget neutral manner, we then apply a case-mix budget 
neutrality factor to the proposed CY 2017 national, standardized 60-day 
episode payment rate (see section III.C.3. of this proposed rule). The 
case-mix budget neutrality factor is calculated as the ratio of total 
payments when the CY 2017 HH PPS case-mix weights (developed using CY 
2015 home health claims data) are applied to CY 2015 utilization 
(claims) data to total payments when CY 2016 HH PPS case-mix weights 
(developed using CY 2014 home health claims data) are applied to CY 
2015 utilization data. This produces a case-mix budget neutrality 
factor for CY 2017 of 1.0062, based on CY 2015 claims data as of 
December 31, 2015.

C. Proposed CY 2017 Home Health Payment Rate Update

1. Proposed CY 2017 Home Health Market Basket Update
    Section 1895(b)(3)(B) of the Act requires that the standard 
prospective payment amounts for CY 2017 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.

[[Page 43732]]

    Using IHS Global Insight's (IGI) first quarter 2016 forecast, the 
MFP adjustment for CY 2017 (the 10-year moving average of MFP for the 
period ending CY 2017) is projected to be 0.5 percent. Thus, in 
accordance with section 1895(b)(3)(B)(iii) of the Act, we propose to 
base the CY 2017 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 2.8 percent based on IGI's first quarter 2016 
forecast). We propose to then reduce this percentage increase by the 
current estimate of the MFP adjustment for CY 2017 of 0.5 percentage 
point (the 10-year moving average of MFP for the period ending CY 2017 
based on IGI's first quarter 2016 forecast), in accordance with 
1895(b)(3)(B)(vi). Therefore, the current estimate of the CY 2017 HH 
payment update is 2.3 percent (2.8 percent market basket update, less 
0.5 percentage point MFP adjustment). Furthermore, we note that if more 
recent data are subsequently available (for example, a more recent 
estimate of the market basket and MFP adjustment), we would use such 
data to determine the CY 2017 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 2017, the home health payment 
update would be 0.3 percent (2.3 percent minus 2 percentage points).
2. Proposed CY 2017 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 2017, 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 2017, the updated wage data are for hospital cost 
reporting periods beginning on or after October 1, 2012 and before 
October 1, 2013 (FY 2013 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).
b. Updates
    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.
    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 OMB 
delineations, as described in OMB Bulletin No. 13-01. In CY 2015, we 
included a one-year transition to those delineations by using a blended 
wage index for CY 2015.
    The OMB's most recent update to the geographic area delineations 
was published on July 15, 2015 in OBM bulletin 15-01. This bulletin is 
available online at https://www.whitehouse.gov/sites/default/files/omb/bulletins/2015/15-01.pdf. The revisions to the delineations that affect 
the HH PPS are changes to CBSA titles and the addition of CBSA 21420, 
Enid, Oklahoma. CBSA 21420 encompasses Garfield County, Oklahoma.
    In order 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 2017 HH PPS wage index, 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. 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 2017, 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 2017, the only urban area without inpatient 
hospital wage data is Hinesville, GA (CBSA 25980).
    The proposed CY 2017 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. Proposed CY 2017 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

[[Page 43733]]

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 2017 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:
    (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 2017 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 2017 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, a 
reduction of 0.97 percent to account for nominal case-mix growth from 
2012 to 2014 as finalized in the CY 2016 HH PPS final rule (80 FR 
68646), 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 proposed CY 2017 wage 
index and compared it to our simulation of total payments for non-LUPA 
episodes using the CY 2016 wage index. By dividing the total payments 
for non-LUPA episodes using the proposed CY 2017 wage index by the 
total payments for non-LUPA episodes using the CY 2016 wage index, we 
obtain a wage index budget neutrality factor of 0.9990. We would apply 
the wage index budget neutrality factor of 0.9990 to the proposed CY 
2017 national, standardized 60-day episode rate.
    As discussed in section III.B 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 2017 national, standardized 60-day episode payment rate. The 
case-mix weight budget neutrality factor is calculated as the ratio of 
total payments when CY 2017 case-mix weights are applied to CY 2015 
utilization (claims) data to total payments when CY 2016 case-mix 
weights are applied to CY 2015 utilization data. The case-mix budget 
neutrality factor for CY 2017 would be 1.0062 as described in section 
III.B.1 of this proposed rule.
    Next, as discussed in the CY 2016 HH PPS final rule (80 FR 68646), 
we would apply a reduction of 0.97 percent to the national, 
standardized 60-day episode payment rate in CY 2017 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 proposed payment rates by the proposed CY 2017 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 proposed CY 2017 national, standardized 60-day episode 
payment rate is calculated in Table 10.

[[Page 43734]]



                                 Table 10--Proposed CY 2017 60-Day National, Standardized 60-Day Episode Payment Amount
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                           Proposed CY
                                                       Wage index        Case-mix      Nominal case-       CY 2017        Proposed CY     2017 national,
   CY 2016 National, standardized 60-day episode         budget      weights  budget     mix growth        Rebasing         2017 HH      standardized 60-
                      payment                          neutrality       neutrality     adjustment (1-     adjustment    payment  update    day  episode
                                                         factor           factor          0.0097)                                            payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
$2,965.12.........................................        x 0.9990         x 1.0062         x 0.9903          -$80.95            1.023        $2,936.68
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The proposed CY 2017 national, standardized 60-day episode payment 
rate for an HHA that does not submit the required quality data is 
updated by the proposed CY 2017 HH payment update (2.3 percent) minus 2 
percentage points and is shown in Table 11.

              Table 11--Proposed CY 2017 National, Standardized 60-Day Episode Payment Amount for HHAs That DO NOT Submit the Quality Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                          Proposed CY
                                                       Wage index        Case-mix      Nominal case-                        2017 HH        Proposed CY
   CY 2016 National, standardized 60-day episode         budget      weights  budget     mix growth        CY 2017      payment  update   2017 national,
                      payment                          neutrality       neutrality     adjustment (1-      Rebasing         minus 2      standardized 60-
                                                         factor           factor          0.0097)         adjustment       percentage      day  episode
                                                                                                                             points          payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
$2,965.12.........................................        x 0.9990         x 1.0062         x 0.9903          -$80.95          x 1.003        $2,879.27
--------------------------------------------------------------------------------------------------------------------------------------------------------

c. Proposed CY 2017 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 proposed CY 2017 national per-visit rates, we 
start with the CY 2016 national per-visit rates. We then apply a wage 
index budget neutrality factor to ensure budget neutrality for LUPA 
per-visit payments and then we 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 proposed CY 2017 
wage index and comparing it to simulated total payments for LUPA 
episodes using the CY 2016 wage index. By dividing the total payments 
for LUPA episodes using the proposed CY 2017 wage index by the total 
payments for LUPA episodes using the CY 2016 wage index, we obtain a 
wage index budget neutrality factor of 0.9998. We would apply the wage 
index budget neutrality factor of 0.9998 in order to calculate the CY 
2017 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 proposed CY 2017 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 proposed CY 2017 national per-visit rates are shown in Tables 12 
and 13.

 Table 12: Proposed CY 2017 National Per-Visit Payment Amounts for HHAs That DO Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                  Wage index
                                CY 2016 per-        budget          CY 2017        Proposed CY      Proposed CY
      HH Discipline type        visit payment     neutrality        Rebasing         2017 HH      2017 per-visit
                                                    factor         adjustment    payment  update      payment
----------------------------------------------------------------------------------------------------------------
Home Health Aide.............          $60.87  x 0.9998.......  + $1.79........  x 1.023........          $64.09
Medical Social Services......          215.47  x 0.9998.......  + 6.34.........  x 1.023........          226.87
Occupational Therapy.........          147.95  x 0.9998.......  + 4.35.........  x 1.023........          155.77
Physical Therapy.............          146.95  x 0.9998.......  + 4.32.........  x 1.023........          154.72
Skilled Nursing..............          134.42  x 0.9998.......  + 3.96.........  x 1.023........          141.54
Speech Language Pathology....          159.71  x 0.9998.......  + 4.70.........  x 1.023........          168.16
----------------------------------------------------------------------------------------------------------------

    The proposed CY 2017 per-visit payment rates for an HHA that does 
not submit the required quality data are updated by the proposed CY 
2017 HH payment update percentage (2.3 percent) minus 2 percentage 
points and is shown in Table 13.

[[Page 43735]]



 Table 13--Proposed CY 2017 National Per-Visit Payment Amounts for HHAs That DO NOT Submit the Required Quality
                                                      Data
----------------------------------------------------------------------------------------------------------------
                                                                                    Proposed CY
                                                    Wage index                        2017 HH
                                   CY 2016 per-       budget          CY 2017     payment update    Proposed CY
       HH Discipline type           visit rates     neutrality       Rebasing         minus 2     2017 per-visit
                                                      factor        adjustment      percentage         rates
                                                                                      points
----------------------------------------------------------------------------------------------------------------
Home Health Aide................          $60.87        x 0.9998         + $1.79         x 1.003          $62.84
Medical Social Services.........          215.47        x 0.9998          + 6.34         x 1.003          222.43
Occupational Therapy............          147.95        x 0.9998          + 4.35         x 1.003          152.73
Physical Therapy................          146.95        x 0.9998          + 4.32         x 1.003          151.69
Skilled Nursing.................          134.42        x 0.9998          + 3.96         x 1.003          138.77
Speech Language Pathology.......          159.71        x 0.9998          + 4.70         x 1.003          164.87
----------------------------------------------------------------------------------------------------------------

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 $261.16 
(1.8451 multiplied by $141.54), subject to area wage adjustment.
e. Proposed CY 2017 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 proposed CY 2017 NRS conversion factor, we start with the 
CY 2016 NRS conversion factor ($52.71) 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 proposed CY 2017 
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 proposed NRS conversion factor for CY 
2017 is shown in Table 14.

       Table 14--Proposed CY 2017 NRS Conversion Factor for HHAs That DO Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                                                   Proposed CY
                                                                   CY 2017        Proposed CY        2017 NRS
                CY 2016 NRS conversion factor                      Rebasing         2017 HH         conversion
                                                                  adjustment    payment  update       factor
----------------------------------------------------------------------------------------------------------------
$52.71.......................................................        x 0.9718          x 1.023           $52.40
----------------------------------------------------------------------------------------------------------------

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

        Table 15--Proposed CY 2017 NRS Payment Amounts for HHAs That DO Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                                                    Proposed CY
                                                                                     Relative        2017 NRS
               Severity level                          Points  (scoring)              weight          payment
                                                                                                      amounts
----------------------------------------------------------------------------------------------------------------
1...........................................  0.................................          0.2698          $14.14
2...........................................  1 to 14...........................          0.9742           51.05
3...........................................  15 to 27..........................          2.6712          139.97
4...........................................  28 to 48..........................          3.9686          207.95
5...........................................  49 to 98..........................          6.1198          320.68
6...........................................  99+...............................         10.5254          551.53
----------------------------------------------------------------------------------------------------------------

    For HHAs that do not submit the required quality data, we begin 
with the CY 2016 NRS conversion factor ($52.71) 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 proposed CY 2017 HH payment update percentage (2.3 percent) minus 2 
percentage points. The proposed CY 2017 NRS conversion factor for HHAs 
that do not submit quality data is shown in Table 16.

[[Page 43736]]



     Table 16--Proposed CY 2017 NRS Conversion Factor for HHAs That DO NOT Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                                  Proposed CY
                                                                                2017 HH payment
                                                                   CY 2017           update        Proposed CY
                CY 2015 NRS Conversion factor                      Rebasing        percentage        2017 NRS
                                                                  adjustment        minus 2         conversion
                                                                                   percentage         factor
                                                                                     Points
----------------------------------------------------------------------------------------------------------------
$52.71.......................................................        x 0.9718          x 1.003           $51.38
----------------------------------------------------------------------------------------------------------------

    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.

      Table 17--Proposed CY 2017 NRS Payment Amounts for HHAs That DO NOT Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                                                    Proposed CY
                                                                                     Relative        2017 NRS
               Severity level                          Points  (scoring)              weight          payment
                                                                                                      amounts
----------------------------------------------------------------------------------------------------------------
1...........................................  0.................................          0.2698          $13.86
2...........................................  1 to 14...........................          0.9742           50.05
3...........................................  15 to 27..........................          2.6712          137.25
4...........................................  28 to 48..........................          3.9686          203.91
5...........................................  49 to 98..........................          6.1198          314.44
6...........................................  99+...............................         10.5254          540.80
----------------------------------------------------------------------------------------------------------------

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) (Public Law 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 2017, 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--Proposed CY 2017 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
----------------------------------------------------------------------------------------------------------------
                                                   Proposed CY                                      Proposed CY
                                                   2017 rural      Proposed CY                      2017 rural
  Proposed CY 2017 national,    Multiply by the     national,    2017 national,  Multiply by the     national,
  standardized 60-day episode   3 percent rural   standardized    standardized   3 percent rural   standardized
         payment rate                add-on          60-day          60-day           add-on          60-day
                                                     episode         episode                          episode
                                                  payment rate    payment rate                     payment rate
----------------------------------------------------------------------------------------------------------------
$2,936.68.....................          x 1.03        $3,024.78       $2,879.27          x 1.03        $2,965.65
----------------------------------------------------------------------------------------------------------------


[[Page 43737]]


                                   Table 19--Proposed CY 2017 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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Proposed CY   Multiply by the    Proposed CY     Proposed CY   Multiply by the    Proposed CY
                  HH Discipline type                    2017 per-visit  3 percent rural  2017 rural per- 2017 per-visit  3 percent rural  2017 rural per-
                                                             rate            add-on        visit rates        rate            add-on        visit rates
--------------------------------------------------------------------------------------------------------------------------------------------------------
HH Aide...............................................          $64.09          x 1.03           $66.01          $62.84          x 1.03           $64.73
MSS...................................................          226.87          x 1.03           233.68          222.43          x 1.03           229.10
OT....................................................          155.77          x 1.03           160.44          152.73          x 1.03           157.31
PT....................................................          154.72          x 1.03           159.36          151.69          x 1.03           156.24
SN....................................................          141.54          x 1.03           145.79          138.77          x 1.03           142.93
SLP...................................................          168.16          x 1.03           173.20          164.87          x 1.03           169.82
--------------------------------------------------------------------------------------------------------------------------------------------------------


             Table 20--Proposed CY 2017 NRS Conversion Factors for Services Provided in a Rural Area
----------------------------------------------------------------------------------------------------------------
                  For HHAs that DO submit quality data                      For HHAs that DO NOT submit quality
-------------------------------------------------------------------------                  data
                                                                         ---------------------------------------
                                                Multiply by  Proposed CY                Multiply by  Proposed CY
                                                   the 3      2017 rural  Proposed CY      the 3      2017 rural
      Proposed CY 2017 conversion factor          percent        NRS          2017        percent        NRS
                                                rural  add-   conversion   conversion   rural  add-   conversion
                                                    on          factor       factor         on          factor
----------------------------------------------------------------------------------------------------------------
$52.40.......................................       x 1.03        $53.97       $51.38       x 1.03        $52.92
----------------------------------------------------------------------------------------------------------------


              Table 21--Proposed CY 2017 NRS Payment Amounts for Services Provided in a Rural Area
----------------------------------------------------------------------------------------------------------------
                                                      For HHAs that DO submit       For HHAs that DO NOT submit
-------------------------------------------------          quality data                    quality data
                                                 ---------------------------------------------------------------
                                                                    Proposed CY                     Proposed CY
                                                                     2017 NRS                        2017 NRS
        Severity level          Points (scoring)     Relative         payment        Relative         payment
                                                      weight        amounts for       weight        amounts for
                                                                    rural areas                     rural areas
----------------------------------------------------------------------------------------------------------------
1.............................  0...............          0.2698          $14.56          0.2698          $14.28
2.............................  1 to 14.........          0.9742           52.58          0.9742           51.55
3.............................  15 to 27........          2.6712          144.16          2.6712          141.36
4.............................  28 to 48........          3.9686          214.19          3.9686          210.02
5.............................  49 to 98........          6.1198          330.29          6.1198          323.86
6.............................  99+.............         10.5254          568.06         10.5254          557.00
----------------------------------------------------------------------------------------------------------------

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 Home Health Resource Group (HHRG). The episode's 
estimated cost is the sum of the national wage-adjusted per-visit 
payment amounts for all visits delivered during the episode. The 
outlier threshold for each case-mix group or Partial Episode Payment 
(PEP) adjustment is defined as the 60-day episode payment or PEP 
adjustment for that group plus a fixed-dollar loss (FDL) amount. The 
outlier payment is defined to be a proportion of the wage-adjusted 
estimated cost beyond the wage-adjusted threshold. The threshold 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 proposed rule (74 FR 40948), we stated that 
outlier payments increased as a percentage of total payments from 4.1 
percent in CY 2005, to 5.0 percent in CY 2006, to 6.4 percent in CY 
2007 and that this excessive growth in outlier payments was primarily 
the result of unusually high outlier payments in a few areas of the 
country. In that discussion, we noted that 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 in CY 2007 and, in the absence of corrective measures, 
would continue do to so. Consequently, we assessed the appropriateness 
of taking action to curb outlier abuse. As described in the HH PPS 
final rule (74 FR 58080 through 58087), to mitigate possible billing 
vulnerabilities associated with excessive outlier payments and adhere 
to our statutory limit on outlier payments, we finalized 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

[[Page 43738]]

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 home health expenditures). 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 required the Secretary to reduce the HH 
PPS payment rates such that aggregate HH PPS payments were 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 the language 
to state that 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. Section 3131(b)(2)(C) of 
the Affordable Care Act also added subparagraph (B) which capped 
outlier payments as a percent of total payments 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 be paid as 
outlier payments, and apply a 10 percent agency-level outlier cap.
2. Proposed Changes to the Methodology Used To Estimate Episode Cost
    As stated earlier, an episode's estimated cost is determined by 
multiplying the national wage-adjusted per-visit payment amounts by 
discipline by the number of visits by discipline reported on the home 
health claim. An episode's estimated cost is then used to determine 
whether an episode will receive an outlier payment and the amount of 
the outlier payment. Analysis of CY 2015 home health claims data 
indicates that there is significant variation in the visit length by 
discipline for outlier episodes. Those agencies with 10 percent of 
their total payments as outlier payments are providing shorter but more 
frequent skilled nursing visits than agencies with less than 10 percent 
of their total payments as outlier payments (see Table 22).

  Table 22--Average Number and Length of Skilled Nursing Visits by the
  Percentage of Outlier Payments to Total Payments at the Agency Level
                 (Current Outlier Methodology), CY 2015
------------------------------------------------------------------------
                                                                 Avg.
                                                 Avg. # of   minutes per
                                                  skilled      skilled
                                                  nursing      nursing
                                                   visits       visit
------------------------------------------------------------------------
<1% Total Outlier Payments....................         21.7         47.2
1% to <5% Total Outlier Payments..............         26.7         44.0
5% to <10% Total Outlier Payments.............         26.7         44.3
10% Total Outlier Payments....................         44.5         35.6
------------------------------------------------------------------------
Source: CY 2015 home health claims data from the standard analytic file
  (as of December 31, 2015) for which we had a linked OASIS assessment.
Note(s): These results are based on simulations using CY 2015
  utilization and the CY2017 payment parameters.

    As shown in Table 23, the number of skilled nursing visits is 
significantly higher than the number of visits for the five other 
disciplines of care and therefore, outlier payments are predominately 
driven by the provision of skilled nursing services.

  Table 23--Average Number of Visits by Discipline for Outlier Episodes
------------------------------------------------------------------------
                                                               Average
                         Discipline                           number of
                                                                visits
------------------------------------------------------------------------
Home health aide...........................................          8.8
Medical social services....................................          0.3
Occupational therapy.......................................          2.3
Physical therapy...........................................          5.1
Skilled nursing............................................         34.0
Speech-language pathology..................................          0.7
------------------------------------------------------------------------
Source: CY 2015 home health claims data from the standard analytic file
  (as of December 31, 2015) for which we had a linked OASIS assessment.
Note(s): These results are based on simulations using CY 2015
  utilization and the CY2017 payment parameters.

    As a result of the analysis of CY 2015 home health claims data, we 
are concerned the current methodology for calculating outlier payments 
may create a financial disincentive for providers to treat medically 
complex beneficiaries who require longer visits. The home health 
environment differs from hospitals and other institutional 
environments. In the home setting, the patient has a greater role in 
determining how, when, and even if, certain interventions will be 
implemented. Individual skill, cognitive and functional ability, and 
financial resources affect the ability of home health patients to 
safely manage their health care needs, interventions, and medication 
regimens.\5\ Clinically complex patients generally use more health 
services, have functional limitations, need more assistance to perform 
activities of daily living (ADLs), require social support and community 
resources, and require more complex medical interventions.\6\ For 
example, patients using home total parenteral nutrition (TPN) must cope 
with very high-tech needs at home and because of the complexity of TPN 
therapy, a high level of knowledge and expertise is required in the 
clinical management of these patients.\7\ In addition to the direct 
patient care needs, patient education aims at instruction on the care 
of the central venous access device, administration procedures and 
monitoring for complications, overall well-being, parenteral nutrition 
composition and frequency, test results, medications, practical and 
psychosocial

[[Page 43739]]

issues.\8\ Visit frequency for home TPN patients varies and length of 
nursing visits can range from 15 minutes for infusion site and catheter 
assessment to 10 hours for direct patient care.\9\ For those patients 
who require assistance with bathing, research has shown older persons 
are more likely to have negative expectations regarding the 
inevitability of further physical decline after they experience bathing 
difficulties.\10\ As older home health patients decline, they may be 
more likely to accept assistance with bathing and this may have the 
unintended consequence of reliance on bathing assistance, which could 
lead to further functional decline in the performance of other ADLs. To 
mitigate further functional decline, home health nursing intensity and 
visit time increases as home nursing interventions are targeted to work 
with patients and caregivers on bathing sub-tasks, assistance in 
modifying the home environment through the acquisition and use of 
adaptive equipment and devising strategies to support patients in 
dealing with pain and fatigue that could prevent independent 
bathing.\11\
---------------------------------------------------------------------------

    \5\ Ibid.
    \6\ Rich, E., Lipson, D., Libersky, J., Parchman, M. (2012). 
Coordinating Care for Adults with Complex Care Needs in the Patient-
Centered Medical Home: Challenges and Solutions. AHRQ Publication 
No. 12-0010, https://pcmh.ahrq.gov/page/coordinating-care-adults-complex-care-needs-patient-centered-medical-home-challenges-and.
    \7\ Huisman-deWaal, G. Achterberg, T., Jansen, J., Wanten, G., 
Schoonhoven, L. (2010). ``High-tech'' home care: Overview of 
professional care in patients on home parenteral nutrition and 
implications for nursing care. Journal of Clinical Nursing. (20), 
2125-2134.
    \8\ Ibid.
    \9\ Piamjariyakul, U., Ross, V., Yadrich, D.M., Williams, A., 
Howard, L., Smith, C. (2010). Complex Home Care: Part I-Utilization 
and Costs to Families for Health Care Services Each Year. Nursing 
Economics. 28(4), 255-263
    \10\ Friedman, B., Yanen, L., Liebel, D., Powers, B. (2014). 
Effects of Home Visiting Nurse Intervention versus Care as Usual on 
Individual Activities of Daily Living: A Secondary Analysis of a 
Randomized Trial. BMC Geriatrics. 14(24), 1-13.
    \11\ Ibid.
---------------------------------------------------------------------------

    Higher nursing visit intensity and longer visits are a generally a 
response to instability of the patient's condition, and/or inability to 
effectively and safely manage their condition and self-care activities; 
therefore, more clinically complex, frail, elderly patients will 
require more intensive and frequent home health surveillance, increased 
home health care utilization, and costs.12 13
---------------------------------------------------------------------------

    \12\ Fried. L., Ferrucci, L., Darer, J., Williamson, J., 
Anderson, G. (2004). Untangling the Concepts of Disability, Frailty 
and Comorbidity: Implications for Improved Targeting and Care. 
Journal of Gerontology. 59(3), 255-263.
    \13\ Riggs, J., Madigan, E., Fortinsky, R. (2011). Home Health 
Care Nursing Visit Intensity and Heart Failure Patient Outcomes. 
Home Health Care Managing Practice. 23(6), 412-420.
---------------------------------------------------------------------------

    In addition to the clinical information described above, 
Mathematica Policy Research published a report in 2010 titled ``Home 
Health Independence Patients: High Use, but Not Financial Outliers.'' 
\14\ In this report, Mathematica described their analysis of the 
relationships among the proxy demonstration target group for the Home 
Health Independence Demonstration, patients who receive outlier 
payments, and the agencies that serve them. As part of their research, 
Mathematica examined the degree of overlap between the proxy 
demonstration target group, who are ill, permanently disabled 
beneficiaries, and those beneficiaries receiving outlier payments. The 
study found that ``Only a small fraction of proxy demonstration 
patients generate outlier payments and that differences between the 
proxy demonstration and outlier patient groups examined in this study 
suggest that outlier payments are not generally being used to serve the 
types of severely, permanently disabled beneficiaries that were 
addressed by the demonstration concept.''
---------------------------------------------------------------------------

    \14\ Cheh, Valerie and Schurrer, John. Home Health Independence 
Patients: High Use, but Not Financial Outliers, Report to Centers 
for Medicare and Medicaid, Mathematical Policy Research. March 31, 
2010.
---------------------------------------------------------------------------

    Therefore, we are proposing to change the methodology used to 
calculate outlier payments, using a cost-per-unit approach rather than 
a cost-per-visit approach. Using this approach, we would convert the 
national per-visit rates in section III.C.3. into per 15 minute unit 
rates (see Table 24). The new per-unit rates by discipline would then 
be used, along with the visit length data by discipline reported on the 
home health claim in 15 minute increments (15 minutes = 1 unit), to 
calculate the estimated cost of an episode to determine whether the 
claim will receive an outlier payment and the amount of payment for an 
episode of care. We note that this change in the methodology would be 
budget neutral as we would still target to pay out 2.5 percent of total 
payments as outlier payments in accordance with section 1895(b)(5)(A) 
of the Act, which requires us to pay up to, but no more than, 2.5 
percent of total HH PPS payments as outlier payments.

             Table 24--Proposed Cost-per-Unit Payment Rates for the Calculation of Outlier Payments
----------------------------------------------------------------------------------------------------------------
                                                                    Proposed CY
                                                                   2017 national      Average      Cost-per-unit
                           Visit type                                per-visit     minutes- per-   (1 unit = 15
                                                                   payment rates       visit         minutes)
----------------------------------------------------------------------------------------------------------------
Home health aide................................................          $64.09            62.2          $15.46
Medical social services.........................................          226.87            56.4           60.34
Occupational therapy............................................          155.77            47.1           49.61
Physical therapy................................................          154.72            46.6           49.80
Skilled nursing.................................................          141.54            44.7           47.50
Speech-language pathology.......................................          168.16            48.1           52.44
----------------------------------------------------------------------------------------------------------------
Source: CY 2015 home health claims data from the standard analytic file (as of December 31, 2015) for which we
  had a linked OASIS assessment.
Note(s): Excludes LUPAs.

    We believe that this proposed change to the outlier methodology 
will result in more accurate outlier payments where the calculated cost 
per episode accounts for not only the number of visits during an 
episode of care, but also the length of the visits performed. This, in 
turn, may address some of the findings from the home health study, 
where margins were lower for patients with medically complex needs that 
typically require longer visits, thus potentially creating an incentive 
to treat less complex patients.
    Table 25 shows the difference in the average number of visits and 
the average minutes per visit for outlier episodes under the current 
outlier methodology and the proposed outlier methodology by the 
percentage of outlier payments to total payments at the agency level.

[[Page 43740]]



Table 25--Average Number of Visits and Minutes per Visit by the Percentage of Outlier Payments to Total Payments
      at the Agency Level for Outlier Episodes for the Current and Proposed Outlier Methodologies, CY 2015
----------------------------------------------------------------------------------------------------------------
                                                                   Current Outlier          Proposed Outlier
                                                                Methodology (Cost per     Methodology (Cost per
                                                                       Visit)                     Unit)
                                                             ---------------------------------------------------
                                                                               Avg.                      Avg.
                                                               Avg. # of   minutes per   Avg. # of   minutes per
                                                                 visits       visit        visits       visit
----------------------------------------------------------------------------------------------------------------
<1% Total Outlier Payments..................................         39.7         48.9         38.5         52.6
1% to <5% Total Outlier Payments............................         44.7         49.2         43.5         52.0
5% to <10% Total Outlier Payments...........................         44.7         49.6         54.8         55.2
10% Total Outlier Payments..................................         60.7         44.0         56.4         65.6
----------------------------------------------------------------------------------------------------------------
Source: CY 2015 home health claims data from the standard analytic file (as of December 31, 2015) for which we
  had a linked OASIS assessment.
Note(s): These results are based on simulations using CY 2015 utilization and the CY2017 payment parameters.

    Analysis of the impact of the change from a cost-per-visit to a 
cost-per-unit approach indicates that approximately two-thirds of 
outlier episodes under the cost-per-unit approach would have still 
received outlier payments under the current cost-per-visit approach, 
while about one-third of outlier episodes under the current cost per 
visit approach would not receive outlier payments under the cost-per-
unit approach. Table 26 shows the average number of visits and the 
visit length for the episodes that would receive outlier payments under 
the current cost-per-visit approach, but not under the proposed cost-
per-unit approach, as well as the average number of visits and the 
visit length for the episodes that would receive outlier payments under 
the proposed cost-per-unit approach, but not under the current cost-
per-visit approach. Those episodes that would only receive outlier 
payments under the current cost-per-visit approach have less average 
resource use (calculated by multiplying the number of visits with the 
number of minutes) than those episodes that would only receive outlier 
payments under the proposed cost-per-unit approach. These results 
indicate that the change from the current cost-per-visit methodology to 
the proposed cost-per-unit methodology would result in more accurate 
outlier payments that better account for the intensity of the visits 
performed rather than only visit volume.

  Table 26--Average Number of Visits and Visit Length for Episodes That Receive Outlier Payments Only Under the
   Current Outlier Methodology and for Episodes That Receive Outlier Payments Only Under the Proposed Outlier
                                              Methodology, CY 2015
----------------------------------------------------------------------------------------------------------------
                                                     Episodes that only would        Episodes that only would
                                                  receive outlier payments under  receive outlier payments under
                                                      the current methodology        the proposed methodology
                                                 ---------------------------------------------------------------
                                                     Avg. # of     Avg.  minutes     Avg. # of     Avg.  minutes
                                                      visits         per visit        visits         per visit
----------------------------------------------------------------------------------------------------------------
<1% Total Outlier Payments......................            36.8            39.9            29.8            63.4
1% to <5% Total Outlier Payments................            37.6            38.5            30.6            65.6
5% to <10% Total Outlier Payments...............            43.8            36.4            30.2            85.9
10% Total Outlier Payments......................            46.1            27.5            31.9           104.5
----------------------------------------------------------------------------------------------------------------
Source: CY 2015 home health claims data from the standard analytic file (as of December 31, 2015) for which we
  had a linked OASIS assessment.
Note(s): These results are based on simulations using CY 2015 utilization and the CY2017 payment parameters.

    In addition, we examined the impact of changing from the current 
cost-per-visit methodology to the proposed cost-per-unit methodology on 
a subset of the vulnerable patient populations identified in the home 
health study. Our simulations indicate that certain subgroups 
identified in the home health study may benefit from the change from 
the current outlier methodology to the proposed outlier methodology. 
Table 27 shows some of the vulnerable patient populations that may 
benefit from the proposed changes to the outlier methodology. As shown 
in Table 27, preliminary analysis indicates that a larger percentage of 
episodes of care for patients with a fragile overall health status will 
qualify for outlier payments under the proposed methodology than under 
the current methodology (24.1 percent versus 20.1 percent). Similarly, 
a larger percentage of episodes of care for patients who need 
assistance with bathing will qualify for outlier payments under the 
proposed methodology than under the current methodology (29.1 percent 
versus 27.0 percent). In addition, a larger percentage of episodes of 
care for patients who need caregiver assistance or who have surgical 
wounds will qualify for outlier payments under the proposed methodology 
versus under the current methodology (7.7 percent versus 6.7 percent 
and 19.0 percent versus 18.1 percent, respectively). Furthermore, there 
are small increases in the percentage of episodes of care that would 
qualify for outlier payments for the patients who need parenteral 
nutrition or have poorly controlled cardiac dysrhythmia or pulmonary 
disorders. These results suggest that the proposed change to the 
outlier methodology may address some of the findings from the home 
health study and may alleviate potential financial

[[Page 43741]]

disincentives to treat patients with medically complex needs.

   Table 27--Impact of the Proposed Outlier Methodology Change on Subgroups of Vulnerable Patient Populations
                                       Identified in the Home Health Study
----------------------------------------------------------------------------------------------------------------
                                                 Overall percentage    Percent of outliers   Percent of outliers
 Subgroups identified in the home health study    for all non-LUPA     based on cost-per-    based on cost-per-
                                                    episodes (%)       visit approach (%)     unit approach (%)
----------------------------------------------------------------------------------------------------------------
Needs caregiver assistance....................                   6.8                   6.7                   7.7
Fragile-serious overall status................                  21.9                  20.1                  24.1
Needs assistance with bathing.................                  20.1                  27.0                  29.1
Parenteral Nutrition..........................                   0.2                   0.2                   0.4
Poorly Controlled Cardiac Dysrhythmia.........                   4.3                   3.4                   3.8
Poorly Controlled Pulmonary Disorder..........                   7.8                   5.4                   6.0
Surgical Wound................................                  17.6                  18.1                  19.0
----------------------------------------------------------------------------------------------------------------
Source: CY 2015 home health claims data from the standard analytic file (as of December 31, 2015) for which we
  had a linked OASIS assessment.
Note(s): These results are based on simulations using CY 2015 utilization and the CY2017 payment parameters.

    In concert with our proposal to change to a cost-per-unit approach 
to estimate episode costs and determine whether an outlier episode 
should receive outlier payments, we are proposing to implement a cap on 
the amount of time per day that would be counted toward the estimation 
of an episode's costs for outlier calculation purposes. Specifically, 
we propose to limit the amount of time per day (summed across the six 
disciplines of care) to 8 hours or 32 units per day when estimating the 
cost of an episode for outlier calculation purposes. We note that this 
proposal is consistent with the definition of ``part-time'' or 
``intermittent'' set out in section 1861(m) of the Act, which limits 
the amount of skilled nursing and home health aide minutes combined to 
less than 8 hours each day and 28 or fewer hours each week (or, subject 
to review on a case-by-case basis as to the need for care, less than 8 
hours each day and 35 or fewer hours per week). We also note that we 
are not limiting the amount of care that can be provided on any given 
day. We are only limiting the time per day that can be credited towards 
the estimated cost of an episode when determining if an episode should 
receive outlier payments and calculating the amount of the outlier 
payment. For instances when more than 8 hours of care is provided by 
one discipline of care, the number of units for the line item will be 
capped at 32 units for the day for outlier calculation purposes. For 
rare instances when more than one discipline of care is provided and 
there is more than 8 hours of care provided in one day, the episode 
cost associated with the care provided during that day will be 
calculated using a hierarchical method based on the cost per unit per 
discipline shown in Table 24. The discipline of care with the lowest 
associated cost per unit will be discounted in the calculation of 
episode cost in order to cap the estimation of an episode's cost at 8 
hours of care per day. For example, if an HHA provided 4.5 hours of 
skilled nursing and 4.5 hours of home health aide services, all 4.5 
hours of skilled nursing would be counted in the episode's estimated 
cost and 3.5 hours of home health aide services would be counted in the 
episode's estimated cost (8 hours - 4.5 hours = 3.5 hours) since home 
health aide services has a lower cost-per-unit than skilled nursing 
services.
    We note that preliminary analysis suggests that this proposed cap 
will have a limited impact on episodes overall. Out of approximately 
5.4 million episodes in our preliminary analytic file for 2015, only 
15,384 episodes or 0.28 percent of all home health episodes reported 
instances where over 8 hours of care were provided in a single day 
(which could have resulted from data entry errors as we currently do 
not use visit length for payment). Of those 15,384 episodes, only 1,591 
would be outlier episodes under the proposed outlier methodology. 
Therefore, we estimate that only 1,600 episodes or so, out of 5.4 
million episodes, would be impacted due to the proposed 8 hour cap.
3. Proposed Fixed Dollar Loss (FDL) Ratio
    For a given level of outlier payments, there is a trade-off between 
the values selected for the FDL ratio and the loss-sharing ratio. A 
high FDL ratio reduces the number of episodes that can receive outlier 
payments, but makes it possible to select a higher loss-sharing ratio, 
and therefore, increase outlier payments for 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.

[[Page 43742]]

    For this proposed rule, simulating payments using preliminary CY 
2015 claims data (as of December 31, 2015) and the CY 2016 payment 
rates (80 FR 68649 through 68652), we estimate that outlier payments in 
CY 2016 would comprise 2.23 percent of total payments. Based on 
simulations using CY 2015 claims data and the CY 2017 payment rates in 
section III.C.3 of this proposed rule, we estimate that outlier 
payments would comprise approximately 2.58 percent of total HH PPS 
payments in CY 2017 under the current outlier methodology, a percent 
change of approximately 15.7 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 the statutory requirement to target up to, but no more than, 
2.5 percent of total payments as outlier payments, we are proposing a 
change to the FDL ratio for CY 2017 as we believe that maintaining an 
FDL ratio of 0.45 with a loss-sharing ratio of 0.80 is no longer 
appropriate given the percentage of outlier payments projected for CY 
2017. We note that we are not proposing a change to the loss-sharing 
ratio (0.80) in order for the HH PPS to remain consistent with payment 
for high-cost outliers in other Medicare payment systems (for example, 
IRF PPS, IPPS, etc.) Under the current outlier methodology, the FDL 
ratio would need to be changed from 0.45 to 0.48 to pay up to, but no 
more than, 2.5 percent of total payments as outlier payments. Under the 
proposed outlier methodology which would use a cost per unit rather 
than a cost per visit when calculating episode costs, we estimate that 
we will pay out 2.74 percent in outlier payments in CY 2017 using an 
FDL ratio of 0.48 and that the FDL ratio will need to be changed to 
0.56 to pay up to, but no more than, 2.5 percent of total payments as 
outlier payments.
    Therefore, in addition to the proposal to change the methodology 
used to calculate outlier payments, we are proposing to change the FDL 
ratio from 0.45 to 0.56 for CY 2017. We note that 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 2015 claims data as of June 30, 2016) and therefore, we may adjust 
the final FDL ratio accordingly. We invite public comments on the 
proposed changes to the outlier payment calculation methodology and the 
associated changes in the regulations text at Sec.  484.240 as well as 
the proposed change to the FDL ratio.

E. Proposed Payment Policies for Negative Pressure Wound Therapy (NPWT) 
Using a Disposable Device

1. Background
    Negative pressure wound therapy (NPWT) is a medical procedure in 
which a vacuum dressing is used to enhance and promote healing in 
acute, chronic, and burn wounds. The therapy involves using a sealed 
wound dressing attached to a pump to create a negative pressure 
environment in the wound. Applying continued or intermittent vacuum 
pressure helps to increase blood flow to the area and draw out excess 
fluid from the wound. Moreover, the therapy promotes wound healing by 
preparing the wound bed for closure, by reducing edema, by promoting 
granulation tissue formation and perfusion, and by removing exudate and 
infectious material. The wound type and/or the location of the wound 
determine whether the vacuum can either be applied continuously or 
intermittently. NPWT can be utilized for varying lengths of time, as 
indicated by the severity of the wound, from a few days of use up to a 
span of several months.
    In addition to the conventional NPWT systems classified as durable 
medical equipment (DME), NPWT can also be performed with a single-use 
disposable system that consists of a non-manual vacuum pump, a 
receptacle for collecting exudate, and dressings for the purposes of 
wound therapy. These disposable systems consist of a small pump, which 
eliminates the need for a bulky canister. Unlike conventional NPWT 
systems classified as DME, disposable NPWT systems have a preset 
continuous negative pressure, there is no intermittent setting, they 
are pocket-sized and easily transportable, and they are generally 
battery-operated with disposable batteries.\15\
---------------------------------------------------------------------------

    \15\ Single use negative pressure wound therapy. CME Online. 
2013 www.pfiedler.com.
---------------------------------------------------------------------------

    Section 1895 of the Act requires that the HH PPS includes payment 
for all covered home health services. Section 1861(m) of the Act 
defines what items and services are considered to be ``home health 
services'' when furnished to a Medicare beneficiary under a home health 
plan of care when provided in the beneficiary's place of residence. 
Those services include:
     Part-time or intermittent nursing care
     Physical or occupational therapy or speech-language 
pathology services
     Medical social services
     Part-time or intermittent services of a home health aide
     Medical supplies
     A covered osteoporosis drug
     Durable medical equipment (DME)
    The unit of payment under the HH PPS is a national, standardized 
60-day episode payment amount with applicable adjustments. The 
national, standardized 60-day episode payment amount includes costs for 
the home health services outlined above per section 1861(m) of the Act, 
except for DME and the covered osteoporosis drug. Section 1814(k) of 
the Act specifically excludes DME from the national, standardized 60-
day episode rate and consolidated billing requirements. DME continues 
to be paid outside of the HH PPS. The cost of the covered osteoporosis 
drug (injectable calcitonin), which is covered where a woman is 
postmenopausal and has a bone fracture, is also not included in the 
national, standardized 60-day episode payment amount, but must be 
billed by the HHA while a patient is under a home health plan of care 
since the law requires consolidated billing of osteoporosis drugs. The 
osteoporosis drug itself continues to be paid on a reasonable cost 
basis.
    Medical supplies are included in the definition of ``home health 
services'' and the cost of such supplies is included in the national, 
standardized 60-day episode payment amount. Medical supplies are items 
that, due to their therapeutic or diagnostic characteristics, are 
essential in enabling HHA personnel to conduct home visits or to carry 
out effectively the care the physician has ordered for the treatment or 
diagnosis of the patient's illness or injury. Supplies are classified 
into two categories, specifically:
     Routine: Supplies used in small quantities for patients 
during the usual course of most home visits; or
     Non-routine: Supplies needed to treat a patient's specific 
illness or injury in accordance with the physician's plan of care and 
meet further conditions.
    Both routine and non-routine medical supplies are included in the 
national, standardized 60-day episode payment amount for every Medicare 
home health patient regardless of whether or not the patient requires 
medical supplies during the episode. The law requires that all medical 
supplies (routine and non-routine) be provided by the HHA while the 
patient is under a home health plan of care. A disposable NPWT system 
would be considered a non-routine supply for home health.
    As required under sections 1814(a)(2)(C) and 1835(a)(2)(A) of the

[[Page 43743]]

Act, for home health services to be covered, the patient must receive 
such services under a plan of care established and periodically 
reviewed by a physician. As described in Sec.  484.18 of the Medicare 
Conditions of Participation (CoPs), the plan of care that is developed 
in consultation with the agency staff, is to cover all pertinent 
diagnoses, including the types of services and equipment required for 
the treatment of those diagnoses as well as any other appropriate 
items, including DME. Consolidated billing requirements ensure that 
only the HHA can bill for home health services, with the exception of 
DME and therapy services provided by physicians, when a patient is 
under a home health plan of care. The types of service most affected by 
the consolidated billing edits tend to be non-routine supplies and 
outpatient therapies, since these services are routinely billed by 
providers other than HHAs, or are delivered by HHAs to patients not 
under home health plans of care.
    As provided under section 1834(k)(5) of the Act, a therapy code 
list was created based on a uniform coding system (that is, the HCPCS) 
to identify and track these outpatient therapy services paid under the 
Medicare Physician Fee Schedule (MPFS). The list of therapy codes, 
along with their respective designation, can be found on the CMS Web 
site, specifically at http://www.cms.hhs.gov/TherapyServices/05_Annual_Therapy_Update.asp#TopOfPage. Two of the designations that 
are used for therapy services are: ``Always therapy'' and ``sometimes 
therapy.'' An ``always therapy'' service must be performed by a 
qualified therapist under a certified therapy plan of care, and a 
``sometimes therapy'' service may be performed by physician or a non-
physician practitioner outside of a certified therapy plan of care. CPT 
codes 97607 and 97608 are categorized as a ``sometimes'' therapy, which 
may be performed by either a physician or a non-physician practitioner 
outside of a certified therapy plan of care, as described in section 
200.9 of Chapter 4 of the Medicare Claims Processing Manual.\16\
---------------------------------------------------------------------------

    \16\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c04.pdf.
---------------------------------------------------------------------------

2. The Consolidated Appropriations Act of 2016
    As mentioned in section III.A.1 above, for patients under a home 
health plan of care, payment for part-time or intermittent skilled 
nursing, physical therapy, speech-language pathology, occupational 
therapy, medical social services, part-time or intermittent home health 
aide visits, and routine and non-routine supplies are included in the 
episode payment amount. A disposable NPWT system is currently 
considered a non-routine supply and thus payment for the disposable 
NPWT system is included in the episode payment amount. The Consolidated 
Appropriations Act of 2016 (Pub. L 114-113) amends both section 1834 of 
the Act (42 U.S.C. 1395m) and section 1861(m)(5) of the Act (42 U.S.C. 
1395x(m)(5)), requiring a separate payment to a HHA for an applicable 
disposable device when furnished on or after January 1, 2017, to an 
individual who receives home health services for which payment is made 
under the Medicare home health benefit. Section 1834(s)(2) of the Act 
defines an applicable device as a disposable negative pressure wound 
therapy device that is an integrated system comprised of a non-manual 
vacuum pump, a receptacle for collecting exudate, and dressings for the 
purposes of wound therapy used in lieu of a conventional NPWT DME 
system.
    As required by the Consolidated Appropriations Act of 2016 (Pub. L 
114-113), the separate payment amount for NPWT using a disposable 
system is to be set equal to the amount of the payment that would be 
made under the Medicare Hospital Outpatient Prospective Payment System 
(OPPS) using the Level I Healthcare Common Procedure Coding System 
(HCPCS) code, otherwise referred to as Current Procedural Terminology 
(CPT-4) codes, for which the description for a professional service 
includes the furnishing of such a device.
    Under the OPPS, CPT codes 97607 and 97608 (APC 5052--Level 2 Skin 
Procedures), include furnishing the service as well as the disposable 
NPWT device. The codes are defined as follows:
     HCPCS 97607--Negative pressure wound therapy, (for 
example, vacuum assisted drainage collection), utilizing disposable, 
non-durable medical equipment including provision of exudate management 
collection system, topical application(s), wound assessment, and 
instructions for ongoing care, per session; total wound(s) surface area 
less than or equal to 50 square centimeters.
     HCPCS 97608--Negative pressure wound therapy, (for 
example, vacuum assisted drainage collection), utilizing disposable, 
non-durable medical equipment including provision of exudate management 
collection system, topical application(s), wound assessment, and 
instructions for ongoing care, per session; total wound(s) surface area 
greater than 50 square centimeters.
3. Proposed Payment Policies for NPWT Using a Disposable Device
    For the purposes of paying for NPWT using a disposable device for a 
patient under a Medicare home health plan of care and for which payment 
is otherwise made under section 1895(b) of the Act, CMS is proposing 
that for instances where the sole purpose for an HHA visit is to 
furnish NPWT using a disposable device, Medicare will not pay for the 
visit under the HH PPS. Instead, we propose that since furnishing NPWT 
using a disposable device for a patient under a home health plan of 
care is to be paid separately, based on the OPPS amount, which includes 
payment for both the device and furnishing the service, the HHA must 
bill these visits separately under type of bill 34x (used for patients 
not under a HH plan of care, Part B medical and other health services, 
and osteoporosis injections) along with the appropriate HCPCS code 
(97607 or 97608). Visits performed solely for the purposes of 
furnishing NPWT using a disposable device are not to be reported on the 
HH PPS claim (type of bill 32x).
    If NPWT using a disposable device is performed during the course of 
an otherwise covered HHA visit (for example, while also furnishing a 
catheter change), we propose that the HHA must not include the time 
spent furnishing NPWT in their visit charge or in the length of time 
reported for the visit on the HH PPS claim (type of bill 32x). 
Providing NPWT using a disposable device for a patient under a home 
health plan of care will be separately paid based on the OPPS amount 
relating to payment for covered OPD services. In this situation, the 
HHA bills for NPWT performed using a disposable device under type of 
bill 34x along with the appropriate HCPCS code (97607 or 97608). 
Additionally, this same visit should also be reported on the HH PPS 
claim (type of bill 32x), but only for the time spent furnishing the 
services unrelated to the provision of NPWT.
    As noted in section III.E.1, since these two CPT codes (97607 and 
97608) are considered ``sometimes'' therapy codes, NPWT using a 
disposable device for patients under a home health plan of care can be 
performed, in accordance to State law, by a registered nurse, physical 
therapist, or occupational therapist and the visits would be reported 
on the type of bill 34x using revenue codes 0559, 042X, 043X. The

[[Page 43744]]

descriptions for CPT codes 97607 and 97608 include performing a wound 
assessment, therefore we believe that it would only be appropriate for 
these visits to be performed by a registered nurse, physical therapist, 
or occupational therapist as defined in Sec.  484.4 of the Medicare 
Conditions of Participation (CoPs).
    The payment amount for both 97607and 97608 will be set equal to the 
amount of the payment that would be made under the OPPS and subject to 
the area wage adjustment policies in place under the OPPS, for CY 2017 
and each subsequent year. Please see Medicare Hospital OPPS Web page 
for Addenda A and B at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Addendum-A-and-Addendum-B-Updates.html. These addenda are a ``snapshot'' of HCPCS codes and their 
status indicators, APC groups, and OPPS payment rates that are in 
effect at the beginning of each quarter. Section 504(b)(1) of the 
Consolidated Appropriations Act of 2016 (Pub. L 114-113) amends section 
1833(a)(1) of the Act, which requires that furnishing the NPWT using a 
disposable device be subject to beneficiary coinsurance in the amount 
of 20 percent. The amount paid to the HHA by Medicare will be equal to 
80 percent of the lesser of the actual charge or the payment amount as 
determined by the OPPS for the year.
    In order for a beneficiary to receive NPWT using a disposable 
device under the home health benefit, the beneficiary must also qualify 
for the home health benefit in accordance with the existing eligibility 
requirements. To be eligible for Medicare home health services, as set 
out in sections 1814(a) and 1835(a) of the Act, a physician must 
certify that the Medicare beneficiary (patient) meets the following 
criteria:

 Is confined to the home
 Needs skilled nursing care on an intermittent basis or 
physical therapy or speech-language pathology; or have a continuing 
need for occupational therapy
 Is under the care of a physician
 Receive services under a plan of care established and reviewed 
by a physician; and
 Has had a face-to-face encounter related to the primary reason 
for home health care with a physician or allowed Non-Physician 
Practitioner (NPP) within a required timeframe.

    As set forth in Sec. Sec.  409.32 and 409.44, to be considered a 
skilled service, the service must be so inherently complex that it can 
be safely and effectively performed only by, or under the supervision 
of, professional or technical personnel. Additionally, care is deemed 
as ``reasonable and necessary'' based on information reflected in the 
home health plan of care, the OASIS as required by Sec.  484.55, or a 
medical record of the individual patient. Coverage for NPWT using a 
disposable device will be determined based upon a doctor's order as 
well as patient preference. Research has shown that patients prefer 
wound dressing materials that afford the quickest wound healing, pain 
reduction, maximum exudate absorption to minimize drainage and odor, 
and they indicated some willingness to pay out of pocket costs.\17\ 
Treatment decisions as to whether to use a disposable NPWT system 
versus a conventional NPWT DME system is determined by the 
characteristics of the wound, as well as, patient goals and preferences 
discussed with the ordering physician to best achieve wound healing and 
reduction.
---------------------------------------------------------------------------

    \17\ Corbett, L., Ennis, W. (2014). What Do Patients Want? 
Patient Preferences in Wound Care. 3(8), 537-543.
---------------------------------------------------------------------------

    We are soliciting public comment on all aspects of the proposed 
payment policies for furnishing a disposable NPWT device as articulated 
in this section as well as the corresponding proposed changes to the 
regulations at Sec.  409.50 in section VII of this proposed rule.

F. Update on Subsequent Research and Analysis Related to Section 
3131(d) of the Affordable Care Act

    Section 3131(d) of the Patient Protection and Affordable Care Act 
(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''), directed the Secretary of Health and 
Human Services (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 and to 
submit a Report to Congress on the study's findings and 
recommendations. As part of the study, the Affordable Care Act stated 
that we may also analyze methods to potentially revise the home health 
prospective payment system (HH PPS). In the CY 2016 HH PPS proposed 
rule (80 FR 39840), we summarized the Report to Congress on the home 
health study, required by section 3131(d) of the Affordable Care Act, 
and provided information on the initial research and analysis conducted 
to potentially revise the HH PPS case-mix methodology to address the 
home health study findings outlined in the Report to Congress. In this 
proposed rule, we are providing an update on additional research and 
analysis conducted on the Home Health Groupings Model (HHGM), one of 
the model options referenced in the CY 2016 HH PPS proposed rule (80 FR 
39866).
    The premise of the HHGM starts with a clinical foundation where 
home health episodes are grouped by primary diagnosis based on what 
home health interventions would be required during the episode of care. 
In addition to the clinical groupings, the HHGM incorporates other 
information from the OASIS and claims data to further group home health 
episodes for payment. Each home health episode is categorized into 
different sub-groups within each of the five categories below:

 Timing (early or late; that is, episode is placed into 1 of 2 
groups)
 Referral source (community, acute, or post-acute admission 
source; that is, episode is placed into 1 of 3 groups)
 Clinical grouping (musculoskeletal rehab, neuro/stroke rehab, 
wounds, MMTA, behavioral, or complex; that is, episode is placed into 1 
of 6 groups)
 Functional/cognitive level (low, medium, or high; that is, 
episode is placed into 1 of 3 groups)
 Comorbidity adjustment (first, second, or third, tier based on 
secondary diagnoses; that is, episode is placed into 1 of 3 groups)

    In total there would be 324 possible payment groupings an episode 
can be grouped into under the HHGM. Unlike the current payment model, 
the HHGM does not rely on the number of therapy visits performed to 
influence payment.
    Similar to the current payment system, episodes under the HHGM are 
first classified as ``early'' or ``late'' depending on when they occur 
within a sequence of adjacent episodes, as outlined in our regulations 
at Sec.  484.230. Currently, the first two 60-day episodes of care are 
considered ``early'' and third or later 60-day episodes of care are 
considered ``late''. However, recent analysis shows that there is a 
substantial difference in the number of visits that occur during the 
first 30 days of a 60-day episode of care compared to the second 30 
days in a 60-day episode of care (see Figure 4, below).

[[Page 43745]]

[GRAPHIC] [TIFF OMITTED] TP05JY16.006

    Given the differences in the number of visits occurring in the 
first 30 days versus the second 30 days in a 60-day episode of care, 
and to better account for the relationship between episode 
characteristics and episode cost, we modeled all episodes as 30-day 
episodes of care, instead of 60-day episodes of care as in the current 
payment system. Under the HHGM, the first 30-day episode in a sequence 
of adjacent episodes was classified as an early episode. All subsequent 
episodes in a sequence (second or later) of adjacent episodes were 
classified as late episodes if separated by no more than a 60-day gap 
in care.
    After taking into account whether the 30-day episode of care was 
``early'' versus ``late'', each episode was then classified into one of 
three referral source categories depending on whether the beneficiary 
was admitted from an acute or post-acute care facility within 14 days 
prior to being admitted to home health (community, acute, or post-
acute). Patients admitted to home health from the community, an acute 
setting of care, or a post-acute setting of care had different 
observable patterns of resource use and thus, under the HHGM, episodes 
of care for those patients would be paid differently.
    We then grouped episodes into one of six clinical groups based on 
the primary diagnosis listed on the OASIS for each episode. We created 
these groups to describe the most common types of care that HHAs 
provide. We have reviewed all possible ICD-9-CM codes that could be 
recorded on the OASIS and assigned each code into one of the following 
clinical groups: Musculoskeletal Rehabilitation; Neuro/Stroke 
Rehabilitation; Wound Care; Medication Management, Teaching and 
Assessment (MMTA); Behavioral Health Care; and Complex Medical Care.
    The HHGM designates a functional/cognitive level for each episode 
based on items identified on the OASIS that impact resource use. Using 
home health episodes from 2013, we estimated a regression model that 
determines the relationship between the responses for certain OASIS 
items and resource use.\18\ The coefficients from the regression show 
how much more or less, on average, an episode's resource use is 
depending on responses to these items which is then used to predict 
resource use for each individual episodes. Ranking the episodes by 
predicted resource use and then identifying thresholds that divides 
episodes into three groups of roughly the same size allows us to assign 
each episode to into a low, medium or high functional/cognitive level.
---------------------------------------------------------------------------

    \18\ ``Resource use'' is an estimate of the cost of an episode. 
It is measured by multiplying the number of minutes of services that 
occur during an episode by a wage rate for the disciplines providing 
the care.
---------------------------------------------------------------------------

    Finally, our exploratory analyses have determined that secondary 
diagnoses (comorbidities) provide additional information that can 
predict resource use even after controlling for episode timing, 
referral source, the clinical grouping (based in the patient's primary 
diagnosis) and functional/cognitive level. Therefore, we further 
differentiated episodes into based on the presence of certain secondary 
diagnoses. We explored two options. For the first option we determined 
the commonly occurring comorbidities (incidence of over 0.1 percent) 
reported on the OASIS that were also associated with above average 
resource use. We then divided the comorbidities into a low or high 
group based on average resource use associated with the comorbidity. We 
then placed episodes into three tiers: Episodes for beneficiaries with 
no comorbidities reported on the OASIS in the low or high group (Tier 
1); episodes for beneficiaries with comorbidities in the low, but not 
high group as reported on the OASIS (Tier 2); and episodes for 
beneficiaries with comorbidities in the high group reported on the 
OASIS (Tier 3). For the second option, we used the major complication 
or comorbidity (MCC) and complication and comorbidity (CC) list from 
the Inpatient Prospective Payment System (IPPS).

[[Page 43746]]

Using the CC and MMC list we placed episodes into three tiers: Episodes 
where beneficiaries had no MCC or CC diagnoses reported on either the 
OASIS or any inpatient or professional claim within 90 days of the 
start of home care (Tier 1); episodes where beneficiaries had CC but no 
MCC diagnoses reported on either the OASIS or any inpatient or 
professional claim within 90 days of the start of home care (Tier 2); 
and episodes where beneficiaries had at least one MCC diagnosis 
reported on either the OASIS or any inpatient or professional claim 
within 90 days of the start of home care (Tier 3).
    We determined the case-mix weight for each of the 324 different 
HHGM payment groups by estimating a regression between episode resource 
use and binary variables controlling for the five dimensions described 
above (episode timing, admission source, HHGM clinical group, 
functional/cognitive level, and comorbidities). After estimating this 
model on home health episodes from 2013 (excluding LUPA and outlier 
episodes), we then used the results of the model to predict the 
expected average resource use of each episode based on these six 
characteristics. We divide the predicted resource use of each episode 
by the overall average resource use (of all 2013 episodes) to calculate 
the average case-mix of all episodes within a particular payment group 
(that is, each combination of the sub-groups within the five main 
groups). That case-mix weight is then used to adjust the base payment 
rate to then determine each episode's payment.
    In many ways, the structure of the HHGM is similar to the current 
payment system. However, by either adding to or removing certain 
components of the current payment system, the HHGM could help to 
strengthen the HH PPS by addressing the margin differences noted in the 
home health study and by removing unintended financial incentives (for 
example, the current therapy thresholds). As noted in the 3131(d) 
study, margin differences exist across beneficiary characteristics such 
as parenteral nutrition, traumatic wounds, whether bathing assistance 
was needed, and admission source. These margin differences would be 
addressed by moving to a HHGM approach where those characteristics are 
better accounted for in the model. Additionally, the HHGM aligns with 
how clinicians generally identify the types of patients they see in 
home health, which, in turn, better defines the home health benefit in 
a more transparent manner so that the payer understands the primary 
reason for home care. We feel that the HHGM will address the findings 
highlighted in the 3131(d) report, specifically improving the payment 
accuracy for purchased home health services, promote fair compensation 
to HHAs, and increase the quality of care for beneficiaries. We plan to 
release a more detailed Technical Report in the future on this 
additional research and analysis conducted on the HHGM. When we release 
the technical report, we are also planning to release a list of the 
ICD-9-CM and ICD-10-CM codes assigned to each of the clinical groups 
within the HHGM to further assist the industry in analyzing the HHGM 
model. While we are not soliciting comments on the HHGM in this 
proposed rule, once the Technical Report is released, we will post a 
link on our Home Health Agency (HHA) Center Web site (https://www.cms.gov/center/provider-Type/home-Health-Agency-HHA-Center.html) to 
receive comments and feedback on the model.

FF. Update on Future Plans To Group HH PPS Claims Centrally During 
Claims Processing

    In the CY 2011 HH PPS proposed rule (75 FR 43236) we solicited 
comments on potential plans to group HH PPS claims centrally during 
claims processing and received many comments in support of this 
initiative. In grouping HH PPS Claims centrally during processing, we 
are describing a process whereby all of the information necessary to 
group the claim and assign a Health Insurance Prospective Payment 
System (HIPPS) score which determines payment is available and 
processed within the Fiscal Intermediary Shared System (FISS). In that 
rule, we discussed the potential use of the treatment authorization 
field to group HH PPS claims within the claims processing system. In 
conducting further analysis, we determined that the use of the 
treatment authorization field was not a viable option. In our analysis, 
we determined that the information we planned to report in this field 
was not permitted by the Health Insurance Portability Accountability 
Act (HIPAA). In this section, we are soliciting comments on another 
process identified whereby all of the information necessary to group HH 
PPS claims occurs centrally during claims processing.
    As we outlined in the previous rule, Medicare makes payment under 
the HH PPS on the basis of a national, standardized 60-day episode 
payment amount that is adjusted for case-mix and geographic wage 
variations. The national, standardized 60-day episode payment amount 
includes services from the six HH disciplines (skilled nursing, HH 
aide, physical therapy, speech-language pathology, occupational 
therapy, and medical social services) and non-routine medical supplies. 
Durable medical equipment covered under HH is paid for outside the HH 
PPS payment. To adjust for case-mix, the HH PPS uses a 153-category 
case-mix classification to assign patients to a home health resource 
group (HHRG). Clinical needs, functional status, and service 
utilization are computed from responses to selected data elements in 
the Outcome & Assessment Information Set (OASIS) instrument. On 
Medicare claims, the HHRGs are represented as HIPPS codes.
    At a patient's start of care and before the start of each 
subsequent 60-day episode, the HHA is required to perform a 
comprehensive clinical assessment of the patient and complete the OASIS 
assessment instrument. The OASIS instrument collects data concerning 3 
dimensions of the patient's condition: (1) Clinical severity 
(orthopedic, neurological or diabetic conditions, etc.); (2) Functional 
status (comprised of 6 activities of daily living (ADLs)); and (3) 
Service utilization (therapy visits provided during episode). HHAs 
enter data collected from their patients' OASIS assessments into a data 
collection software tool. For Medicare patients, the data collection 
software invokes HH PPS Grouper software to assign a HIPPS code to the 
patient's OASIS assessment. The HHA includes the HIPPS code assigned by 
HH PPS Grouper software on the Medicare HH PPS bill, ultimately 
enabling our claims processing system to reimburse the HHA for services 
provided to patients receiving Medicare home health services.
    The HHA is separately required to electronically submit OASIS 
assessments for their Medicare and Medicaid patients to us. On the HH 
PPS Web site at https://www.qtso.com/havendownload.html, we provide a 
free OASIS assessment data collection tool (JHAVEN) which includes the 
HH PPS grouper software, a separate HH PPS grouper program which can be 
incorporated into an HHA's own data collection software, and HH PPS 
data specifications for use by HHAs or software vendors desiring to 
build their own HH PPS grouper. Most HHAs do not use the JHAVEN 
freeware, instead preferring to employ software vendors to create and 
maintain a customized assessment data collection tool which can be 
integrated into the HHA's billing software. Likewise, many vendors 
employed by HHAs do not utilize the

[[Page 43747]]

HH PPS grouper freeware, instead preferring to build their own HH PPS 
grouper from the data specifications which we provide.
    Prior to the CY 2008, we made infrequent, minor changes to the HH 
PPS Grouper software. Since CY 2008, the HH PPS Grouper became more 
complex and more sensitive to annual diagnosis coding changes. As a 
result, in recent years, HHAs have been required to update their 
grouper software twice a year. Most HHAs employ software vendors to 
effectuate these updates. HHAs have expressed concerns to us that the 
bi-annual grouper updates coupled with the additional complexity of the 
grouper has increased provider and vendor burden.
    We continue to identify OASIS assessments submitted with erroneous 
HIPPS codes through a process of comparing the submitted HIPPS code to 
the HIPPS code returned by our assessment system. These errors may 
occur when HHAs or their software vendors inaccurately replicate the HH 
PPS Grouper algorithm into the HHA's customized software. HHAs have 
expressed concerns that the HH PPS Grouper complexities increase their 
vulnerability to submit an inaccurate HIPPS code on the Medicare bill. 
We believe that embedding the HH PPS Grouper within the claims 
processing system would mitigate the provider's vulnerability and 
improve payment accuracy.
    We recently implemented a process where we match the claim and the 
OASIS assessment in order to validate the HIPPS code on the Medicare 
bill. In addition, we have conducted an analysis and prototype testing 
of a java-based grouper with our FISS maintenance contractor. We 
believe that making additional enhancements to the claim and OASIS 
matching process would enable us to collect all of the other necessary 
information to assign a HIPPS code within the claims processing system. 
Adopting such a process would improve payment accuracy by improving the 
accuracy for HIPPS codes on bills, decrease costs, and burden to HHAs.
    We are soliciting public comments on this potential enhancement as 
described above. If we implemented grouping HH PPS claims centrally 
within the claims processing system, the HHA would no longer have to 
maintain a separate process outside of our claims processing system, 
thus reducing the costs and burden to HHAs associated with the updates 
of the grouper software as well as the ongoing agency costs associated 
with embedding the HH PPS Grouper within JHAVEN. Finally, this 
enhancement would also address current payment vulnerabilities 
associated with the reporting of incorrect HIPPS codes on the claim.

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

A. Background

    As authorized by section 1115A of the Act and finalized in the CY 
2016 HH PPS final rule, we implemented the HHVBP Model to begin on 
January 1, 2016. The HHVBP Model has an overall purpose of improving 
the quality and delivery of home health care services to Medicare 
beneficiaries. The specific goals of the Model are to: (1) Provide 
incentives for better quality care with greater efficiency; (2) study 
new potential quality and efficiency measures for appropriateness in 
the home health setting; and, (3) enhance the current public reporting 
process.
    Using the randomized selection methodology finalized in the CY 2016 
HH PPS final rule, nine states were selected for inclusion in the HHVBP 
Model, representing each geographic area across the nation. All 
Medicare-certified HHAs that provide services in Arizona, Florida, 
Iowa, Maryland, Massachusetts, Nebraska, North Carolina, Tennessee, and 
Washington (competing HHAs), are required to compete in the Model. 
Requiring all Medicare-certified HHAs in the selected states to 
participate in the Model ensures that: (1) There is no selection bias; 
(2) participating HHAs are representative of HHAs nationally; and, (3) 
there is sufficient participation to generate meaningful results.
    As finalized in the CY 2016 HH PPS final rule, the HHVBP Model will 
utilize the waiver authority under section 1115A(d)(1) of the Act to 
adjust Medicare payment rates under section 1895(b) of the Act 
beginning in calendar year (CY) 2018 based on performance on applicable 
measures. Payment adjustments will be increased incrementally over the 
course of the HHVBP Model in the following manner: (1) A maximum 
payment adjustment of 3 percent (upward or downward) in CY 2018; (2) a 
maximum payment adjustment of 5 percent (upward or downward) in CY 
2019; (3) a maximum payment adjustment of 6 percent (upward or 
downward) in CY 2020; (4) a maximum payment adjustment of 7 percent 
(upward or downward) in CY 2021; and, (5) a maximum payment adjustment 
of 8 percent (upward or downward) in CY 2022. Payment adjustments will 
be based on each HHA's Total Performance Score (TPS) in a given 
performance year (PY) on (1) a set of measures already reported via 
OASIS and HHCAHPS for all patients serviced by the HHA, or determined 
by claims data and, (2) three New Measures where points are achieved 
for reporting data.

B. Smaller- and Larger-Volume Cohorts Proposals

    The HHVBP Model compares a competing HHA's performance on quality 
measures against the performance of other competing HHAs within the 
same state and size cohort. Within each of the nine selected states, 
each competing HHA is grouped to either the smaller-volume cohort or 
the larger-volume cohort, as defined in Sec.  484.305. The larger-
volume cohort is defined as the group of competing HHAs within the 
boundaries of selected states that are participating in HHCAHPS in 
accordance with Sec.  484.250 and the smaller-volume cohort is defined 
as the group of competing HHAs within the boundaries of selected states 
that are exempt from participation in HHCAHPS in accordance with Sec.  
484.250 (80 FR 68664). An HHA can be exempt from the HHCAHPS reporting 
requirements for a calendar year period if it has less than 60 eligible 
unique HHCAHPS patients annually as specified in Sec.  484.250. In the 
CY 2016 HH PPS final rule, we finalized that when there are too few 
HHAs in the smaller-volume cohort in each state (such as when there are 
only one or two HHAs competing within a smaller-volume cohort in a 
given state) to compete in a fair manner, the HHAs would be included in 
the larger-volume cohort for purposes of calculating the TPS and 
payment adjustment percentage without being measured on HHCAHPS (80 FR 
68664).
1. Proposal to Eliminate Smaller- and Larger-Volume Cohorts Solely for 
Purposes of Setting Performance Benchmarks and Thresholds
    In the CY 2016 HH PPS final rule (80 FR 68681-68682), we finalized 
a scoring methodology for determining achievement points for each 
measure under which HHAs will receive points along an achievement 
range, which is a scale between the achievement threshold and a 
benchmark. The achievement thresholds are calculated as the median of 
all HHAs' performance on the specified quality measure during the 
baseline period and the benchmark is calculated as the mean of the top 
decile of all HHAs' performance on the specified quality measure during 
the baseline period.

[[Page 43748]]

    We previously finalized that under the HHVBP Model, we would 
calculate both the achievement threshold and the benchmark separately 
for each selected state and for HHA cohort size. Under this 
methodology, benchmarks and achievement thresholds would be calculated 
for both the larger-volume cohort and for the smaller-volume cohort of 
HHAs in each state (which we defined in each state based on a baseline 
period from January 1, 2015 through December 31, 2015). We also 
finalized that, in determining improvement points for each measure, 
HHAs would receive points along an improvement range, which we defined 
as a scale indicating the change between an HHA's performance during 
the performance period and the HHA's performance in the baseline period 
divided by the difference between the benchmark and the HHAs 
performance in the baseline period. We finalized that both the 
benchmarks and the achievement thresholds would be calculated 
separately for each state and for HHA cohort size.
    We finalized the above policies based on extensive analyses of the 
2013-2014 OASIS, claims, and HHCAHPS archived data. We believed that 
these data were sufficient to predict the effect of using cohorts for 
benchmarking and threshold purposes because they have been used for 
several years in other CMS quality initiatives such as the Home Health 
Quality Reporting Program.
    Since the publication of the CY 2016 HH PPS final rule, we have 
continued to evaluate the calculation of the benchmarks and achievement 
thresholds using the most recent CY 2015 data that is now available. We 
have calculated benchmarks and achievement thresholds for the OASIS 
measures for the smaller- and larger-volume cohorts and state-wide for 
each of the nine states using these data. Our review of the benchmarks 
and achievement thresholds for each of the cohorts and states indicates 
that the benchmark values for the smaller-volume cohorts varied 
considerably more from state-to-state than the benchmark values for the 
larger-volume cohorts. Some inter-state variation in the benchmarks and 
achievement thresholds for each of the measures was expected due to 
different state regulatory environments. However, the overall variation 
in these values was more than we expected, given the previous analyses 
we did. For example, with respect to the Improvement in Bed 
Transferring measure, we discovered that variation in the benchmark 
values between the smaller-volume cohorts was nearly three times 
greater than the variation in the benchmark values for the larger-
volume cohorts or the statewide benchmarks. We also discovered that 
this large variation affected most of the measures. We are concerned 
that this high variation is not the result of expected differences like 
state regulatory policy, but is instead the result of (1) the cohort is 
so small that there are not enough HHAs in the cohort to calculate the 
values using the finalized methodology (mean of the top decile); or (2) 
the cohort is large enough to calculate the values using the finalized 
methodology, but there are not enough HHAs in the cohort to generate 
reliable values.
    We have included three tables in this proposed rule to help 
illustrate this issue. Each of the three tables include the 10 
benchmarks for the OASIS measures that were calculated for the Model 
using the 2015 QIES roll-up file data for each state. We did not 
include the claims measures and the HHCAHPS measures in this example 
because we do not have all of the 2015 data available. These three 
tables demonstrate the relationship between the size of the cohort and 
degree of variation of the different benchmark values among the states. 
Table 28, Table 29 and Table 30 represent the benchmarks for the OASIS 
measures for the smaller-volume cohorts, larger-volume cohorts and 
state-wide (which includes HHAs from both smaller- and larger-volume 
cohorts) respectively. For example, the difference in benchmark values 
for Iowa and Nebraska (two of the four states that have smaller-volume 
cohorts) for the Improvement in Bed Transfers measure is 13.1 (72.7 for 
Iowa and 85.8 for Nebraska) for the smaller-volume cohort (Table 28), 
4.1 (78.1 for Iowa to 82.2 for Nebraska) for the larger-volume cohort 
(Table 29) and 5.5 (77.6 for Iowa to 83.1 for Nebraska) for the state 
level cohort (Table 30). We believe that the higher range for the 
smaller-volume cohorts is a result of there being a fewer number of 
HHAs in these cohorts.

                                                       Table 28--Smaller-Volume Cohort Benchmarks
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          State
                                                               -----------------------------------------------------------------------------------------
                                                                   AZ        FL        IA        MA        MD        NC        NE        TN        WA
--------------------------------------------------------------------------------------------------------------------------------------------------------
Oasis-Based Measures:
    Discharged to Community...................................      77.0      88.8      73.6      82.0  ........      75.1      81.1      79.4
    Drug Education on All Medications Provided to Patient/         100.0     100.0     100.0     100.0  ........      98.5     100.0     100.0
     Caregiver during all Episodes of Care....................
    Improvement in Ambulation- Locomotion.....................      90.6      90.5      72.7      75.6  ........      60.1      84.0      85.2
    Improvement in Bathing....................................      82.0      91.2      79.5      71.8  ........      72.1      77.4      81.5
    Improvement in Bed Transferring...........................      68.8      80.4      72.7      74.1  ........      55.1      85.8      79.0
    Improvement in Dyspnea....................................      84.2      90.4      81.3      62.6  ........      62.5      80.3      93.7
    Improvement in Management of Oral Medications.............      63.0      74.0      58.4      62.0  ........      62.8      65.8      58.9
    Improvement in Pain Interfering with Activity.............      83.2      97.3      82.6      82.3  ........      58.5      78.2      69.0
    Influenza Immunization Received for Current Flu Season....      73.4      89.8      90.8      83.8  ........      89.2      83.6      88.9
    Pneumococcal Polysaccharide Vaccine Ever Received.........      95.8      91.5      95.8      95.3  ........      83.6      97.0     100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 43749]]


                                                        Table 29--Larger-Volume Cohort Benchmarks
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          State
                                                               -----------------------------------------------------------------------------------------
                                                                   AZ        FL        IA        MA        MD        NC        NE        TN        WA
--------------------------------------------------------------------------------------------------------------------------------------------------------
Oasis-Based Measures:
    Discharged to Community...................................      82.1      85.6      78.3      81.2      81.1      78.2      80.3      81.0      83.1
    Drug Education on All Medications Provided to Patient/          99.8     100.0      99.9     100.0      99.9      99.7      99.9      99.8      99.7
     Caregiver during all Episodes of Care....................
    Improvement in Ambulation- Locomotion.....................      76.4      92.4      76.7      76.1      76.5      75.2      80.8      77.2      70.8
    Improvement in Bathing....................................      84.2      94.2      81.9      81.0      81.0      78.9      86.6      83.5      77.7
    Improvement in Bed Transferring...........................      76.4      85.4      78.1      80.2      77.5      74.5      82.2      76.8      73.5
    Improvement in Dyspnea....................................      85.9      90.5      81.3      82.2      85.1      85.5      80.7      84.2      80.7
    Improvement in Management of Oral Medications.............      69.4      80.5      68.1      73.2      71.7      63.9      68.1      72.2      64.0
    Improvement in Pain Interfering with Activity.............      88.6      96.7      81.0      89.5      84.4      81.5      86.0      81.7      75.5
    Influenza Immunization Received for Current Flu Season....      88.0      93.3      88.1      90.1      87.9      88.0      95.2      88.2      87.0
    Pneumococcal Polysaccharide Vaccine Ever Received.........      92.5      93.6      94.4      93.8      92.1      93.4      97.0      92.7      92.7
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                         Table 30--State Level Cohort Benchmarks
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          State
                                                               -----------------------------------------------------------------------------------------
                                                                   AZ        FL        IA        MA        MD        NC        NE        TN        WA
--------------------------------------------------------------------------------------------------------------------------------------------------------
Oasis-Based Measures:
    Discharged to Community...................................      81.8      86.3      77.7      81.9      81.1      78.2      80.5      80.9      83.1
    Drug Education on All Medications Provided to Patient/          99.8     100.0     100.0     100.0      99.9      99.7      99.9      99.8      99.7
     Caregiver during all Episodes of Care....................
    Improvement in Ambulation- Locomotion.....................      77.5      92.1      76.2      76.3      76.5      75.2      82.9      77.9      70.8
    Improvement in Bathing....................................      84.1      93.8      81.8      80.3      81.0      78.9      84.6      83.5      77.7
    Improvement in Bed Transferring...........................      75.9      84.8      77.6      80.1      77.5      74.5      83.1      77.3      73.5
    Improvement in Dyspnea....................................      85.8      90.5      81.9      81.7      85.1      85.5      81.3      85.8      80.7
    Improvement in Management of Oral Medications.............      69.1      79.6      67.3      72.0      71.7      64.1      68.3      72.2      64.0
    Improvement in Pain Interfering with Activity.............      88.1      96.8      81.5      88.4      84.4      81.5      84.3      81.7      75.5
    Influenza Immunization Received for Current Flu Season....      87.6      92.9      88.9      90.1      87.9      88.3      94.4      88.2      87.0
    Pneumococcal Polysaccharide Vaccine Ever Received.........      92.9      93.3      94.8      94.2      92.1      93.4      97.0      93.3      92.7
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The three tables are based on the analysis using the most current 
data available. The results highlight that there is a greater degree of 
interstate variation in the benchmark values for the cohorts that have 
fewer HHAs as compared to the variation in benchmark values for the 
cohorts that have a greater number of HHAs.
    We also performed a similar analysis with the achievement 
thresholds and comparing how the individual benchmarks and achievement 
thresholds would fluctuate from one year to the next for the smaller-
volume cohorts, larger-volume cohorts, and the state level cohorts. The 
results of those analyses were similar.
    Based on the analyses that we have described, we are concerned that 
if we separate HHAs into smaller- and larger-volume cohorts by state 
for purposes of calculating the benchmarks and achievement thresholds, 
HHAs in the smaller-volume cohorts could be required to meet 
performance standards that are greater than the level of performance 
that HHAs in the larger-volume cohorts would be required to achieve. 
For this reason, we are proposing to calculate the benchmarks and 
achievement thresholds at the state level rather than at the smaller- 
and larger-volume cohort level for all model years, beginning with CY 
2016. This change will eliminate the increased variation caused by 
having few HHAs in the cohort but still takes into account that there 
will be some inter-state variation in the values due to state 
regulatory differences.
    We seek public comments on this proposal.
2. The Payment Adjustment Methodology
    We finalized in the CY 2016 HH PPS final rule that we would use a 
linear exchange function (LEF) to translate a competing HHA's TPS into 
a value-based payment adjustment percentage under the HHVBP Model (80 
FR 68686). We also finalized that we would calculate the LEF separately 
for each smaller-volume cohort and larger-volume cohort. In addition, 
we finalized that if an HHA does not have a minimum of 20 episodes of 
care during a performance year to generate a performance score on at 
least five measures, we would not include the HHA in the LEF and we 
would not calculate a payment adjustment percentage for that HHA.
    Since the publication of the CY 2016 HH PPS final rule, we have 
continued

[[Page 43750]]

to evaluate the payment adjustment methodology using the most recent 
data available. We updated our analysis of the 10 OASIS quality 
measures and two claims-based measures using the newly available 2014 
QIES Roll Up File data, which was not available prior to the issuance 
of that final rule.\19\ We also determined the size of the cohorts 
using the 2014 Quality Episode File based on OASIS assessments rather 
than archived quality data sources that were used in the CY 2016 rule, 
whereby the HHAs reported at least five measures with over 20 episodes 
of care. Based on this data, we determined that with respect to 
performance year 2016, there were only three states (AZ, FL, NE) that 
have more than 10 HHAs in the smaller-volume cohort; one state (IA) 
that has 8-10 HHAs in the smaller-volume cohort, three states (NC, MA, 
TN) that have 1-3 HHAs in the smaller-volume cohort; and two states 
(MD, WA) that have no HHAs in the smaller-volume cohort. In the CY 2016 
HH PPS final rule (80 FR 68664), we finalized that when there are too 
few HHAs in the smaller-volume cohort in each state to compete in a 
fair manner, the HHAs in that cohort would be included in the larger-
volume cohort for purposes of calculating their payment adjustment 
percentage. The CY 2016 rule further defines too few as when there is 
only one or two HHAs competing within a smaller-volume cohort in a 
given state.
---------------------------------------------------------------------------

    \19\ We did not update our analysis of the HHCAHPS measures 
because more recent data was not available.
---------------------------------------------------------------------------

    We also used the more current data source mentioned above to 
analyze the effects of outliers on the LEF. As indicated by the payment 
distributions set forth in Table 23 of this rule, the LEF is designed 
so that the majority of the payment adjustment values fall closer to 
the median and only a small percentage of HHAs receive adjustments at 
the higher and lower ends of the distribution. However, when we looked 
at the more recent data, we discovered that if there are only three or 
four HHAs in the cohort, one HHA outlier could skew the payment 
adjustments and deviate the payment distribution from the intended 
design of the LEF payment methodology where HHAs should fall close to 
the median of the payment distribution. For example, if there are only 
three HHAs in the cohort, we concluded that there is a high likelihood 
that those HHAs would have payment adjustments of -2.5 percent, -2.0 
percent and +4.5 percent when the maximum payment adjustment is 5 
percent, none falling close to the mean, with the result that those 
HHAs would receive payment adjustments at the higher or lower ends of 
the distribution. As the size of the cohort increases, we determined 
that this became less of an issue, and that the majority of the HHAs 
would have payment adjustments that are close to the median. This is 
illustrated in the payment distribution in Table 23 of this rule. Under 
the payment distribution for the larger-volume cohorts, 80 percent of 
the HHAs in AZ, IA, FL and NE would receive a payment adjustment 
ranging from -2.2 percent to +2.2 percent when the maximum payment 
adjustment is 5 percent (See state level cohort in Table 23). Arizona 
is a state that has a smaller-volume cohort with only nine HHAs but its 
payment distribution is comparable, ranging from -1 percent to +1 
percent even with one outlier that is at 5 percent.
    In order to determine the minimum number of HHAs that would have to 
be in a smaller-volume cohort in order to insulate that cohort from the 
effect of outliers, we analyzed performance results related to the 
OASIS and claims-based measures, as well as HHCAHPS, using 2013 and 
2014 data. We specifically simulated the impact that outliers would 
have on cohort sizes ranging from four HHAs to twelve HHAs. We found 
that the LEF was less susceptible to large variation from outlier 
impacts once the cohort size reached a minimum of eight HHAs. We also 
found that a minimum of eight HHAs would allow for four states with 
smaller-volume cohorts to have 80 percent of their payment adjustments 
fall between -2.3 percent and + 2.4 percent. As a result of this 
analysis, we are proposing that a smaller-volume cohort have a minimum 
eight HHAs in order for the HHAs in that cohort to be compared only 
against each other, and not against the HHAs in the larger-volume 
cohort. We believe this proposal would better mitigate the impact of 
outliers as compared to our current policy, while also enabling us to 
evaluate the impact of the Model on competition between smaller-volume 
HHAs.
    We are also proposing that if a smaller-volume cohort in a state 
has fewer than eight HHAs, those HHAs would be included in the larger-
volume cohort for that state for purposes of calculating the LEF and 
payment adjustment percentages. If finalized, this change would apply 
to the CY 2018 payment adjustments and thereafter. We will continue to 
analyze and review the most current cohort size data as it becomes 
available. We seek public comments on this proposal.

C. Quality Measure Proposals

    In the CY 2016 HH PPS final rule, we finalized a set of quality 
measures in Figure 4a: Final PY1 Measures and Figure 4b: Final PY1 New 
Measures (80 FR 68671-68673) for the HHVBP Model to be used in the 
first performance year (PY1), referred to as the ``starter set''.
    The measures were selected for the Model using the following 
guiding principles: (1) Use a broad measure set that captures the 
complexity of the services HHAs provide; (2) Incorporate the 
flexibility for future inclusion of the Improving Medicare Post-Acute 
Care Transformation (IMPACT) Act of 2014 measures that cut across post-
acute care settings; (3) Develop `second generation' (of the HHVBP 
Model) 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. This set of 
quality measures encompasses the multiple National Quality Strategy 
(NQS) domains \20\ (80 FR 68668). The NQS domains include six priority 
areas identified in the CY 2016 HH PPS final rule (80 FR 68668) as the 
CMS Framework for Quality Measurement Mapping. These areas are: (1) 
Clinical quality of care, (2) Care coordination, (3) Population & 
community health, (4) Person- and Caregiver-centered experience and 
outcomes, (5) Safety, and (6) Efficiency and cost reduction. Figures 5 
and 6 of the CY 2016 HH PPS final rule identified 15 outcome measures 
(five from the HHCAHPS, eight from OASIS, and two from the Chronic Care 
Warehouse (claims)), and nine process measures (six from OASIS, and 
three New Measures, which were not previously reported in the home 
health setting).
---------------------------------------------------------------------------

    \20\ 2015 Annual Report to Congress, http://www.ahrq.gov/workingforquality/reports/annual-reports/nqs2015annlrpt.htm.
---------------------------------------------------------------------------

    During implementation of the Model, we determined that four of the 
measures finalized for PY1 require further consideration before 
inclusion in the HHVBP Model measure set as described below. 
Specifically, we are proposing to remove the following measures, as 
described in Figure 4a of the CY 2016 HH PPS final rule, from the set 
of applicable measures: (1) Care Management: Types and Sources of 
Assistance; (2) Prior Functioning ADL/IADL; (3) Influenza Vaccine Data 
Collection Period: Does this episode of care include any dates on or 
between

[[Page 43751]]

October 1 and March 31?; and (4) Reason Pneumococcal Vaccine Not 
Received. We are proposing to remove these four measures, for the 
reasons discussed below, beginning with the CY 2016 Performance Year 
(PY1) calculations, and believe this will not cause substantial change 
in the first annual payment adjustment that will occur in CY 2018, as 
each measure is equally weighted and will not be represented in the 
calculations. The proposed revisions to the measure set, as set forth 
in Table 31 would be applicable to each performance year subject to any 
changes made through future rulemaking.
    We are proposing to remove the ``Care Management: Types and Sources 
of Assistance'' measure because (1) a numerator and denominator for the 
measure were not made available in the CY2016 HH PPS final rule; and 
(2) the potential OASIS items that could be utilized in the development 
of the measure were not fully specified in the CY 2016 HH PPS final 
rule. We want to further consider the appropriate numerator and 
denominator for the OASIS data source before proposing the inclusion of 
this measure in the HHVBP Model.
    We are proposing to remove the ``Prior Functioning ADL/IADL'' 
measure because (1) the NQF endorsed measure (NQF0430) included in the 
2016 HH PPS final rule does not apply to home health agencies; and (2) 
the NQF endorsed measure (NQF0430) refers to a measure that utilizes 
the AM-PAC (Activity Measure for Post-Acute Care) tool that is not 
currently (and has never been) collected by home health agencies.
    We are proposing to remove the ``Influenza Vaccine Data Collection 
Period: Does this episode of care include any dates on or between 
October 1 and March 31?'' measure because this datum element (OASIS 
item M1041) is used to calculate another HHVBP measure ``Influenza 
Immunization Received for Current Flu Season'' and was not designed as 
an additional and separate measure of performance.
    We are proposing to remove the ``Reason Pneumococcal Vaccine Not 
Received'' measure because (1) these data are reported as an element of 
the record for clinical decision making and inform agency policy (that 
is, so that the agency knows what proportion of its patients did not 
receive the vaccine because it was contraindicated (harmful) for the 
patient or that the patient chose to not receive the vaccine); and (2) 
this measure itemizes the reason for the removal of individuals for 
whom the vaccine is not appropriate, which is already included in the 
numerator of the ``Pneumococcal Polysaccharide Vaccine Ever Received'' 
measure also included in the HHVBP Model.
    Because the starter set is defined as the quality measures selected 
for the first year of the Model only, we propose to revise Sec.  
484.315 to refer to ``a set of quality measures'' rather than ``a 
starter set of quality measures'' and to revise Sec.  484.320 (a), (b), 
(c), and (d) to remove the phrase ``in the starter set''. We are also 
proposing to delete the definition of ``Starter set'' in Sec.  484.305 
because that definition would no longer be used in the HHVBP Model 
regulations following the proposed revisions to Sec. Sec.  484.315 and 
484.320.
    The proposed revised set of applicable measures is presented in 
Table 31, which excludes the four measures we propose to be removed. We 
propose that this measure set will be applicable to PY1 and each 
subsequent performance year until such time that another set of 
applicable measures, or changes to this measure set, are proposed and 
finalized in future rulemaking. Moving forward, we plan to utilize an 
implementation contractor who will invite a group of measure experts to 
provide advice on the adjustment of the current measure set.
---------------------------------------------------------------------------

    \21\ 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.

                                                 Table 31--Proposed Measure Set for the HHVBP Model \21\
--------------------------------------------------------------------------------------------------------------------------------------------------------
           NQS domains               Measure title       Measure type         Identifier          Data source          Numerator          Denominator
--------------------------------------------------------------------------------------------------------------------------------------------------------
Clinical Quality of Care........  Improvement in      Outcome...........  NQF0167...........  OASIS (M1860).....  Number of home      Number of home
                                   Ambulation-                                                                     health episodes     health episodes
                                   Locomotion.                                                                     of care where the   of care ending
                                                                                                                   value recorded on   with a discharge
                                                                                                                   the discharge       during the
                                                                                                                   assessment          reporting period,
                                                                                                                   indicates less      other than those
                                                                                                                   impairment in       covered by
                                                                                                                   ambulation/         generic or
                                                                                                                   locomotion at       measure-specific
                                                                                                                   discharge than at   exclusions.
                                                                                                                   the start (or
                                                                                                                   resumption) of
                                                                                                                   care.
Clinical Quality of Care........  Improvement in Bed  Outcome...........  NQF0175...........  OASIS (M1850).....  Number of home      Number of home
                                   Transferring.                                                                   health episodes     health episodes
                                                                                                                   of care where the   of care ending
                                                                                                                   value recorded on   with a discharge
                                                                                                                   the discharge       during the
                                                                                                                   assessment          reporting period,
                                                                                                                   indicates less      other than those
                                                                                                                   impairment in bed   covered by
                                                                                                                   transferring at     generic or
                                                                                                                   discharge than at   measure-specific
                                                                                                                   the start (or       exclusions.
                                                                                                                   resumption) of
                                                                                                                   care.
Clinical Quality of Care........  Improvement in      Outcome...........  NQF0174...........  OASIS (M1830).....  Number of home      Number of home
                                   Bathing.                                                                        health episodes     health episodes
                                                                                                                   of care where the   of care ending
                                                                                                                   value recorded on   with a discharge
                                                                                                                   the discharge       during the
                                                                                                                   assessment          reporting period,
                                                                                                                   indicates less      other than those
                                                                                                                   impairment in       covered by
                                                                                                                   bathing at          generic or
                                                                                                                   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      Number of home
                                   Dyspnea.                                                                        health episodes     health episodes
                                                                                                                   of care where the   of care ending
                                                                                                                   discharge           with a discharge
                                                                                                                   assessment          during the
                                                                                                                   indicates less      reporting period,
                                                                                                                   dyspnea at          other than those
                                                                                                                   discharge than at   covered by
                                                                                                                   start (or           generic or
                                                                                                                   resumption) of      measure-specific
                                                                                                                   care.               exclusions.

[[Page 43752]]

 
Communication & Care              Discharged to       Outcome...........  NA................  OASIS (M2420).....  Number of home      Number of home
 Coordination.                     Community.                                                                      health episodes     health episodes
                                                                                                                   where the           of care ending
                                                                                                                   assessment          with discharge or
                                                                                                                   completed at the    transfer to
                                                                                                                   discharge           inpatient
                                                                                                                   indicates the       facility during
                                                                                                                   patient remained    the reporting
                                                                                                                   in the community    period, other
                                                                                                                   after discharge.    than those
                                                                                                                                       covered by
                                                                                                                                       generic or
                                                                                                                                       measure-specific
                                                                                                                                       exclusions.
Efficiency & Cost Reduction.....  Acute Care          Outcome...........  NQF0171...........  CCW (Claims)......  Number of home      Number of home
                                   Hospitalization:                                                                health stays for    health stays that
                                   Unplanned                                                                       patients who have   begin during the
                                   Hospitalization                                                                 a Medicare claim    12-month
                                   during first 60                                                                 for an unplanned    observation
                                   days of Home                                                                    admission to an     period. A home
                                   Health.                                                                         acute care          health stay is a
                                                                                                                   hospital in the     sequence of home
                                                                                                                   60 days following   health payment
                                                                                                                   the start of the    episodes
                                                                                                                   home health stay.   separated from
                                                                                                                                       other home health
                                                                                                                                       payment episodes
                                                                                                                                       by at least 60
                                                                                                                                       days.
Efficiency & Cost Reduction.....  Emergency           Outcome...........  NQF0173...........  CCW (Claims)......  Number of home      Number of home
                                   Department Use                                                                  health stays for    health stays that
                                   without                                                                         patients who have   begin during the
                                   Hospitalization.                                                                a Medicare claim    12-month
                                                                                                                   for outpatient      observation
                                                                                                                   emergency           period. A home
                                                                                                                   department use      health stay is a
                                                                                                                   and no claims for   sequence of home
                                                                                                                   acute care          health payment
                                                                                                                   hospitalization     episodes
                                                                                                                   in the 60 days      separated from
                                                                                                                   following the       other home health
                                                                                                                   start of the home   payment episodes
                                                                                                                   health stay.        by at least 60
                                                                                                                                       days.
Patient Safety..................  Improvement in      Outcome...........  NQF0177...........  OASIS (M1242).....  Number of home      Number of home
                                   Pain Interfering                                                                health episodes     health episodes
                                   with Activity.                                                                  of care where the   of care ending
                                                                                                                   value recorded on   with a discharge
                                                                                                                   the discharge       during the
                                                                                                                   assessment          reporting period,
                                                                                                                   indicates less      other than those
                                                                                                                   frequent pain at    covered by
                                                                                                                   discharge than at   generic or
                                                                                                                   the start (or       measure-specific
                                                                                                                   resumption) of      exclusions.
                                                                                                                   care.
Patient Safety..................  Improvement in      Outcome...........  NQF0176...........  OASIS (M2020).....  Number of home      Number of home
                                   Management of                                                                   health episodes     health episodes
                                   Oral Medications.                                                               of care where the   of care ending
                                                                                                                   value recorded on   with a discharge
                                                                                                                   the discharge       during the
                                                                                                                   assessment          reporting period,
                                                                                                                   indicates less      other than those
                                                                                                                   impairment in       covered by
                                                                                                                   taking oral         generic or
                                                                                                                   medications         measure-specific
                                                                                                                   correctly at        exclusions.
                                                                                                                   discharge than at
                                                                                                                   start (or
                                                                                                                   resumption) of
                                                                                                                   care.
Population/Community Health.....  Influenza           Process...........  NQF0522...........  OASIS (M1046).....  Number of home      Number of home
                                   Immunization                                                                    health episodes     health episodes
                                   Received for                                                                    during which        of care ending
                                   Current Flu                                                                     patients (a)        with discharge,
                                   Season.                                                                         received            or transfer to
                                                                                                                   vaccination from    inpatient
                                                                                                                   the HHA or (b)      facility during
                                                                                                                   had received        the reporting
                                                                                                                   vaccination from    period, other
                                                                                                                   HHA during          than those
                                                                                                                   earlier episode     covered by
                                                                                                                   of care, or (c)     generic or
                                                                                                                   was determined to   measure-specific
                                                                                                                   have received       exclusions.
                                                                                                                   vaccination from
                                                                                                                   another provider.
Population/Community Health.....  Pneumococcal        Process...........  NQF0525...........  OASIS (M1051).....  Number of home      Number of home
                                   Polysaccharide                                                                  health episodes     health episodes
                                   Vaccine Ever                                                                    during which        of care ending
                                   Received.                                                                       patients were       with discharge or
                                                                                                                   determined to       transfer to
                                                                                                                   have ever           inpatient
                                                                                                                   received            facility during
                                                                                                                   Pneumococcal        the reporting
                                                                                                                   Polysaccharide      period, other
                                                                                                                   Vaccine (PPV).      than those
                                                                                                                                       covered by
                                                                                                                                       generic or
                                                                                                                                       measure-specific
                                                                                                                                       exclusions.
Clinical Quality of Care........  Drug Education on   Process...........  NA................  OASIS (M2015).....  Number of home      Number of home
                                   All Medications                                                                 health episodes     health episodes
                                   Provided to                                                                     of care during      of care ending
                                   Patient/Caregiver                                                               which patient/      with a discharge
                                   during all                                                                      caregiver was       or transfer to
                                   Episodes of Care.                                                               instructed on how   inpatient
                                                                                                                   to monitor the      facility during
                                                                                                                   effectiveness of    the reporting
                                                                                                                   drug therapy, how   period, other
                                                                                                                   to recognize        than those
                                                                                                                   potential adverse   covered by
                                                                                                                   effects, and how    generic or
                                                                                                                   and when to         measure-specific
                                                                                                                   report problems     exclusions.
                                                                                                                   (since the
                                                                                                                   previous OASIS
                                                                                                                   assessment).
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.
Patient & Caregiver-Centered      Willingness to      Outcome...........                      CAHPS.............  NA................  NA.
 Experience.                       recommend the
                                   agency.

[[Page 43753]]

 
Population/Community Health.....  Influenza           Process...........  NQF0431 (Used in    Reported by HHAs    Healthcare          Number of
                                   Vaccination                             other care          through Web         personnel in the    healthcare
                                   Coverage for Home                       settings, not       Portal.             denominator         personnel who are
                                   Health Care                             Home Health).                           population who      working in the
                                   Personnel.                                                                      during the time     healthcare
                                                                                                                   from October 1      facility for at
                                                                                                                   (or when the        least 1 working
                                                                                                                   vaccine became      day between
                                                                                                                   available)          October 1 and
                                                                                                                   through March 31    March 31 of the
                                                                                                                   of the following    following year,
                                                                                                                   year: (a)           regardless of
                                                                                                                   received an         clinical
                                                                                                                   influenza           responsibility or
                                                                                                                   vaccination         patient contact.
                                                                                                                   administered at
                                                                                                                   the 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       beneficiaries
                                   the patient ever                                                                aged 60 years and   aged 60 years and
                                   received the                                                                    over who report     over receiving
                                   shingles                                                                        having ever         services from the
                                   vaccination?.                                                                   received zoster     HHA.
                                                                                                                   vaccine (shingles
                                                                                                                   vaccine).
Communication & Care              Advance Care Plan.  Process...........  NQF0326...........  Reported by HHAs    Patients who have   All patients aged
 Coordination.                                                                                 through Web         an advance care     65 years and
                                                                                               Portal.             plan or surrogate   older.
                                                                                                                   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.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In the CY 2016 HH PPS final rule, we finalized that HHAs will be 
required to begin reporting data on each of the three New Measures no 
later than October 7, 2016 for the period July 2016 through September 
2016 and quarterly thereafter. We now propose to require annual, rather 
than quarterly reporting for one of the three New Measures, ``Influenza 
Vaccination Coverage for Home Health Personnel,'' with the first annual 
submission in April 2017 for PY2. Specifically, we are proposing to 
require an annual submission in April for the prior 6-month reporting 
period of October 1-March 31 to coincide with the flu season. Under 
this proposal, for PY1, the HHA would report on this measure in October 
2016 and January 2017. HHAs would report on this measure in April 2017 
for PY2 and annually in April thereafter. We believe that changing the 
reporting and submission periods for this measure from quarterly to 
annually would avoid the need for HHAs to have to report zeroes in 
multiple data fields for the two quarters (July through September, and 
April through June) that fall outside of the parameters of the 
denominator (October through March).
    We are not proposing to change the quarterly reporting and 
submission requirements as set forth in the CY 2016 HH PPS final rule 
(80 FR 68674-68678) for the other two New Measures, ``Advanced Care 
Planning'', and ``Herpes zoster (Shingles) vaccination: Has the patient 
ever received the shingles vaccination?''
    We are also proposing to increase the timeframe for submitting New 
Measures data from seven calendar days (80 FR 68675-68678) to fifteen 
calendar days following the end of each reporting period to account for 
weekends and holidays.
    We invite public comment on our proposals.

D. Appeals Process Proposal

    In the CY 2016 HH PPS final rule (80 FR 68689), we stated that we 
intended to propose an appeals mechanism in future rulemaking prior to 
the application of the first payment adjustments scheduled for CY 2018. 
We are proposing an appeals process for the HHVBP Model which includes 
the period to review and request recalculation of both the Interim 
Performance Reports and the Annual TPS and Payment Adjustment Reports, 
as finalized in the CY 2016 HH PPS final rule (80 FR 68688-68689) and 
subject to the modifications we are proposing here, and reconsideration 
request process for the Annual TPS and Payment Adjustment Report only, 
as described later in this section, which may only occur after an HHA 
has first submitted a recalculation request for the Annual TPS and 
Payment Adjustment Report.
    As finalized in the CY 2016 HH PPS final rule, HHAs have the 
opportunity to review their Interim Performance Report following each 
quarterly posting. The Interim Performance Reports are posted on the 
HHVBP Secure Portal quarterly, setting forth the HHA's measure scores 
based on available data to date. The first Interim Performance Report 
will be provided to all competing HHAs in July 2016 and will include 
performance scores for the OASIS-based measures for the first quarter 
of CY 2016. See Table 32 for data provided in each report. The 
quarterly Interim Performance Reports

[[Page 43754]]

will provide competing HHAs with the opportunity to identify and 
correct calculation errors and resolve discrepancies, thereby 
minimizing challenges to the annual performance scores linked to 
payment adjustment.
    Competing HHAs also have the opportunity to review their Annual TPS 
and Payment Adjustment Report. We will inform each competing HHA of its 
TPS and payment adjustment percentage in an Annual TPS and Payment 
Adjustment Report provided prior to the calendar year for which the 
payment adjustment will be applied. The annual TPS will be calculated 
based on the calculation of performance measures contained in the 
Interim Performance Reports that have already been received by the HHAs 
for the performance year.
    We are proposing specific timeframes for the submission of 
recalculation and reconsideration requests to ensure that the final 
payment adjustment percentage for each competing Medicare-certified HHA 
can be submitted to the Fiscal Intermediary Shared Systems in time to 
allow for application of the payment adjustments beginning in January 
of the following calendar year. We believe HHVBP payment adjustments 
should be timely and that the appeals process should be designed so 
that determinations on recalculations and reconsiderations can be made 
in advance of the applicable payment year to reduce burden and 
uncertainty for competing HHAs.
    In this proposed rule, we are proposing to add new Sec.  484.335, 
titled ``Appeals Process for the Home Health Value-Based Purchasing 
Model,'' which would codify the recalculation request process finalized 
in the CY 2016 HH PPS final rule and also a proposed reconsideration 
request process for the Annual TPS and Payment Adjustment Report. The 
first level of this appeals process would be the recalculation request 
process, as finalized in the CY 2016 HH PPS final rule and subject to 
the proposed modifications described later in this section. We are 
proposing that the reconsideration request process for the Annual TPS 
and Payment Adjustment Report would complete the appeals process, and 
would be available only when an HHA has first submitted a recalculation 
request for the Annual TPS and Payment Adjustment Report under the 
process finalized in the CY 2016 HH PPS final rule, subject to the 
modifications we are proposing here. We believe that this proposed 
appeals process will allow the HHAs to seek timely corrections for 
errors that may be introduced during the Interim Performance Reports 
that could affect an HHA's payments.
    To inform our proposal for an appeals process under the HHVBP Model 
we reviewed the appeals policies for two CMS programs that are similar 
in their program goals to the HHVBP Model, the Medicare Shared Savings 
Program \22\ and Hospital Value-Based Purchasing Program,\23\ as well 
as the appeals policy for the Comprehensive Care for Joint Replacement 
Model \24\ that is being tested by the Center for Medicare and Medicaid 
Innovation (CMMI).
---------------------------------------------------------------------------

    \22\ Title 42--Public Health, Chapter IV--Centers for Medicare & 
Medicaid Services, Department of Health and Human Services, 
Subchapter B, Part 425--Medicare Shared Savings Program, Subpart I--
Reconsideration Review Process. (http://www.ecfr.gov/cgi-bin/text-idx?SID=880f6bd181904fc648f0e9a885103dba&mc=true&node=sp42.3.425.i&rgn=div6)
    \23\ Title 42--Public Health, Chapter IV--Centers for Medicare & 
Medicaid Services, Department of Health and Human Services, 
Subchapter B, Part 412--Prospective Payment System for Inpatient 
Hospital Services, Subpart I--Adjustments to the Base Operating DRG 
Payment Amounts Under the Prospective Payment Systems for Inpatient 
Operating Costs (http://www.ecfr.gov/cgi-bin/text-idx?SID=dd15db0a13792035b9b42b342270fad6&mc=true&node=sg42.2.412_1155_6412_1159.sg4&rgn=div7)
    \24\ Title 42--Public Health, Chapter IV--Centers for Medicare & 
Medicaid Services, Department of Health and Human Services, 
Subchapter H--Health Care Infrastructure and Model Programs, Part 
510-- Comprehensive Care for Joint Replacement Model. (http://www.ecfr.gov/cgi-bin/text-idx?SID=a18d6f5665d1fbf2e1ae955e1bf1b97c&mc=true&node=pt42.5.510&rgn=div5)
---------------------------------------------------------------------------

    Under section 1115A(d) of the Act, there is no administrative or 
judicial review under sections 1869 or 1878 of the Act or otherwise for 
the following:
     The selection of models for testing or expansion under 
section 1115A of the Act.
     The selection of organizations, sites or participants to 
test those models selected.
     The elements, parameters, scope, and duration of such 
models for testing or dissemination.
     Determinations regarding budget neutrality under section 
1115A(b)(3) of the Act.
     The termination or modification of the design and 
implementation of a model under section 1115A(b)(3)(B) of the Act.
     Decisions about expansion of the duration and scope of a 
model under section 1115A(c) of the Act, including the determination 
that a model is not expected to meet criteria described in section 
1115A(c)(1) or (2) of the Act.

                             Table 32--HHVBP Model Performance Report Data Schedule
----------------------------------------------------------------------------------------------------------------
                                                                  OASIS-Based measures     Claims- and HHCAHPS-
             Report type                  Publication date         and  new measures          based measures
----------------------------------------------------------------------------------------------------------------
Interim Performance Scores..........  January.................  3 quarters of previous   2 quarters of previous
                                                                 PY (9 months); [Jan-     PY (6 months); [Jan-
                                                                 Sept].                   Jun].
Interim Performance Scores..........  April...................  12 months of previous    3 quarters of previous
                                                                 PY [Jan-Dec].            PY (9 months); [Jan-
                                                                                          Sept].
Interim Performance Scores..........  July....................  1st quarter of next PY   12 months of previous
                                                                 (3 months); [Jan-Mar].   PY; [Jan-Dec].
Interim Performance Scores..........  October.................  2 quarters of next PY    1st quarter of next PY
                                                                 (6 months); [Jan-Jun].   (3 months); [Jan-Mar].
                                                               -------------------------------------------------
Annual TPS and Payment Adjustment     August..................     Entire 12 months of previous PY; [Jan-Dec].
 Percentage.
                                                               -------------------------------------------------
Annual TPS and Payment Adjustment     November................   Entire 12 months of previous PY [Jan-Dec] after
 Percentage; (Final).                                            all recalculations and reconsideration requests
                                                                                    processed.
----------------------------------------------------------------------------------------------------------------


[[Page 43755]]

1. Recalculation
    HHAs may submit recalculation requests for both the Interim 
Performance Reports and the Annual TPS and Payment Adjustment Report 
via a form located on the HHVBP Secure Portal that is only accessible 
to the competing HHAs. The request form would be entered by a person 
who has legal authority to sign on behalf of the HHA and, as finalized 
in the CY 2016 HH PPS final rule, must be submitted within 30 calendar 
days of the posting of each performance report on the model-specific 
Web site. For the reasons discussed later in this section, we are 
proposing to change this policy to require that recalculation requests 
for both the Interim Performance Report and the Annual TPS and Payment 
Adjustment Report be submitted within 15 calendar days of the posting 
of the Interim Performance Report and the Annual TPS and Payment 
Adjustment Report on the HHVBP Secure Portal instead of 30 calendar 
days.
    For both the Interim Performance Reports and the Annual TPS and 
Payment Adjustment Report, requests for recalculation must contain 
specific information, as set forth in the CY 2016 HH PPS final rule (80 
FR 68688). We are proposing that requests for reconsideration of the 
Annual TPS and Payment Adjustment Report must also contain this same 
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 recalculation of an Interim 
Performance Report or the Annual TPS and Payment Adjustment Report, CMS 
or its agent will:
     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 recalculation request results in a score change, altering 
performance measure scores or the HHA's TPS;
     Conduct a review of quality data if recalculation results 
in a performance score or TPS change, and recalculate the TPS using the 
corrected performance data if an error is found; 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.
    We anticipate providing this response as soon as administratively 
feasible following the submission of the request.
    We will not be responsible for providing HHAs with the underlying 
source data utilized to generate performance measure scores because 
HHAs have access to this data via the QIES system.
    We are proposing that recalculation requests for the Interim 
Performance Reports must be submitted within 15 calendar days of these 
reports being posted on the HHVBP Secure Portal, rather than 30 
calendar days as finalized in the CY 2016 HH PPS final rule. We believe 
this would allow recalculations of the Interim Performance Reports 
posted in July to be completed prior to the posting of the Annual TPS 
and Payment Adjustment Report in August. We are proposing that 
recalculation requests for the TPS or payment adjustment percentage 
must be submitted within 15 calendar days of the Annual TPS and Payment 
Adjustment Report being posted on the HHVBP Secure Portal, rather than 
30 days as finalized in the CY 2016 HH PPS final rule. We are proposing 
to shorten this timeframe to allow for a second level of appeals, the 
proposed reconsideration request process, to be completed prior to the 
generation of the final data files containing the payment adjustment 
percentage for each competing Medicare-certified HHA and the submission 
of those data files to the Fiscal Intermediary Share Systems. We 
contemplated longer timeframes for the submission of both recalculation 
and reconsideration requests for the Annual TPS and Payment Adjustment 
Reports, but believe that this would result in appeals not being 
resolved in advance of the payment adjustments being applied beginning 
in January of the following calendar year. We invite comments on this 
proposed timeframe for recalculation requests, as well as any 
alternatives.
2. Reconsideration
    We are proposing that if we determine that the calculation was 
correct and deny the HHA request for recalculation of the Annual TPS 
and Payment Adjustment Report, or if the HHA disagrees with the results 
of a CMS recalculation of such report, the HHA may submit a 
reconsideration request for the Annual TPS and Payment Adjustment 
Report. The reconsideration request and supporting documentation would 
be required to be submitted via the form on the HHVBP Secure Portal 
within 15 calendar days of CMS' notification to the HHA contact of the 
outcome of the recalculation request for the Annual TPS and Payment 
Adjustment Report.
    We propose that an HHA may request reconsideration of the outcome 
of a recalculation request for its Annual TPS and Payment Adjustment 
Report only. We believe that the ability to review the Interim 
Performance Reports and submit recalculation requests on a quarterly 
basis provides competing HHAs with a mechanism to address potential 
errors in advance of receiving their annual TPS and payment adjustment 
percentage. Therefore, we expect that in many cases, the 
reconsideration request process proposed in this rule would result in a 
mechanical review of the application of the formulas for the TPS and 
the LEF, which could result in the determination that a formula was not 
accurately applied. Reconsiderations would be conducted by a CMS 
official who was not involved with the original recalculation request.
    We are proposing that an HHA must submit the reconsideration 
request and supporting documentation via the HHVBP Secure Portal within 
15 calendar days of CMS' notification to the HHA contact of the outcome 
of the recalculation process so that a decision on the reconsideration 
can be made prior to the generation of the final data files containing 
the payment adjustment percentage for each competing Medicare-certified 
HHA and the submission of those data files to the Fiscal Intermediary 
Share Systems. We believe that this would allow for finalization of the 
interim performance scores, TPS, and annual payment adjustment 
percentages in advance of the application of the payment adjustments 
for the applicable performance year. As noted above, we contemplated 
longer timeframes for the submission of both recalculation and 
reconsideration requests, but believe this would result in appeals not 
being resolved in advance of the payment adjustments being applied 
beginning in January of the following calendar year. CMS invites 
comments on its proposed timeframe for reconsideration requests, as 
well as any alternatives.

[[Page 43756]]

    We finalized in the CY 2016 HH PPS final rule (80 FR 68688) that 
the final TPS and payment adjustment percentage would be provided to 
competing HHAs in a final report no later than 60 calendar days in 
advance of the payment adjustment taking effect. We are now proposing 
that the final TPS and payment adjustment percentage be provided to 
competing HHAs in a final report no later than 30 calendar days in 
advance of the payment adjustment taking effect to account for 
unforeseen delays that could occur between the time the Annual TPS and 
Payment Adjustment Reports are posted and the appeals process is 
completed.
    We solicit comments on our proposals related to the appeals process 
for the HHVBP Model described in this section and the associated 
proposed regulation text at Sec.  484.335.

E. Public Display of Total Performance Scores for the HHVBP Model

    In the CY 2016 HH PPS final rule (80 FR 68658), we stated that one 
of the three goals of the HHVBP Model is to ``Enhance current public 
reporting processes''. Annual publicly-available performance reports 
would be 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 
will 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. 
These public reports would provide home health industry stakeholders, 
including providers and suppliers that refer their patients to HHAs, an 
opportunity to confirm that the beneficiaries they are referring for 
home health services are being provided the best possible quality of 
care available.
    We received support via public comments to publicly report the 
HHVBP Model performance data because they would inform industry 
stakeholders of quality improvements. These comments noted several 
areas of value in performance data. Specifically, commenters suggested 
that public reports would permit providers to direct patients to a 
source of information about higher-performing HHAs based on quality 
reports. Commenters offered that to the extent possible, accurate 
comparable data will encourage HHAs to improve care delivery and 
patient outcomes, while better predicting and managing quality 
performance and payment updates. Although competing HHAs have direct 
technical support and other tools to encourage best practices, we 
believe public reporting of their Total Performance Score will 
encourage providers and patients to utilize this information when 
selecting a HHA to provide quality care.
    We have employed a variety of means to ensure that we maintain 
transparency while developing and implementing the HHVBP Model. This 
same care is being taken as we plan public reporting in collaboration 
with other CMS components that use many of the same quality measures. 
We continue to engage and inform stakeholders about various aspects of 
the HHVBP Model through CMS Open Door Forums and updates to the HHVBP 
Model Innovation Center Web page (https://innovation.cms.gov/initiatives/home-health-value-based-purchasing-model). We have held 
several webinars since December 2015 to educate competing HHAs. Topics 
of the webinars ranged from an overview of the HHVBP Model to specific 
content areas addressed in the CY 2016 HH PPS final rule. The primary 
purpose of the focused attention provided to the competing HHAs through 
the HHVBP learning systems and webinars is to facilitate direct 
communication, sharing of information, and collaboration.
    Section 1895(b)(3)(B)(v) of the Act requires HHAs to submit 
patient-level quality of care data using the Outcome and Information 
Assessment Set (OASIS) and the Home Health Consumer Assessment of 
Health Care Providers and Systems (HHCAHPS). Section 
1895(b)(3)(B)(v)(III) of the Act states that this quality data is to be 
made available to the public. Thus, home health agencies have been 
required to collect OASIS data since 1999 and report HHCAHPS data since 
2012. Use of OASIS measures for the HHVBP Model logically follows, as 
the validation through experience creates greater efficiency than 
constructing an entirely new set of measures.
    We are considering various public reporting platforms for the HHVBP 
Model including Home Health Compare (HHC) and the Center for Medicare 
and Medicaid Innovation (CMMI) Web page as a vehicle for maintaining 
information in a centralized location and making information available 
over the Internet. We believe the public reporting of competing HHAs' 
performance scores under the HHVBP Model supports our continuing 
efforts to empower consumers by providing more information to help them 
make health care decisions, while also encouraging providers to strive 
for higher levels of quality. As the public reporting mechanism for the 
HHVBP Model is being developed, we are considering which data elements 
reported will be meaningful to stakeholders and may inform the 
selection of HHAs for care.
    We are considering public reporting for the HHVBP Model, beginning 
no earlier than CY 2019, to allow analysis of at least eight quarters 
of performance data for the Model and the opportunity to compare how 
those results align with other publicly reported quality data. We are 
encouraged by the previous stakeholder comments and support for public 
reporting that could assist patients, physicians, discharge planners, 
and other referral sources to choose higher-performing HHAs.

V. Proposed Updates to 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.
    The Improving Medicare Post-Acute Care Transformation Act of 2014 
(the IMPACT Act) imposed new data reporting requirements for certain 
post-acute care (PAC) providers, including HHAs. For more information 
on the statutory background of the IMPACT Act, please refer to the CY 
2016 HH PPS final rule (80 FR 68690 through 68692).
    In that final rule, we established our approach for identifying 
cross-setting measures and processes for the adoption of measures, 
including the application and purpose of the Measures Application 
Partnership (MAP) and the notice and comment rulemaking process. More 
information on the

[[Page 43757]]

IMPACT Act is also available at https://www.govtrack.us/congress/bills/113/hr4994.
    In the CY 2016 HH PPS final rule (80 FR 68692), we also discussed 
the reporting of OASIS data as it relates to the 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, including a new OMB control number (see 80 FR 15796). The new 
information collection request for OASIS-C1/ICD-10 version was approved 
under OMB control number 0938-1279 with a current expiration date of 
May 31, 2018. To satisfy requirements in the IMPACT Act that HHAs 
submit standardized patient assessment data in accordance with section 
1899B(b) and to create consistency in the lookback period across 
selected OASIS items, we have created a modified version of the OASIS, 
OASIS-C2. We have submitted request for approval to OMB for the OASIS-
C2 version under the PRA process (81 FR 18855); also see https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html. The OASIS-C2 version will 
replace the OASIS-C1/ICD-10 and will be effective for data collected 
with an assessment completion date (M0090) on and after January 1, 
2017. Information regarding the OASIS-C1/ICD-10 and C2 can be located 
on the OASIS Data Sets Web page at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/OASIS-Data-Sets.html.

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

    We refer readers to the CY 2016 HH PPS final rule (80 FR 68695 
through 68698) for a detailed discussion of the considerations we apply 
in measure selection for the Home Health Quality Reporting Program (HH 
QRP), such as alignment with the CMS Quality Strategy,\25\ which 
incorporates the three broad aims of the National Quality Strategy.\26\ 
Overall, 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 (QRPs), 
coupled with public reporting of quality information are critical to 
the advancement of health care quality improvement efforts. Valid, 
reliable, and relevant quality measures are fundamental to the 
effectiveness of our QRPs. Therefore, selection of quality measures is 
a priority for us in all of our QRPs.
---------------------------------------------------------------------------

    \25\ http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/CMS-Quality-Strategy.html.
    \26\ http://www.ahrq.gov/workingforquality/nqs/nqs2011annlrpt.htm.
---------------------------------------------------------------------------

    In this proposed rule, we propose to adopt for the HH QRP one 
measure that we are specifying under section 1899B(c)(1)(C) of the Act 
to meet the Medication Reconciliation domain: (1) Drug Regimen Review 
Conducted with Follow-Up for Identified Issues-Post-Acute Care Home 
Health Quality Reporting Program (Drug Regimen Review Conducted with 
Follow-Up for Identified Issues-PAC HH QRP). Further, we are proposing 
to adopt for the HH QRP three measures to meet the ``Resource Use and 
other Measures'' domains required by section 1899B(d)(1) of the Act: 
(1) Total Estimated Medicare Spending per Beneficiary--Post Acute Care 
Home Health Quality Reporting Program (MSPB-PAC HH QRP); (2) Discharge 
to Community--Post Acute Care Home Health Quality Reporting Program 
(Discharge to Community-PAC HH QRP); and (3) Potentially Preventable 
30-Day Post-Discharge Readmission Measure for Post-Acute Care Home 
Health Quality Reporting Program (Potentially Preventable 30-Day Post-
Discharge Readmission Measure for HH QRP).
    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. To meet 
this requirement, we provided the following opportunities for 
stakeholder input: Our measure development contractor convened 
technical expert panels (TEPs) that included stakeholder experts and 
patient representatives on July 29, 2015 for the Drug Regimen Review 
Conducted with Follow-Up for Identified Issues-PAC HH QRP; on August 
25, 2015, September 25, 2015, and October 5, 2015, for the Discharge to 
Community-PAC HH QRP; on August 12-13, 2015, and October 14, 2015, for 
the Potentially Preventable 30-Day Post-Discharge Readmission Measure 
for HH QRP; and on October 29-30, 2015, for the MSPB-PAC HH QRP 
measures. In addition, we released draft quality measure specifications 
for public comment on the Drug Regimen Review Conducted with Follow-Up 
for Identified Issues-PAC HH QRP from September 18, 2015 to October 6, 
2015, for the Discharge to Community-PAC HH QRP from November 9, 2015 
to December 8, 2015, for the Potentially Preventable 30-Day Post-
Discharge Readmission Measure for HH QRP from November 2, 2015 to 
December 1, 2015, and for the MSPB-PAC HH QRP measures from January 13, 
2016 to February 5, 2016. Further, we opened a public mailbox, 
[email protected], for the submission of public 
comments. This PAC mailbox is accessible on our post-acute care quality 
initiatives Web site, on the IMPACT Act of 2014 Data Standardization & 
Cross Setting Measures Web page at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-of-2014-Data-Standardization-and-Cross-Setting-MeasuresMeasures.html.
    Additionally, we sought public input from the MAP Post-Acute Care, 
Long-Term Care Workgroup during the annual public meeting held December 
14-15, 2015. The MAP is composed of multi-stakeholder groups convened 
by the NQF, our current contractor under section 1890(a) of the Act, 
tasked to provide input on the selection of quality and efficiency 
measures described in section 1890(b)(7)(B) of the Act. The MAP 
reviewed each measure proposed in this rule for use in the HH QRP. For 
more information on the MAP, we refer readers to the CY 2016 HH PPS 
final rule (80 FR 68692 through 68694). Further, for more information 
on the MAP's recommendations, we refer readers to the MAP 2015-2016 
Considerations for Implementing Measures in Federal Programs public 
report at http://www.qualityforum.org/Publications/2016/02/MAP_2016_Considerations_for_Implementing_Measures_in_Federal_Programs_-_PAC-LTC.aspx.
    For measures that do not have NQF endorsement, or which are not 
fully supported by the MAP for use in the HH QRP, we are proposing 
measures for the HH QRP for the purposes of satisfying the measure 
domains required under the IMPACT Act measures that most closely align 
with the national priorities identified in the National Quality 
Strategy (http://www.ahrq.gov/workingforquality/) and with respect to 
which the MAP supports the measure concept. Further, we discuss below 
the importance and high-priority status of

[[Page 43758]]

these proposed measures in the HH setting.

C. Process for Retaining, Removing, and Replacing Previously Adopted 
Home Health Quality Reporting Program Measures for Subsequent Payment 
Determinations

    Consistent with the policies of other provider QRPs, including the 
Hospital Inpatient Quality Reporting Program (Hospital IQR) (77 FR 
53512 through 53513), the Hospital Outpatient Quality Reporting Program 
(Hospital OQR) (77 FR 68471), the LTCH QRP (77 FR 53614 through 53615), 
and the IRF QRP (77 FR 68500 through 68507), we are proposing that when 
we initially adopt a measure for the HH QRP for a payment 
determination, this measure will be automatically retained for all 
subsequent payment determinations unless we propose to remove or 
replace the measure, or unless the exception discussed below applies.
    We are proposing to define the term ``remove'' to mean that the 
measure is no longer a part of the HH QRP measure set, data on the 
measure will no longer be collected for purposes of the HH QRP, and the 
performance data for the measure will no longer be displayed on HH 
Compare. We are also proposing to use the following criteria when 
considering a quality measure for removal: (1) Measure performance 
among HHAs is so high and unvarying that meaningful distinctions in 
improvements in performance can no longer be made; (2) performance or 
improvement on a measure does not result in better patient outcomes; 
(3) a measure does not align with current clinical guidelines or 
practice; (4) a more broadly applicable measure (across settings, 
populations, or conditions) for the particular topic is available; (5) 
a measure that is more proximal in time to desired patient outcomes for 
the particular topic is available; and (6) a measure that is more 
strongly associated with desired patient outcomes for the particular 
topic is available. These items may still appear on OASIS for 
previously established purposes that are non-related to our HH QRP. 
HHAs will be able to access these reports using the Certification and 
Survey Provider Enhanced Reports (CASPER) system and can use the 
information for their own monitoring and quality improvement efforts.
    Further, we are proposing to define ``replace'' to mean that we 
would adopt a different quality measure in place of a currently used 
quality measure, for one or more of the reasons described above. 
Additionally, we are proposing that any such ``removal'' or 
``replacement'' will take place through notice-and-comment rulemaking, 
unless we determine that a measure is causing concern for patient 
safety. Specifically, in the case of a HH QRP measure for which there 
is a reason to believe that the continued collection raises possible 
safety concerns or would cause other unintended consequences, we 
propose to promptly remove the measure and publish the justification 
for the removal in the Federal Register during the next rulemaking 
cycle. In addition, we will immediately notify HHAs and the public 
through the usual communication channels, including listening session, 
memos, email notification, and Web postings. If we removed a measure 
under these circumstances, we would also not continue to collect data 
on that measure under our alternative authorities for purposes other 
than the HH QRP.
    We invite public comment on our proposed policy for retaining, 
removing and replacing previously adopted quality measures, including 
the criteria we propose to use when considering whether to remove a 
quality measure from the HH QRP.

D. Quality Measures That Will Be Removed From the Home Health Quality 
Initiative, and Quality Measures That Are Proposed for Removal From the 
HH QRP Beginning With the CY 2018 Payment Determination

    In 2015, we undertook a comprehensive reevaluation of all 81 HH 
quality measures, some of which are used only in the Home Health 
Quality Initiative (HHQI), and others which are also used in the HH 
QRP. This review of all the measures was performed in accordance with 
the guidelines from the CMS Measure Management System (MMS) (https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/MMS-Blueprint.html). The goal of this reevaluation was 
to streamline the measure set, consistent with MMS guidance and in 
response to stakeholder feedback. This reevaluation included a review 
of the current scientific basis for each measure, clinical relevance, 
usability for quality improvement, and evaluation of measure 
properties, including reportability, and variability. Our measure 
development and maintenance contractor convened a Technical Expert 
Panel (TEP) on August 21, 2015, to review and advise on the 
reevaluation results. The TEP provided feedback on which measures are 
most useful for patients, caregivers, clinicians, and stakeholders, and 
on analytics and an environmental scan conducted to inform measure set 
revisions. Further information about the TEP feedback is available at 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/Downloads/Health-Quality-Reporting-Program-HHQRP-TEP-.zip.
    As a result of the comprehensive reevaluation described above, we 
identified 28 HHQI measures that were either ``topped out'' and/or 
determined to be of limited clinical and quality improvement value by 
TEP members. Therefore, these measures will no longer be included in 
the HHQI. A list of these measures, along with our reasons for no 
longer including them in the HHQI, can be found at the following link 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIQualityMeasures.html.
    In addition, based on the results of the comprehensive reevaluation 
and the TEP input, we are proposing to remove 6 process measures from 
the HH QRP, beginning with the CY 2018 payment determination, because 
they are ``topped out'' and therefore no longer have sufficient 
variability to distinguish between providers in public reporting. These 
6 measures are different than the 28 measures that will no longer be 
included within the HHQI. If this proposal is finalized, items used to 
calculate one or more of these six measures may still appear on the 
OASIS for previously established purposes that are not related to the 
HH QRP.
    The 6 process measures we are proposing to remove from the HH QRP 
are:
     Pain Assessment Conducted;
     Pain Interventions Implemented During All Episodes of 
Care;
     Pressure Ulcer Risk Assessment Conducted;
     Pressure Ulcer Prevention in Plan of Care;
     Pressure Ulcer Prevention Implemented During All Episodes 
of Care; and
     Heart Failure Symptoms Addressed During All Episodes of 
Care.
    The technical analysis that supports our proposal to remove the six 
process measures can be found at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIQualityMeasures.html.
    We invite public comment on our above proposal to remove 6 process 
measures from the HH QRP.

E. Proposed Process for Adoption of Updates to HH QRP Measures

    We believe that it is important to have in place a sub-regulatory 
process to

[[Page 43759]]

incorporate non-substantive updates into the measure specifications so 
that these measures remain up-to-date. We also recognize that some 
changes are substantive in nature and might not be appropriate for 
adoption using a sub-regulatory process.
    Therefore, in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53504 
through 53505), we finalized a policy for the Hospital IQR Program 
under which we use a subregulatory process to make nonsubstantive 
updates to measures used for that program. For what constitutes 
substantive versus nonsubstantive changes, we make this determination 
on a case-by-case basis. Examples of nonsubstantive changes to measures 
might include: Updated diagnosis or procedure codes, medication updates 
for categories of medications, broadening of age ranges, and exclusions 
for a measure. Nonsubstantive changes may also include updates to NQF-
endorsed measures based upon changes to guidelines upon which the 
measures are based. Examples of changes that we might consider to be 
substantive would be those in which: The changes are so significant 
that the measure is no longer the same measure, or when a standard of 
performance assessed by a measure becomes more stringent (for example, 
changes in acceptable timing of medication, procedure/process, or test 
administration). Another example of a substantive change might be where 
the NQF has extended its endorsement of a previously endorsed measure 
to a new setting, such as extending a measure from the inpatient 
setting to hospice.
    We are proposing to implement the same process for adopting updates 
to measures in the HH QRP, and would apply this process, including our 
policy for determining on a case-by-case basis whether an update is 
substantive or nonsubstantive. We believe this process adequately 
balances our need to incorporate updates to the HH QRP measures in the 
most expeditious manner possible while preserving the public's ability 
to comment on updates that do not fundamentally change a measure that 
it is no longer the same measure that we originally adopted.
    We invite public comment on this proposal.

F. Modifications to Guidance Regarding Assessment Data Reporting in the 
OASIS

    We are proposing modifications to our coding guidance modifications 
related to certain pressure ulcer items on the OASIS. In the CY 2016 HH 
PPS final rule (80 FR 68700), we adopted the NQF #0678 Percent of 
Residents or Patients with Pressure Ulcers that are New or Worsened 
(Short Stay) measure for use in the HH QRP for the CY 2018 HH QRP 
payment determination and subsequent years. Concurrent with the 
effective date for OASIS-C2 of January 1, 2017, we would use modified 
guidance for the reporting of current pressure ulcers. The purpose of 
this modification is to align with reporting guidance used in other 
post-acute care settings and with the policies of relevant clinical 
associations. Chapter 3 of the OASIS-C1/ICD-10 Guidance Manual 
currently states ``Stage III and IV (full thickness) pressure ulcers 
heal through a process of contraction, granulation, and 
epithelialization. They can never be considered `fully healed' but they 
can be considered closed when they are fully granulated and the wound 
surface is covered with new epithelial tissue.'' We utilize 
professional organizations, such as the National Pressure Ulcer 
Advisory Panel (NPUAP) to provide clinical insight and expertise 
related to the use and completion of relevant OASIS items. Based on the 
currently published position statements and best practices available 
from the NPUAP,\27\ effective January 1, 2017, full-thickness (Stage 3 
or 4) pressure ulcers should not be reported on OASIS as unhealed 
pressure ulcers once complete re-epithelialization has occurred. This 
represents a change in past guidance, and will allow OASIS data 
collection to conform to professional clinical guidelines, and align 
with pressure ulcer reporting practices in other post-acute care 
settings. In addition to revising guidance related to closed Stage 3 
and 4 pressure ulcers, we are changing the reporting instructions when 
a graft is applied to a pressure ulcer. Current guidance states that 
when a graft is placed on a pressure ulcer, the wound remains a 
pressure ulcer and is not concurrently reported as a surgical wound on 
the OASIS. In order to align with reporting guidance in other post-
acute care settings, effective January 1, 2017, once a graft is applied 
to a pressure ulcer, the wound will be reported on OASIS as a surgical 
wound, and no longer be reported as a pressure ulcer.
---------------------------------------------------------------------------

    \27\ http://www.npuap.org/wp-content/uploads/2012/01/Reverse-Staging-Position-Statement.pdf.
---------------------------------------------------------------------------

G. Proposed HH QRP Quality, Resource Use, and Other Measures for the CY 
2018 Payment Determination and Subsequent Years

    For the CY 2018 payment determination and subsequent years, in 
addition to the quality measures we would retain if our proposed policy 
on retaining measures is finalized, we are proposing to adopt four new 
measures. These four measures were developed to meet the requirements 
of the IMPACT Act. These proposed measures are:
     MSPB-PAC HH QRP;
     Discharge to Community-PAC HH QRP;
     Potentially Preventable 30-Day Post-Discharge Readmission 
Measure for HH QRP; and
     Drug Regimen Review Conducted With Follow-Up for 
Identified Issues-PAC HH QRP
    For the risk-adjustment of the resource use and other measures, we 
understand the important role that sociodemographic status plays in the 
care of patients. However, we continue to have concerns about holding 
agencies to different standards for the outcomes of their patients of 
diverse sociodemographic status because we do not want to mask 
potential disparities or minimize incentives to improve the outcomes of 
disadvantaged populations. We routinely monitor the impact of 
sociodemographic status on agencies' results on our measures.
    The NQF is currently undertaking a 2-year trial period in which new 
measures and measures undergoing maintenance review will be assessed to 
determine if risk-adjusting for sociodemographic factors is 
appropriate. For 2 years, NQF will conduct a trial of temporarily 
allowing inclusion of sociodemographic factors in the risk-adjustment 
approach for some performance measures. At the conclusion of the trial, 
NQF will issue recommendations on future permanent inclusion of 
sociodemographic factors. During the trial, measure developers are 
expected to submit information such as analyses and interpretations as 
well as performance scores with and without sociodemographic factors in 
the risk adjustment model.
    Furthermore, the Office of the Assistant Secretary for Planning and 
Evaluation (ASPE) is conducting research to examine the impact of 
sociodemographic status on quality measures, resource use, and other 
measures under the Medicare program as directed by the IMPACT Act. We 
will closely examine the findings of the ASPE reports and related 
Secretarial recommendations and consider how they apply to our quality 
programs at such time as they are available.
    We are inviting public comment on how socioeconomic and demographic 
factors should be used in risk adjustment for the resource use 
measures.

[[Page 43760]]

1. Proposal To Address the IMPACT Act Domain of Resource Use and Other 
Measures: MSPB-PAC HH QRP
    Section 1899B(d)(1)(A) of the Act requires that no later than the 
specified application date (which under section 1899B(a)(1)(E)(ii) is 
October 1, 2016 for SNFs, IRFs and LTCHs and January 1, 2017 for HHAs), 
the Secretary specify a measure to address the domain of resource use 
measures, including total estimated Medicare spending per beneficiary. 
We are proposing to adopt the measure, MSPB-PAC HH QRP, for which we 
would begin to collect data on January 1, 2017 for the CY 2018 payment 
determination and subsequent years as a Medicare fee-for-service (FFS) 
claims-based measure to meet this requirement.
    Rising Medicare expenditures for post-acute care as well as wide 
variation in spending for these services underlines the importance of 
measuring resource use for providers rendering these services. Between 
2001 and 2013, Medicare PAC spending grew at an average annual rate of 
6.1 percent and doubled to $59.4 billion, while payments to inpatient 
hospitals grew at an annual rate of 1.7 percent over this same 
period.\28\ A study commissioned by the Institute of Medicine found 
that variation in PAC spending explains 73 percent of variation in 
total Medicare spending across the United States.\29\
---------------------------------------------------------------------------

    \28\ MedPAC, ``A Data Book: Health Care Spending and the 
Medicare Program,'' (2015). 114.
    \29\ Institute of Medicine, ``Variation in Health Care Spending: 
Target Decision Making, Not Geography,'' (Washington, DC: National 
Academies 2013). 2.
---------------------------------------------------------------------------

    We reviewed the NQF's consensus-endorsed measures and were unable 
to identify any NQF-endorsed resource use measures for PAC settings. 
Therefore, we are proposing to adopt this MSPB-PAC HH QRP measure under 
section 1899B(e)(2)(B) of the Act, which allows us to specify a measure 
under section 1899B that is not NQF-endorsed if the measure deals with 
a specified area or medical topic the Secretary has determined to be 
appropriate for which there is no feasible or practical NQF-endorsed 
measure. We recognize that there are other measures that address 
Medicare spending per beneficiary, but we are not aware of any such 
measures that have been endorsed or adopted specifically for the home 
health setting. Given the current lack of resource use measures for PAC 
settings, our proposed MSPB-PAC HH QRP measure has the potential to 
provide valuable information to HHAs on their relative Medicare 
spending in delivering services to approximately 3.5 million Medicare 
beneficiaries.\30\
---------------------------------------------------------------------------

    \30\ Figures for 2013. MedPAC, ``Medicare Payment Policy,'' 
Report to the Congress (2015). xvii-xviii.
---------------------------------------------------------------------------

    The proposed MSPB-PAC HH QRP episode-based measure would provide 
actionable and transparent information to support HHAs' efforts to 
promote care coordination and deliver high quality care at a lower cost 
to Medicare. The MSPB-PAC HH QRP measure holds HHAs accountable for the 
Medicare payments within an ``episode of care'' (episode), which 
includes the period during which a patient is directly under the HHA's 
care, as well as a defined period after the end of the HHA treatment, 
which may be reflective of and influenced by the services furnished by 
the HHA. MSPB-PAC HH QRP episodes, constructed according to the 
methodology described below, have high levels of Medicare spending with 
substantial variation. In FY 2014, Medicare FFS beneficiaries 
experienced 5,379,410 MSPB-PAC HH QRP episodes triggered by admission 
to a HHA. The mean payment-standardized, risk-adjusted episode spending 
for these episodes was $10,348 during that fiscal year. There was 
substantial variation in the Medicare payments for these MSPB-PAC HH 
QRP episodes--ranging from approximately $2,480 at the 5th percentile 
to approximately $31,964 at the 95th percentile. This variation was 
partially driven by variation in payments occurring following HH 
treatment.
    Evaluating Medicare payments during an episode creates a continuum 
of accountability between providers and has the potential to improve 
post-treatment care planning and coordination. While some stakeholders 
throughout the measure development process supported the MSPB-PAC 
measures and believe that measuring Medicare spending is critical for 
improving efficiency, others believe that resource use measures do not 
reflect quality of care in that they do not take into account patient 
outcomes or experience beyond those observable in claims data. However, 
we believe that HHAs involved in the provision of high quality PAC care 
as well as appropriate discharge planning and post-discharge care 
coordination will perform well on this measure because beneficiaries 
will experience fewer costly adverse events (for example, avoidable 
hospitalizations, infections, and emergency room usage). Further, it is 
important that the cost of care be explicitly measured so that, in 
conjunction with other quality measures, we can recognize HHAs that are 
involved in the provision of high quality care at lower cost.
    We have undertaken development of MSPB-PAC measures for each of the 
four PAC settings. In addition to this measure proposal, we proposed a 
LTCH-specific MSPB-PAC measure in the FY 2017 IPPS/LTCH proposed rule 
(81 FR 25216 through 25220), an IRF-specific MSPB-PAC measure in the FY 
2017 IRF PPS proposed rule (81 FR 24197 through 24201), and a SNF-
specific MSPB-PAC measure in the FY 2017 SNF PPS proposed rule (81 FR 
24258 through 24262). These four setting-specific MSPB-PAC measures are 
closely aligned in terms of episode construction and measure 
calculation. Each of the MSPB-PAC measures assess Medicare Part A and 
Part B spending during an episode, and the numerator and denominator 
are defined similarly for each of the MSPB-PAC measures. However, 
developing setting-specific measures allows us to account for 
differences between settings in payment policy, the types of data 
available, and the underlying health characteristics of beneficiaries. 
For example, the MSPB-PAC HH QRP measure compares episodes triggered by 
Partial Episode Payment (PEP) and Low-Utilization Payment Adjustment 
(LUPA) claims only with episodes of the same type, as detailed below.
    The MSPB-PAC measures mirror the general construction of the 
inpatient prospective payment system (IPPS) hospital MSPB measure, 
which was adopted for the Hospital IQR Program beginning with the FY 
2014 program, and was implemented in the Hospital VBP Program beginning 
with the FY 2015 program. The measure was endorsed by the NQF on 
December 6, 2013 (NQF #2158).\31\ The hospital MSPB measure evaluates 
hospitals' Medicare spending relative to the Medicare spending for the 
national median hospital during a hospital MSPB episode. It assesses 
Medicare Part A and Part B payments for services performed by hospitals 
and other healthcare providers during a hospital MSPB episode, which 
comprises the periods immediately prior to, during, and following a 
patient's hospital inpatient stay.32 33 Similarly, the MSPB-
PAC

[[Page 43761]]

measures assess all Medicare Part A and Part B payments for FFS claims 
with a start date that begins at the episode trigger and continues for 
the length of the episode window (which, as discussed in this section, 
is the time period during which Medicare FFS Part A and Part B services 
are counted towards the MSPB-PAC HH QRP episode). However, there are 
differences between the MSPB-PAC measures, as proposed, and the 
hospital MSPB measure that reflect differences in payment policies and 
the nature of care provided in each PAC setting. For example, the MSPB-
PAC measures exclude a limited set of services (for example, for 
clinically unrelated services) provided to a beneficiary during the 
episode window while the hospital MSPB measure does not exclude any 
services.\34\
---------------------------------------------------------------------------

    \31\ QualityNet, ``Measure Methodology Reports: Medicare 
Spending Per Beneficiary (MSPB) Measure,'' (2015). http://www.qualitynet.org/dcs/ContentServer?pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772053996.
    \32\ QualityNet, ``Measure Methodology Reports: Medicare 
Spending Per Beneficiary (MSPB) Measure,'' (2015). http://www.qualitynet.org/dcs/ContentServer?pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772053996.
    \33\ FY 2012 IPPS/LTCH PPS final rule (76 FR 51619).
    \34\ FY 2012 IPPS/LTCH PPS final rule (76 FR 51620).
---------------------------------------------------------------------------

    MSPB-PAC episodes may begin within 30 days of discharge from an 
inpatient hospital as part of a patient's trajectory from an acute to a 
PAC setting. A home health episode beginning within 30 days of 
discharge from an inpatient hospital will therefore be included: Once 
in the hospital's MSPB measure, and once in the HHA's MSPB-PAC measure. 
Aligning the hospital MSPB and MSPB-PAC measures in this way creates 
continuous accountability and aligns incentives to improve care 
planning and coordination across inpatient and PAC settings.
    We have sought and considered the input of stakeholders throughout 
the measure development process for the MSPB-PAC measures. We convened 
a TEP consisting of 12 panelists with combined expertise in all of the 
PAC settings on October 29 and 30, 2015, in Baltimore, Maryland. A 
follow-up email survey was sent to TEP members on November 18, 2015, to 
which 7 responses were received by December 8, 2015. The MSPB-PAC TEP 
Summary Report is available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/Technical-Expert-Panel-on-Medicare-Spending-Per-Beneficiary.pdf. The measures were also presented to the MAP Post-Acute 
Care/Long-Term Care (PAC/LTC) Workgroup on December 15, 2015. As the 
MSPB-PAC measures were under development, there were three voting 
options for members: Encourage continued development, do not encourage 
further consideration, and insufficient information.\35\ The MAP PAC/
LTC Workgroup voted to ``encourage continued development'' for each of 
the MSPB-PAC measures.\36\ The MAP PAC/LTC Workgroup's vote of 
``encourage continued development'' was affirmed by the MAP 
Coordinating Committee on January 26, 2016.\37\ The MAP's concerns 
about the MSPB-PAC measures, as outlined in its final report, ``MAP 
2016 Considerations for Implementing Measures in Federal Programs: 
Post-Acute Care and Long-Term Care,'' and Spreadsheet of Final 
Recommendations were taken into consideration during our measure 
development process and are discussed as part of our responses to 
public comments we received during the measure development process, 
described below.38 39
---------------------------------------------------------------------------

    \35\ National Quality Forum, Measure Applications Partnership, 
``Process and Approach for MAP Pre-Rulemaking Deliberations, 2015-
2016'' (February 2016) http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81693.
    \36\ National Quality Forum, Measure Applications Partnership 
Post-Acute Care/Long-Term Care Workgroup, ``Meeting Transcript--Day 
2 of 2'' (December 15, 2015) 104-106 http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81470.
    \37\ National Quality Forum, Measure Applications Partnership, 
``Meeting Transcript--Day 1 of 2'' (January 26, 2016) 231-232 http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81637.
    \38\ National Quality Forum, Measure Applications Partnership, 
``MAP 2016 Considerations for Implementing Measures in Federal 
Programs: Post-Acute Care and Long-Term Care'' Final Report, 
(February 2016) http://www.qualityforum.org/Publications/2016/02/MAP_2016_Considerations_for_Implementing_Measures_in_Federal_Programs_-_PAC-LTC.aspx.
    \39\ National Quality Forum, Measure Applications Partnership, 
``Spreadsheet of MAP 2016 Final Recommendations'' (February 1, 2016) 
http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81593.
---------------------------------------------------------------------------

    Since the MAP's review and recommendation of continued development, 
we have continued to refine the risk adjustment model and conduct 
measure testing for the proposed MSPB-PAC measures. The proposed MSPB-
PAC measures are both consistent with the information submitted to the 
MAP and support the scientific acceptability of these measures for use 
in quality reporting programs.
    In addition, a public comment period, accompanied by draft measures 
specifications, was originally open from January 13 to 27, 2016 and 
twice extended to January 29 and February 5. A total of 45 comments on 
the MSPB-PAC measures were received during this 3.5 week period. The 
comments received also covered each of the MAP's concerns as outlined 
in their Final Recommendations.\40\ The MSPB-PAC Public Comment Summary 
Report is available https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/2016_03_24_mspb_pac_public_comment_summary_report.pdf and 
contains the public comments. If finalized, the proposed MSPB-PAC HH 
QRP measure, along with the other MSPB-PAC measures, as applicable, 
will be submitted for NQF consideration of endorsement.
---------------------------------------------------------------------------

    \40\ National Quality Forum, Measure Applications Partnership, 
``Spreadsheet of MAP 2016 Final Recommendations'' (February 1, 2016) 
http://www.qualityforum.org/WorkArea/linkit.aspx?LinkIdentifier=id&ItemID=81593.
---------------------------------------------------------------------------

    To calculate the MSPB-PAC HH QRP measure for each HHA, we first 
define the construction of the MSPB-PAC HH QRP episode, including the 
length of the episode window as well as the services included in the 
episode. Next, we apply the methodology for the measure calculation. 
The specifications are discussed further in this section. More detailed 
specifications for the proposed MSPB-PAC measures, including the MSPB-
PAC HH QRP measure in this proposed rule, are available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/2016_04_06_mspb_pac_measure_specifications_for_rulemaking.pdf.
a. Episode Construction
    An MSPB-PAC HH QRP episode begins at the episode trigger, which is 
defined as the patient's admission to a HHA. This admitting HHA is the 
provider for whom the MSPB-PAC HH QRP measure is calculated (that is, 
the attributed provider). The episode window is the time period during 
which Medicare FFS Part A and Part B services are counted towards the 
MSPB-PAC HH QRP episode. Because Medicare FFS claims are already 
reported to the Medicare program for payment purposes, HHAs will not be 
required to report any additional data to CMS for calculation of this 
measure. Thus, there will be no additional data collection burden from 
the implementation of this measure.
    Our proposed MSPB-PAC HH QRP episode construction methodology 
differentiates between episodes triggered by standard HH claims (for 
which there is no PEP or LUPA adjustment) and claims for which PEP and 
LUPA adjustments apply, reflecting the HHA PPS payment policy. 
Standard, PEP, and LUPA episodes would be compared only with standard, 
PEP and LUPA episodes, respectively. Differences in episode 
construction

[[Page 43762]]

between these three episode types are noted below; they otherwise share 
the same definition.
    The episode window is comprised of a treatment period and an 
associated services period. For MSPB-PAC HH Standard and LUPA QRP 
episodes, the treatment period begins at the trigger (that is, on the 
first day of the home health claim) and ends after 60 days. For MSPB-
PAC PEP QRP episodes, the treatment period begins at the trigger (that 
is, on the first day of the home health claim) and ends at discharge. 
The treatment period includes those services that are provided directly 
or reasonably managed by the HHA that are directly related to the 
beneficiary's care plan. The associated services period is the time 
during which Medicare Part A and Part B services (with certain 
exclusions) are counted towards the episode. The associated services 
period begins at the episode trigger and ends 30 days after the end of 
the treatment period. The distinction between the treatment period and 
the associated services period is important because clinical exclusions 
of services may differ for each period. Certain services are excluded 
from the MSPB-PAC HH QRP episodes because they are clinically unrelated 
to HHA care, and/or because HHAs may have limited influence over 
certain Medicare services delivered by other providers during the 
episode window. These limited service-level exclusions are not counted 
towards a given HHA's Medicare spending to ensure that beneficiaries 
with certain conditions and complex care needs receive the necessary 
care. Certain services that have been determined by clinicians to be 
outside of the control of a HHA include: planned hospital admissions, 
management of certain preexisting chronic conditions (for example, 
dialysis for end-stage renal disease (ESRD), and enzyme treatments for 
genetic conditions), treatment for preexisting cancers, organ 
transplants, and preventive screenings (for example, colonoscopy and 
mammograms). Exclusion of such services from the MSPB-PAC HH QRP 
episode ensures that facilities do not have disincentives to treat 
patients with certain conditions or complex care needs.
    An MSPB-PAC episode may begin during the associated services period 
of an MSPB-PAC HH QRP episode in the 30 days post-treatment. One 
possible scenario occurs where a HHA discharges a beneficiary who is 
then admitted to a SNF within 30 days. The SNF claim would be included 
once as an associated service for the attributed provider of the first 
MSPB-PAC HH QRP episode and once as a treatment service for the 
attributed provider of the second MSPB-PAC SNF episode. As in the case 
of overlap between hospital and PAC episodes discussed earlier, this 
overlap is necessary to ensure continuous accountability between 
providers throughout a beneficiary's trajectory of care, as both 
providers share incentives to deliver high quality care at a lower cost 
to Medicare. Even within the HH setting, one MSPB-PAC HH QRP episode 
may begin in the associated services period of another MSPB-PAC HH QRP 
episode in the 30 days post-treatment. The second HH claim would be 
included once as an associated service for the attributed HHA of the 
first MSPB-PAC HH QRP episode and once as a treatment service for the 
attributed HHA of the second MSPB-PAC HH QRP episode. Again, this 
ensures that HHAs have the same incentives throughout both MSPB-PAC HH 
QRP episodes to deliver quality care and engage in patient-focused care 
planning and coordination. If the second MSPB-PAC HH QRP episode were 
excluded from the second HHA's MSPB-PAC HH QRP measure, that HHA would 
not share the same incentives as the first HHA of the first MSPB-PAC HH 
QRP episode. The MSPB-PAC HH QRP measure is designed to benchmark the 
resource use of each attributed provider against what their spending is 
expected to be as predicted through risk adjustment. As discussed 
further below, the measure takes the ratio of observed spending to 
expected spending for each episode and then takes the average of those 
ratios across all of the attributed provider's episodes. The measure is 
not a simple sum of all costs across a provider's episodes, thus 
mitigating concerns about double counting.
b. Measure Calculation
    Medicare payments for Part A and Part B claims for services 
included in MSPB-PAC HH QRP episodes, defined according to the 
methodology previously discussed, are used to calculate the MSPB-PAC HH 
QRP measure. Measure calculation involves determination of the episode 
exclusions, the approach for standardizing payments for geographic 
payment differences, the methodology for risk adjustment of episode 
spending to account for differences in patient case mix, and the 
specifications for the measure numerator and denominator. The measure 
calculation is performed separately for MSPB-PAC HH QRP standard, PEP, 
and LUPA episodes to ensure that they are compared only to other 
standard, PEP, and LUPA episodes, respectively. The final MSPB-PAC HH 
QRP measure would combine the three ratios above to construct one HHA 
score as described below.
(1) Exclusion Criteria
    In addition to service-level exclusions that remove some payments 
from individual episodes, we exclude certain episodes in their entirety 
from the MSPB-PAC HH QRP measure to ensure that the MSPB-PAC HH QRP 
measure accurately reflects resource use and facilitates fair and 
meaningful comparisons between HHAs. The proposed episode-level 
exclusions are as follows:
     Any episode that is triggered by a HH claim outside the 50 
states, DC, Puerto Rico, and U.S. territories.
     Any episode where the claim(s) constituting the attributed 
HHA provider's treatment have a standard allowed amount of zero or 
where the standard allowed amount cannot be calculated.
     Any episode in which a beneficiary is not enrolled in 
Medicare FFS for the entirety of a 90-day lookback period (that is, a 
90-day period prior to the episode trigger) plus episode window 
(including where a beneficiary dies), or is enrolled in Part C for any 
part of the lookback period plus episode window.
     Any episode in which a beneficiary has a primary payer 
other than Medicare for any part of the 90-day lookback period plus 
episode window.
     Any episode where the claim(s) constituting the attributed 
HHA provider's treatment include at least one related condition code 
indicating that it is not a prospective payment system bill.
(2) Standardization and Risk Adjustment
    Section 1899B(d)(2)(C) of the Act requires that the MSPB-PAC 
measures are adjusted for the factors described under section 
1886(o)(2)(B)(ii) of the Act, which include adjustment for factors such 
as age, sex, race, severity of illness, and other factors that the 
Secretary determines appropriate. Medicare payments included in the 
MSPB-PAC HH QRP measure are payment-standardized and risk-adjusted. 
Payment standardization removes sources of payment variation not 
directly related to clinical decisions and facilitates comparisons of 
resource use across geographic areas. We propose to use the same 
payment standardization methodology as that used in the NQF-endorsed 
hospital MSPB measure. This methodology removes geographic payment 
differences, such as wage index and geographic practice cost index 
(GPCI), incentive payment adjustments, and

[[Page 43763]]

other add-on payments that support broader Medicare program goals 
including indirect graduate medical education (IME) and hospitals 
serving a disproportionate share of uninsured patients (DSH).\41\
---------------------------------------------------------------------------

    \41\ QualityNet, ``CMS Price (Payment) Standardization--Detailed 
Methods'' (Revised May 2015) https://qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier4&cid=1228772057350.
---------------------------------------------------------------------------

    Risk adjustment uses patient claims history to account for case-mix 
variation and other factors that affect resource use but are beyond the 
influence of the attributed HHA. To assist with risk adjustment for 
MSPB-PAC HH QRP episodes, we create mutually exclusive and exhaustive 
clinical case mix categories using the most recent institutional claim 
in the 60 days prior to the start of the MSPB-PAC HH QRP episode. The 
beneficiaries in these clinical case mix categories have a greater 
degree of clinical similarity than the overall HHA patient population, 
and allow us to more accurately estimate Medicare spending. Our 
proposed MSPB-PAC HH QRP model, adapted for the HH setting from the 
NQF-endorsed hospital MSPB measure, uses a regression framework with a 
90-day hierarchical condition category (HCC) lookback period and 
covariates including the clinical case mix categories, HCC indicators, 
age brackets, indicators for originally disabled, ESRD enrollment, and 
long-term care status, and selected interactions of these covariates 
where sample size and predictive ability make them appropriate. During 
the public comment period that ran from January 13 to February 5, 2016 
discussed above, we sought and considered public comment regarding the 
treatment of hospice services occurring within the MSPB-PAC HH QRP 
episode window. Given the comments received, we propose to include the 
Medicare spending for hospice services but risk adjust for them, such 
that MSPB-PAC HH QRP episodes with hospice are compared to a benchmark 
reflecting other MSPB-PAC HH QRP episodes with hospice. We believe that 
this provides a balance between the measure's intent of evaluating 
Medicare spending and ensuring that providers do not have incentives 
against the appropriate use of hospice services in a patient-centered 
continuum of care.
    As noted previously, we understand the important role that 
sociodemographic status, beyond age, plays in the care of patients. 
However, we continue to have concerns about holding providers to 
different standards for the outcomes of their patients of diverse 
sociodemographic status because we do not want to mask potential 
disparities or minimize incentives to improve the outcomes of 
disadvantaged populations. We routinely monitor the impact of 
sociodemographic status on providers' results on our measures.
    The NQF is currently undertaking a 2-year trial period in which new 
measures and measures undergoing maintenance review will be assessed to 
determine if risk-adjusting for sociodemographic factors is 
appropriate. For 2 years, NQF will conduct a trial of temporarily 
allowing inclusion of sociodemographic factors in the risk-adjustment 
approach for some performance measures. At the conclusion of the trial, 
NQF will issue recommendations on future permanent inclusion of 
sociodemographic factors. During the trial, measure developers are 
expected to submit information such as analyses and interpretations as 
well as performance scores with and without sociodemographic factors in 
the risk adjustment model.
    Furthermore, ASPE is conducting research to examine the impact of 
sociodemographic status on quality measures, resource use, and other 
measures under the Medicare program as required under the IMPACT Act. 
We will closely examine the findings of the ASPE reports and related 
Secretarial recommendations and consider how they apply to our quality 
programs at such time as they are available.
    While we conducted analyses on the impact of age by sex on the 
performance of the MSPB-PAC HH QRP risk-adjustment model, we are not 
proposing to adjust the MSPB-PAC HH measure for socioeconomic and 
demographic factors at this time. As this MSPB-PAC HH QRP measure will 
be submitted to the NQF for consideration of endorsement, we prefer to 
await the results of this trial and study before deciding whether to 
risk adjust for socioeconomic and demographic factors. We will monitor 
the results of the trial, studies, and recommendations. We are inviting 
public comment on how socioeconomic and demographic factors should be 
used in risk adjustment for the MSPB-PAC HH QRP measure.
(3) Measure Numerator and Denominator
    The MPSB-PAC HH QRP measure is a payment-standardized, risk-
adjusted ratio that compares a given HHA's Medicare spending against 
the Medicare spending of other HHAs within a performance period. 
Similar to the hospital MSPB measure, the ratio allows for ease of 
comparison over time as it obviates the need to adjust for inflation or 
policy changes.
    The MSPB-PAC HH QRP measure is calculated as the ratio of the MSPB-
PAC Amount for each HHA divided by the episode-weighted median MSPB-PAC 
Amount across all HHAs. To calculate the MSPB-PAC Amount for each HHA, 
one calculates the average of the ratio of the standardized spending 
for HHA standard episodes over the expected spending (as predicted in 
risk adjustment) for HHA standard episodes, the average of the ratio of 
the standardized spending for HHA PEP episodes over the expected 
spending (as predicted in risk adjustment) for HHA PEP episodes, and 
the average of the ratio of the standardized spending for HHA LUPA 
episodes over the expected spending (as predicted in risk adjustment) 
for HHA LUPA episodes. This quantity is then multiplied by the average 
episode spending level across all HHAs nationally for standard, PEP, 
and LUPA episodes. The denominator for a HHA's MSPB-PAC HH QRP measure 
is the episode-weighted national median of the MSPB-PAC Amounts across 
all HHAs. An MSPB-PAC HH QRP measure of less than 1 indicates that a 
given HHA's Medicare spending is less than that of the national median 
HHA during a performance period. Mathematically, this is represented in 
equation (A) below:

[[Page 43764]]

[GRAPHIC] [TIFF OMITTED] TP05JY16.007

Where:

 Yij = attributed standardized spending for episode i and 
provider j
 Yij = expected standardized spending for episode i and 
provider j, as predicted from risk adjustment
 nj = number of episodes for provider j
 n = total number of episodes nationally
 i[isin]{Ij{time}  = all episodes i in the set of episodes 
attributed to provider j.
a. Data Sources
    The MSPB-PAC HH QRP resource use measure is an administrative 
claims-based measure. It uses Medicare Part A and Part B claims from 
FFS beneficiaries and Medicare eligibility files.
b. Cohort
    The measure cohort includes Medicare FFS beneficiaries with a HHA 
treatment period ending during the data collection period.
c. Reporting
    If this proposed measure is finalized, we intend to provide initial 
confidential feedback to providers, prior to public reporting of this 
measure, based on Medicare FFS claims data from discharges in CY 2016. 
We intend to publicly report this measure using claims data from 
discharges in CY 2017. We are proposing a minimum of 20 episodes for 
reporting and inclusion in the HH QRP. For the reliability calculation, 
as described in the measure specifications provided above, we used data 
from FY 2014. The reliability results support the 20 episode case 
minimum, and 94.27 percent of HHAs had moderate or high reliability 
(above 0.4).
    We invite public comment on our proposal to adopt the MSPB-PAC HH 
QRP measure for the HH QRP.
2. Proposal To Address the IMPACT Act Domain of Resource Use and Other 
Measures: Discharge to Community-Post Acute Care Home Health Quality 
Reporting Program
    Section 1899B(d)(1)(B) of the Act requires that no later than the 
specified application date (which under section 1899B(a)(1)(E)(ii) is 
October 1, 2016 for SNFs, IRFs and LTCHs and January 1, 2017 for HHAs), 
the Secretary specify a measure to address the domain of discharge to 
community. We are proposing to adopt the measure, Discharge to 
Community--PAC HH QRP for the HH QRP, beginning with the CY 2018 
payment determination and subsequent years as a Medicare fee-for-
service (FFS) claims-based measure to meet this requirement.
    This proposed measure assesses successful discharge to the 
community from a HH setting, with successful discharge to the community 
including no unplanned hospitalizations and no deaths in the 31 days 
following discharge from the HH agency setting. Specifically, this 
proposed measure reports a HHA's risk-standardized rate of Medicare FFS 
patients who are discharged to the community following a HH episode, do 
not have an unplanned admission to an acute care hospital or LTCH in 
the 31 days following discharge to community, and remain alive during 
the 31 days following discharge to community. The term ''community,'' 
for this measure, is defined as home/self-care, without home health 
services, based on Patient Discharge Status Codes 01 and 81 on the 
Medicare FFS claim.42 43 This measure is specified uniformly 
across the PAC settings, in terms of the definition of the discharge to 
community outcome, the approach to risk adjustment, and the measure 
calculation.
---------------------------------------------------------------------------

    \42\ Further description of patient discharge status codes can 
be found, for example, at the following Web page: https://med.noridianmedicare.com/web/jea/topics/claim-submission/patient-status-codes.
    \43\ This definition is not intended to suggest that board and 
care homes, assisted living facilities, or other settings included 
in the definition of ``community'' for the purpose of this measure 
are the most integrated setting for any particular individual or 
group of individuals under the Americans with Disabilities Act (ADA) 
and Section 504.
---------------------------------------------------------------------------

    Discharge to a community setting is an important health care 
outcome for many patients for whom the overall goals of post-acute care 
include optimizing functional improvement, returning to a previous 
level of independence, and avoiding institutionalization. Returning to 
the community is also an important outcome for many patients who are 
not expected to make functional improvement during their HH episode and 
for patients who may be expected to decline functionally due to their 
medical condition. The discharge to community outcome offers a multi-
dimensional view of preparation for community life, including the 
cognitive, physical, and psychosocial elements involved in a discharge 
to the community.44 45
---------------------------------------------------------------------------

    \44\ El-Solh AA, Saltzman SK, Ramadan FH, Naughton BJ. Validity 
of an artificial neural network in predicting discharge destination 
from a post-acute geriatric rehabilitation unit. Archives of 
physical medicine and rehabilitation. 2000;81(10):1388-1393.
    \45\ Tanwir S, Montgomery K, Chari V, Nesathurai S. Stroke 
rehabilitation: Availability of a family member as caregiver and 
discharge destination. European journal of physical and 
rehabilitation medicine. 2014;50(3):355-362.
---------------------------------------------------------------------------

    In addition to being an important outcome from a patient and family 
perspective, patients discharged to community settings, on average, 
incur lower costs over the recovery episode, compared with patients 
discharged to institutional settings.46 47 Given the high 
costs of care in institutional settings, encouraging post-acute 
providers to prepare patients for discharge to community, when 
clinically appropriate, may have cost-saving implications for the 
Medicare program.\48\ Also, providers have discovered that successful 
discharge to the community was a major driver of their ability to 
achieve savings, where capitated payments for post-acute care were in 
place.\49\ For patients who

[[Page 43765]]

require long-term care due to persistent disability, discharge to 
community could result in lower long-term care costs for Medicaid and 
for patients' out-of-pocket expenditures.\50\
---------------------------------------------------------------------------

    \46\ Dobrez D, Heinemann AW, Deutsch A, Manheim L, Mallinson T. 
Impact of Medicare's prospective payment system for inpatient 
rehabilitation facilities on stroke patient outcomes. American 
journal of physical medicine & rehabilitation/Association of 
Academic Physiatrists. 2010;89(3):198-204.
    \47\ Gage B, Morley M, Spain P, Ingber M. Examining Post Acute 
Care Relationships in an Integrated Hospital System Final Report. 
RTI International;2009.
    \48\ Newcomer RJ, Ko M, Kang T, Harrington C, Hulett D, Bindman 
AB. Health Care Expenditures After Initiating Long-term Services and 
Supports in the Community Versus in a Nursing Facility. Med Care. 
2016 Mar;54(3):221-228.
    \49\ Doran JP, Zabinski SJ. Bundled payment initiatives for 
Medicare and non-Medicare total joint arthroplasty patients at a 
community hospital: bundles in the real world. The Journal of 
arthroplasty. 2015;30(3):353-355.
    \50\ Newcomer RJ, Ko M, Kang T, Harrington C, Hulett D, Bindman 
AB. Health Care Expenditures After Initiating Long-term Services and 
Supports in the Community Versus in a Nursing Facility. Med Care. 
2016 Jan 12. Epub ahead of print.
---------------------------------------------------------------------------

    Analyses conducted for ASPE on PAC episodes, using a 5 percent 
sample of 2006 Medicare claims, revealed that relatively high average, 
unadjusted Medicare payments associated with discharge from IRFs, SNFs, 
LTCHs, or HHAs to institutional settings, as compared with payments 
associated with discharge from these PAC providers to community 
settings.\51\ Average, unadjusted Medicare payments associated with 
discharge to community settings ranged from $0 to $4,017 for IRF 
discharges; $0 to $3,544 for SNF discharges, $0 to $4,706 for LTCH 
discharges, and $0 to $992 for HHA discharges. In contrast, payments 
associated with discharge to non-community settings were considerably 
higher, ranging from $11,847 to $25,364 for IRF discharges, $9,305 to 
$29,118 for SNF discharges, $12,465 to $18,205 for LTCH discharges, and 
$7,981 to $35,192 for HHA discharges.\52\
---------------------------------------------------------------------------

    \51\ Gage B, Morley M, Spain P, Ingber M. Examining Post Acute 
Care Relationships in an Integrated Hospital System. Final Report. 
RTI International;2009.
    \52\ Ibid.
---------------------------------------------------------------------------

    Measuring and comparing agency-level discharge to community rates 
is expected to help differentiate among agencies with varying 
performance in this important domain, and to help avoid disparities in 
care across patient groups. Variation in discharge to community rates 
has been reported within and across post-acute settings, across a 
variety of facility-level characteristics such as geographic location 
(for example, regional location, urban or rural location), ownership 
(for example, for-profit or nonprofit), freestanding or hospital-based 
units, and across patient-level characteristics such as race and 
gender.53 54 55 56 57 58 In the HH Medicare FFS population, 
using CY 2013 national claims data, we found that approximately 82 
percent of episodes ended with a discharge to the community. A multi-
center study of 23 LTCHs demonstrated that 28.8 percent of 1,061 
patients who were ventilator-dependent on admission were discharged to 
home.\59\ A single-center study revealed that 31 percent of LTCH 
hemodialysis patients were discharged to home.\60\ One study noted that 
64 percent of beneficiaries who were discharged from the home health 
episode did not use any other acute or post-acute services paid by 
Medicare in the 30 days after discharge \61\ and a second study noted 
that between 58 percent and 63 percent of beneficiates were discharged 
to home with rates varying by admission site.\62\ However, significant 
numbers of patients were admitted to hospitals (29 percent) and lesser 
numbers to SNFs (7.6 percent), IRFs (1.5 percent), home health (7.2 
percent) or hospice (3.3 percent).\63\
---------------------------------------------------------------------------

    \53\ Reistetter TA, Karmarkar AM, Graham JE, et al. Regional 
variation in stroke rehabilitation outcomes. Archives of physical 
medicine and rehabilitation. 2014;95(1):29-38.
    \54\ El-Solh AA, Saltzman SK, Ramadan FH, Naughton BJ. Validity 
of an artificial neural network in predicting discharge destination 
from a post-acute geriatric rehabilitation unit. Archives of 
physical medicine and rehabilitation. 2000;81(10):1388-1393.
    \55\ March 2015 Report to the Congress: Medicare Payment Policy. 
Medicare Payment Advisory Commission;2015.
    \56\ Bhandari VK, Kushel M, Price L, Schillinger D. Racial 
disparities in outcomes of inpatient stroke rehabilitation. Archives 
of physical medicine and rehabilitation. 2005;86(11):2081-2086.
    \57\ Chang PF, Ostir GV, Kuo YF, Granger CV, Ottenbacher KJ. 
Ethnic differences in discharge destination among older patients 
with traumatic brain injury. Archives of physical medicine and 
rehabilitation. 2008;89(2):231-236.
    \58\ Berges IM, Kuo YF, Ostir GV, Granger CV, Graham JE, 
Ottenbacher KJ. Gender and ethnic differences in rehabilitation 
outcomes after hip-replacement surgery. American journal of physical 
medicine & rehabilitation/Association of Academic Physiatrists. 
2008;87(7):567-572.
    \59\ Scheinhorn DJ, Hassenpflug MS, Votto JJ, et al. Post-ICU 
mechanical ventilation at 23 long-term care hospitals: a multicenter 
outcomes study. Chest. 2007;131(1):85-93.
    \60\ Thakar CV, Quate-Operacz M, Leonard AC, Eckman MH. Outcomes 
of hemodialysis patients in a long-term care hospital setting: a 
single-center study. American journal of kidney diseases: the 
official journal of the National Kidney Foundation. 2010;55(2):300-
306.
    \61\ Wolff JL, Meadow A, Weiss CO, Boyd CM, Leff B. Medicare 
home health patients' transitions through acute and post-acute care 
settings. Medical care. 2008;46(11):1188-1193.
    \62\ Riggs JS, Madigan EA. Describing Variation in Home Health 
Care Episodes for Patients with Heart Failure. Home Health Care 
Management & Practice 2012; 24(3) 146-152.
    \63\ Ibid.
---------------------------------------------------------------------------

    Discharge to community is an actionable health care outcome, as 
targeted interventions have been shown to successfully increase 
discharge to community rates in a variety of post-acute 
settings.64 65 66 67 68 Many of these interventions involve 
discharge planning or specific rehabilitation strategies, such as 
addressing discharge barriers and improving medical and functional 
status.69 70 71 72 73 The effectiveness of these 
interventions suggests that improvement in discharge to community rates 
among post-acute care patients is possible through modifying provider-
led processes and interventions.
---------------------------------------------------------------------------

    \64\ Kushner DS, Peters KM, Johnson-Greene D. Evaluating Siebens 
Domain Management Model for Inpatient Rehabilitation to Increase 
Functional Independence and Discharge Rate to Home in Geriatric 
Patients. Archives of physical medicine and rehabilitation. 
2015;96(7):1310-1318.
    \65\ Wodchis WP, Teare GF, Naglie G, et al. Skilled nursing 
facility rehabilitation and discharge to home after stroke. Archives 
of physical medicine and rehabilitation. 2005;86(3):442-448.
    \66\ Berkowitz RE, Jones RN, Rieder R, et al. Improving 
disposition outcomes for patients in a geriatric skilled nursing 
facility. Journal of the American Geriatrics Society. 
2011;59(6):1130-1136.
    \67\ Kushner DS, Peters KM, Johnson-Greene D. Evaluating use of 
the Siebens Domain Management Model during inpatient rehabilitation 
to increase functional independence and discharge rate to home in 
stroke patients. PM & R: the journal of injury, function, and 
rehabilitation. 2015;7(4):354-364.
    \68\ Parker, E., Zimmerman, S., Rodriguez, S., & Lee, T. 
Exploring best practices in home health care: a review of available 
evidence on select innovations. Home Health Care Management and 
Practice, 2014; 26(1): 17-33.
    \69\ Kushner DS, Peters KM, Johnson-Greene D. Evaluating Siebens 
Domain Management Model for Inpatient Rehabilitation to Increase 
Functional Independence and Discharge Rate to Home in Geriatric 
Patients. Archives of physical medicine and rehabilitation. 
2015;96(7):1310-1318.
    \70\ Wodchis WP, Teare GF, Naglie G, et al. Skilled nursing 
facility rehabilitation and discharge to home after stroke. Archives 
of physical medicine and rehabilitation. 2005;86(3):442-448.
    \71\ Berkowitz RE, Jones RN, Rieder R, et al. Improving 
disposition outcomes for patients in a geriatric skilled nursing 
facility. Journal of the American Geriatrics Society. 
2011;59(6):1130-1136.
    \72\ Kushner DS, Peters KM, Johnson-Greene D. Evaluating use of 
the Siebens Domain Management Model during inpatient rehabilitation 
to increase functional independence and discharge rate to home in 
stroke patients. PM & R: the journal of injury, function, and 
rehabilitation. 2015;7(4):354-364.
    \73\ Parker, E., Zimmerman, S., Rodriguez, S., & Lee, T. 
Exploring best practices in home health care: a review of available 
evidence on select innovations. Home Health Care Management and 
Practice, 2014; 26(1): 17-33.
---------------------------------------------------------------------------

    A TEP convened by our measure development contractor was strongly 
supportive of the importance of measuring discharge to community 
outcomes, and implementing the proposed measure, Discharge to 
Community-PAC HH QRP into the HH QRP. The panel provided input on the 
technical specifications of this proposed measure, including the 
feasibility of implementing the measure, as well as the overall measure 
reliability and validity. A summary of the TEP proceedings is available 
on the PAC Quality Initiatives Downloads and Videos Web page at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.

[[Page 43766]]

    We also solicited stakeholder feedback on the development of this 
measure through a public comment period held from November 9, 2015 
through December 8, 2015. Several stakeholders and organizations, 
including the MedPAC, among others, supported this measure for 
implementation. The public comment summary report for the proposed 
measure is available on the CMS Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The NQF-convened MAP met on December 14 and 15, 2015, and provided 
input on the use of this proposed Discharge to Community-PAC HH QRP 
measure in the HH QRP. The MAP encouraged continued development of the 
proposed measure to meet the mandate of the IMPACT Act. The MAP 
supported the alignment of this proposed measure across PAC settings, 
using standardized claims data. More information about the MAP's 
recommendations for this measure is available at http://www.qualityforum.org/Publications/2016/02/MAP_2016_Considerations_for_Implementing_Measures_in_Federal_Programs_-_PAC-LTC.aspx.
    Since the MAP review the measure and recommended continued 
development, we have continued to refine the risk adjustment model and 
conduct measure testing for this measure. This proposed measure is 
consistent with the information submitted to the MAP and is 
scientifically acceptable for current specification in the HH QRP.
    We reviewed the NQF's consensus-endorsed measures and were unable 
to identify any NQF-endorsed resource use or other measures for post-
acute care focused on discharge to the community. In addition, we are 
unaware of any other post-acute care measures for discharge to 
community that have been endorsed or adopted by other consensus 
organizations. Therefore, we are proposing the measure, Discharge to 
Community-PAC HH QRP, under the Secretary's authority to specify non-
NQF-endorsed measures under section 1899B(e)(2)(B) of the Act.
    We are proposing to use data from the Medicare FFS claims and 
Medicare eligibility files to calculate this proposed measure. We are 
proposing to use data from the ``Patient Discharge Status Code'' on 
Medicare FFS claims to determine whether a patient was discharged to a 
community setting for calculation of this proposed measure. In all PAC 
settings, we tested the accuracy of determining discharge to a 
community setting using the ``Patient Discharge Status Code'' on the 
PAC claim by examining whether discharge to community coding based on 
PAC claim data agreed with discharge to community coding based on PAC 
assessment data. We found excellent agreement between the two data 
sources in all PAC settings, ranging from 94.6 percent to 98.8 percent. 
Specifically, in the HH setting, using 2013 data, we found 97 percent 
agreement in discharge to community codes when comparing ``Patient 
Discharge Status Code'' from claims and Discharge Disposition (M2420) 
and Inpatient Facility (M2410) on the OASIS C discharge assessment, 
when the claims and OASIS assessment had the same discharge date. We 
further examined the accuracy of ``Patient Discharge Status Code'' on 
the PAC claim by assessing how frequently discharges to an acute care 
hospital were confirmed by follow-up acute care claims. We found that 
50 percent of HH claims with acute care discharge status codes were 
followed by an acute care claim in the 31 days after HH discharge. We 
believe these data support the use of the ``Patient Discharge Status 
Code'' for determining discharge to a community setting for this 
measure. In addition, the proposed measure has high feasibility because 
all data used for measure calculation are derived from Medicare FFS 
claims and eligibility files, which are already available to us.
    Based on the evidence discussed above, we are proposing to adopt 
the measure entitled, ``Discharge to Community-PAC HH QRP'', for the HH 
QRP for the CY 2018 payment determination and subsequent years. This 
proposed measure is calculated utilizing 2 years of data as defined 
below. We are proposing a minimum of 20 eligible episodes in a given 
HHA for public reporting of the proposed measure for that HHA. Since 
Medicare FFS claims data are already reported to the Medicare program 
for payment purposes, and Medicare eligibility files are also 
available, HHAs will not be required to report any additional data to 
CMS for calculation of this measure. The proposed measure denominator 
is the risk-adjusted expected number of discharges to community. The 
proposed measure numerator is the risk-adjusted estimate of the number 
of home health patients who are discharged to the community, do not 
have an unplanned readmission to an acute care hospital or LTCH in the 
31-day post-discharge observation window, and who remain alive during 
the post-discharge observation window. The measure is risk-adjusted for 
variables such as age and sex, principal diagnosis, comorbidities, and 
ESRD status among other variables. For technical information about this 
proposed measure, including information about the measure calculation, 
risk adjustment, and denominator exclusions, we refer readers the 
document titled Proposed Measure Specifications for Measures Proposed 
in the CY 2017 HH QRP proposed rule, available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIQualityMeasures.html.
    If this proposed measure is finalized, we intend to provide initial 
confidential feedback to home health agencies, prior to the public 
reporting of this measure, based on Medicare FFS claims data from 
discharges in CYs 2015 and 2016. We intend to publicly report this 
measure using claims data from discharges in CYs 2016 and 2017. We plan 
to submit this proposed measure to the NQF for consideration for 
endorsement.
    We invite public comment on our proposal to adopt the measure, 
Discharge to Community--PAC HH QRP for the HH QRP.
3. Proposal To Address the IMPACT Act Domain of Resource Use and Other 
Measures: Potentially Preventable 30-Day Post-Discharge Readmission 
Measure for Post-Acute Care Home Health Quality Reporting Program
    Section 1899B(d)(1)(C) of the Act requires that no later than the 
specified application date (which under section 1899B(a)(1)(E)(ii) is 
October 1, 2016 for SNFs, IRFs and LTCHs and January 1, 2017 for HHAs), 
the Secretary specify measures to address the domain of all-condition 
risk-adjusted potentially preventable hospital readmission rates. We 
are proposing the measure Potentially Preventable 30-Day Post-Discharge 
Readmission Measure for HH QRP as a Medicare FFS claims-based measure 
to meet this requirement beginning with the CY 2018 payment 
determination.
    The proposed measure assesses the facility-level risk-standardized 
rate of unplanned, potentially preventable hospital readmissions for 
Medicare FFS beneficiaries that take place within 30 days of a HH 
discharge. The HH admission must have occurred within up to 30 days of 
discharge from a prior proximal hospital stay, which is defined as an 
inpatient admission to an acute care hospital (including IPPS, CAH, or 
a psychiatric hospital). Hospital

[[Page 43767]]

readmissions include readmissions to a short-stay acute-care hospital 
or a LTCH, with a diagnosis considered to be unplanned and potentially 
preventable. This proposed measure is claims-based, requiring no 
additional data collection or submission burden for HHAs. Because the 
measure denominator is based on HH admissions, each Medicare 
beneficiary may be included in the measure multiple times within the 
measurement period. Readmissions counted in this measure are identified 
by examining Medicare FFS claims data for readmissions to either acute 
care hospitals (IPPS or CAH) or LTCHs that occur during a 30-day window 
beginning two days after HH discharge. This measure is conceptualized 
uniformly across the PAC settings, in terms of the measure definition, 
the approach to risk adjustment, and the measure calculation. Our 
approach for defining potentially preventable hospital readmissions is 
described in more detail below.
    Hospital readmissions among the Medicare population, including 
beneficiaries that utilize PAC, are common, costly, and often 
preventable.74 75 The MedPAC estimated that 17 to 20 percent 
of Medicare beneficiaries discharged from the hospital were readmitted 
within 30 days. MedPAC found that more than 75 percent of 30-day and 
15-day readmissions and 84 percent of 7-day readmissions were 
considered ``potentially preventable.'' \76\ In addition, MedPAC 
calculated that annual Medicare spending on potentially preventable 
readmissions would be $12 billion for 30-day, $8 billion for 15-day, 
and $5 billion for 7-day readmissions.\77\ For hospital readmissions 
from one post-acute care setting, SNFs, MedPAC deemed 76 percent of 
these readmissions as ``potentially avoidable''--associated with $12 
billion in Medicare expenditures.\78\ Mor et al. analyzed 2006 Medicare 
claims and SNF assessment data (Minimum Data Set), and reported a 23.5 
percent readmission rate from SNFs, associated with $4.3 billion in 
expenditures.\79\ An analysis of data from a nationally representative 
sample of Medicare FFS beneficiaries receiving home health services in 
2004 show that home health patients receive significant amounts of 
acute and post-acute services after discharge from home health care. 
Within 30 days of discharge from home health, 29 percent of patients 
were admitted to a hospital.\80\ Focusing on readmissions, Madigan and 
colleagues studied 74,580 Medicare home health patients with a 
rehospitalization within 30 days of the index hospital discharge. The 
30-day rehospitalization rate was 26 percent with the largest 
proportion related to a cardiac-related diagnosis (42 percent).\81\ 
Fewer studies have investigated potentially preventable readmission 
rates from other post-acute care settings.
---------------------------------------------------------------------------

    \74\ Friedman, B., and Basu, J.: The rate and cost of hospital 
readmissions for preventable conditions. Med. Care Res. Rev. 
61(2):225-240, 2004. doi:10.1177/1077558704263799.
    \75\ Jencks, S.F., Williams, M.V., and Coleman, E.A.: 
Rehospitalizations among patients in the Medicare Fee-for-Service 
Program. N. Engl. J. Med. 360(14):1418-1428, 2009. doi:10.1016/
j.jvs.2009.05.045
    \76\ MedPAC: Payment policy for inpatient readmissions, in 
Report to the Congress: Promoting Greater Efficiency in Medicare. 
Washington, DC, pp. 103-120, 2007. Available from http://www.medpac.gov/documents/reports/Jun07_EntireReport.pdf.
    \77\ ibid.
    \78\ ibid.
    \79\ Mor, V., Intrator, O., Feng, Z., et al. The revolving door 
of rehospitalization from skilled nursing facilities. Health Aff. 
29(1):57-64, 2010. doi:10.1377/hlthaff.2009.0629.
    \80\ Wolff, J. L., Meadow, A., Weiss, C.O., Boyd, C.M., Leff, B. 
Medicare Home Health Patients' Transitions Through Acute And Post-
Acute Care Settings.'' Medicare Care 11(46) 2008; 1188-1193.
    \81\ Madigan, E. A., N. H. Gordon, et al. ``Rehospitalization in 
a national population of home health care patients with heart 
failure.'' Health Serv Res 47(6): 2013; 2316-2338.
---------------------------------------------------------------------------

    We have addressed the high rates of hospital readmissions in the 
acute care setting as well as in PAC. For example, we developed the 
following measure: Rehospitalization During the First 30 Days of Home 
Health (NQF #2380), as well as similar measures for other PAC providers 
(NQF #2502 for IRFs, NQF #2510 for SNFs NQF #2512 for LTCHs).\82\ These 
measures are endorsed by the NQF, and the NQF-endorsed measure (NQF 
#2380) was adopted into the HH QRP in the CY 2014 HH PPS final rule (80 
FR 68691 through 68692). Note that these NQF-endorsed measures assess 
all-cause unplanned readmissions.
---------------------------------------------------------------------------

    \82\ National Quality Forum: All-Cause Admissions and 
Readmissions Measures. pp. 1-319, April 2015. Available from http://www.qualityforum.org/Publications/2015/04/All-Cause_Admissions_and_Readmissions_Measures_-_Final_Report.aspx.
---------------------------------------------------------------------------

    Several general methods and algorithms have been developed to 
assess potentially avoidable or preventable hospitalizations and 
readmissions for the Medicare population. These include the Agency for 
Healthcare Research and Quality's (AHRQ's) Prevention Quality 
Indicators, approaches developed by MedPAC, and proprietary approaches, 
such as the 3M\TM\ algorithm for Potentially Preventable 
Readmissions.83 84 85 Recent work led by Kramer et al. for 
MedPAC identified 13 conditions for which readmissions were deemed as 
potentially preventable among SNF and IRF populations.86 87 
Although much of the existing literature addresses hospital 
readmissions more broadly and potentially avoidable hospitalizations 
for specific settings like long-term care, these findings are relevant 
to the development of potentially preventable readmission measures for 
PAC.88 89 90
---------------------------------------------------------------------------

    \83\ Goldfield, N.I., McCullough, E.C., Hughes, J.S., et al. 
Identifying potentially preventable readmissions. Health Care Finan. 
Rev. 30(1):75-91, 2008. Available from http://www.ncbi.nlm.nih.gov/pmc/articles/PMC4195042/.
    \84\ National Quality Forum: Prevention Quality Indicators 
Overview. 2008.
    \85\ MedPAC: Online Appendix C: Medicare Ambulatory Care 
Indicators for the Elderly. pp. 1-12, prepared for Chapter 4, 2011. 
Available from http://www.medpac.gov/documents/reports/Mar11_Ch04_APPENDIX.pdf?sfvrsn=0.
    \86\ Kramer, A., Lin, M., Fish, R., et al. Development of 
Inpatient Rehabilitation Facility Quality Measures: Potentially 
Avoidable Readmissions, Community Discharge, and Functional 
Improvement. pp. 1-42, 2015. Available from http://www.medpac.gov/documents/contractor-reports/development-of-inpatient-rehabilitation-facility-quality-measures-potentially-avoidable-readmissions-community-discharge-and-functional-improvement.pdf?sfvrsn=0.
    \87\ Kramer, A., Lin, M., Fish, R., et al. Development of 
Potentially Avoidable Readmission and Functional Outcome SNF Quality 
Measures. pp. 1-75, 2014. Available from http://www.medpac.gov/documents/contractor-reports/mar14_snfqualitymeasures_contractor.pdf?sfvrsn=0.
    \88\ Allaudeen, N., Vidyarthi, A., Maselli, J., et al. 
Redefining readmission risk factors for general medicine patients. 
J. Hosp. Med. 6(2):54-60, 2011. doi:10.1002/jhm.805.
    \89\ Gao, J., Moran, E., Li, Y.-F., et al. Predicting 
potentially avoidable hospitalizations. Med. Care 52(2):164-171, 
2014. doi:10.1097/MLR.0000000000000041.
    \90\ Walsh, E.G., Wiener, J.M., Haber, S., et al. Potentially 
avoidable hospitalizations of dually eligible Medicare and Medicaid 
beneficiaries from nursing facility and home[hyphen]and 
community[hyphen]based services waiver programs. J. Am. Geriatr. 
Soc. 60(5):821-829, 2012. doi:10.1111/j.1532-5415.2012.03920.
---------------------------------------------------------------------------

    Potentially Preventable Readmission Measure Definition: We 
conducted a comprehensive environmental scan, analyzed claims data, and 
obtained input from a TEP to develop a definition and list of 
conditions for which hospital readmissions are potentially preventable. 
The Ambulatory Care Sensitive Conditions and Prevention Quality 
Indicators, developed by AHRQ, served as the starting point in this 
work. For patients in the 30-day post-PAC discharge period, a 
potentially preventable readmission refers to a readmission for which 
the probability of occurrence could be minimized with adequately 
planned, explained, and implemented post discharge instructions, 
including the establishment of appropriate follow-up ambulatory care. 
Our list of PPR

[[Page 43768]]

conditions is categorized by 3 clinical rationale groupings:
     Inadequate management of chronic conditions;
     Inadequate management of infections; and
     Inadequate management of other unplanned events
    Additional details regarding the definition for potentially 
preventable readmissions are available in the document titled Proposed 
Measure Specifications for Measures Proposed in the CY 2017 HH QRP 
proposed rule available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIQualityMeasures.html.
    This proposed measure focuses on readmissions that are potentially 
preventable and also unplanned. Similar to the Rehospitalization During 
the First 30 Days of Home Health measure (NQF #2380), this proposed 
measure uses the current version of the CMS Planned Readmission 
Algorithm as the main component for identifying planned readmissions. A 
complete description of the CMS Planned Readmission Algorithm, which 
includes lists of planned diagnoses and procedures, can be found on the 
CMS Web site at http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html. In addition to the CMS Planned Readmission Algorithm, 
this proposed measure incorporates procedures that are considered 
planned in post-acute care settings, as identified in consultation with 
TEPs. Full details on the planned readmissions criteria used, including 
the CMS Planned Readmission Algorithm and additional procedures 
considered planned for post-acute care, can be found in the document 
titled Proposed Measure Specifications for Measures Proposed in the CY 
2017 HH QRP proposed rule available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIQualityMeasures.html.
    The proposed measure, Potentially Preventable 30-Day Post-Discharge 
Readmission Measure for HH QRP, assesses potentially preventable 
readmission rates while accounting for patient demographics, principal 
diagnosis in the prior hospital stay, comorbidities, and other patient 
factors. While estimating the predictive power of patient 
characteristics, the model also estimates an agency-specific effect, 
common to patients treated in each agency. This proposed measure is 
calculated for each HHA based on the ratio of the predicted number of 
risk-adjusted, unplanned, potentially preventable hospital readmissions 
that occur within 30 days after an HH discharge, including the 
estimated agency effect, to the estimated predicted number of risk-
adjusted, unplanned hospital readmissions for the same patients treated 
at the average HHA. A ratio above 1.0 indicates a higher than expected 
readmission rate (worse), while a ratio below 1.0 indicates a lower 
than expected readmission rate (better). This ratio is referred to as 
the standardized risk ratio (SRR). The SRR is then multiplied by the 
overall national raw rate of potentially preventable readmissions for 
all HH episodes. The resulting rate is the risk-standardized 
readmission rate (RSRR) of potentially preventable readmissions.
    An eligible HH episode is followed until: (1) The 30-day post-
discharge period ends; or (2) the patient is readmitted to an acute 
care hospital (IPPS or CAH) or LTCH. If the readmission is unplanned 
and potentially preventable, it is counted as a readmission in the 
measure calculation. If the readmission is planned, the readmission is 
not counted in the measure rate.
    This measure is risk adjusted. The risk adjustment modeling 
estimates the effects of patient characteristics, comorbidities, and 
select health care variables on the probability of readmission. More 
specifically, the risk-adjustment model for HHAs accounts for 
demographic characteristics (age, sex, original reason for Medicare 
entitlement), principal diagnosis during the prior proximal hospital 
stay, body system specific surgical indicators, comorbidities, length 
of stay during the patient's prior proximal hospital stay, intensive 
care and coronary care unit (ICU and CCU) utilization, ESRD status, and 
number of acute care hospitalizations in the preceding 365 days.
    The proposed measure is calculated using 3 consecutive calendar 
years of FFS data, in order to ensure the statistical reliability of 
this measure for smaller agencies. In addition, we are proposing a 
minimum of 20 eligible episodes for public reporting of the proposed 
measure. For technical information about this proposed measure 
including information about the measure calculation, risk adjustment, 
and exclusions, we refer readers to our Proposed Measure Specifications 
for Measures Proposed in the CY 2017 HH QRP proposed rule at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIQualityMeasures.html.
    A TEP convened by our measure contractor provided recommendations 
on the technical specifications of this proposed measure, including the 
development of an approach to define potentially preventable hospital 
readmission for PAC. Details from the TEP meetings, including TEP 
members' ratings of conditions proposed as being potentially 
preventable, are available in the TEP summary report available on the 
CMS Web site at: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html. We also 
solicited stakeholder feedback on the development of this measure 
through a public comment period held from November 2 through December 
1, 2015. Comments on the measure varied, with some commenters 
supportive of the proposed measure, while others either were not in 
favor of the measure, or suggested potential modifications to the 
measure specifications, such as including standardized function data. A 
summary of the public comments is also available on the CMS Web site at 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The NQF-convened MAP encouraged continued development of the 
proposed measure. Specifically, the MAP stressed the need to promote 
shared accountability and ensure effective care transitions. More 
information about the MAP's recommendations for this measure is 
available at http://www.qualityforum.org/Publications/2016/02/MAP_2016_Considerations_for_Implementing_Measures_in_Federal_Programs_-_PAC-LTC.aspx.
    At the time of the MAP, the risk-adjustment model was still under 
development. Following completion of that development work, we were 
able to test for measure validity and reliability as identified in the 
measure specifications document provided above. Testing results are 
within range for similar outcome measures finalized in public reporting 
and value-based purchasing programs, including the Rehospitalization 
During the First 30 Days of Home Health Measure (NQF #2380) adopted 
into the HH QRP.
    We reviewed the NQF's consensus endorsed measures and were unable 
to identify any NQF-endorsed measures focused on potentially 
preventable

[[Page 43769]]

hospital readmissions. We are unaware of any other measures for this 
IMPACT Act domain that have been endorsed or adopted by other consensus 
organizations. Therefore, we are proposing the Potentially Preventable 
30-Day Post-Discharge Readmission Measure for HH QRP under the 
Secretary's authority to specify non-NQF-endorsed measures under 
section 1899B(e)(2)(B) of the Act, for the HH QRP for the CY 2018 
payment determination and subsequent years given the evidence 
previously discussed above.
    We plan to submit the proposed measure to the NQF for consideration 
of endorsement. If this proposed measure is finalized, we intend to 
provide initial confidential feedback to providers, prior to public 
reporting of this proposed measure, based on 3 calendar years of claims 
data from discharges in CYs 2014, 2015 and 2016. We intend to publicly 
report this proposed measure using claims data from CYs 2015, 2016 and 
2017.
    We are inviting public comment on our proposal to adopt the 
measure, Potentially Preventable 30-Day Post-Discharge Readmission 
Measure for HH QRP.
4. Proposal To Address the IMPACT Act Domain of Medication 
Reconciliation: Drug Regimen Review Conducted With Follow-Up for 
Identified Issues--Post-Acute Care Home Health Quality Reporting 
Program
    Section 1899B(c)(1)(C) of the Act requires that no later than the 
specified application date (which under section 1899B(a)(1)(E)(i) is 
October 1, 2018 for SNFs, IRFs and LTCHs and January 1, 2017 for HHAs), 
the Secretary specify quality measures to address the domain of 
medication reconciliation. We are proposing to adopt the quality 
measure, Drug Regimen Review Conducted with Follow-Up for Identified 
Issues--PAC HH QRP for the HH QRP as a patient-assessment based, cross-
setting quality measure to meet this requirement with data collection 
beginning January 1, 2017, beginning with the CY 2018 payment 
determination.
    This proposed measure assesses whether PAC providers were 
responsive to potential or actual clinically significant medication 
issue(s) when such issues were identified. Specifically, the proposed 
quality measure reports the percentage of patient episodes in which a 
drug regimen review was conducted at the start of care or resumption of 
care and timely follow-up with a physician occurred each time potential 
clinically significant medication issues were identified throughout 
that episode. For this proposed quality measure, a drug regimen review 
is defined as the review of all medications or drugs the patient is 
taking in order to identify potential clinically significant medication 
issues. This proposed quality measure utilizes both the processes of 
medication reconciliation and a drug regimen review in the event an 
actual or potential medication issue occurred. The proposed measure 
informs whether the PAC agency identified and addressed each clinically 
significant medication issue and if the agency responded or addressed 
the medication issue in a timely manner. Of note, drug regimen review 
in PAC settings is generally considered to include medication 
reconciliation and review of the patient's drug regimen to identify 
potential clinically significant medication issues.\91\ This measure is 
applied uniformly across the PAC settings.
---------------------------------------------------------------------------

    \91\ Institute of Medicine. Preventing Medication Errors. 
Washington, DC: National Academies Press; 2006.
---------------------------------------------------------------------------

    Medication reconciliation is a process of reviewing an individual's 
complete and current medication list. Medication reconciliation is a 
recognized process for reducing the occurrence of medication 
discrepancies that may lead to Adverse Drug Events (ADEs). Medication 
discrepancies occur when there is conflicting information documented in 
the medical records.
    The World Health Organization regards medication reconciliation as 
a standard operating protocol necessary to reduce the potential for 
ADEs that cause harm to patients. Medication reconciliation is an 
important patient safety process that addresses medication accuracy 
during transitions in patient care and in identifying preventable 
ADEs.\92\ The Joint Commission added medication reconciliation to its 
list of National Patient Safety Goals (2005), suggesting that 
medication reconciliation is an integral component of medication 
safety.\93\ The Society of Hospital Medicine published a statement in 
agreement of the Joint Commission's emphasis and value of medication 
reconciliation as a patient safety goal.\94\ There is universal 
agreement that medication reconciliation directly addresses patient 
safety issues that can result from medication miscommunication and 
unavailable or incorrect information.95 96 97 98
---------------------------------------------------------------------------

    \92\ Leotsakos A., et al. Standardization in patient safety: The 
WHO High 5s project. Int J Qual Health Care. 2014:26(2):109-116.
    \93\ The Joint Commission. 2016 Long Term Care: National Patient 
Safety Goals Medicare/Medicaid Certification-based Option. 
(NPSG.03.06.01).
    \94\ Greenwald, J.L., Halasyamani, L., Greene, J., LaCivita, C., 
et al. (2010). Making inpatient medication reconciliation patient 
centered, clinically relevant and implementable: A consensus 
statement on key principles and necessary first steps. Journal of 
Hospital Medicine, 5(8), 477-485.
    \95\ IHI. Medication Reconciliation to Prevent Adverse Drug 
Events [Internet]. Cambridge, MA: Institute for Healthcare 
Improvement; [cited 2016 Jan 11]. Available from: http://www.ihi.org/topics/adesmedicationreconciliation/Pages/default.aspx. 
Leotsakos A., et al. Standardization in patient safety: The WHO High 
5s project. Int J Qual Health Care. 2014:26(2):109-116.
    \96\ The Joint Commission. 2016 Long Term Care: National Patient 
Safety Goals Medicare/Medicaid Certification-based Option. 
(NPSG.03.06.01).
    \97\ Greenwald, J.L., Halasyamani, L., Greene, J., LaCivita, C., 
et al. (2010). Making inpatient medication reconciliation patient 
centered, clinically relevant and implementable: A consensus 
statement on key principles and necessary first steps. Journal of 
Hospital Medicine, 5(8), 477-485.
    \98\ The Joint Commission. 2016 Long Term Care: National Patient 
Safety Goals Medicare/Medicaid Certification-based Option. 
(NPSG.03.06.01).
---------------------------------------------------------------------------

    The performance of timely medication reconciliation is valuable to 
the process of drug regimen review. Preventing and responding to ADEs 
is of critical importance as ADEs account for significant increases in 
health services utilization and costs,99 100 including 
subsequent emergency room visits and re-hospitalizations. ADEs are 
associated with an estimated $3.5 billion in annual health care costs 
and 7,000 deaths annually.\101\
---------------------------------------------------------------------------

    \99\ Jha A.K., Kuperman G.J., Rittenberg E., et al. Identifying 
hospital admissions due to adverse drug events using a computer-
based monitor. Pharmacoepidemiol Drug Saf. 2001;10(2):113-119.
    \100\ Hohl C.M., Nosyk B., Kuramoto L., et al. Outcomes of 
emergency department patients presenting with adverse drug events. 
Ann Emerg Med. 2011;58:270-279.
    \101\ Kohn L.T., Corrigan J.M., Donaldson M.S., ``To Err Is 
Human: Building a Safer Health System,'' National Academies Press, 
Washington, DC 1999
---------------------------------------------------------------------------

    Medication errors include the duplication of medications, delivery 
of an incorrect drug, inappropriate drug omissions, or errors in the 
dosage, route, frequency, and duration of medications. Medication 
errors are one of the most common types of medical error and can occur 
at any point in the process of ordering and delivering a medication. 
Medication errors have the potential to result in an 
ADE.102 103 104 105 106 107

[[Page 43770]]

Inappropriately prescribed medications are also considered a major 
healthcare concern in the United States for the elderly population, 
with costs of roughly $7.2 billion annually.108 109
---------------------------------------------------------------------------

    \102\ Institute of Medicine. To err is human: Building a safer 
health system. Washington, DC: National Academies Press; 2000.
    \103\ Lesar T.S., Briceland L., Stein D.S. Factors related to 
errors in medication prescribing. JAMA. 1997:277(4): 312-317.
    \104\ Bond C.A., Raehl C.L., & Franke T. Clinical pharmacy 
services, hospital pharmacy staffing, and medication errors in 
United States hospitals. Pharmacotherapy. 2002:22(2): 134-147.
    \105\ Bates D.W., Cullen D.J., Laird N., Petersen L.A., Small 
S.D., et al. Incidence of adverse drug events and potential adverse 
drug events. Implications for prevention. JAMA. 1995:274(1): 29-34.
    \106\ Barker K.N., Flynn E.A., Pepper G.A., Bates D.W., & Mikeal 
R.L. Medication errors observed in 36 health care facilities. JAMA. 
2002: 162(16):1897-1903.
    \107\ Bates D.W., Boyle D.L., Vander Vliet M.B., Schneider J, & 
Leape L. Relationship between medication errors and adverse drug 
events. J Gen Intern Med. 1995:10(4): 199-205.
    \108\ Institute of Medicine. To err is human: Building a safer 
health system. Washington, DC: National Academies Press; 2000
    \109\ Greenwald, J.L., Halasyamani, L., Greene, J., LaCivita, 
C., et al. (2010). Making inpatient medication reconciliation 
patient centered, clinically relevant and implementable: A consensus 
statement on key principles and necessary first steps. Journal of 
Hospital Medicine, 5(8), 477-485.
---------------------------------------------------------------------------

    There is strong evidence that medication discrepancies can occur 
during transfers from acute care facilities to post-acute care 
facilities. Discrepancies can occur when there is conflicting 
information documented in the medical records. Almost one-third of 
medication discrepancies have the potential to cause patient harm.\110\ 
Potential medication problems upon admission to HHAs have been reported 
as occurring at a rate of 39 percent of reviewed charts \111\ and mean 
medication discrepancies between 2.0  2.3 and 2.1  2.4.\112\ Similarly, medication discrepancies were noted as 
patients transitioned from the hospital to home health settings.\113\ 
An estimated fifty percent of patients experienced a clinically 
important medication error after hospital discharge in an analysis of 
two tertiary care academic hospitals.\114\
---------------------------------------------------------------------------

    \110\ Wong, J.D.., et al. ``Medication reconciliation at 
hospital discharge: Evaluating discrepancies.'' Annals of 
Pharmacotherapy 42.10 (2008): 1373-1379.
    \111\ Vink J., Morton D., Ferreri S. Medication-Related Problems 
in the Home Care Setting. The Consultant Pharmacist. Vol 26 No 7 
2011 478-484
    \112\ Setter S.M., Corbett C.F., Neumiller J.J., Gates B.J., et 
al. Effectiveness of a pharmacist-nurse intervention on resolving 
medication discrepancies for patients transitioning from hospital to 
home health care, Am J Health-Syst Pharm, vol. 66, pp. 2027-2031, 
2009
    \113\ Zillich A.J., Snyder M.E., Frail C.K., Lewis J.L., et al. 
A Randomized, Controlled Pragmatic Trial of Telephonic Medication 
Therapy Management to Reduce Hospitalization in Home Health Patient, 
Health Services Research, vol. 49, no. 5, pp. 1537-1554, 2014.
    \114\ Kripalani, Sunil, et al. ``Effect of a pharmacist 
intervention on clinically important medication errors after 
hospital discharge: A randomized trial. ``Annals of internal 
medicine 157.1 (2012): 1-10.
---------------------------------------------------------------------------

    Medication reconciliation has been identified as an area for 
improvement during transfer from the acute care facility to the 
receiving post-acute care facility. PAC facilities report gaps in 
medication information between the acute care hospital and the 
receiving post-acute care setting when performing medication 
reconciliation.115 116 Hospital discharge has been 
identified as a particularly high risk time point, with evidence that 
medication reconciliation identifies high levels of 
discrepancy.117 118 119 120 121 122 Also, there is evidence 
that medication reconciliation discrepancies occur throughout the 
patient stay.123 124 With respect to older patients who may 
have multiple comorbid conditions and thus multiple medications, 
transitions between acute and post-acute care settings can be further 
complicated,\125\ and medication reconciliation and patient knowledge 
(medication literacy) can be inadequate post-discharge.\126\ The 
proposed quality measure, Drug Regimen Review Conducted with Follow-Up 
for Identified Issues-PAC HH QRP, provides an important component of 
care coordination for PAC settings and would affect a large proportion 
of the Medicare population who transfer from hospitals into PAC 
settings each year. For example, in 2013, 3.2 million Medicare FFS 
beneficiaries had a home health episode.
---------------------------------------------------------------------------

    \115\ Gandara, Esteban, et al. ``Communication and information 
deficits in patients discharged to rehabilitation facilities: An 
evaluation of five acute care hospitals.'' Journal of Hospital 
Medicine 4.8 (2009): E28-E33.
    \116\ Gandara, Esteban, et al. ``Deficits in discharge 
documentation in patients transferred to rehabilitation facilities 
on anticoagulation: Results of a system wide evaluation.'' Joint 
Commission Journal on Quality and Patient Safety 34.8 (2008): 460-
463.
    \117\ Coleman E.A., Smith J.D., Raha D., Min S.J. Post hospital 
medication discrepancies: Prevalence and contributing factors. Arch 
Intern Med. 2005 165(16):1842-1847.
    \118\ Wong J.D., Bajcar J.M., Wong G.G., et al. Medication 
reconciliation at hospital discharge: Evaluating discrepancies. Ann 
Pharmacother. 2008 42(10):1373-1379.
    \119\ Hawes E.M., Maxwell W.D., White S.F., Mangun J., Lin F.C. 
Impact of an outpatient pharmacist intervention on medication 
discrepancies and health care resource utilization in post 
hospitalization care transitions. Journal of Primary Care & 
Community Health. 2014; 5(1):14-18.
    \120\ Foust J.B., Naylor M.D., Bixby M.B., Ratcliffe S.J. 
Medication problems occurring at hospital discharge among older 
adults with heart failure. Research in Gerontological Nursing. 2012, 
5(1): 25-33.
    \121\ Pherson E.C., Shermock K.M., Efird L.E., et al. 
Development and implementation of a post discharge home-based 
medication management service. Am J Health Syst Pharm. 2014; 71(18): 
1576-1583.
    \122\ Pronovosta P., Weasta B., Scwarza M., et al. Medication 
reconciliation: A practical tool to reduce the risk of medication 
errors. J Crit Care. 2003; 18(4): 201-205.
    \123\ Bates D.W., Cullen D.J., Laird N., Petersen L.A., Small 
S.D., et al. Incidence of adverse drug events and potential adverse 
drug events. Implications for prevention. JAMA. 1995:274(1): 29-34.
    \124\ Himmel, W., M. Tabache, and M.M. Kochen. ``What happens to 
long-term medication when general practice patients are referred to 
hospital?. ``European journal of clinical pharmacology 50.4 (1996): 
253-257.
    \125\ Chhabra, P.T., et al. (2012). ``Medication reconciliation 
during the transition to and from long-term care settings: A 
systematic review.'' Res Social Adm Pharm 8(1): 60-75.
    \126\ Hume K., Tomsik E. Enhancing Patient Education and 
Medication Reconciliation Strategies to Reduce Readmission Rates. 
Hosp Pharm; 2014; 49(2):112-114.
---------------------------------------------------------------------------

    A TEP convened by our measure development contractor provided input 
on the technical specifications of this proposed quality measure, Drug 
Regimen Review Conducted with Follow-Up for Identified Issues-PAC HH 
QRP, including components of reliability, validity and the feasibility 
of implementing the measure across PAC settings. The TEP supported the 
measure's implementation across PAC settings and was supportive of our 
plans to standardize this measure for cross-setting development. A 
summary of the TEP proceedings is available on the PAC Quality 
Initiatives Downloads and Video Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    We solicited stakeholder feedback on the development of this 
measure by means of a public comment period held from September 18 
through October 6, 2015. Through public comments submitted by several 
stakeholders and organizations, we received support for implementation 
of this proposed measure. The public comment summary report for the 
proposed measure is available on the CMS Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/IMPACT-Act-Downloads-and-Videos.html.
    The NQF-convened MAP met on December 14 and 15, 2015, and provided 
input on the use of this proposed quality measure, Drug Regimen Review 
Conducted with Follow-Up for Identified Issues-PAC HH QRP. The MAP 
encouraged continued development of the proposed quality measure for 
the HH QRP to meet the mandate of the IMPACT Act. The MAP agreed with 
the measure gaps identified by CMS including medication reconciliation, 
and stressed that medication reconciliation be present as an ongoing 
process. More information about the MAPs recommendations for this 
measure is available at http://www.qualityforum.org/Setting_Priorities/Partnership/MAP_Final_Reports.aspx.
    Since the MAP's review, we have continued to refine this proposed

[[Page 43771]]

measure in compliance with the MAP's recommendations. The proposed 
measure is both consistent with the information submitted to the MAP 
and supports its scientific acceptability for use in the HH QRP. 
Therefore, we are proposing this measure for implementation in the HH 
QRP as required by the IMPACT Act.
    We reviewed the NQF's endorsed measures and identified one NQF-
endorsed cross-setting and quality measure related to medication 
reconciliation, which applies to the SNF, LTCH, IRF, and HH settings of 
care: Care for Older Adults (COA) (NQF #0553). The quality measure, 
Care for Older Adults (COA) (NQF #0553) assesses the percentage of 
adults 66 years and older who had a medication review. The Care for 
Older Adults (COA) (NQF #0553) measure requires at least one medication 
review conducted by a prescribing practitioner or clinical pharmacist 
during the measurement year and the presence of a medication list in 
the medical record. This is in contrast to the proposed quality 
measure, Drug Regimen Review Conducted with Follow-Up for Identified 
Issues-PAC HH QRP, which reports the percentage of patient episodes in 
which a drug regimen review was conducted at the time of admission and 
that timely follow-up with a physician or physician-designee occurred 
each time one or more potential clinically significant medication 
issues were identified throughout that episode.
    After careful review of both quality measures, we have decided to 
propose the quality measure, Drug Regimen Review Conducted with Follow-
Up for Identified Issues-PAC HH QRP for the following reasons:
     The IMPACT Act requires the implementation of quality 
measures, using patient assessment data that are standardized and 
interoperable across PAC settings. The proposed quality measure, Drug 
Regimen Review Conducted with Follow-Up for Identified Issues-PAC HH 
QRP, employs three standardized patient-assessment data elements for 
each of the four PAC settings so that data are standardized, 
interoperable, and comparable; whereas, the Care for Older Adults (COA) 
(NQF #0553) quality measure does not contain data elements that are 
standardized across all four PAC settings;
     The proposed quality measure, Drug Regimen Review 
Conducted with Follow-Up for Identified Issues-PAC HH QRP, requires the 
identification of clinically potential medication issues at the 
beginning, during and at the end of the patient's episode to capture 
data on each patient's complete HH episode; whereas, the Care for Older 
Adults (COA) (NQF #0553) quality measure only requires annual 
documentation in the form of a medication list in the medical record of 
the target population;
     The proposed quality measure, Drug Regimen Review 
Conducted with Follow-Up for Identified Issues-PAC HH QRP, includes 
identification of the potential clinically significant medication 
issues and communication with the physician (or physician designee) as 
well as resolution of the issue(s) within a rapid time frame (by 
midnight of the next calendar day); whereas, the Care for Older Adults 
(COA) (NQF #0553) quality measure does not include any follow-up or 
time frame in which the follow-up would need to occur;
     The proposed quality measure, Drug Regimen Review 
Conducted with Follow-Up for Identified Issues-PAC HH QRP, does not 
have age exclusions; whereas, the Care for Older Adults (COA) (NQF 
#0553) quality measure limits the measure's population to patients aged 
66 and older; and
     The proposed quality measure, Drug Regimen Review 
Conducted with Follow-Up for Identified Issues-PAC HH QRP, would be 
reported to HHAs quarterly to facilitate internal quality monitoring 
and quality improvement in areas such as patient safety, care 
coordination and patient satisfaction; whereas, the Care for Older 
Adults (COA) (NQF #0553) quality measure would not enable quarterly 
quality updates, and thus data comparisons within and across PAC 
providers would be difficult due to the limited data and scope of the 
data collected.
    Therefore, based on the evidence discussed above, we are proposing 
to adopt the quality measure entitled, Drug Regimen Review Conducted 
with Follow-Up for Identified Issues-PAC HH QRP, for the HH QRP for CY 
2018 payment determination and subsequent years. We plan to submit the 
quality measure to the NQF for consideration of endorsement.
    The calculation of the proposed quality measure would be based on 
the data collection of three standardized items that would be added to 
the OASIS. The collection of data by means of the standardized items 
would be obtained at start or resumption of care and end of care. For 
more information about the data submission required for this proposed 
measure, we refer readers to Section I. Form, Manner, and Timing of 
OASIS Data Submission and OASIS Data for Annual Payment Update.
    The standardized items used to calculate this proposed quality 
measure will replace existing items currently used for data collection 
within the OASIS. The proposed measure denominator is the number of 
patient episodes with an end of care assessment during the reporting 
period. The proposed measure numerator is the number of episodes in the 
denominator where the medical record contains documentation of a drug 
regimen review conducted at: (1) Start or resumption of care; and (2) 
end of care with a look back through the home health patient episode 
with all potential clinically significant medication issues identified 
during the course of care and followed-up with a physician or physician 
designee by midnight of the next calendar day. This measure is not risk 
adjusted. For technical information about this proposed measure, 
including information about the measure calculation and discussion 
pertaining to the standardized items used to calculate this measure, we 
refer readers to the document titled Proposed Measure Specifications 
for Measures Proposed in the CY 2017 HH QRP proposed rule available at 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIQualityMeasures.html.
    Data for the proposed quality measure, Drug Regimen Review 
Conducted with Follow-Up for Identified Issues--PAC HH QRP, would be 
collected using the OASIS with submission through the QIES ASAP system.
    We invite public comment on our proposal to adopt the quality 
measure, Drug Regimen Review Conducted with Follow-Up for Identified 
Issues--PAC HH QRP for CY 2018 APU determination and subsequent years.

H. HH QRP Quality Measures and Measure Concepts Under Consideration for 
Future Years

    We invite public comment on the importance, relevance, 
appropriateness, and applicability of each of the quality measures 
listed in Table 33 for use in future years in the HH QRP.

[[Page 43772]]

[GRAPHIC] [TIFF OMITTED] TP05JY16.008

    We are developing a measure related to the IMPACT Act domain, 
``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.'' We are also considering application of two 
IMPACT Act measures to the HH QRP, to assess the incidence of falls 
with major injury and functional assessment and goals setting. We are 
additionally considering application of four standardized functional 
measures to the HH QRP; two that would assess change in function across 
the HH episode and two that would assess actual function at discharge 
relative to expected function. Finally, we are considering a measure 
related to health and well-being, Percent of Residents or Patients Who 
Were Assessed and Appropriately Given the Seasonal Influenza Vaccine 
(Short Stay).
    Based on input from stakeholders, we have identified additional 
concept areas for potential future measure development for the HH QRP. 
These include ``efficacy'' measures that pair processes, such as 
assessment and care planning, with outcomes, such as emergency 
treatment for injuries or increase in pain. The prevalence of mental 
health and behavioral problems was identified as an option to address 
outcomes for special populations. In addition, CMS is considering 
development of measures that assess if functional abilities were 
maintained during a care episode and composite measures that combine 
multiple evidence-based processes. CMS invites feedback on the 
importance, relevance, appropriateness, and applicability of these 
measure constructs.

I. 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 43773]]

comprehensive assessment 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 are not required to submit OASIS data for patients who are 
excluded from the OASIS submission requirements as described 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).
    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 payment reductions, and do not affect the HHA's reporting 
responsibilities as announced in the December 23, 2005 OASIS final 
rules (70 FR 76202).
2. Home Health Quality Reporting Program Requirements for CY 2017 
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 1 of the calendar year 2 years prior to the 
calendar year of the Annual Payment Update (APU) effective date and 
ending June 30 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 quality data 
to the Secretary in accordance with subclause (II) for such a year. 
This pay-for-reporting requirement was implemented on January 1, 2007. 
In the CY 2016 HH PPS final rule (80 FR 68703 through 68705), we 
finalized a proposal to define the quantity of OASIS assessments each 
HHA must submit to meet the pay-for-reporting requirement. 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.
    Section 80 of Chapter 10 of the Medicare Claims Processing Manual 
states, ``If a Medicare beneficiary is covered under an MA Organization 
during a period of home care, and subsequently decides to change to 
Medicare FFS coverage, a new start of care OASIS assessment must be 
completed that reflects the date of the beneficiary's change to this 
pay source.'' We wish to clarify that the SOC OASIS assessment 
submitted when this change in coverage occurs will not be used in our 
determination of a quality assessment for the purpose of determining 
compliance with data submission requirements. In such a circumstance, 
the original SOC or ROC assessment submitted while the Medicare 
beneficiary is covered under an MA Organization would be considered a 
quality assessment within the pay-for-reporting, APU, Quality 
Assessments Only methodology. For further information on successful 
submission of OASIS assessments, types of assessments submitted by an 
HHA that fit the definition of a quality assessment, defining the 
``Quality Assessments Only'' (QAO) formula, and implementing a pay-for-
reporting performance requirement over a 3-year period, please see the 
CY 2016 HH PPS final rule (80 FR 68704 to 68705). HHAs must score at 
least 70 percent on the QAO metric of pay-for-reporting performance 
requirement for CY 2017 (reporting period July 1, 2015 to June 30, 
2016), 80 percent for CY 2018 (reporting period July 1, 2016 to June 
30, 2017) and 90 percent for CY 2019 (reporting period July 1, 2017 to 
June 30, 2018) or be subject to a 2 percentage point reduction to their 
market basket update for that reporting period.
    In this proposed rule we are not proposing any additional policies 
related to the pay-for-reporting performance requirement.
4. Proposed Timeline and Data Submission Mechanisms for Measures 
Proposed for the CY 2018 Payment Determination and Subsequent Years
a. Claims Based Measures
    The MSPB-PAC HH QRP, Discharge to Community--PAC HH QRP, and 
Potentially Preventable 30-Day Post-Discharge Readmission Measure for 
HH QRP, which we have proposed in this proposed rule, are Medicare FFS 
claims-based measures. Because claims-based measures can be calculated 
based on data that are already reported to the Medicare program for 
payment purposes, no additional information collection will be required 
from HHAs. As previously discussed in V.G., for the Discharge to 
Community--PAC HH QRP measure we propose to use 2 years of claims data, 
beginning with CYs 2015 and 2016 claims data to inform confidential 
feedback and CYs 2016 and 2017 claims data for public reporting. For 
the Potentially Preventable 30-Day Post-Discharge Readmission Measure 
for HH QRP we propose to use 3 years of claims data, beginning with CY 
2014, 2015 and 2016 claims data to inform confidential feedback reports 
for HHAs, and CY 2015, 2016 and 2017 claims data for public reporting. 
For the MSPB-PAC HH QRP measure, we propose to use one year of claims 
data beginning with CY 2016 claims data to inform confidential feedback 
reports for HHAs, and CY 2017 claims data for public reporting for the 
HH QRP.

[[Page 43774]]

b. Assessment-Based Measures Using OASIS Data Collection
    As discussed in section V.G of this proposed rule, for the proposed 
measure, Drug Regimen Review Conducted with Follow-Up for Identified 
Issues--PAC HH QRP, affecting CY 2018 payment determination and 
subsequent years, we are proposing that HHAs would submit data by 
completing data elements on the OASIS and then submitting the OASIS to 
CMS through the QIES ASAP system beginning January 1, 2017. For more 
information on HH QRP reporting through the QIES ASAP system, refer to 
CMS Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIOASISUserManual.html.
    We propose to use standardized data elements in OASIS C2 to 
calculate the proposed measure: Drug Regimen Review Conducted with 
Follow-Up for Identified Issues--PAC HH QRP. The data elements 
necessary to calculate this measure using the OASIS are available on 
our Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIQualityMeasures.html.
    We invite public comments on the proposed HH QRP data collection 
requirements for the proposed measure affecting CY 2018 payment 
determination and subsequent years.
5. Proposed Timeline and Data Submission Mechanisms for the CY 2018 
Payment Determination and Subsequent Years for New HH QRP Assessment-
Based Quality Measure
    In the CY 2016 HH PPS final rule (80 FR 68695 through 68698) for 
the FY 2018 payment determination, we finalized that HHAs must submit 
data on the quality measure NQF #0678 Percent of Residents or Patients 
with Pressure Ulcers that are New or Worsened (Short Stay) using CY 
2017 data, for example, patients who are admitted to the HHA on and 
after January 1, 2017, and discharged from the HHA up to and including 
December 31, 2017. However, for CY 2018 APU purposes this timeframe 
would be impossible to achieve, given the processes we have established 
associated with APU determinations, such as the opportunity for 
providers to seek reconsideration for determinations of non-compliance. 
Therefore, for both the measure NQF #0678 Percent of Residents or 
Patients with Pressure Ulcers that are New or Worsened (Short Stay) 
that we finalized in the CY 2016 HH PPS rule, and the CY 2017 HH PPS 
proposed measure, Drug Regimen Review Conducted with Follow-Up for 
Identified Issues--PAC HH QRP, we propose that we would collect two 
quarters of data for CY 2018 APU determination to remain consistent 
with the January release schedule for the OASIS and to give HHAs 
sufficient time to update their systems so that they can comply with 
the new data reporting requirements, and to give us a sufficient amount 
of time to determine compliance for the CY 2018 program. The proposed 
use of two quarters of data for the initial year of quality reporting 
is consistent with the approach we have used to implement new measures 
in a number of other QRPs, including the LTCH, IRF, and Hospice QRPs in 
which only one quarter of data was used.
    We invite public comments on our proposal to adopt a calendar year 
data collection time frame, using an initial 6-month reporting period 
from January 1, 2017, to June 30, 2017 for CY 2018 payment 
determinations, for the application of measure NQF #0678 Percent of 
Residents or Patients with Pressure Ulcers that are New or Worsened 
(Short Stay) that we finalized in the CY 2016 HH PPS rule, and the CY 
2017 HH PPS proposed measure, Drug Regimen Review Conducted with 
Follow-Up for Identified Issues--PAC HH QRP.
6. Data Collection Timelines and Requirements for the CY 2019 Payment 
Determinations and Subsequent Years
    In CY 2014 HH PPS final rule (78 FR 72297), we finalized our use of 
a July 1-June 30 time frame for APU determinations. In alignment with 
the previously established timeframe data collection for a given 
calendar year APU determination time period, beginning with the CY 2019 
payment determination, we propose for both the finalized measure, NQF 
#0678 Percent of Residents or Patients with Pressure Ulcers that are 
New or Worsened (Short Stay), and the proposed measure, Drug Regimen 
Review Conducted with Follow-Up for Identified Issues--PAC HH QRP, to 
use 12 months of data collection, specifically assessments submitted 
July 1, 2017 through June 30, 2018, for the CY 2019 payment 
determination. We further propose to continue to use the same 12-month 
timeframe of July 1-June 30 for these measures for subsequent years for 
APU determinations.
    We invite comment on these proposals for the data collection 
timelines and requirements.
7. Proposed Data Review and Correction Timeframes for Data Submitted 
Using the OASIS Instrument
    In addition, to remain consistent with the SNF, LTCH and IRF QRPs, 
as well as to comply with the requirements of section of section 
1899B(g) of the Act, we are also proposing to implement calendar year 
provider review and correction periods for the OASIS assessment-based 
quality measures implemented into the HH QRP in satisfaction of the 
IMPACT Act, that is, finalized NQF #0678 Percent of Residents or 
Patients with Pressure Ulcers that are New or Worsened (Short Stay) and 
the proposed Drug Regimen Review Conducted with Follow-Up for 
Identified Issues--PAC HH QRP. More specifically, we are proposing that 
HHAs would have approximately 4.5 months after the reporting quarter to 
correct any errors of their assessment-based data (that appear on the 
CASPER generated Quality Measure reports) to calculate the measures. 
During the time of data submission for a given quarterly reporting 
period and up until the quarterly submission deadline, HHAs could 
review and perform corrections to errors in the assessment data used to 
calculate the measures and could request correction of measure 
calculations. However, once the quarterly submission deadline occurs, 
the data is ``frozen'' and calculated for public reporting and 
providers can no longer submit any corrections. As laid out in Table 
34, the first calendar year reporting quarter is January 1, 2017 
through March 31, 2017. The final deadline for submitting corrected 
data would be August 15, 2017 for CY Quarter 1, and subsequently and 
sequentially, November 15, 2017 for CY 2017 Quarter 2, February 15, 
2018 for CY 2017 Quarter 3 and May 15, 2018 for CY 2017 Quarter 4. We 
note that this proposal to review and correct data does not replace 
other requirements associated with timely data submission. We would 
encourage HHAs to submit timely assessment data during a given 
quarterly reporting period and review their data and information early 
during the review and correction period so that they can identify 
errors and resubmit data before the data submission deadline.

[[Page 43775]]

[GRAPHIC] [TIFF OMITTED] TP05JY16.009

    We invite public comments on our proposal to adopt a calendar year 
data collection time frame, with a 4.5 month period of time for review 
and correction beginning with CY 2017 for the measure NQF #0678 Percent 
of Residents or Patients with Pressure Ulcers that are New or Worsened 
(Short Stay) that we finalized in the CY 2016 HH PPS rule, and the CY 
2017 HH PPS proposed measure, Drug Regimen Review Conducted with 
Follow-Up for Identified Issues-PAC HH QRP for the HH QRP.
    Further, we propose that the OASIS assessment-based measures 
already finalized for adoption into the HH QRP follow a similar CY 
schedule of data reporting using quarterly data collection/submission 
reporting periods followed by 4.5 months during which providers will 
have an opportunity to review and correct their data up until the 
quarterly data submission deadlines as provided in Table 35 for all 
reporting years unless otherwise specified. This policy would apply to 
all proposed and finalized assessment-based measures in the HH QRP.

  Table 35--Proposed CY Data Collection Submission Quarterly Reporting Periods, Quarterly Review and Correction
  Periods and Data Submission Deadlines for Measures Specified in Satisfaction of the IMPACT Act in Subsequent
                                                      Years
----------------------------------------------------------------------------------------------------------------
                                                                 Proposed quarterly
                                           Proposed data        review and correction
Proposed CY data  collection quarter   collection/submission      periods and data        Proposed  correction
                                        quarterly reporting     submission quarterly          deadlines *
                                               period                deadlines *
----------------------------------------------------------------------------------------------------------------
Quarter 1...........................  January 1-March 31.....  April 1-August 15.....  August 15.
Quarter 2...........................  April 1-June 30........  July 1-November 15....  November 15.
Quarter 3...........................  July 1-September 30....  October 1-February 15.  February 15.
Quarter 4...........................  October 1-December 31..  January 1-May 15......  May 15.
----------------------------------------------------------------------------------------------------------------
*We note that the submission deadlines provided pertain to the correction of data and that the submission of
  OASIS data must continue to adhere to all submission deadline requirements as imposed under the Conditions of
  Participation.

    We invite public comment on our use of CY quarterly data 
collection/submission reporting periods with quarterly data submission 
deadlines that follow a period of approximately 4.5 months of time to 
enable the review and correction of such data for OASIS assessment-
based measures.

J. Public Display of Quality Measure Data for the HH QRP and Procedures 
for the Opportunity To Review and Correct Data and Information

    Medicare home health regulations, as codified at Sec.  484.250(a), 
require 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. Section 1899B(g) of the Act requires that 
data and information of provider performance on quality measures and 
resource use and other measures be made publicly available beginning 
not later than 2 years after the applicable specified application date. 
In future rulemaking, we intend to propose a policy to publicly display 
performance information for individual HHAs on IMPACT Act measures, as 
required under the Act. In addition, sections 1895(b)(3)(B)(v)(III) and 
1899B(g) of the Act require the Secretary to establish procedures for 
making data submitted under subclause (II) available to the

[[Page 43776]]

public. Under section 1899B(g)(2), such procedures must ensure, 
including through a process consistent with the process applied under 
section 1886(b)(3)(B)(viii)(VII) of the Act, which refers to public 
display and review requirements in the Hospital IQR Program, that a 
home health agency has the opportunity to review and submit corrections 
to its data and information that are to be made public for the agency 
prior to such data being made public through a process consistent with 
the Hospital Inpatient Quality Reporting Program (Hospital IQR). 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 are meaningful. Further, we 
agree that measures for comparing performance across home health 
agencies requires should be constructed from data collected in a 
standardized and uniform manner. In this proposed rule, we are 
proposing procedures that would allow individual HHAs to review and 
correct their data and information on IMPACT Act measures that are to 
be made public before those measure data are made public.
1. Proposals for the Review and Correction of Data Used To Calculate 
the Assessment-Based Measures Prior to Public Display
    As provided in section V.I.7., and in Table 34, for assessment-
based measures, we are proposing to provide confidential feedback 
reports to HHAs that contain performance information that the HHAs can 
review, during the review and correction period, and correct the data 
used to calculate the measures for the HH QRP that the HHA submitted 
via the QIES ASAP system. In addition, during the review period, the 
HHA would be able to request correction of any errors in the 
assessment-based measure rate calculations.
    We propose that these confidential feedback reports would be 
available to each HHA using the Certification and Survey Provider 
Enhanced Reporting (CASPER) System. We refer to these reports as the HH 
Quality Measure (QM) Reports. We intend to provide monthly updates to 
the data contained in these reports that pertain to assessment-based 
data, as data become available. The reports will contain both agency- 
and patient-level data used to calculate the assessment-based quality 
measures. The CASPER facility level QM reporting would include the 
numerator, denominator, agency rate, and national rate. The CASPER 
patient-level QM Reports would also contain individual patient 
information that HHAs can use to identify patients that were included 
in the quality measures so as to identify any potential errors. In 
addition, we would make other reports available to HHAs through the 
CASPER System, including OASIS data submission reports and provider 
validation reports, which would contain information on each HHA's data 
submission status, including details on all items the HHA submitted in 
relation to individual assessments and the status of the HHA's 
assessment (OASIS) records that they submitted. When available, 
additional information regarding the content and availability of these 
confidential feedback reports would be provided on the HH QRP Web site 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/index.html.
    As previously proposed in section V.I.7., for those measures that 
use assessment-based data, HHAs would have 4.5 months after the 
conclusion of each reporting quarter to review and update their 
reported measure data for the quarter, including correcting any errors 
that they find on the CASPER-generated Review and Correct, QM reports 
pertaining to their assessment-based data used to calculate the 
assessment-based measures. However, at the conclusion of this 4.5 month 
review and correction period, the data reported for that quarter would 
be ``frozen'' and used to calculate measure rates for public reporting. 
We would encourage HHAs to submit timely assessment data during each 
quarterly reporting period and to review their data and information 
early during the 4.5 month review and correction period so they can 
identify errors and resubmit data before the data submission deadline.
    We believe that the proposed data submission period along with a 
review and correction period, consisting of the reporting quarter plus 
approximately 4.5 months, is sufficient time for HHAs to submit, review 
and, where necessary, correct their data and information. We also 
propose that, in addition to the data submission/correction and review 
period, HHAs will have a 30-day preview period prior to public display 
during which they can preview the performance information on their 
measures that will be made public. We also propose to provide this 
preview report using the Certification and Survey Provider Enhanced 
Reporting (CASPER) System because HHAs are familiar with this system. 
The CASPER preview reports for the reporting quarter would be available 
after the 4.5 month review and correction period ends, and would be 
refreshed quarterly or annually for each measure, depending on the 
length of the reporting period for that measure. We propose to give 
HHAs 30 days to review this information, beginning from the date on 
which they can access the preview report. Corrections to the underlying 
data would not be permitted during this time; however, HHAs would be 
able to ask for a correction to their measure calculations during the 
30-day preview period. If we determine that the measure, as it is 
displayed in the preview report, contains a calculation error, we would 
suppress the data on the public reporting Web site, recalculate the 
measure and publish the corrected rate at the time of the next 
scheduled public display date. This process is consistent with informal 
processes used in the Hospital IQR program. If finalized, we intend to 
utilize a subregulatory mechanism, such as our HH QRP Web site, to 
explain the technical details for how and when providers may contest 
their measure calculations. We further propose to increase the current 
preview period of 15 days to 30 days beginning with the public display 
of the measures finalized for the CY 2018 payment determination. This 
preview period would include all measures that are to be publicly 
displayed under the current quarterly refresh schedule used for posting 
quality measure data on the Medicare.gov Home Health Compare site.
    We invite public comment on these proposals.
2. Proposals for Review and Correction of Data Used To Calculate 
Claims-Based Measures Prior To Public Display
    In addition to assessment-based measures, we have also proposed 
claims-based measures for the HH QRP. As noted previously, section 
1899B(g)(2) of the Act requires prepublication provider review and 
correction procedures that are consistent with those followed in the 
Hospital IQR program. Under the Hospital IQR Program's procedures, for 
claims-based measures, we give hospitals 30 days to preview their 
claims-based measures and data in a preview report containing aggregate 
hospital-level data. We propose to adopt a similar process for the HH 
QRP.
    Prior to the public display of our claims-based measures, in 
alignment with the Hospital IQR, HAC and Hospital VBP programs, we 
propose to make available through the CASPER system a confidential 
preview report that will contain information pertaining

[[Page 43777]]

to their claims-based measure rate calculations, including agency and 
national rates. This information would be accompanied by additional 
confidential information based on the most recent administrative data 
available at the time we extract the claims data for purposes of 
calculating the rates.
    We propose to create data extracts using claims data for these 
claims based measures, at least 90 days after the last discharge date 
in the applicable period (12 calendar months preceding), which we will 
use for the calculations. For example, if the last discharge date in 
the applicable period for a measure is December 31, 2017, for data 
collection January 1, 2017, through December 31, 2017, we would create 
the data extract on approximately March 31, 2018, at the earliest, and 
use that data to calculate the claims-based measures for the 2017 
reporting period. We propose that beginning with data for measures that 
will be publicly displayed by January 1, 2019, and for which will need 
to coincide with the quarterly refresh schedule on Home Health Compare, 
the claims-based measures will be calculated at least 90 days after the 
last discharge date using claims data from the applicable reporting 
period. This timeframe allows us to balance the need to provide timely 
program information to HHAs with the need to calculate the claims-based 
measures using as complete a data set as possible. Since HHAs would not 
be able to submit corrections to the underlying claims snapshot or add 
claims (for those measures that use HH claims) to this data set, at the 
conclusion of the 90-day period following the last date of discharge 
used in the applicable period, we would consider the HH claims data to 
be complete for purposes of calculating the claims-based measures. We 
wish to convey the importance that HHAs ensure the completeness and 
correctness of their claims prior to the claims ``snapshot''. We seek 
to have as complete a data set as possible. We recognize that the 
proposed approximately 90 day ``run-out'' period is less than the 
Medicare program's current timely claims filing policy under which 
providers have up to 1 year from the date of discharge to submit 
claims. We considered a number of factors in determining that the 
proposed approximately 90 day run-out period is appropriate to 
calculate the claims-based measures. After the data extract is created, 
it takes several months to incorporate other data needed for the 
calculations (particularly in the case of risk-adjusted, and/or 
episode-based measures). We then need to generate and check the 
calculations. Because several months lead time is necessary after 
acquiring the data to generate the claims-based calculations, if we 
were to delay our data extraction point to 12 months after the last 
date of the last discharge in the applicable period, we would not be 
able to deliver the calculations to HHAs sooner than 18 to 24 months 
after the last discharge. We believe this would create an unacceptably 
long delay, both for HHAs and for us to deliver timely calculations to 
HHAs for quality improvement.
    As noted, under this proposed procedure, during the 30-day preview 
period, HHAs would not be able to submit corrections to the underlying 
claims data or add new claims to the data extract. This is for two 
reasons. First, for certain measures, some of the claims data used to 
calculate the measure are derived not from the HHA's claims, but from 
the claims of another provider. For example, the proposed measure 
Potentially Preventable 30-Day Post-Discharge Readmission Measure for 
HH QRP uses claims data submitted by the hospital to which the patient 
was readmitted. HHAs are not able to make corrections to these hospital 
claims, although the agency could request that the hospital reconfirm 
that its submissions are correct. Second, even where HHA claims are 
used to calculate the measures, it would not be not possible to correct 
the data after it is extracted for the measures calculation. This is 
because it is necessary to take a static ``snapshot'' of the claims in 
order to perform the necessary measure calculations.
    As noted previously, we propose to provide HHAs a 30-day preview 
period to review their confidential preview reports. HHAs would have 30 
days from the date the preview report is made available to review this 
information. The 30-day preview period would be the only time when HHAs 
would be able to see their claims-based measure rates before they are 
publicly displayed. HHAs could request that we correct our measure 
calculation during the 30-day preview period if the HHA believes the 
measure rate is incorrect. If we agree that the measure rate, as it is 
displayed in the preview report, contains a calculation error, we would 
suppress the data on the public reporting Web site, recalculate the 
measure, and publish the corrected measure rate at the time of the next 
scheduled public display date. If finalized, we intend to utilize a 
subregulatory mechanism, such as our HH QRP Web site, to explain the 
technical details regarding how and when providers may contest their 
measure calculations. We refer readers to the discussion inV.I.2 for 
additional information on these preview reports.
    In addition, because the claims-based measures used for the HH QRP 
are re-calculated on an annual basis, these confidential CASPER QM 
preview reports for claims-based measures would be refreshed annually. 
An annual refresh is being utilized to ensure consistency in our 
display of claims based measures, and it will include both claims-based 
measures that satisfy the IMPACT Act, as well as all other HH QRP 
claims-based measures.
    We invite public comment on these proposals for the public display 
of quality measure data.

K. Mechanism for Providing Feedback Reports to HHAs

    Section 1899B(f) of the Act requires the Secretary to provide 
confidential feedback measure reports to post-acute care providers on 
their performance on the measures specified under paragraphs (c)(1) and 
(d)(1), beginning 1 year after the specified application date that 
applies to such measures and PAC providers. We propose to build upon 
the current confidential quality measure reports we already generate 
for HHAs so as to also provide data and information on the measures 
implemented in satisfaction of the IMPACT Act. As a result, HHAs could 
review their performance on these measures, as well as those already 
adopted in the HH QRP. We propose that these additional confidential 
feedback reports would be made available to each HHA through the CASPER 
System. Data contained within these CASPER reports would be updated, as 
previously described, on a monthly basis as the data become available 
except for claims-based measures, which will only be updated on an 
annual basis.
    We intend to provide detailed procedures to HHAs on how to obtain 
their new confidential feedback reports in CASPER on the HH QRP Web 
site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/Home-Health-Quality-Reporting-Requirements.html. We also propose to use the QIES ASAP 
system to provide these new confidential quality measure reports in a 
manner consistent with how HHAs have obtained such reports to date. The 
QIES ASAP system is a confidential and secure system with access 
granted to providers, or their designees.
    We invite public comment on this proposal to satisfy the 
requirement to provide confidential feedback reports to

[[Page 43778]]

HHAs specific to the requirements of the Act.

L. Home Health Care CAHPS[supreg] Survey (HHCAHPS)

    In the CY 2016 HH PPS final rule (80 FR 68623), we stated that the 
home health quality measures reporting requirements for Medicare-
certified agencies includes the Home Health Care CAHPS[supreg] 
(HHCAHPS) Survey for the CY 2017 and 2018 Annual Payment Update (APU) 
periods. We are continuing to maintain the stated HHCAHPS data 
requirements for CY 2017 and CY 2018 that were stated in CY 2016 and in 
previous HH PPS 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 endorsed by the 
National Quality Forum (NQF) in March 2009 (NQF Number 0517) and NQF 
re-endorsed in 2015. The HHCAHPS Survey is approved under OMB Control 
Number 0938-1066. The HHCAHPS survey is part of a family of 
CAHPS[supreg] surveys that asks patients to report on and rate their 
experiences with health care. The Home Health Care CAHPS[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 this 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.
    Since April 2012, 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. 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. We continue to 
consider additional language translations of the HHCAHPS in response to 
the needs of the home health patient population.
    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. 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
     Are ``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 their 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. We have approximately 30 approved HHCAHPS survey 
vendors. The 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.
    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 2017 APU
    For the CY 2017 APU, we require continuous 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 are 
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 
are firm; no exceptions are permitted.
    For the CY 2017 APU, we require that all HHAs with fewer than 60 
HHCAHPS-eligible unduplicated or unique patients in the period of April 
1, 2014, through March 31, 2015, are exempt 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

[[Page 43779]]

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 CY 2017 HHCAHPS Participation Exemption Request 
form posted on https://homehealthcahps.org from April 1, 2015, to 11:59 
p.m., EST to 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 count. 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 do not need to complete the HHCAHPS Participation 
Exemption Request Form for the CY 2017 APU.
4. HHCAHPS Requirements for the CY 2018 APU
    For the CY 2018 APU, we require continuous 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 will 
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 are firm; no exceptions will be permitted.
    For the CY 2018 APU, we require that all HHAs with fewer than 60 
HHCAHPS-eligible unduplicated or unique patients in the period of April 
1, 2015 through March 31, 2016, are exempt 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 CY 2018 HHCAHPS Participation Exemption 
Request form posted on https://homehealthcahps.org from April 1, 2016, 
to 11:59 p.m., EST to March 31, 2017. 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 count. 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 do not need to complete the HHCAHPS Participation 
Exemption Request Form for the CY 2018 APU.
5. HHCAHPS Requirements for the CY 2019 APU
    For the CY 2019 APU, we require continuous monthly HHCAHPS data 
collection and reporting for four quarters. The data collection period 
for the CY 2018, APU includes the second quarter 2017 through the first 
quarter 2018 (the months of April 2017 through March 2018). HHAs will 
be required to submit their HHCAHPS data files to the HHCAHPS Data 
Center for the second quarter 2017 by 11:59 p.m., EST on October 19, 
2017; for the third quarter 2017 by 11:59 p.m., EST on January 18, 
2018; for the fourth quarter 2017 by 11:59 p.m., EST on April 19, 2018; 
and for the first quarter 2018 by 11:59 p.m., EST on July 19, 2018. 
These deadlines are firm; no exceptions will be permitted.
    For the CY 2019 APU, we require that all HHAs with fewer than 60 
HHCAHPS-eligible unduplicated or unique patients in the period of April 
1, 2016 through March 31, 2017, are exempt from the HHCAHPS data 
collection and submission requirements for the CY 2019 APU, upon 
completion of the CY 2019 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, 2016, through March 31, 2017, are required to submit 
their patient counts on the CY 2019 HHCAHPS Participation Exemption 
Request form posted on https://homehealthcahps.org from April 1, 2017, 
to 11:59 p.m., EST to March 31, 2018. 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 count. HHAs receiving 
Medicare-certification on or after April 1, 2017, are exempt from the 
HHCAHPS reporting requirement for the CY 2019 APU. These newly-
certified HHAs do not need to complete the HHCAHPS Participation 
Exemption Request Form for the CY 2019 APU.
6. HHCAHPS Requirements for the CY 2020 APU
    For the CY 2020 APU, we require continued monthly HHCAHPS data 
collection and reporting for four quarters. The data collection period 
for the CY 2020, APU includes the second quarter 2018 through the first 
quarter 2019 (the months of April 2018 through March 2019). HHAs will 
be required to submit their HHCAHPS data files to the HHCAHPS Data 
Center for the second quarter 2018 by 11:59 p.m., EST on October 18, 
2018; for the third quarter 2018 by 11:59 p.m., EST on January 17, 
2019; for the fourth quarter 2018 by 11:59 p.m., EST on April 18, 2019; 
and for the first quarter 2019 by 11:59 p.m., EST on July 19, 2019. 
These deadlines are firm; no exceptions will be permitted.
    For the CY 2020 APU, we require that all HHAs with fewer than 60 
HHCAHPS-eligible unduplicated or unique patients in the period of April 
1, 2017, through March 31, 2018, are exempt from the HHCAHPS data 
collection and submission requirements for the CY 2020 APU, upon 
completion of the CY 2020 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, 2017, through March 31, 2018, are required to submit 
their patient counts on the CY 2020 HHCAHPS Participation Exemption 
Request form posted on https://homehealthcahps.org from April 1, 2018, 
to 11:59 p.m., EST to March 31, 2019. 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 count. HHAs receiving 
Medicare-certification on or after April 1, 2018 are exempt from the 
HHCAHPS reporting requirement for the CY 2020 APU. These newly-
certified HHAs do not need to complete the HHCAHPS Participation 
Exemption Request Form for the CY 2020 APU.
7. 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 helps HHAs ensure that their data are submitted in the proper 
format for data

[[Page 43780]]

processing to the HHCAHPS Data Center.
    We continue the OASIS and HHCAHPS reconsiderations and appeals 
process that we have finalized and that we have used for prior all 
periods cited in the previous rules, and utilized in the CY 2012 to CY 
2016 APU determinations. We have described the HHCAHPS reconsiderations 
and appeals process requirements in the APU Notification Letter that we 
send to the affected HHAs annually in September. HHAs have 30 days from 
their receipt of the letter informing them that they did not meet the 
HHCAHPS requirements to reply to us with documentation that supports 
their requests for reconsideration of the annual payment update to us. 
It is important that the affected HHAs send in comprehensive 
information in their reconsideration letter/package because we will 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, then the 2 percent 
reduction in the annual payment update will be upheld. If clear 
evidence of compliance is present, then the 2 percent reduction for the 
APU will be reversed. We notify affected HHAs by December 31 of the 
decisions that affects payments in the annual year beginning on January 
1. If we determine to uphold the 2 percent reduction for the annual 
payment update, the affected HHA may further appeal the 2 percent 
reduction via the Provider Reimbursement Review Board (PRRB) appeals 
process, which is described in the December letter.
8. Summary
    We did not propose 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 for 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 to CMS at [email protected], or telephone 
toll-free (1-866-354-0985) for more information about the HHCAHPS 
Survey.

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

[[Page 43781]]

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 HHVBP Model will apply a payment adjustment based on an HHA's 
performance on quality measures to test the effects on quality and 
costs of care. The HHVBP Model was implemented in January 2016 as 
described in the CY 2016 HH PPS final rule.

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).
    Section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action that is likely to result in a rule: 
(1) Having an annual effect on the economy of $100 million or more in 
any 1 year, or adversely and materially affecting a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or state, local or tribal governments or communities 
(also referred to as ``economically significant''); (2) creating a 
serious inconsistency or otherwise interfering with an action taken or 
planned by another agency; (3) materially altering the budgetary 
impacts of entitlement grants, user fees, or loan programs or the 
rights and obligations of recipients thereof; or (4) raising novel 
legal or policy issues arising out of legal mandates, the President's 
priorities, or the principles set forth in the Executive Order.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with economically significant effects ($100 million or more in any 1 
year).The net transfer impacts related to the changes in payments under 
the HH PPS for CY 2017 are estimated to be -$180 million. The savings 
impacts related to the HHVBP model are estimated at a total projected 
5-year gross savings of $378 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. Therefore, we 
estimate that this rulemaking is ``economically significant'' as 
measured by the $100 million threshold, and hence also a major rule 
under the Congressional Review Act. Accordingly, we have prepared a 
Regulatory Impact Analysis that to the best of our ability presents the 
costs and benefits of the rulemaking. In accordance with the provisions 
of Executive Order 12866, this regulation was reviewed by the Office of 
Management and Budget.
    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 is applicable exclusively to HHAs. 
Therefore, the Secretary has determined this rule would not have a 
significant economic impact on the operations of small rural hospitals. 
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 changes 
in payments under the HH PPS for CY 2017 are estimated to be -$180 
million. The savings impacts related to the HHVBP Model are estimated 
at a total projected 6-year gross savings of $378 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.
    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2016, that 
threshold is approximately $146 million. This proposed rule is not 
anticipated to have an effect on State, local, or tribal governments, 
in the aggregate, or on the private sector of $146 million or more.
1. HH PPS
    The update set forth in this rule applies to Medicare payments 
under HH PPS in CY 2017. Accordingly, the following analysis describes 
the impact in CY 2017 only. We estimate that the net impact of the 
policies in this rule is approximately $180 million in decreased 
payments to HHAs in CY 2017. 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 2017 wage index and the recalibration of the 
case-mix weights for 2017 is zero. The -$180 million impact reflects 
the distributional effects of the 2.3 percent HH payment update 
percentage ($420 million increase), the effects of the fourth 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 -2.3 
percent ($420 million decrease), the effects of the -0.97 percent 
adjustment to the national, standardized 60-day episode payment rate to 
account for nominal case-mix growth for an impact of -0.9 percent ($160 
million decrease), and the effects of the proposed change to the FDL 
ratio of 0.45 to 0.56 for an impact of -0.1 percent ($20 million 
decrease). The $180 million in decreased payments is reflected in the 
last column of the first row in Table 36 as a 1.0 percent decrease in 
expenditures when comparing CY 2016 payments to estimated CY 2017 
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

[[Page 43782]]

conclude that the policies proposed in this rule would 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 would have a significant 
economic impact on a substantial number of small entities. Further 
detail is presented in Table 39, 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 2017. For the 0.97 percent 
reduction to the national, standardized 60-day episode payment amount 
for CY 2017 described in section III.C.3 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 for the CY 2016 HH PPS proposed rule (80 FR 39839), we note 
that we considered reducing the 60-day episode rate in CY 2016 only to 
account for nominal case-mix growth between CY 2012 and CY 2014. 
However, we instead finalized a reduction to the 60-day episode rate 
over a three-year period (CY 2016, CY 2017, and CY 2018) to account for 
estimated nominal case-mix growth between CY 2012 and CY 2014 in order 
to lessen the impact on HHAs in a given year (80 FR 68646).
    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 beyond CY 2017. 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.
2. HHVBP Model
    Under the HHVBP Model, the first payment adjustment will apply in 
CY 2018 based on PY1 (CY 2016) data and the final payment adjustment 
will apply in CY 2022 based on PY5 (CY 2020) data. In the CY 2016 HH 
PPS final rule, the overall impact of HHVBP Model from CY 2018-CY 2022 
was approximately a reduction of $380 million. That estimate was based 
on the five performance years of the Model and only two payment 
adjustment years. We now estimate that this will be approximately a 
decrease of $378 million. This estimate represents the five performance 
years (CY 2016-CY 2020) and applying the payment adjustments from CY 
2018 through CY 2021. We assume that the behavior changes and savings 
will continue into 2021 because HHAs will continue to receive quality 
reports until July 2021. Although behavior changes and savings could 
persist into CY 2022, HHAs would not be receiving quality reports so we 
did not include it in our savings assumptions.

C. Detailed Economic Analysis

1. HH PPS
    This rule proposes updates for CY 2017 to the HH PPS rates 
contained in the CY 2016 HH PPS final rule (80 FR 68624 through 68719). 
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 Medicare claims data from 2015. 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 36 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 2015 OASIS assessments and HH claims data 
for dates of service that ended on or before December 31, 2015 (as of 
March 31, 2016). The first column of Table 36 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 the CY 2017 wage index. The fourth column shows the 
payment effects of the CY 2016 case-mix weights. The fifth column shows 
the effects the 0.97 percent reduction 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 2017, the 
average impact for all HHAs due to the effects of rebasing is an 
estimated 2.3 percent decrease in payments. The seventh column shows 
the effects of revising the FDL ratio used to compute outlier payments 
from 0.45 to 0.56. The eighth column shows the effects of the change to 
the outlier methodology. The ninth column shows the effects of the CY 
2017 home health payment update percentage.
    The last column shows the combined effects of all the policies 
proposed in this rule. Overall, it is projected that aggregate payments 
in CY 2017 would decrease by 1.0 percent. As illustrated in Table 36, 
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

[[Page 43783]]

group may experience different impacts on payments than others due to 
the distributional impact of the CY 2017 wage index, the extent to 
which HHAs had episodes in case-mix groups where the case-mix weight 
decreased for CY 2017 relative to CY 2016, 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 36-- Estimated Home Health Agency Impacts by Facility Type and Area of the Country, CY 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    60-day
                                                                                    episode                                           HH
                                                            CY 2017     CY 2017      rate                   Revised     Revised     payment
                                               Number of  wage index   case-mix     nominal    Rebas-ing    outlier     outlier     update      Total %
                                               Agencies      \1\ %      weights    case-mix      \4\ %       FDL %      method-   percentage
                                                                         \2\ %    reduct-ion                            ology %      \5\ %
                                                                                     \3\ %
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Agencies................................      11,167         0.0         0.0        -0.9        -2.3        -0.1         0.0         2.3        -1.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Facility Type and Control
--------------------------------------------------------------------------------------------------------------------------------------------------------
Free-Standing/Other Vol/NP..................       1,087        -0.2        -0.1        -0.9        -2.2        -0.1         0.9         2.3        -0.3
Free-Standing/Other Proprietary.............       8,715         0.1         0.0        -0.9        -2.3        -0.1        -0.3         2.3        -1.2
Free-Standing/Other Government..............         362         0.1         0.1        -0.9        -2.2        -0.1         0.3         2.3        -0.4
Facility-Based Vol/NP.......................         690        -0.1        -0.1        -0.9        -2.2        -0.1         0.8         2.3        -0.3
Facility-Based Proprietary..................         109         0.0         0.0        -0.9        -2.2        -0.1         0.4         2.3        -0.5
Facility-Based Government...................         204        -0.3         0.0        -0.9        -2.3        -0.1         0.8         2.3        -0.5
    Subtotal: Freestanding..................      10,164         0.0         0.0        -0.9        -2.3        -0.1        -0.1         2.3        -1.1
    Subtotal: Facility-based................       1,003        -0.1         0.0        -0.9        -2.2        -0.1         0.8         2.3        -0.2
    Subtotal: Vol/NP........................       1,777        -0.2        -0.1        -0.9        -2.2        -0.1         0.9         2.3        -0.3
    Subtotal: Proprietary...................       8,824         0.1         0.0        -0.9        -2.3        -0.1        -0.3         2.3        -1.2
    Subtotal: Government....................         566        -0.1         0.1        -0.9        -2.3        -0.1         0.5         2.3        -0.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Facility Type and Control: Rural
--------------------------------------------------------------------------------------------------------------------------------------------------------
Free-Standing/Other Vol/NP..................         279         0.1         0.1        -0.9        -2.2        -0.1         0.8         2.3         0.1
Free-Standing/Other Proprietary.............         873         0.0        -0.1        -0.9        -2.3        -0.1         0.2         2.3        -0.9
Free-Standing/Other Government..............         261         0.2         0.0        -0.9        -2.4        -0.1        -0.2         2.3        -1.1
Facility-Based Vol/NP.......................         333         0.3         0.1        -0.9        -2.2        -0.1         0.5         2.3         0.0
Facility-Based Proprietary..................          54        -0.1         0.1        -0.9        -2.3        -0.1         0.5         2.3        -0.5
Facility-Based Government...................         152         0.1         0.2        -0.9        -2.2        -0.1         0.4         2.3        -0.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Facility Type and Control: Urban
--------------------------------------------------------------------------------------------------------------------------------------------------------
Free-Standing/Other Vol/NP..................         807        -0.3        -0.2        -0.9        -2.2        -0.1         0.9         2.3        -0.5
Free-Standing/Other Proprietary.............       7,837         0.1         0.0        -0.9        -2.3        -0.1        -0.4         2.3        -1.3
Free-Standing/Other Government..............         101         0.0         0.0        -0.9        -2.3        -0.1         0.2         2.3        -0.8
Facility-Based Vol/NP.......................         357        -0.2        -0.1        -0.9        -2.2        -0.1         0.9         2.3        -0.3
Facility-Based Proprietary..................          55         0.1        -0.1        -0.9        -2.2        -0.1         0.3         2.3        -0.6
Facility-Based Government...................          52        -0.6        -0.1        -0.9        -2.3        -0.1         1.1         2.3        -0.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Facility Location: Urban or Rural
--------------------------------------------------------------------------------------------------------------------------------------------------------
Rural.......................................       1,952         0.2         0.0        -0.9        -2.3        -0.1         0.0         2.3        -0.8
Urban.......................................       9,209         0.0         0.0        -0.9        -2.3        -0.1         0.0         2.3        -1.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Facility Location: Region of the Country
--------------------------------------------------------------------------------------------------------------------------------------------------------
Northeast...................................         848        -0.4         0.0        -0.9        -2.1        -0.1         0.8         2.3        -0.4
Midwest.....................................       2,992         0.0         0.0        -0.9        -2.4        -0.1         0.4         2.3        -0.7
South.......................................       5,310        -0.1         0.0        -0.9        -2.3        -0.1        -0.6         2.3        -1.7
West........................................       1,968         0.6         0.0        -0.9        -2.3        -0.1         0.3         2.3        -0.1
Other.......................................          49        -0.3         0.1        -0.9        -2.2        -0.1         0.9         2.3        -0.2
Puerto Rico.................................          41        -0.5         0.1        -0.8        -2.2        -0.1         0.5         2.3        -0.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                Facility Location: Region of the Country (Census Region)
--------------------------------------------------------------------------------------------------------------------------------------------------------
New England.................................         347        -0.7         0.1        -0.9        -2.1        -0.1         0.3         2.3        -1.1
Mid Atlantic................................         501        -0.3        -0.1        -0.9        -2.1        -0.1         1.1         2.3        -0.1
East North Central..........................       2,271         0.0         0.1        -0.9        -2.4        -0.1         0.4         2.3        -0.6
West North Central..........................         721         0.0        -0.1        -0.9        -2.3        -0.1         0.6         2.3        -0.5
South Atlantic..............................       1,791        -0.3        -0.1        -0.9        -2.3        -0.1        -0.6         2.3        -2.0
East South Central..........................         426        -0.1         0.0        -0.9        -2.4        -0.1         0.0         2.3        -1.1
West South Central..........................       3,093         0.3         0.0        -0.9        -2.3        -0.1        -0.8         2.3        -1.5
Mountain....................................         672         0.2         0.1        -0.9        -2.3        -0.1        -0.2         2.3        -0.9
Pacific.....................................       1,296         0.7         0.0        -0.9        -2.3        -0.1         0.6         2.3         0.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Facility Size (Number of 1st Episodes)
--------------------------------------------------------------------------------------------------------------------------------------------------------
<100 episodes...............................       3,177         0.0         0.3        -0.9        -2.3        -0.1         0.4         2.3        -0.3
100 to 249..................................       2,733         0.1         0.2        -0.9        -2.4        -0.1         0.1         2.3        -0.7
250 to 499..................................       2,342         0.1         0.0        -0.9        -2.3        -0.1         0.0         2.3        -0.9
500 to 999..................................       1,597         0.0         0.0        -0.9        -2.3        -0.1        -0.1         2.3        -1.1
1,000 or More...............................       1,318         0.0        -0.1        -0.9        -2.3        -0.1         0.0         2.3        -1.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: CY 2015 Medicare claims data for episodes ending on or before December 31, 2015 (as of December 31, 2015) for which we had a linked OASIS
  assessment.
\1\ The impact of the CY 2017 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 CY 2017 home health case-mix weights reflects the recalibration of the case-mix weights as outlined in section III.B of this
  proposed rule offset by the case-mix weights budget neutrality factor described in section III.C.3 of this proposed rule.

[[Page 43784]]

 
\3\ The 0.97 percent reduction to the national, standardized 60-day episode payment amount in CY 2017 is estimated to have a 0.9 percent impact on
  overall HH PPS expenditures.
\4\ The impact of rebasing includes the rebasing adjustments to the national, standardized 60-day episode payment rate (-2.74 percent after the CY 2017
  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 2017 home health payment update percentage reflects the home health market basket update of 2.8 percent, reduced by a 0.5 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. HHVBP Model
    Table 37 displays our analysis of the distribution of possible 
payment adjustments at the 3-percent, 5-percent, 6-percent, 7-percent, 
and 8-percent rates that are being used in the Model using the 2013 and 
2014 OASIS measures, hospitalization measure and Emergency Department 
(ED) measure from QIES, and Home Health CAHPS data. The impacts below 
also account for the proposals to change the smaller-volume cohort size 
determination, calculate achievement threshold and benchmark proposals 
at the state level, and revise the applicable measures. We determined 
the distribution of possible payment adjustments based on ten (10) 
OASIS quality measures, two (2) claims-based measures in QIES, the 
three (3)New Measures (with the assumption that all HHAs reported on 
all New Measures and received full points), and QIES Roll Up File data 
in the same manner as they would be in the Model. The five (5) HHCAHPS 
measures are based on archived data. The size of the cohorts were 
determined using the 2014 Quality Episode File based on OASIS 
assessments (the Model will use the year before each performance year), 
whereby the HHAs reported at least five measures with over 20 
observations. The basis of the payment adjustment was derived from 
complete 2014 claims data. We note that this impact analysis is based 
on the aggregate value of all nine (9) selected states.
    Table 38 displays our analysis of the distribution of possible 
payment adjustments based on the same 2013-2014 data used to calculate 
Table 37, 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 (9) selected states. All Medicare-certified 
HHAs that provide services in Massachusetts, Maryland, North Carolina, 
Florida, Washington, Arizona, Iowa, Nebraska, and Tennessee are 
required to compete in this Model. Value-based incentive payment 
adjustments for the estimated 1,900 plus HHAs in the selected states 
that compete in the HHVBP Model are stratified by size as described in 
this proposed rule. Under the proposal described, there must be a 
minimum of eight (8) HHAs in any cohort.
    Those HHAs that are in states that do not have at least eight small 
HHAs would not have a smaller-volume cohort and thus there would only 
be one cohort that would include all the HHAS in that state. As 
indicated in Table 38, under this proposal, Massachusetts, Maryland, 
North Carolina, Tennessee and Washington would only have one cohort and 
Florida, Arizona, Iowa, Nebraska would have a smaller-volume cohort and 
a larger-volume cohort. For example, Iowa has 29 HHAs eligible to be 
exempt from being required to have their beneficiaries complete HHCAHPS 
surveys because they provided HHA services to less than 60 
beneficiaries in 2013. Therefore, those 29 HHAs would be competing in 
Iowa's smaller-volume cohort if the performance year was 2014.
    Using 2013-2014 data and the payment adjustment of 5-percent (as 
applied in CY 2019), based on the ten (10) OASIS quality measures, two 
(2) claims-based measures in QIES, the five (5) HHCAHPS measures (based 
on the archived data), and the three (3) New Measures (with the 
assumption that all HHAs submitted data), Table 38 illustrates that 
smaller-volume HHAs in Iowa would have a mean payment adjustment of 
positive 0.62 percent and the payment adjustment ranges from -2.3 
percent at the 10th percentile to +3.8 percent at the 90th percentile. 
As a result of using the OASIS quality and claims-based measures, the 
same source data (from QIES rather than archived data) that the Model 
will use for implementation, and adding the assumption that all HHAs 
will submit data for each of the New Measures when calculating the 
payment adjustments, the range of payment adjustments for all cohorts 
in this proposed rule is lower than that was included in HH PPS 2016 
rule. This difference is largely due to the lowered variation in TPS 
caused by the assumption that all HHAs will submit data for each of the 
New Measures.
    Table 39 provides the payment adjustment distribution based on 
proportion of dually-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 payment adjustment percentages were calculated at the state and 
size level so that each HHA'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 1,839 HHAs 
in the nine selected states out of 1,991 HHAs that were found in the 
HHA data sources that yielded a sufficient number of measures to 
receive a payment adjustment 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.

[[Page 43785]]



    Table 37--HHVBP Model: Adjustment Distribution by Percentile Level of Quality Total Performance Score at Different Model Payment Adjustment Rates
                                                                      [Percentage]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                Payment adjustment distribution                  Range     10%      20%      30%      40%     Median    60%      70%      80%      90%
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% Payment Adjustment For Performance year 1 of the Model.....     3.08    -1.23    -0.87    -0.56    -0.30    -0.02     0.27     0.61     1.11     1.85
5% Payment Adjustment For Performance year 2 of the Model.....     5.12    -2.04    -1.45    -0.94    -0.50    -0.03     0.46     1.01     1.85     3.08
6% Payment Adjustment For Performance year 3 of the Model.....     6.15    -2.45    -1.74    -1.13    -0.61    -0.04     0.55     1.21     2.22     3.70
7% Payment Adjustment For Performance year 4 of the Model.....     7.18    -2.86    -2.03    -1.32    -0.71    -0.04     0.64     1.42     2.59     4.32
8% Payment Adjustment For Performance year 5 of the Model.....     8.25    -3.27    -2.32    -1.50    -0.81    -0.05     0.73     1.62     2.96     4.93
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                   Table 38--HHVBP Model: HHA Cohort Payment Adjustment Distributions by State/Cohort
                                                        [Based on a 5-percent payment adjustment]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Average
                       COHORT                          # of    payment     10%      20%      30%      40%     Median    60%      70%      80%      90%
                                                       HHA     adj. (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  HHA Cohort in States with no small cohorts (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
MA.................................................      127       0.00    -2.20    -1.50    -1.10    -0.70    -0.30     0.00     0.80     1.40     2.70
MD.................................................       53       0.56    -1.50    -1.10    -0.80    -0.10     0.20     0.50     1.40     2.00     3.60
NC.................................................      172       0.16    -1.90    -1.50    -1.00    -0.50     0.10     0.50     0.90     1.70     2.40
TN.................................................      135       0.36    -2.00    -1.30    -0.80    -0.40    -0.10     0.30     0.90     2.00     3.10
WA.................................................       59       0.71    -1.70    -0.70    -0.30     0.20     0.50     0.80     1.70     2.30     2.90
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             Smaller-volume HHA Cohort in states with small cohort (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
AZ small...........................................        9       0.53    -1.20    -0.70    -0.70    -0.50    -0.30    -0.10     0.60     0.90     5.00
FL small...........................................      130      -0.14    -2.20    -1.70    -1.20    -0.60    -0.20     0.10     0.40     1.20     1.80
IA small...........................................       29       0.62    -2.30    -1.10    -0.80     0.00     0.30     0.90     1.70     2.30     3.80
NE small...........................................       16       0.48    -1.70    -1.60    -1.20    -0.60    -0.40     1.30     2.20     2.40     4.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             Larger-volume HHA Cohort in states with small cohorts (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
AZ large...........................................      112      -0.06    -2.20    -1.50    -1.10    -0.70    -0.30     0.10     0.50     1.30     2.30
FL large...........................................      889       0.37    -2.10    -1.50    -0.90    -0.40     0.00     0.60     1.30     2.20     3.30
IA large...........................................      107      -0.21    -2.30    -1.60    -1.30    -0.70    -0.20     0.10     0.50     1.00     1.80
NE large...........................................       49       0.31    -1.80    -1.20    -0.90    -0.60    -0.10     0.30     0.70     1.80     3.70
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                              Table 39--PAYMENT ADJUSTMENT DISTRIBUTIONS BY CHARACTERISTICS
                                                        [Based on a 5-percent payment adjustment]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Average
                       COHORT                          # of    payment     10%      20%      30%      40%     Median    60%      70%      80%      90%
                                                       HHA     adj. (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Low % Dually-eligible..............................      621       0.18    -1.80    -1.30    -0.90    -0.50     0.00     0.40     0.90     1.50     2.50
Medium % Dually-eligible...........................      841      -0.15    -2.20    -1.70    -1.20    -0.80    -0.40     0.00     0.50     1.20     2.20
High % Dually-eligible.............................      416       1.21    -1.80    -0.80    -0.20     0.50     1.10     1.80     2.60     3.30     4.20
Low acuity.........................................      459       0.97    -1.70    -1.00    -0.40     0.10     0.70     1.30     2.10     2.90     4.00
Mid acuity.........................................     1089       0.83    -2.10    -1.50    -1.00    -0.60    -0.10     0.30     0.80     1.50     2.60
High acuity........................................      338      -0.16    -2.10    -1.60    -1.30    -0.90    -0.50    -0.10     0.50     1.30     2.40
All non-rural......................................      989       0.57    -2.10    -1.50    -0.90    -0.40     0.10     1.00     1.80     2.70     3.80
Up to 35% rural....................................      141       0.01    -2.10    -1.50    -1.10    -0.60    -0.20     0.20     0.70     1.40     2.30
Over 35% rural.....................................      172       0.54    -1.80    -1.30    -0.90    -0.50     0.00     0.50     1.10     1.70     2.90
Church.............................................       62       0.80    -1.70    -0.90    -0.80     0.10     0.40     1.10     1.70     2.60     3.70
Private NP.........................................      168       0.22    -1.90    -1.30    -0.90    -0.30     0.10     0.50     0.90     1.70     2.50
Other..............................................       84       0.40    -1.60    -1.10    -0.70    -0.40     0.20     0.60     1.00     1.80     2.60
Private FP.........................................     1315       0.20    -2.10    -1.50    -1.00    -0.60    -0.10     0.30     1.00     1.90     3.10
Federal............................................       72       0.37    -2.20    -1.60    -1.10    -0.40     0.20     0.60     1.40     2.10     2.80
State..............................................        5      -0.39    -2.50    -1.90    -1.40    -0.50     0.30     0.50     0.60     0.80     1.00
Local..............................................       57       0.50    -1.50    -1.10    -0.70     0.00     0.30     0.60     0.90     1.40     2.40
--------------------------------------------------------------------------------------------------------------------------------------------------------

D. Alternatives Considered

    As described in the CY 2016 HH PPS proposed rule (80 FR 39911), 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 
estimated that the aggregate impact would have been a decrease of $600 
million in payments to HHAs. However, instead of implementing 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 finalized a reduction to the national, 
standardized 60-day episode payment rate of 0.97 percent in CY 2016, CY 
2017, and CY 2018 to account for nominal case-mix growth from CY 2012 
through CY 2014 (80 FR 68646). Since the 0.97 percent reduction to the 
national, standardized 60-day episode payment rate to account for 
nominal case-mix growth from 2012 to 2014 was finalized in the CY 2016 
HH PPS final

[[Page 43786]]

rule, we did not consider alternatives to implementing this reduction 
for CY 2017.
    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 -0.5 percentage point productivity adjustment to the 
proposed CY 2017 home health market basket update (2.8 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).
    With regards to payments made under the HH PPS for high-cost 
``outlier'' episodes of care (that is, episodes of care with unusual 
variations in the type or amount of medically necessary care), we did 
not consider maintaining the fixed-dollar loss (FDL) ratio at 0.45 in 
section III.D.3 of this proposed rule because simulations using CY 2015 
utilization data (that is, home health claims data) the proposed CY 
2017 HH PPS payment rates resulted in an estimated 2.58 percent of 
total HH PPS payments being paid as outlier payments using the existing 
methodology (cost-per-visit) for calculating the cost of an episode of 
care. Likewise, simulations using CY 2015 utilization data (that is, 
home health claims data) the proposed CY 2017 HH PPS payment rates 
resulted in an estimated 3.10 percent of total HH PPS payments being 
paid as outlier payments using the proposed methodology (cost-per-unit) 
for calculating the cost of an episode of care. The FDL ratio and the 
loss-sharing ratio must be selected so that the estimated outlier 
payments do not exceed the 2.5 percent of total HH PPS payments (as 
required by section 1895(b)(5)(A) of the Act). We did not consider 
proposing a change to the loss-sharing ratio (0.80) in order for the HH 
PPS to remain consistent with payment for high-cost outliers in other 
Medicare payment systems (for example, IRF PPS, IPPS, etc.)
    With regards to the methodology used to calculate the cost of an 
episode of care in order to determine the payment amount under the HH 
PPS for high-cost ``outliers'' (that is, episodes of care with unusual 
variations in the type or amount of medically necessary care), in 
section III.D.2, we considered maintaining the current methodology used 
to calculate the cost of an episode of care (cost-per-visit). However, 
due to the findings from the home health study required as a result of 
section 3131(d) of the Affordable Care Act (as discussed in section 
III.D.2 of this proposed rule and in the CY 2016 HH PPS proposed rule 
(80 FR 39864), we believe that the proposed methodology change (cost-
per-unit) helps to alleviate financial disincentives for providers to 
treat medically complex beneficiaries who require longer visits. Since 
the projection of the percentage of outlier dollars is the same as 
before the change, the impact of this proposal is budget neutral.
    As described in Section III.E of this proposed rule, the 
Consolidated Appropriations Act of 2016 (Pub. L 114-113) amends both 
Section 1834 of the Act (42 U.S.C. 1395m) and Section 1861(m)(5) of the 
Act (42 U.S.C. 1395x(m)(5)), requiring a separate payment to a HHA for 
an applicable disposable device when furnished on or after January 1, 
2017, to an individual who receives home health services for which 
payment is made under the Medicare home health benefit. Therefore, we 
do not have the discretion to delay or eliminate the implementation of 
a separate payment amount for NPWT performed using a disposable device 
and thus we did not consider any alternatives regarding this proposal.
    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 40, 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 40 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 40--Accounting Statement: HH PPS Classification of Estimated
            Transfers and Costs, From the CYs 2016 to 2017 *
------------------------------------------------------------------------
                 Category                             Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............  -$180 million.
From Whom to Whom?                          Federal Government to HHAs.
------------------------------------------------------------------------

    Table 41 provides our best estimate of the decrease in Medicare 
payments under the HHVBP Model as a result of the proposed changes 
presented in this proposed rule for the HHVBP Model.

 Table 41--Accounting Statement: HHVBP Model Classification of Estimated
                      Cost Savings for CY 2016-2021
------------------------------------------------------------------------
                 Category                              Savings
------------------------------------------------------------------------
6-Year Gross Savings......................  -$378 million.
Medicare Payments.........................  Hospitals and SNFs.
------------------------------------------------------------------------

F. Conclusion

1. HH PPS
    In conclusion, we estimate that the net impact of the HH PPS 
policies in this rule is a decrease of 1.0 percent, or $180 million, in 
Medicare payments to

[[Page 43787]]

HHAs for CY 2017. The -$180 million impact reflects the effects of the 
2.3 percent CY 2017 HH payment update percentage ($420 million 
increase), a 0.9 percent decrease in payments due to the 0.97 percent 
reduction to the national, standardized 60-day episode payment rate in 
CY 2016 to account for nominal case-mix growth from 2012 through 2014 
($160 million decrease), the 0.1 percent decrease in payments due to 
the change to the FDL ratio ($20 million decrease), and a 2.3 percent 
decrease in in payments due to the third year of the 4-year phase-in of 
the rebasing adjustments required by section 3131(a) of the Affordable 
Care Act ($420 million decrease).
    This analysis, together with the remainder of this preamble, 
provides an initial Regulatory Flexibility Analysis.
2. HHVBP Model
    In conclusion, we estimate there would be no net impact (to include 
either a net increase or reduction in payments) in this proposed rule 
in Medicare payments to HHAs competing in the HHVBP Model for CY 2017. 
However, the overall economic impact of the HHVBP Model provision is an 
estimated $378 million in total savings from a reduction in unnecessary 
hospitalizations and SNF usage as a result of greater quality 
improvements in the home health industry over the life of the HHVBP 
Model. The financial estimates were based on the analysis of hospital, 
home health and skilled nursing facility claims data from nine states 
using the most recent 2014 Medicare claims data. A study published in 
2002 by the Journal of the American Geriatric Society (JAGS), 
``Improving patient outcomes of home health care: findings from two 
demonstration trials of outcome-based quality improvement,'' formed the 
basis for CMMI's projections.\127\ That study observed a 
hospitalization relative rate of decline of 22-percent to 26-percent 
over the 3-year and 4-year demonstration periods (the 1st year of each 
being the base year) for the national and New York trials. CMMI assumed 
a conservative savings estimate of up to a 6-percent ultimate annual 
reduction in hospitalizations and up to a 1.0-percent ultimate annual 
reduction in SNF admissions and took into account costs incurred from 
the beneficiary remaining in the HHA if the hospitalization did not 
occur; resulting in total projected six performance year gross savings 
of $378 million. Based on the JAGS study, which observed 
hospitalization reductions of over 20-percent, the 6-percent ultimate 
annual hospitalization reduction assumptions are considered reasonable.
---------------------------------------------------------------------------

    \127\ Shaughnessy, et al. ``Improving patient outcomes of home 
health care: findings from two demonstration trials of outcome-based 
quality improvement,'' available at http://www.ncbi.nlm.nih.gov/pubmed/12164991.
---------------------------------------------------------------------------

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 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 amends 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 Act (42 U.S.C. 1302 and 
1395hh).

0
2. Section 409.50 is revised to read as follows:


Sec.  409.50  Coinsurance for durable medical equipment (DME) and 
applicable disposable devices furnished as a home health service.

    The coinsurance liability of the beneficiary or other person for 
DME or applicable disposable devices (as defined in section 1834(s)(2)) 
furnished as a home health service is 20 percent of the customary 
(insofar as reasonable) charge for the services.

PART 484--HOME HEALTH SERVICES

0
3. The authority citation for part 484 continues to read as follows:

    Authority: Secs 1102 and 1871 of the Act (42 U.S.C. 1302 and 
1395(hh)) unless otherwise indicated.

0
4. Section 484.240 is amended by revising paragraph (d) to read as 
follows:


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

* * * * *
    (d) CMS imputes the cost for each episode by multiplying the 
national per-15 minute unit amount of each discipline by the number of 
15 minute units in the discipline and computing the total imputed cost 
for all disciplines.
* * * * *
0
5. Section 484.305 is amended by revising the definition of 
``Benchmark'' and removing the definition of ``Starter Set'' and to 
read as follows:


Sec.  484.305  Definitions.

* * * * *
    Benchmark refers to the mean of the top decile of Medicare-
certified HHA performance on the specified quality measure during the 
baseline period, calculated for each state.
* * * * *
0
6. Section 484.315 is amended by revising paragraph (a) to read as 
follows:


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

    (a) Competing home health agencies will be evaluated using a set of 
quality measures.
* * * * *


Sec.  484.320  [Amended]

0
7. Section 484.320 is amended by:
0
a. Amending paragraphs (a), (b), and (c) by removing the phrase ``in 
the starter set,''.
0
b. Amending paragraph (d) by removing the phrase ``in the starter 
set''.
0
8. Section 484.335 is added to read as follows:


Sec.  484.335  Appeals Process for the Home Health Value-Based 
Purchasing (HHVBP) Model.

    (a) Requests for recalculation--(1) Matters for recalculation. 
Subject to the limitations on review under section 1115A of the Act, a 
HHA may submit a request for recalculation under this section if it 
wishes to dispute the calculation of the following:
    (i) Interim performance scores.
    (ii) Annual total performance scores.
    (iii) Application of the formula to calculate annual payment 
adjustment percentages.
    (2) Time for filing a request for recalculation. A recalculation 
request must be submitted in writing within 15 calendar days after CMS 
posts the HHA-specific information on the HHVBP Secure Portal, in a 
time and manner specified by CMS.
    (3) Content of request. (i) The provider's name, address associated 
with the services delivered, and CMS Certification Number (CCN).

[[Page 43788]]

    (ii) 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.
    (iii) 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).
    (iv) The HHA may include in the request for reconsideration 
additional documentary evidence that CMS should consider. Such 
documents may not include data that was to have been filed by the 
applicable data submission deadline, but may include evidence of timely 
submission.
    (4) Scope of review for recalculation. In conducting the 
recalculation, CMS will review the applicable measures and performance 
scores, the evidence and findings upon which the determination was 
based, and any additional documentary evidence submitted by the home 
health agency. CMS may also review any other evidence it believes to be 
relevant to the recalculation.
    (5) Recalculation decision. CMS will issue a written notification 
of findings. A recalculation decision is subject to the request for 
reconsideration process in accordance with paragraph (b) of this 
section.
    (b) Requests for reconsideration--(1) Matters for reconsideration. 
A home health agency may request reconsideration of the recalculation 
of the annual total performance score and payment adjustment percentage 
following a recalculation request submitted under Sec.  484.335(a) or 
the decision to deny a HHA's recalculation request submitted under 
paragraph (a) of this section.
    (2) Time for filing a request for reconsideration. The request for 
reconsideration must be submitted via the HHVBP Secure Portal within 15 
calendar days from CMS' notification to the HHA contact of the outcome 
of the recalculation process.
    (3) Content of request. (i) The name of the HHA, address associated 
with the services delivered, and CMS Certification Number (CCN).
    (ii) The basis for requesting reconsideration to include the 
specific quality measure data that the HHA believes is inaccurate or 
the calculation the HHA believes is incorrect.
    (iii) 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).
    (iv) The HHA may include in the request for reconsideration 
additional documentary evidence that CMS should consider. Such 
documents may not include data that was to have been filed by the 
applicable data submission deadline, but may include evidence of timely 
submission.
    (4) Scope of review for reconsideration. In conducting the 
reconsideration review, CMS will review the applicable measures and 
performance scores, the evidence and findings upon which the 
determination was based, and any additional documentary evidence 
submitted by the HHA. CMS may also review any other evidence it 
believes to be relevant to the reconsideration. The HHA must prove its 
case by a preponderance of the evidence with respect to issues of fact
    (5) Reconsideration decision. CMS reconsideration officials will 
issue a written determination.

    Dated: June 2, 2016.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Dated: June 23, 2016.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2016-15448 Filed 6-27-16; 4:15 pm]
BILLING CODE 4120-01-P