[Federal Register Volume 81, Number 213 (Thursday, November 3, 2016)]
[Rules and Regulations]
[Pages 76702-76797]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-26290]



[[Page 76701]]

Vol. 81

Thursday,

No. 213

November 3, 2016

Part II





Department of Health and Human Services





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 Centers for Medicare & Medicaid Services





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42 CFR Parts 409 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; Final Rule

  Federal Register / Vol. 81 , No. 213 / Thursday, November 3, 2016 / 
Rules and Regulations  

[[Page 76702]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 409 and 484

[CMS-1648-F]
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: Final rule.

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SUMMARY: This final rule updates 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 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; 
finalizes changes to the methodology used to calculate payments made 
under the HH PPS for high-cost ``outlier'' episodes of care; implements 
changes in payment for furnishing Negative Pressure Wound Therapy 
(NPWT) using a disposable device for patients under a home health plan 
of care; discusses our efforts to monitor the potential impacts of the 
rebasing adjustments; includes an update on subsequent research and 
analysis as a result of the findings from the home health study; and 
finalizes changes to the Home Health Value-Based Purchasing (HHVBP) 
Model, which was implemented on January 1, 2016; and updates to the 
Home Health Quality Reporting Program (HH QRP).

DATES: These regulations are effective on January 1, 2017.

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

SUPPLEMENTARY INFORMATION: 

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. Provisions of the Proposed Rule and Analysis of and Responses 
to Comments
    A. Monitoring for Potential Impacts--Affordable Care Act 
Rebasing Adjustments
    B. CY 2017 HH PPS Case-Mix Weights
    C. CY 2017 Home Health Rate Update
    1. CY 2017 Home Health Market Basket Update
    2. CY 2017 Home Health Wage Index
    3. CY 2017 Annual Payment Update
    D. Payments for High-Cost Outliers Under the HH PPS
    1. Background
    2. Changes to the Methodology Used to Estimate Episode Cost
    3. Fixed Dollar Loss (FDL) Ratio
    E. 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. Provisions of the Home Health Value-Based Purchasing (HHVBP) 
Model and Analysis of and Responses to Comments
    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. Updates to the Home Health Care Quality Reporting Program (HHQRP) 
and Analysis of and Responses to Comments
    A. Background and Statutory Authority
    B. General Considerations Used for the Selection of Quality 
Measures for the HH QRP
    C. Process for Retaining, Removing, and Replacing Previously 
Adopted Home Health Quality Reporting Program Measures for 
Subsequent Payment Determinations
    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
    E. Process for Adoption of Updates to HH QRP Measures
    F. Modifications to Guidance Regarding Assessment Data Reporting 
in the OASIS
    G. HH QRP Quality, Resource Use, and Other Measures for the CY 
2018 Payment Determination and Subsequent Years
    H. HH QRP Quality Measures and Measure Concepts under 
Consideration for Future Years
    I. Form Manner and Timing of OASIS Data Submission and OASIS 
Data for Annual Payment Update
    J. Public Display of Quality Measure Data for the HH QRP and 
Procedures for the Opportunity to Review and Correct Data and 
Information
    K. Mechanism for Providing Feedback Reports to HHAs
    L. Home Health Care CAHPS[supreg] Survey (HHCAHPS)
VI. Collection of Information Requirements
VII. Regulatory Impact Analysis
VIII. Federalism Analysis
    Regulations Text

Acronyms

    In addition, because of the many terms to which we refer by 
abbreviation in this 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
CASPER Certification and Survey Provider Enhanced Reports
CBSA Core-Based Statistical Area
CBWI Commuting-based Wage Index
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

[[Page 76703]]

HHCAHPS Home Health Care Consumer Assessment of Healthcare Providers 
and Systems Survey
HH PPS Home Health Prospective Payment System
HHRG Home Health Resource Group
HHVBP Home Health Value-Based Purchasing
HIPPS Health Insurance Prospective Payment System
HVBP Hospital Value-Based Purchasing
ICD-9-CM International Classification of Diseases, Ninth Revision, 
Clinical Modification
ICD-10-CM International Classification of Diseases, Tenth Revision, 
Clinical Modification
IH Inpatient Hospitalization
IMPACT Act Improving Medicare Post-Acute Care Transformation Act of 
2014 (P.L. 113-185)
IRF Inpatient Rehabilitation Facility
LEF Linear Exchange Function
LTCH Long-Term Care Hospital
LUPA Low-Utilization Payment Adjustment
MEPS Medical Expenditures Panel Survey
MFP Multifactor productivity
MMA Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003, Pub. L. 108-173, enacted December 8, 2003
MSA Metropolitan Statistical Area
MSPB-PAC Medicare Spending Per Beneficiary-Post Acute Care
MSS Medical Social Services
NPWT Negative Pressure Wound Therapy
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
OPPS Outpatient Prospective Payment System
PAMA Protecting Access to Medicare Act of 2014
PAC-PRD Post-Acute Care Payment Reform Demonstration
PEP Partial Episode Payment Adjustment
PT Physical Therapy
PY Performance Year
PRRB Provider Reimbursement Review Board
QAP Quality Assurance Plan
RAP Request for Anticipated Payment
RF Renal Failure
RFA Regulatory Flexibility Act, Pub. L. 96-354
RHHIs Regional Home Health Intermediaries
RIA Regulatory Impact Analysis
SAF Standard Analytic File
SLP Speech-Language Pathology
SN Skilled Nursing
SNF Skilled Nursing Facility
TPS Total Performance Score
TPN Total Parenteral Nutrition
UMRA Unfunded Mandates Reform Act of 1995.
VBP Value-Based Purchasing

I. Executive Summary

A. Purpose

    This final rule updates 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 update reflects 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 final rule also updates 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 finalizes 
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) of the Act, as amended by the Consolidated 
Appropriations Act, 2016 (Pub. L. 114-113), this rule implements 
changes in payment for furnishing Negative Pressure Wound Therapy 
(NPWT) using a disposable device for patients under a home health plan 
of care for which payment would otherwise be made under section 1895(b) 
of the Act. Additionally, this rule finalizes changes to the Home 
Health Value-Based Purchasing (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 
changes to the home health quality reporting program requirements under 
the authority of section 1895(b)(3)(B)(v) 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 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 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 update the payment rates under the HH PPS by the home health 
payment update percentage of 2.5 percent (using the 2010-based Home 
Health Agency (HHA) market basket update of 2.8 percent, minus 0.3 
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 update the CY 2017 home health wage index using more current 
hospital wage data. In section III.D, we are finalizing a change to 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

[[Page 76704]]

III.E of this rule, as a result of the Consolidated Appropriations Act, 
2016 (Pub. L. 114-113), we are implementing changes in payment for 
furnishing Negative Pressure Wound Therapy (NPWT) using a disposable 
device for a patient under a home health plan of care 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 rule, we provide an update a process for grouping the HH PPS 
claim centrally during claims processing.
    In section IV of this rule, we are finalizing changes to the HHVBP 
Model that was implemented January 1, 2016. We are finalizing: the 
removal of the definition of ``starter set''; a revised definition for 
``benchmark''; calculation of benchmarks and achievement thresholds at 
the state level; a minimum requirement of eight HHAs in a cohort; an 
increased timeframe for submitting New Measure data; removal of four 
measures from the set of applicable measures; an annual reporting 
period and submission date for one of the New Measures; and an appeals 
process that includes a recalculation and reconsideration process. We 
are also providing an update on the progress towards developing public 
reporting of performance under the HHVBP Model.
    This final rule also include updates to the Home Health Quality 
Reporting Program in section V, including removing six quality 
measures, adopting four new quality measures, mentioning future 
measures under consideration, following a calendar year schedule for 
measure and data submission requirements, and aligning quarterly 
reporting timeframes and quarterly review and correction periods.

C. Summary of Costs and Transfers

    The preliminary complete set of benchmarks

                 Table 1--Summary of Costs and Transfers
------------------------------------------------------------------------
     Provision description            Costs             Transfers
------------------------------------------------------------------------
CY 2017 HH PPS Payment Rate      ..............  The overall economic
 Update.                                          impact of the HH PPS
                                                  payment rate update is
                                                  an estimated -$130
                                                  million (-0.7 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.
    In accordance with section 1895(b)(3)(A) of the Act, the 
computation of a standard prospective payment amount must be computed 
to include all costs for covered HH services paid on a reasonable cost 
basis and such amounts must be initially based on the most recent 
reported cost report data. Additionally, section 1895(b)(3)(A) of the 
Act requires the standardized prospective payment amount to 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, 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

[[Page 76705]]

complete and full description of the HH PPS as required by the BBA, see 
the July 2000 HH PPS final rule (65 FR 41128 through 41214).
    Section 5201(c) of the Deficit Reduction Act of 2005 (DRA) (Pub. L. 
109-171, enacted February 8, 2006) added new section 1895(b)(3)(B)(v) 
to the Act, requiring HHAs to submit data for purposes of measuring 
health care quality, and links the quality data submission to the 
annual applicable percentage increase. This data submission requirement 
is applicable for CY 2007 and each subsequent year. If an HHA does not 
submit quality data, the HH market basket percentage increase is 
reduced by 2 percentage points. In the November 9, 2006 Federal 
Register (71 FR 65884, 65935), we published a final rule to implement 
the pay-for-reporting requirement of the DRA, which was codified at 
Sec.  484.225(h) and (i) in accordance with the statute. The pay-for-
reporting requirement was implemented on January 1, 2007.
    The Affordable Care Act made additional changes to the HH PPS. One 
of the changes in section 3131 of the Affordable Care Act is the 
amendment to section 421(a) of the Medicare Prescription Drug, 
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173, 
enacted on December 8, 2003) as amended by section 5201(b) of the DRA. 
Section 421(a) of the MMA, as amended by section 3131 of the Affordable 
Care Act, requires that the Secretary increase, by 3 percent, the 
payment amount otherwise made under section 1895 of the Act, for HH 
services furnished in a rural area (as defined in section 1886(d)(2)(D) 
of the Act) with respect to episodes and visits ending on or after 
April 1, 2010, and before January 1, 2016. Section 210 of the Medicare 
Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10) 
amended section 421(a) of the MMA to extend the rural add-on for 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 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. New section 
1899B of the Act is titled, ``Standardized Post-Acute Care (PAC) 
Assessment Data for Quality, Payment, and Discharge Planning''. Under 
section 1899B(a)(1) of the Act, certain post-acute care (PAC) providers 
(defined in section 1899B(a)(2)(A) of the Act to include HHAs, SNFs, 
IRFs, and LTCHs) must submit standardized patient assessment data in 
accordance with section 1899B(b) of the Act, data on quality measures 
required under section 1899B(c)(1) of the Act, and data on resource 
use, and other measures required under section 1899B(d)(1) of the Act. 
The Act also sets out specified application dates for each of the 
measures. The Secretary must specify the quality, resource use, and 
other measures no later than the applicable specified application date 
defined in section 1899B(a)(2)(E) of the Act.

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 
III.C.3.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

[[Page 76706]]

case-mix change. As a result of our analysis, we identified a 19.03 
percent nominal increase in case-mix. At that time, to fully account 
for the 19.03 percent nominal case-mix growth identified from 2000 to 
2009, we finalized a 3.79 percent payment reduction in CY 2012 and a 
1.32 percent payment reduction for CY 2013.
    In the CY 2013 HH PPS final rule (77 FR 67078), we implemented a 
1.32 percent reduction to the payment rates for CY 2013 to account for 
nominal case-mix growth from 2000 through 2010. When taking into 
account the total measure of case-mix change (23.90 percent) and the 
15.97 percent of total case-mix change estimated as real from 2000 to 
2010, we obtained a final nominal case-mix change measure of 20.08 
percent from 2000 to 2010 (0.2390 * (1-0.1597) = 0.2008). To fully 
account for the remainder of the 20.08 percent increase in nominal 
case-mix beyond that which was accounted for in previous payment 
reductions, we estimated that the percentage reduction to the national, 
standardized 60-day episode rates for nominal case-mix change would be 
2.18 percent. Although we considered proposing a 2.18 percent reduction 
to account for the remaining increase in measured nominal case-mix, we 
finalized the 1.32 percent payment reduction to the national, 
standardized 60-day episode rates in the CY 2012 HH PPS final rule (76 
FR 68532).
    Section 3131(a) of the Affordable Care Act requires that, beginning 
in CY 2014, we apply an adjustment to the national, standardized 60-day 
episode rate and other amounts that reflect factors such as changes in 
the number of visits in an episode, the mix of services in an episode, 
the level of intensity of services in an episode, the average cost of 
providing care per episode, and other relevant factors. Additionally, 
we must phase in any adjustment over a 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 specifies that the 
maximum rebasing adjustment is to be no more than 3.5 percent per year 
of the CY 2010 rates. Therefore, in the CY 2014 HH PPS final rule (78 
FR 72256) for each year, CY 2014 through CY 2017, we finalized a fixed-
dollar reduction to the national, standardized 60-day episode payment 
rate of $80.95 per year, increases to the national per-visit payment 
rates per year as reflected in Table 2, and a decrease to the NRS 
conversion factor of 2.82 percent per year. We also finalized three 
separate LUPA add-on factors for skilled nursing, physical therapy, and 
speech-language pathology and removed 170 diagnosis codes from 
assignment to diagnosis groups in the HH PPS Grouper. In the CY 2015 HH 
PPS final rule (79 FR 66032), we implemented the 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    adjustments
                                             per-visit     per year (CY
                                           payment rates   2014 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, section 421(a) of the 
MMA, as amended by section 210 of the Medicare Access and CHIP 
Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10), extended 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. Provisions of the Proposed Rule and Analysis of and Responses to 
Comments

    We received 83 timely comments from the public, including comments 
from home health agencies, national provider associations, patient and 
other advocacy organizations, nurses, and device manufacturers. The 
following sections, arranged by subject area, include a summary of the 
public comments received, and our responses.

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

    In the CY 2017 proposed rule (81 FR 43714), we provided a summary 
of analysis on FY 2014 HHA cost report data and how such data, if used, 
would impact our estimate of the percentage difference between Medicare 
payments and HHA costs used to calculate the Affordable Care Act 
rebasing adjustments. In addition, we presented information on Medicare 
home health utilization that included HHA claims data through CY 2015. 
We will continue to monitor the impacts due to the rebasing adjustments 
and other future policy changes and will provide the industry with 
periodic updates on our analysis in future rulemaking and/or 
announcements on the HHA Center Web page at: https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center.html.

B. 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-

[[Page 76707]]

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. For this final rule, we used CY 2015 home health claims 
data (as of June 30, 2016) with linked OASIS data to generate the final 
CY 2017 HH PPS case-mix weights. These data are the most current and 
complete data available at this time. The tables below have been 
revised to reflect the results using the updated data. The process we 
used to calculate the HH PPS case-mix weights are also 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 Bureau of Labor 
Statistics national hourly wage (covering May 2015) plus fringe rates 
(covering December 2015) for the six home health disciplines and the 
visit length (reported in 15-minute units) from the claim. The points 
for each of the variables for each leg of the model, updated with CY 
2015 data, are shown in Table 3. The points for the clinical variables 
are added together to determine an episode's clinical score. The points 
for the functional variables are added together to determine an 
episode's functional score.

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

[[Page 76708]]

 
30. Primary or Other Diagnosis = Urostomy/Cystostomy............  ..........          18  ..........          13
31. M1030 (Therapy at home) = 1 (IV/Infusion) or 2 (Parenteral).  ..........          17           6          17
32. M1030 (Therapy at home) = 3 (Enteral).......................  ..........          16  ..........           9
33. M1200 (Vision) = 1 or more..................................
34. M1242 (Pain) = 3 or 4.......................................           3  ..........           2
35. M1311 = Two or more pressure ulcers at stage 3 or 4 \1\.....           5          10           5          10
36. M1324 (Most problematic pressure ulcer stage) = 1 or 2......           4          19           7          16
37. M1324 (Most problematic pressure ulcer stage) = 3 or 4......           9          32          11          26
38. M1334 (Stasis ulcer status) = 2.............................           4          15           8          15
39. M1334 (Stasis ulcer status) = 3.............................           7          17          10          17
40. M1342 (Surgical wound status) = 2...........................           2           7           5          11
41. M1342 (Surgical wound status) = 3...........................  ..........           6           4           9
42. M1400 (Dyspnea) = 2, 3, or 4................................
43. M1620 (Bowel Incontinence) = 2 to 5.........................  ..........           4  ..........           3
44. M1630 (Ostomy) = 1 or 2.....................................           4          12           2           8
45. M2030 (Injectable Drug Use) = 0, 1, 2, or 3.................
----------------------------------------------------------------------------------------------------------------
                                              Functional Dimension
----------------------------------------------------------------------------------------------------------------
46. M1810 or M1820 (Dressing upper or lower body) = 1, 2, or 3..           1  ..........           1
47. M1830 (Bathing) = 2 or more.................................           6           5           5           2
48. M1840 (Toilet transferring) = 2 or more.....................           1           2
49. M1850 (Transferring) = 2 or more............................           3           1           2
50. M1860 (Ambulation) = 1, 2 or 3..............................           7  ..........           4  ..........
51. M1860 (Ambulation) = 4 or more..............................           8           9           6           8
----------------------------------------------------------------------------------------------------------------
Source: CY 2015 Medicare claims data for episodes ending on or before December 31, 2015 (as of June 30, 2016)
  for which we had a linked OASIS assessment. LUPA episodes, outlier episodes, and episodes with SCIC or PEP
  adjustments were excluded. Note(s): Points are additive; however, points may not be given for the same line
  item in the table more than once.

    In updating the four-equation model for CY 2017, using complete 
2015 data as of June 30, 2016 (the last update to the four-equation 
model for CY 2016 used 2014 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 2014 and 2015. The CY 2017 
four-equation model resulted in 119 point-giving variables being used 
in the model (as compared to the 124 point-giving variables for the 
2016 recalibration). Of those 119 variables, the CY 2017 four-equation 
model had 113 variables that were also present in the CY 2016 four-
equation model. Of those 113 variables, the points for 33 variables 
increased in the CY 2017 four-equation model compared to CY 2016 and 
the points for 33 variables decreased in the CY 2017 4-equation model 
compared to CY 2016. There were 47 variables with the same point values 
between CY 2016 and CY 2017. There were 6 variables that were added to 
the model in CY 2017 that weren't in the model in CY 2016. Also, 11 
variables were in the model in CY 2016 but dropped in CY 2017 due to 
the absence of additional resources associated with these variables. In 
other words, these variables are not associated with additional 
resources beyond what is captured by the other case-mix adjustment 
variables in the regression model.
---------------------------------------------------------------------------

    \1\ M1308 `Current Number of Unhealed Pressure Ulcers at Each 
Stage or Unstageable' will be changed to M1311 `Current Number of 
Unhealed Pressure Ulcers at Each Stage' under the new OASIS C2 
format, effective January 1, 2017.
---------------------------------------------------------------------------

    Step 2: Re-define 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 clinical 
score, and a third of episodes are classified as high clinical score. 
The same approach is then done looking at the functional score. It was 
not always possible to evenly divide the episodes within each step into 
thirds due to many episodes being clustered around one particular 
score.\2\ Also, we looked at the average resource use associated with 
each clinical and functional score and used that to guide where we 
placed our thresholds. We tried to group scores with similar average 
resource use within the same level (even if it meant that more or less 
than a third of episodes were placed within a level). The new

[[Page 76709]]

thresholds, based off of the CY 2017 four-equation model points are 
shown in Table 4.
---------------------------------------------------------------------------

    \2\ For Step 1, 49.2 percent of episodes were in the medium 
functional level (All with score 14).
    For Step 2.1, 70.7 percent of episodes were in the low 
functional level (Most with score 5 and 6).
    For Step 2.2, 78.7 percent of episodes were in the medium 
functional level (Most with score 2).
    For Step 3, 51.0 percent of episodes were in the medium 
functional level (Most with score 10).
    For Step 4, 51.2 percent of episodes were in the medium 
functional level (Most with score 5 and 6).

                                                   Table 4--CY 2017 Clinical and Functional Thresholds
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               1st and 2nd episodes                3rd+ episodes           All episodes
                                                                         -------------------------------------------------------------------------------
                                                                              0 to 13        14 to 19         0 to 13        14 to 19       20+ therapy
                                                                          therapy visits  therapy visits  therapy visits  therapy visits      visits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Grouping Step:                                                                         1             2.1               3             2.2               4
Equation(s) used to calculate points: (see Table 3)                                    1               2               3               4           (2&4)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                        Dimension                         Severity Level
-------------------------------------------------------------------------
Clinical................................................              C1          0 to 1          0 to 1          0 to 1          0 to 1          0 to 3
                                                                      C2          2 to 3          2 to 7               2          2 to 9         4 to 16
                                                                      C3              4+              8+              3+             10+             17+
Functional..............................................              F1         0 to 13          0 to 6          0 to 6          0 to 1          0 to 2
                                                                      F2              14         7 to 13         7 to 10          2 to 9          3 to 6
                                                                      F3             15+             14+             11+             10+              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 5 shows the regression coefficients for the variables in the 
payment regression model updated with CY 2015 data. The R-squared value 
for the payment regression model is 0.4929 (an increase from 0.4822 for 
the CY 2016 recalibration).

                    Table 5--Payment Regression Model
------------------------------------------------------------------------
                                                            New payment
                  Variable description                      regression
                                                           coefficients
------------------------------------------------------------------------
Step 1, Clinical Score Medium...........................          $22.81
Step 1, Clinical Score High.............................           53.36
Step 1, Functional Score Medium.........................           70.51
Step 1, Functional Score High...........................          108.77
Step 2.1, Clinical Score Medium.........................           32.34
Step 2.1, Clinical Score High...........................          146.99
Step 2.1, Functional Score Medium.......................           11.24
Step 2.1, Functional Score High.........................           64.89
Step 2.2, Clinical Score Medium.........................           42.88
Step 2.2, Clinical Score High...........................          193.55
Step 2.2, Functional Score Medium.......................            0.00
Step 2.2, Functional Score High.........................           57.18
Step 3, Clinical Score Medium...........................           11.50
Step 3, Clinical Score High.............................           91.93
Step 3, Functional Score Medium.........................           53.82
Step 3, Functional Score High...........................           85.08
Step 4, Clinical Score Medium...........................           76.81
Step 4, Clinical Score High.............................          256.77
Step 4, Functional Score Medium.........................           35.45
Step 4, Functional Score High...........................           81.20
Step 2.1, 1st and 2nd Episodes, 14 to 19 Therapy Visits.          498.79
Step 2.2, 3rd+ Episodes, 14 to 19 Therapy Visits........          506.90
Step 3, 3rd+ Episodes, 0-13 Therapy Visits..............          -72.76
Step 4, All Episodes, 20+ Therapy Visits................          903.44
Intercept...............................................          397.53
------------------------------------------------------------------------
Source: CY 2015 Medicare claims data for episodes ending on or before
  December 31, 2015 (as of June 30, 2016) 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 weights associated with 0 to 5 therapy visits are then 
increased by 3.75 percent, the weights associated with 14-15 therapy 
visits are decreased by 2.5 percent, and the weights associated with 
20+ therapy visits are decreased by 5 percent. These adjustments to the 
case-mix weights were finalized in the CY 2012 HH PPS final rule (76 FR 
68557) and were done to address 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

[[Page 76710]]

6 therapy visits and the increase between 6 therapy visits and 7-9 
therapy visits) are constant. This interpolation is the identical to 
the process finalized in the CY 2012 HH PPS final rule (76 FR 68555).
    Step 7: The interpolated weights are then adjusted so that the 
average case-mix for the weights is equal to 1.0000.\4\ This last step 
creates the CY 2017 case-mix weights shown in Table 6.
---------------------------------------------------------------------------

    \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 6--Final CY 2017 Case-Mix Payment Weights
----------------------------------------------------------------------------------------------------------------
                                                                                                   Final CY 2017
          Payment group            Step (episode and/or therapy   Clinical and functional levels     case-mix
                                           visit ranges)         (1 = low; 2 = medium; 3 = high)      weights
----------------------------------------------------------------------------------------------------------------
10111............................  1st and 2nd Episodes, 0 to 5  C1F1S1                                   0.5857
                                    Therapy Visits.
10112............................  1st and 2nd Episodes, 6       C1F1S2                                   0.7168
                                    Therapy Visits.
10113............................  1st and 2nd Episodes, 7 to 9  C1F1S3                                   0.8479
                                    Therapy Visits.
10114............................  1st and 2nd Episodes, 10      C1F1S4                                   0.9790
                                    Therapy Visits.
10115............................  1st and 2nd Episodes, 11 to   C1F1S5                                   1.1100
                                    13 Therapy Visits.
10121............................  1st and 2nd Episodes, 0 to 5  C1F2S1                                   0.6896
                                    Therapy Visits.
10122............................  1st and 2nd Episodes, 6       C1F2S2                                   0.8030
                                    Therapy Visits.
10123............................  1st and 2nd Episodes, 7 to 9  C1F2S3                                   0.9164
                                    Therapy Visits.
10124............................  1st and 2nd Episodes, 10      C1F2S4                                   1.0298
                                    Therapy Visits.
10125............................  1st and 2nd Episodes, 11 to   C1F2S5                                   1.1433
                                    13 Therapy Visits.
10131............................  1st and 2nd Episodes, 0 to 5  C1F3S1                                   0.7460
                                    Therapy Visits.
10132............................  1st and 2nd Episodes, 6       C1F3S2                                   0.8630
                                    Therapy Visits.
10133............................  1st and 2nd Episodes, 7 to 9  C1F3S3                                   0.9800
                                    Therapy Visits.
10134............................  1st and 2nd Episodes, 10      C1F3S4                                   1.0970
                                    Therapy Visits.
10135............................  1st and 2nd Episodes, 11 to   C1F3S5                                   1.2140
                                    13 Therapy Visits.
10211............................  1st and 2nd Episodes, 0 to 5  C2F1S1                                   0.6193
                                    Therapy Visits.
10212............................  1st and 2nd Episodes, 6       C2F1S2                                   0.7526
                                    Therapy Visits.
10213............................  1st and 2nd Episodes, 7 to 9  C2F1S3                                   0.8860
                                    Therapy Visits.
10214............................  1st and 2nd Episodes, 10      C2F1S4                                   1.0193
                                    Therapy Visits.
10215............................  1st and 2nd Episodes, 11 to   C2F1S5                                   1.1526
                                    13 Therapy Visits.
10221............................  1st and 2nd Episodes, 0 to 5  C2F2S1                                   0.7232
                                    Therapy Visits.
10222............................  1st and 2nd Episodes, 6       C2F2S2                                   0.8389
                                    Therapy Visits.
10223............................  1st and 2nd Episodes, 7 to 9  C2F2S3                                   0.9545
                                    Therapy Visits.
10224............................  1st and 2nd Episodes, 10      C2F2S4                                   1.0702
                                    Therapy Visits.
10225............................  1st and 2nd Episodes, 11 to   C2F2S5                                   1.1858
                                    13 Therapy Visits.
10231............................  1st and 2nd Episodes, 0 to 5  C2F3S1                                   0.7796
                                    Therapy Visits.
10232............................  1st and 2nd Episodes, 6       C2F3S2                                   0.8988
                                    Therapy Visits.
10233............................  1st and 2nd Episodes, 7 to 9  C2F3S3                                   1.0181
                                    Therapy Visits.
10234............................  1st and 2nd Episodes, 10      C2F3S4                                   1.1373
                                    Therapy Visits.
10235............................  1st and 2nd Episodes, 11 to   C2F3S5                                   1.2565
                                    13 Therapy Visits.
10311............................  1st and 2nd Episodes, 0 to 5  C3F1S1                                   0.6643
                                    Therapy Visits.
10312............................  1st and 2nd Episodes, 6       C3F1S2                                   0.8204
                                    Therapy Visits.
10313............................  1st and 2nd Episodes, 7 to 9  C3F1S3                                   0.9765
                                    Therapy Visits.
10314............................  1st and 2nd Episodes, 10      C3F1S4                                   1.1325
                                    Therapy Visits.
10315............................  1st and 2nd Episodes, 11 to   C3F1S5                                   1.2886
                                    13 Therapy Visits.
10321............................  1st and 2nd Episodes, 0 to 5  C3F2S1                                   0.7682
                                    Therapy Visits.
10322............................  1st and 2nd Episodes, 6       C3F2S2                                   0.9066
                                    Therapy Visits.
10323............................  1st and 2nd Episodes, 7 to 9  C3F2S3                                   1.0450
                                    Therapy Visits.
10324............................  1st and 2nd Episodes, 10      C3F2S4                                   1.1834
                                    Therapy Visits.
10325............................  1st and 2nd Episodes, 11 to   C3F2S5                                   1.3218
                                    13 Therapy Visits.
10331............................  1st and 2nd Episodes, 0 to 5  C3F3S1                                   0.8246
                                    Therapy Visits.
10332............................  1st and 2nd Episodes, 6       C3F3S2                                   0.9666
                                    Therapy Visits.
10333............................  1st and 2nd Episodes, 7 to 9  C3F3S3                                   1.1086
                                    Therapy Visits.
10334............................  1st and 2nd Episodes, 10      C3F3S4                                   1.2505
                                    Therapy Visits.
10335............................  1st and 2nd Episodes, 11 to   C3F3S5                                   1.3925
                                    13 Therapy Visits.
21111............................  1st and 2nd Episodes, 14 to   C1F1S1                                   1.2411
                                    15 Therapy Visits.
21112............................  1st and 2nd Episodes, 16 to   C1F1S2                                   1.4125
                                    17 Therapy Visits.
21113............................  1st and 2nd Episodes, 18 to   C1F1S3                                   1.5838
                                    19 Therapy Visits.
21121............................  1st and 2nd Episodes, 14 to   C1F2S1                                   1.2567
                                    15 Therapy Visits.
21122............................  1st and 2nd Episodes, 16 to   C1F2S2                                   1.4388
                                    17 Therapy Visits.
21123............................  1st and 2nd Episodes, 18 to   C1F2S3                                   1.6209
                                    19 Therapy Visits.
21131............................  1st and 2nd Episodes, 14 to   C1F3S1                                   1.3310
                                    15 Therapy Visits.
21132............................  1st and 2nd Episodes, 16 to   C1F3S2                                   1.5089
                                    17 Therapy Visits.
21133............................  1st and 2nd Episodes, 18 to   C1F3S3                                   1.6868
                                    19 Therapy Visits.
21211............................  1st and 2nd Episodes, 14 to   C2F1S1                                   1.2859
                                    15 Therapy Visits.
21212............................  1st and 2nd Episodes, 16 to   C2F1S2                                   1.4769
                                    17 Therapy Visits.
21213............................  1st and 2nd Episodes, 18 to   C2F1S3                                   1.6679
                                    19 Therapy Visits.
21221............................  1st and 2nd Episodes, 14 to   C2F2S1                                   1.3014
                                    15 Therapy Visits.
21222............................  1st and 2nd Episodes, 16 to   C2F2S2                                   1.5032
                                    17 Therapy Visits.

[[Page 76711]]

 
21223............................  1st and 2nd Episodes, 18 to   C2F2S3                                   1.7049
                                    19 Therapy Visits.
21231............................  1st and 2nd Episodes, 14 to   C2F3S1                                   1.3757
                                    15 Therapy Visits.
21232............................  1st and 2nd Episodes, 16 to   C2F3S2                                   1.5733
                                    17 Therapy Visits.
21233............................  1st and 2nd Episodes, 18 to   C2F3S3                                   1.7708
                                    19 Therapy Visits.
21311............................  1st and 2nd Episodes, 14 to   C3F1S1                                   1.4446
                                    15 Therapy Visits.
21312............................  1st and 2nd Episodes, 16 to   C3F1S2                                   1.6636
                                    17 Therapy Visits.
21313............................  1st and 2nd Episodes, 18 to   C3F1S3                                   1.8826
                                    19 Therapy Visits.
21321............................  1st and 2nd Episodes, 14 to   C3F2S1                                   1.4602
                                    15 Therapy Visits.
21322............................  1st and 2nd Episodes, 16 to   C3F2S2                                   1.6899
                                    17 Therapy Visits.
21323............................  1st and 2nd Episodes, 18 to   C3F2S3                                   1.9197
                                    19 Therapy Visits.
21331............................  1st and 2nd Episodes, 14 to   C3F3S1                                   1.5345
                                    15 Therapy Visits.
21332............................  1st and 2nd Episodes, 16 to   C3F3S2                                   1.7601
                                    17 Therapy Visits.
21333............................  1st and 2nd Episodes, 18 to   C3F3S3                                   1.9856
                                    19 Therapy Visits.
22111............................  3rd+ Episodes, 14 to 15       C1F1S1                                   1.2523
                                    Therapy Visits.
22112............................  3rd+ Episodes, 16 to 17       C1F1S2                                   1.4200
                                    Therapy Visits.
22113............................  3rd+ Episodes, 18 to 19       C1F1S3                                   1.5876
                                    Therapy Visits.
22121............................  3rd+ Episodes, 14 to 15       C1F2S1                                   1.2523
                                    Therapy Visits.
22122............................  3rd+ Episodes, 16 to 17       C1F2S2                                   1.4359
                                    Therapy Visits.
22123............................  3rd+ Episodes, 18 to 19       C1F2S3                                   1.6195
                                    Therapy Visits.
22131............................  3rd+ Episodes, 14 to 15       C1F3S1                                   1.3315
                                    Therapy Visits.
22132............................  3rd+ Episodes, 16 to 17       C1F3S2                                   1.5093
                                    Therapy Visits.
22133............................  3rd+ Episodes, 18 to 19       C1F3S3                                   1.6870
                                    Therapy Visits.
22211............................  3rd+ Episodes, 14 to 15       C2F1S1                                   1.3117
                                    Therapy Visits.
22212............................  3rd+ Episodes, 16 to 17       C2F1S2                                   1.4941
                                    Therapy Visits.
22213............................  3rd+ Episodes, 18 to 19       C2F1S3                                   1.6765
                                    Therapy Visits.
22221............................  3rd+ Episodes, 14 to 15       C2F2S1                                   1.3117
                                    Therapy Visits.
22222............................  3rd+ Episodes, 16 to 17       C2F2S2                                   1.5100
                                    Therapy Visits.
22223............................  3rd+ Episodes, 18 to 19       C2F2S3                                   1.7083
                                    Therapy Visits.
22231............................  3rd+ Episodes, 14 to 15       C2F3S1                                   1.3909
                                    Therapy Visits.
22232............................  3rd+ Episodes, 16 to 17       C2F3S2                                   1.5834
                                    Therapy Visits.
22233............................  3rd+ Episodes, 18 to 19       C2F3S3                                   1.7759
                                    Therapy Visits.
22311............................  3rd+ Episodes, 14 to 15       C3F1S1                                   1.5203
                                    Therapy Visits.
22312............................  3rd+ Episodes, 16 to 17       C3F1S2                                   1.7141
                                    Therapy Visits.
22313............................  3rd+ Episodes, 18 to 19       C3F1S3                                   1.9079
                                    Therapy Visits.
22321............................  3rd+ Episodes, 14 to 15       C3F2S1                                   1.5203
                                    Therapy Visits.
22322............................  3rd+ Episodes, 16 to 17       C3F2S2                                   1.7300
                                    Therapy Visits.
22323............................  3rd+ Episodes, 18 to 19       C3F2S3                                   1.9398
                                    Therapy Visits.
22331............................  3rd+ Episodes, 14 to 15       C3F3S1                                   1.5995
                                    Therapy Visits.
22332............................  3rd+ Episodes, 16 to 17       C3F3S2                                   1.8034
                                    Therapy Visits.
22333............................  3rd+ Episodes, 18 to 19       C3F3S3                                   2.0073
                                    Therapy Visits.
30111............................  3rd+ Episodes, 0 to 5         C1F1S1                                   0.4785
                                    Therapy Visits.
30112............................  3rd+ Episodes, 6 Therapy      C1F1S2                                   0.6333
                                    Visits.
30113............................  3rd+ Episodes, 7 to 9         C1F1S3                                   0.7880
                                    Therapy Visits.
30114............................  3rd+ Episodes, 10 Therapy     C1F1S4                                   0.9428
                                    Visits.
30115............................  3rd+ Episodes, 11 to 13       C1F1S5                                   1.0976
                                    Therapy Visits.
30121............................  3rd+ Episodes, 0 to 5         C1F2S1                                   0.5578
                                    Therapy Visits.
30122............................  3rd+ Episodes, 6 Therapy      C1F2S2                                   0.6967
                                    Visits.
30123............................  3rd+ Episodes, 7 to 9         C1F2S3                                   0.8356
                                    Therapy Visits.
30124............................  3rd+ Episodes, 10 Therapy     C1F2S4                                   0.9745
                                    Visits.
30125............................  3rd+ Episodes, 11 to 13       C1F2S5                                   1.1134
                                    Therapy Visits.
30131............................  3rd+ Episodes, 0 to 5         C1F3S1                                   0.6039
                                    Therapy Visits.
30132............................  3rd+ Episodes, 6 Therapy      C1F3S2                                   0.7494
                                    Visits.
30133............................  3rd+ Episodes, 7 to 9         C1F3S3                                   0.8949
                                    Therapy Visits.
30134............................  3rd+ Episodes, 10 Therapy     C1F3S4                                   1.0405
                                    Visits.
30135............................  3rd+ Episodes, 11 to 13       C1F3S5                                   1.1860
                                    Therapy Visits.
30211............................  3rd+ Episodes, 0 to 5         C2F1S1                                   0.4955
                                    Therapy Visits.
30212............................  3rd+ Episodes, 6 Therapy      C2F1S2                                   0.6587
                                    Visits.
30213............................  3rd+ Episodes, 7 to 9         C2F1S3                                   0.8220
                                    Therapy Visits.
30214............................  3rd+ Episodes, 10 Therapy     C2F1S4                                   0.9852
                                    Visits.
30215............................  3rd+ Episodes, 11 to 13       C2F1S5                                   1.1485
                                    Therapy Visits.
30221............................  3rd+ Episodes, 0 to 5         C2F2S1                                   0.5748
                                    Therapy Visits.
30222............................  3rd+ Episodes, 6 Therapy      C2F2S2                                   0.7222
                                    Visits.
30223............................  3rd+ Episodes, 7 to 9         C2F2S3                                   0.8695
                                    Therapy Visits.
30224............................  3rd+ Episodes, 10 Therapy     C2F2S4                                   1.0169
                                    Visits.
30225............................  3rd+ Episodes, 11 to 13       C2F2S5                                   1.1643
                                    Therapy Visits.
30231............................  3rd+ Episodes, 0 to 5         C2F3S1                                   0.6208
                                    Therapy Visits.
30232............................  3rd+ Episodes, 6 Therapy      C2F3S2                                   0.7748
                                    Visits.
30233............................  3rd+ Episodes, 7 to 9         C2F3S3                                   0.9288
                                    Therapy Visits.

[[Page 76712]]

 
30234............................  3rd+ Episodes, 10 Therapy     C2F3S4                                   1.0829
                                    Visits.
30235............................  3rd+ Episodes, 11 to 13       C2F3S5                                   1.2369
                                    Therapy Visits.
30311............................  3rd+ Episodes, 0 to 5         C3F1S1                                   0.6140
                                    Therapy Visits.
30312............................  3rd+ Episodes, 6 Therapy      C3F1S2                                   0.7953
                                    Visits.
30313............................  3rd+ Episodes, 7 to 9         C3F1S3                                   0.9765
                                    Therapy Visits.
30314............................  3rd+ Episodes, 10 Therapy     C3F1S4                                   1.1578
                                    Visits.
30315............................  3rd+ Episodes, 11 to 13       C3F1S5                                   1.3391
                                    Therapy Visits.
30321............................  3rd+ Episodes, 0 to 5         C3F2S1                                   0.6933
                                    Therapy Visits.
30322............................  3rd+ Episodes, 6 Therapy      C3F2S2                                   0.8587
                                    Visits.
30323............................  3rd+ Episodes, 7 to 9         C3F2S3                                   1.0241
                                    Therapy Visits.
30324............................  3rd+ Episodes, 10 Therapy     C3F2S4                                   1.1895
                                    Visits.
30325............................  3rd+ Episodes, 11 to 13       C3F2S5                                   1.3549
                                    Therapy Visits.
30331............................  3rd+ Episodes, 0 to 5         C3F3S1                                   0.7393
                                    Therapy Visits.
30332............................  3rd+ Episodes, 6 Therapy      C3F3S2                                   0.9114
                                    Visits.
30333............................  3rd+ Episodes, 7 to 9         C3F3S3                                   1.0834
                                    Therapy Visits.
30334............................  3rd+ Episodes, 10 Therapy     C3F3S4                                   1.2554
                                    Visits.
30335............................  3rd+ Episodes, 11 to 13       C3F3S5                                   1.4275
                                    Therapy Visits.
40111............................  All Episodes, 20+ Therapy     C1F1S1                                   1.7552
                                    Visits.
40121............................  All Episodes, 20+ Therapy     C1F2S1                                   1.8030
                                    Visits.
40131............................  All Episodes, 20+ Therapy     C1F3S1                                   1.8648
                                    Visits.
40211............................  All Episodes, 20+ Therapy     C2F1S1                                   1.8588
                                    Visits.
40221............................  All Episodes, 20+ Therapy     C2F2S1                                   1.9067
                                    Visits.
40231............................  All Episodes, 20+ Therapy     C2F3S1                                   1.9684
                                    Visits.
40311............................  All Episodes, 20+ Therapy     C3F1S1                                   2.1016
                                    Visits.
40321............................  All Episodes, 20+ Therapy     C3F2S1                                   2.1495
                                    Visits.
40331............................  All Episodes, 20+ Therapy     C3F3S1                                   2.2112
                                    Visits.
----------------------------------------------------------------------------------------------------------------

    To ensure the changes to the HH PPS case-mix weights are 
implemented in a budget neutral manner, we apply a case-mix budget 
neutrality factor to the CY 2017 national, standardized 60-day episode 
payment rate (see section III.C.3. of this final rule). The case-mix 
budget neutrality factor is calculated as the ratio of total payments 
when the CY 2017 HH PPS grouper and case-mix weights (developed using 
CY 2015 claims data) are applied to CY 2015 utilization (claims) data 
to total payments when the CY 2016 HH PPS grouper and case-mix weights 
(developed using CY 2014 claims data) are applied to CY 2015 
utilization data. Using CY 2015 claims data as of June 30, 2016, we 
calculated the case-mix budget neutrality factor for CY 2017 to be 
1.0214.
    The following is a summary of the comments and our responses to 
comments on the CY 2017 case-mix weights.
    Comment: One commenter implied that the recalibration should be 
based on trends or standards for the type of care Medicare and 
providers collectively agree are appropriate for Medicare 
beneficiaries, rather than a single year of data, and that CMS should 
recognize innovations in the home health industry. Another commenter 
stated that current home health resource use does not accurately 
reflect what the resource use should be and Medicare law provides. The 
commenter stated that under this payment structure, patients with 
clinically complex and long-term chronic conditions are often either 
unable to gain access to legally covered care, or they are provided 
with limited care relative to what their plan of care orders or their 
OASIS indicates they should receive. One commenter stated that CMS' 
2015 decision, to decrease case-mix weights for the third and later 
episodes of care with 0 to 19 therapy visits due to the CY 2015 
recalibration of the case-mix weights (81 FR 43722), is contrary to 
Medicare coverage law and that a decrease in case-mix weights for later 
episodes creates broad-based, practical access problems to HHAs for 
those who qualify for Medicare home health benefit. One commenter 
suggested that the case-mix weight recalibration can be easily 
manipulated to cause industry reimbursement to be much less than 
projected and/or necessary. The commenter stated that CMS eliminated 
scoring variables from the case-mix system one year, but then added the 
variables back into the system the subsequent year. The commenter 
stated that CMS may not be able to identify what patient 
characteristics may require additional resources and stated that a 
committee comprised of CMS and industry representatives should be 
established to oversee the annual changes to the home health case-mix 
weights.
    Response: We note that we did not change the recalibration 
methodology from previous years. In CY 2015, we proposed and finalized 
annual recalibration and the methodology to be used for each 
recalibration. The recalibration determines the points associated with 
the case-mix variables and the weights associated with the HHRGs based 
on resource use (estimated using the Bureau of Labor Statistics 
national hourly wage plus fringe rates for the six home health 
disciplines and the visit length (reported in 15-minute units) from the 
home health claim). The points in the model are taken directly from a 
regression of resource use and reflect the most current, complete 
utilization data available. Any decreases in the points associated with 
the case-mix variables or decreases in the case-mix weights reflect 
fewer resources being furnished in those episodes than what was 
previously furnished. We update the recalibration weights every year to 
reflect current utilization data. Variables falling out or coming back 
into the case-mix system are a direct reflection of the

[[Page 76713]]

changes in the services being furnished and reported.
    As noted in section III.F. of this final rule, we have conducted 
research and analyses to potentially revise the HH PPS case-mix 
methodology. We plan to release a more detailed Technical Report in the 
future on our research and analyses.
    Comment: One commenter expressed concern with the use of 15-minute 
unit data at uniform levels as proxies for cost in the case-mix weight 
recalibration. The commenter stated that there are certain fixed costs 
that do not vary by visit length, including, but not limited to, 
transportation and administrative costs, and that using a 15 minute 
time increment as a cost proxy is inaccurate unless it is weighted in 
relation to the fixed costs incurred regardless of visit length. The 
commenter stated that using a single weighted 15 minute time unit in 
the case-mix recalibration results in HHRGs with shorter than average 
visits having a lower case-mix weight than what is appropriate and 
HHRGs with longer than average visits having a higher case-mix weight 
than what is appropriate. The commenter stated that CMS should withdraw 
the case mix weight recalibration proposal and that any future 
recalibration based on time units should proceed only if CMS can fairly 
weight the units to account for costs that are incurred without regard 
to visit length.
    Response: We have used wage weighted 15-minute units as our measure 
of resource use since the inception of the HH PPS. We did not propose 
any changes to the methodology or method of estimating resource use in 
the proposed rule. Weighting the first 15-minute unit to account for 
fixed costs is not appropriate as payment for the fixed costs of an 
episode, such as transportation, are already accounted for under the 
national, standardized 60-day episode payment rate. We will continue to 
conduct ongoing data analysis to monitor resource use patterns.
    Comment: Commenters urged CMS to reconsider the proposed CY 2017 HH 
PPS case-mix weight adjustments. Commenters stated that the reduced 
scoring in the clinical and functional dimensions will significantly 
adversely impact the ability of HHAs to care for certain types of 
patients and listed the types of patients affected. Commenters stated 
that the new case-mix weight scoring has removed key conditions from 
the case mix index: Diabetes as a co-morbid diagnosis, heart disease 
diagnosis, neurological diagnoses, including their associated 
functional deficit combination, blood disorder diagnoses, dyspnea as a 
symptom for which points are attributed, diagnosis combinations, such 
as the combination of neurological and orthopedic diagnoses with their 
functional deficits, and reduced points for skin, wound, and ulcer 
diagnoses. One commenter stated that CMS should ensure access to care 
for people with these conditions, support high-quality HHAs that care 
for these populations, and motivate transfer partners, such as 
hospitals, to seek out HHAs that can care for these populations. The 
commenter stated that the case-mix weights also reduce payment for 
clinical and functional domain needs and that their member HHAs which 
serve patients with complex conditions and high functional needs are 
disproportionately affected by the changes. Commenters urged CMS to 
restore justified scoring and weights to ensure that care for patients 
with these chronic conditions are properly reimbursed.
    Another commenter stated that the findings of the home health study 
required by section 3131(d) of the Affordable Care Act on access to 
care for vulnerable beneficiaries should be incorporated into the case-
mix weights for CY 2017 and that if the current 4-equation case mix 
model cannot be adapted to account for these beneficiary 
characteristics, CMS should expedite replacing the current model with 
one that can more accurately account for variations in patient 
characteristics and needs.
    A commenter stated that these new weights shift payments to HHAs in 
unpredictable ways related to each individual agency's distribution of 
patients and expressed concerns that the proposed case-mix weights may 
cause significant variation in payment depending on an individual HHA's 
typical case mix. The commenter stated that CMS should produce 
significantly more detailed impact analyses to assure that the agency 
specific impacts of these ongoing adjustments to individual case mix 
weights are not creating unfair impacts on individual agencies that are 
lost in the aggregate impact analyses. The commenter expressed concerns 
that the current impact analysis is too broad and masking potential 
impact issues.
    Response: Any changes in the case-mix weights reflect changes in 
utilization from 2014 (data used for the CY 2016 recalibration) to 2015 
(data used for the CY 2017 recalibration). The points table and weights 
described in the proposed rule are based off of CY 2015 data as of 
December 31, 2015 and there are changes in the points and weights when 
using complete 2015 data as of June 30, 2016. Using complete 2015 data, 
there are 119 variables in the four-equation model versus 110 variables 
in the CY 2017 proposed rule. In addition, there were fewer variables 
dropped from the model and more variables with no change in the points 
when using complete CY 2015 data as of June 30, 2016 than when using 
2015 data as of December 31, 2015. A number of the diagnoses that the 
commenters mentioned now have points associated with the case-mix 
variables when using complete 2015 data as of June 30, 2016, such as 
diabetes as a co-morbid diagnosis, heart disease diagnosis, and blood 
disorder diagnoses. In addition, there were increases in the points for 
some of the diagnoses mentioned such as ``Other Diagnosis = Skin 1--
Traumatic wounds, burns, post-operative complications.'' We encourage 
commenters to review the updated table of points (Table 3). We note 
that in 2015, we started the annual recalibration of the case-mix 
weights. In addition, on October 1, 2015, ICD-10 was implemented. 
Changes in the point values and case-mix weights may reflect changes 
due to the transition to ICD-10 as well as changes in the provision of 
services as a result of the CY 2015 recalibration.
    There are five case-mix variables which have had a drop of 4 points 
from the CY 2016 recalibration (which is based on CY 2014 data) to the 
CY 2017 recalibration (which is based on CY 2015 data). The total 
number of visits for episodes with these characteristics decreased from 
CY 2014 to CY 2015, with decreases ranging from 0.4 to 2.1 visits per 
episode. Since there are fewer services being provided in CY 2015 than 
in CY 2014, points associated with these case-mix variables have 
decreased. It is important to note that we did not propose any changes 
to the recalibration methodology and we report impact analyses the same 
way we have done every year, with expenditure effects of policy changes 
by HHA facility type and area of the country.
    In the CY 2017 HH PPS proposed rule, we described our follow-on 
work to the home health study, providing further information on our 
research and analyses conducted to potentially revise the HH PPS case-
mix methodology to address the home health study findings outlined in 
the Report to Congress (81 FR 43744 through 43746). In the proposed 
rule, we stated that we planned to release a more detailed Technical 
Report in the future on this additional research and analysis conducted 
on the Home Health Groupings Model (HHGM), an alternative to the 
current case-mix system. This report will address

[[Page 76714]]

vulnerable beneficiaries as identified in the home health study, which 
include those beneficiaries that have more complex care needs. As noted 
in section III.F. of this final rule, once the Technical Report is 
released, we will post a link on our Home Health Agency (HHA) Center 
Web site at https://www.cms.gov/center/provider-Type/home-Health-
Agency-HHA-Center.html to receive comments and feedback on the model. 
While we are not incorporating findings of the section 3131(d) home 
health study on access to care for vulnerable beneficiaries in the 
case-mix system for CY 2017, we encourage commenters to provide 
feedback on our alternate model that may be considered in future 
rulemaking.
    Comment: One commenter stated that CMS has not provided sufficient 
transparency of the details and methods used to recalibrate the HH PPS 
case-mix weights in its discussion of the proposed rule and that CMS 
provides little justification for recalibrating the case-mix weights 
just one year following the recalibration of case-mix weights in CY 
2016 and only four years since the recalibration for the CY 2012 Final 
Rule. The commenter stated that the proposed recalibration is 
significant in that their analysis indicates a greater reduction in 
case weights than the 0.62 percent proposed by CMS as the budget 
neutrality adjustment. Another commenter requested that CMS describe in 
detail how the wage index and case-mix weights budget neutrality 
factors are calculated.
    Response: We proposed and finalized annual recalibration to the 
weights in CY 2015 in order to ensure that the case-mix system reflects 
current utilization patterns. We use the most current, complete data 
available at the time of rulemaking. We note that the budget neutrality 
factor in the proposed rule was based on 2015 claims data as of 
December 31, 2015. Updating the budget neutrality factor with complete 
2015 claims data as of June 30, 2016, data indicated that a budget 
neutrality factor of 1.0214 is needed. We encourage commenters to 
review the methodology described in the CY 2015 rule (79 FR 66066) on 
how the budget neutrality factor is calculated. The method of 
calculating a budget neutrality factor is similar to the method used in 
other payment systems.
    Final Decision: We are finalizing the recalibrated scores for the 
case-mix adjustment variables, clinical and functional thresholds, 
payment regression model, and case-mix weights in Tables 3 through 6. 
For the final rule, the CY 2017 scores for the case-mix variables, the 
clinical and functional thresholds, and the case-mix weights were 
developed using complete CY 2015 claims data as of June 30, 2016. We 
note that we finalized the recalibration methodology and the proposal 
to annually recalibrate the HH PPS case-mix weights in the CY 2015 HH 
PPS final rule (79 FR 66072). No additional proposals were made with 
regard to the recalibration methodology in the CY 2017 HH PPS proposed 
rule.

C. CY 2017 Home Health Payment Rate Update

1. 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. 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). The HH market basket percentage 
increase for CY 2017 is based on IHS Global Insight Inc.'s (IGI) third 
quarter 2016 forecast with historical data through the second quarter 
of 2016. The HH market basket percentage increase for CY 2017 is 2.8 
percent.
    Section 3401(e) of the Affordable Care Act, adding new section 
1895(b)(3)(B)(vi) to the Act, requires that the market basket 
percentage under the HH PPS (as described in section 1895(b)(3)(B) of 
the Act) be annually adjusted by changes in economy-wide productivity 
for CY 2015 and each subsequent calendar year. 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. The MFP adjustment for CY 2017 (the 
projection of the 10-year moving average of MFP for the period ending 
CY 2017) is 0.3 percent. Therefore, the CY 2017 HH market basket 
percentage of 2.8 percent will be reduced by the MFP adjustment of 0.3 
percent. The resulting HH payment update percentage is equal to 2.5 
percent, or 2.8 percent less 0.3 percentage point.
    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 0.5 percent (2.5 percent minus 2 percentage points).
2. 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 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).
    We will continue to use the same methodology discussed in the CY 
2007 HH PPS final rule (71 FR 65884) to address those geographic areas 
in which there are no inpatient hospitals, and thus, no hospital wage 
data on which to base the calculation of the CY 2017 HH PPS wage index. 
For rural areas that do not have inpatient hospitals, we will 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).
b. Updates
    Previously, we determined each HHA's labor market area based on

[[Page 76715]]

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.''
    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 CY 2016 HH PPS wage index was fully based 
on the revised OMB delineations adopted in 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.
    The 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. 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 Sec.  484.220, we adjust the 
national, standardized 60-day episode payment rate by a case-mix 
relative weight (as described in section III.B of this final rule) and 
a wage index value based on the site of service for the beneficiary.
    To account for area wage differences, we apply the appropriate wage 
index value to the labor portion of the HH PPS payment rates. The 
labor-related share of the HH PPS payment rates continues to be 78.535 
percent and the non-labor-related continues to be 21.465 percent, as 
set out in the CY 2013 HH PPS final rule (77 FR 67068). The following 
steps are taken to compute the case-mix and wage-adjusted national, 
standardized 60-day episode payment amount:
    (1) Multiply the national, standardized 60-day episode rate by the 
episode'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, standardized 60-day episode rate is 
equal to the rate for the previous calendar year increased by the 
applicable HH market basket index amount minus 2 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 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 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 adjust the 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. Sec.  484.205(c) and 484.230.
     A partial episode payment (PEP) adjustment as set forth in 
Sec. Sec.  484.205(d) and 484.235.
     An outlier payment as set forth in Sec. Sec.  484.205(e) 
and 484.240.
b. 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 will 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 HH 
payment update percentage discussed in section III.C.1 of this final 
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 0.9996. Therefore, we 
will apply the wage index budget neutrality factor of 0.9996 in our 
calculation of the CY 2017 national, standardized 60-day episode rate.
    As discussed in section III.B of the final rule, to ensure the 
changes to the case-mix weights are implemented in a budget neutral 
manner, we will apply a case-mix weight budget neutrality factor in our 
calculation of the CY 2017

[[Page 76716]]

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 applied for CY 2017 will be 1.0214 as described in section III.B 
of this final rule.
    Next, as discussed in the CY 2016 HH PPS final rule (80 FR 68646), 
we will 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 will 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 will update the 
payment rates by the CY 2017 HH payment update percentage of 2.5 
percent as described in section III.C.1 of this final rule. The CY 2017 
national, standardized 60-day episode payment rate is calculated in 
Table 7.

                                          Table 7--CY 2017 National, Standardized 60-Day Episode Payment Amount
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                             CY 2017
                                                       Wage index        Case-mix      Nominal case-       CY 2017                          national,
   CY 2016 national, standardized 60-day episode         budget      weights  budget     mix growth        rebasing        CY 2017 HH    standardized 60-
                      payment                          neutrality       neutrality     adjustment (1-     adjustment     payment update    day  episode
                                                         factor           factor          0.0097)                                            payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
$2,965.12.........................................        x 0.9996         x 1.0214         x 0.9903          -$80.95          x 1.025        $2,989.97
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The CY 2017 national, standardized 60-day episode payment rate for 
an HHA that does not submit the required quality data is updated by the 
CY 2017 HH payment update (2.5 percent) minus 2 percentage points and 
is shown in Table 8.

                   Table 8--CY 2017 National, Standardized 60-Day Episode Payment Amount for HHAs That DO NOT Submit the Quality Data
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                           CY 2017 HH        CY 2017
                                                       Wage index        Case-mix      Nominal case-       CY 2017       payment update     national,
   CY 2016 national, standardized 60-day episode         budget      weights  budget     mix growth        rebasing         minus 2      standardized 60-
                      payment                          neutrality       neutrality    adjustment  (1-     adjustment       percentage      day  episode
                                                         factor           factor          0.0097)                            points          payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
$2,965.12.........................................        x 0.9996         x 1.0214         x 0.9903          -$80.95          x 1.005        $2,931.63
--------------------------------------------------------------------------------------------------------------------------------------------------------

c. 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 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 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 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 1.0000. We will apply the wage index budget neutrality factor of 
1.0000 in calculating the CY 2017 national per-visit rates.
    The LUPA per-visit rates are not adjusted by the case-mix relative 
weights. Therefore, there is no case-mix weight budget neutrality 
factor needed to ensure budget neutrality for LUPA payments. We then 
apply the rebasing adjustments finalized in the CY 2014 HH PPS final 
rule (78 FR 72280) to the per-visit rates for each discipline. Finally, 
the per-visit rates for each discipline are updated by the CY 2017 HH 
payment update percentage of 2.5 percent. The national per-visit rates 
are adjusted by the wage index based on the site of service of the 
beneficiary. The per-visit payments for LUPAs are separate from the 
LUPA add-on payment amount, which is paid for episodes that occur as 
the only episode or initial episode in a sequence of adjacent episodes. 
The CY 2017 national per-visit rates are shown in Tables 9 and 10.

      Table 9--CY 2017 National Per-Visit Payment Amounts for HHAs That DO Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                  Wage index
                                CY 2016 per-        budget          CY 2017         CY 2017 HH     CY 2017  per-
      HH discipline type        visit payment     neutrality        rebasing     payment  update  visit  payment
                                                    factor         adjustment
----------------------------------------------------------------------------------------------------------------
Home Health Aide.............          $60.87  x 1.0000.......  + $1.79........  x 1.025........          $64.23
Medical Social Services......          215.47  x 1.0000.......  + 6.34.........  x 1.025........          227.36

[[Page 76717]]

 
Occupational Therapy.........          147.95  x 1.0000.......  + 4.35.........  x 1.025........          156.11
Physical Therapy.............          146.95  x 1.0000.......  + 4.32.........  x 1.025........          155.05
Skilled Nursing..............          134.42  x 1.0000.......  + 3.96.........  x 1.025........          141.84
Speech-Language Pathology....          159.71  x 1.0000.......  + 4.70.........  x 1.025........          168.52
----------------------------------------------------------------------------------------------------------------

    The CY 2017 per-visit payment rates for an HHA that does not submit 
the required quality data are updated by the CY 2017 HH payment update 
percentage (2.5 percent) minus 2 percentage points and are shown in 
Table 10.

   Table 10--CY 2017 National Per-Visit Payment Amounts for HHAs That DO NOT Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                                    CY 2017 HH
                                                  Wage index        CY 2017       payment update
      HH Discipline type        CY 2016  per-       budget          rebasing         minus 2       CY 2017  per-
                                visit  rates      neutrality       adjustment       percentage     visit  rates
                                                    factor                            points
----------------------------------------------------------------------------------------------------------------
Home Health Aide.............          $60.87  x 1.0000.......  + $1.79........  x 1.005........          $62.97
Medical Social Services......          215.47  x 1.0000.......  + 6.34.........  x 1.005........          222.92
Occupational Therapy.........          147.95  x 1.0000.......  + 4.35.........  x 1.005........          153.06
Physical Therapy.............          146.95  x 1.0000.......  + 4.32.........  x 1.005........          152.03
Skilled Nursing..............          134.42  x 1.0000.......  + 3.96.........  x 1.005........          139.07
Speech-Language Pathology....          159.71  x 1.0000.......  + 4.70.........  x 1.005........          165.23
----------------------------------------------------------------------------------------------------------------

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 $261.71 
(1.8451 multiplied by $141.84), subject to area wage adjustment.
e. 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 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 CY 2017 HH payment 
update percentage (2.5 percent). We do not apply a standardization 
factor as the NRS payment amount calculated from the conversion factor 
is not wage or case-mix adjusted when the final claim payment amount is 
computed. The NRS conversion factor for CY 2017 is shown in Table 11.

            Table 11--CY 2017 NRS Conversion Factor for HHAs That DO Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                   CY 2017                         CY 2017 NRS
                CY 2016 NRS conversion factor                      rebasing        CY 2017 HH       conversion
                                                                  adjustment     payment update       factor
----------------------------------------------------------------------------------------------------------------
$52.71.......................................................        x 0.9718          x 1.025           $52.50
----------------------------------------------------------------------------------------------------------------

    Using the CY 2016 NRS conversion factor, the payment amounts for 
the six severity levels are shown in Table 12.

             Table 12--CY 2017 NRS Payment Amounts for HHAs That DO Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                                                    CY 2017 NRS
               Severity level                          Points (scoring)              Relative         payment
                                                                                      weight          amounts
----------------------------------------------------------------------------------------------------------------
1...........................................  0.................................          0.2698          $14.16

[[Page 76718]]

 
2...........................................  1 to 14...........................          0.9742           51.15
3...........................................  15 to 27..........................          2.6712          140.24
4...........................................  28 to 48..........................          3.9686          208.35
5...........................................  49 to 98..........................          6.1198          321.29
6...........................................  99+...............................         10.5254          552.58
----------------------------------------------------------------------------------------------------------------

    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 the proposed 
rule (1-0.0282 = 0.9718). We then update the NRS conversion factor by 
the CY 2017 HH payment update percentage (2.5 percent) minus 2 
percentage points. The CY 2017 NRS conversion factor for HHAs that do 
not submit quality data is shown in Table 13.

          Table 13--CY 2017 NRS Conversion Factor for HHAs That DO NOT Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                                   CY 2017 HH
                                                                                payment  update
                                                                   CY 2017         percentage      CY 2017 NRS
                CY 2016 NRS conversion factor                      rebasing         minus 2         conversion
                                                                  adjustment       percentage         factor
                                                                                     points
----------------------------------------------------------------------------------------------------------------
$52.71.......................................................        x 0.9718          x 1.005           $51.48
----------------------------------------------------------------------------------------------------------------

    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 14.

           Table 14--CY 2017 NRS Payment Amounts for HHAs That DO NOT Submit the Required Quality Data
----------------------------------------------------------------------------------------------------------------
                                                                                                    CY 2017 NRS
               Severity level                          Points  (scoring)             Relative         payment
                                                                                      weight          amounts
----------------------------------------------------------------------------------------------------------------
1...........................................  0.................................          0.2698          $13.89
2...........................................  1 to 14...........................          0.9742           50.15
3...........................................  15 to 27..........................          2.6712          137.51
4...........................................  28 to 48..........................          3.9686          204.30
5...........................................  49 to 98..........................          6.1198          315.05
6...........................................  99+...............................         10.5254          541.85
----------------------------------------------------------------------------------------------------------------

f. Rural Add-On
    Section 421(a) of the MMA, as amended by section 210 of the 
Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), requires 
that the Secretary increase by 3 percent the payment amount otherwise 
made under section 1895 of the Act, for HH services furnished in rural 
areas (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, 
2018. Section 421 of the MMA 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 will be increased by 3 percent as mandated by section 
421(a) of the MMA, as amended. 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 15 through 18 for these payment 
rates.

[[Page 76719]]



                               Table 15--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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       CY 2017 Rural       CY 2017                        CY 2017 Rural
                                                                     Multiply by the     national,        National,     Multiply by the     national,
    CY 2017 National, standardized 60-day  episode payment rate      3 percent rural  standardized 60- standardized 60- 3 percent rural  standardized 60-
                                                                          add-on        day  episode     day  episode        add-on        day  episode
                                                                                        payment rate     payment rate                      payment rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
$2,989.97..........................................................          x 1.03        $3,079.67        $2,931.63           x 1.03        $3,019.58
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                        Table 16--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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Multiply by the   CY 2017 rural                  Multiply by the   CY 2017 rural
                  HH discipline type                     CY 2017 per-   3 percent rural     per-visit     CY 2017 per-   3 percent rural     per-visit
                                                          visit rate         add-on           rates        visit rate         add-on           rates
--------------------------------------------------------------------------------------------------------------------------------------------------------
HH Aide...............................................          $64.23          x 1.03           $66.16          $62.97          x 1.03           $64.86
MSS...................................................          227.36          x 1.03           234.18          222.92          x 1.03           229.61
OT....................................................          156.11          x 1.03           160.79          153.06          x 1.03           157.65
PT....................................................          155.05          x 1.03           159.70          152.03          x 1.03           156.59
SN....................................................          141.84          x 1.03           146.10          139.07          x 1.03           143.24
SLP...................................................          168.52          x 1.03           173.58          165.23          x 1.03           170.19
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                     Table 17--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 the   CY 2017 rural       CY 2017      Multiply by the   CY 2017 rural
                     CY 2017 conversion factor                       3 percent rural  NRS  conversion     conversion    3 percent rural  NRS  conversion
                                                                          add-on           factor           factor           add-on           factor
--------------------------------------------------------------------------------------------------------------------------------------------------------
$52.50.............................................................          x 1.03           $54.08           $51.48           x 1.03           $53.02
--------------------------------------------------------------------------------------------------------------------------------------------------------


                   Table 18--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
                                                 ---------------------------------------------------------------
         Severity level               Points                        CY 2017 NRS                     CY 2017 NRS
                                     (scoring)       Relative         payment        Relative         payment
                                                      weight        amounts for       weight        amounts for
                                                                    rural areas                     rural areas
----------------------------------------------------------------------------------------------------------------
1...............................               0          0.2698           14.59          0.2698          $14.30
2...............................         1 to 14          0.9742           52.68          0.9742           51.65
3...............................        15 to 27          2.6712          144.46          2.6712          141.63
4...............................        28 to 48          3.9686          214.62          3.9686          210.42
5...............................        49 to 98          6.1198          330.96          6.1198          324.47
6...............................             99+         10.5254          569.21         10.5254          558.06
----------------------------------------------------------------------------------------------------------------

    The following is a summary of the comments we received regarding 
the CY 2017 home health rate update.
Home Health Wage Index
    Comment: Several commenters believe that the pre-floor, pre-
reclassified hospital wage index is inadequate for adjusting HH costs. 
The commenters believe that the statute does give CMS the authority to 
allow HHAs the same reclassification opportunity provided to hospitals 
and correct some of these inequities. One commenter expressed concern 
about how the home health wage index is calculated and implemented 
compared to hospitals within the same CBSA. The commenter believes that 
the geographic reclassification and rural floor provisions, which are 
available to hospitals, create inequity for HHAs because CMS does not 
apply those provisions to the HH wage index. The commenter states that 
this inequity makes it difficult for HHAs to compete with hospitals in 
recruiting and retaining nurses and therapists. A few commenters 
requested that if the rural floor and reclassification provisions that 
apply to the hospital wage index cannot be applied to the HH wage 
index, then CMS should develop a HH wage index that is based on home 
healthcare industry wages.
    Response: We continue to believe that the regulations and statutes 
that govern the HH PPS do not provide a mechanism for allowing HHAs to 
seek geographic reclassification or to utilize the rural floor 
provisions that exist for IPPS hospitals. Section 4410(a) of the BBA 
provides that the area wage index applicable to any hospital that is 
located in an urban area of a State may not be less than the area wage 
index applicable to hospitals located in rural areas in that state. 
This is the rural floor provision

[[Page 76720]]

and it is specific to hospitals. The re-classification provision at 
section 1886(d)(10)(C)(i) of the Act states that the Board shall 
consider the application of any subsection (d) hospital requesting the 
Secretary change the hospital's geographic classification. This re-
classification provision is only applicable to hospitals as defined in 
section 1886(d) of the Act.
    In addition, we do not believe that using hospital reclassification 
data would be appropriate as these data are specific to the requesting 
hospitals and may or may not apply to a given HHA. With regard to 
implementing a rural floor, we do not believe it would be prudent at 
this time to adopt such a policy. In Chapter 3 of its March 2013 Report 
to Congress on Medicare Payment Policy, MedPAC recommended eliminating 
the rural floor policy from the calculation of the IPPS wage index. On 
page 65 of the report (available at http://medpac.gov/documents/reports/mar13_entirereport.pdf) MedPAC states that in 2007, MedPAC had 
``. . . recommended eliminating these special wage index adjustments 
and adopting a new wage index system to avoid geographic inequities 
that can occur due to current wage index policies.''
    We continue to believe that using the pre-floor, pre-reclassified 
hospital wage index as the wage adjustment to the labor portion of the 
HH PPS rates is appropriate and reasonable.
    Comment: Several commenters recommend that CMS include wage data 
from critical access hospitals (CAHs) in calculating the HH wage index 
in order to make the wage index more reflective of actual local wage 
practices.
    Response: Although the pre-floor, pre-classified hospital wage 
index does not include data from CAHs, we believe that it reflects the 
relative level of wages and wage-related costs applicable to providing 
HH services. As we stated in the August 1, 2003 IPPS final rule (68 FR 
45397), the CAHs represent a substantial number of hospitals with 
significantly different labor costs in many labor market areas where 
they exist. We further noted that, ``. . . in 89 percent of all labor 
market areas with hospitals converted to CAH status sometime after 
2000, the average hourly wage for CAHs is lower than the average hourly 
wage for other short-term hospitals in the area.'' In 79 percent of the 
labor market areas with CAHs the average hourly wage for CAHs is lower 
than the average hourly wage for other short-term hospitals by 5 
percent or greater. These results suggest that the wage data for CAHs, 
in general, are significantly different from other short-term hospitals 
and thus may not adequately represent the relative level of wages and 
wage-related costs applicable to providing HH services.
    Comment: A commenter requested that CMS explore a wholesale 
revision and reform of the HH wage index. Another commenter states that 
in 2015, CMS indicated that the entire wage index system was under 
review and that a move to a commuting-based wage index (CBWI) was being 
considered. The commenter urges CMS to expedite that review and 
implement a system that not only recognizes variations between 
localities, but also treats all provider types within a local market 
equitably.
    Response: Our ``Report to Congress: Plan to Reform the Medicare 
Wage Index'' was submitted by the Secretary on April 11, 2012 and is 
available on our Wage Index Reform Web page at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Reform.html. This report states that implementation of a CBWI may 
require both statutory and regulatory changes. In addition, we believe 
other intermediate steps for implementation, including the collection 
of commuting data, may be necessary.
    Comment: One commenter believes that the unpredictable year-to-year 
swings in wage index values are often based on inaccurate or incomplete 
hospital cost reports. Another commenter requested that CMS describe in 
detail how the wage index is calculated.
    Response: We believe that the hospital cost report data are 
accurate. We utilize efficient means to ensure and review the accuracy 
of the hospital cost report data and resulting wage index. The home 
health wage index is derived from the pre-floor, pre-reclassified wage 
index which is calculated based on cost report data from hospitals paid 
under the IPPS. All IPPS hospitals must complete the wage index survey 
(Worksheet S-3, Parts II and III) as part of their Medicare cost 
reports. Cost reports will be rejected if Worksheet S-3 is not 
completed. In addition, our intermediaries perform desk reviews on all 
hospitals' Worksheet S-3 wage data, and we run edits on the wage data 
to further ensure the accuracy and validity of the wage data. We 
believe that our review processes result in an accurate reflection of 
the applicable wages for the areas given. The processes and procedures 
describing how the inpatient hospital wage index is developed are 
discussed in the IPPS rule each year, with the most recent discussion 
provided in the FY 2017 IPPS final rule (81 FR 56762 through 57345). 
Any provider type may submit comments on the hospital wage index during 
the annual IPPS rulemaking cycle.
    Comment: A commenter believes that the CMS decision 10 years ago to 
switch from Metropolitan Statistical Areas (MSAs) to CBSAs for the wage 
adjustment to the rates has had negative financial ramifications for 
HHAs in New York City. The commenter stated that unlike past MSA 
designations, where all of the counties in the New York City 
designation were from New York State, the 2006 CBSA wage index 
designation added Bergen, Hudson, and Passaic counties from New Jersey 
into the New York City CBSA. The commenter also noted that with the CY 
2015 final rule, CMS added three more New Jersey counties (Middlesex, 
Monmouth, and Ocean) to the CBSA used for New York City.
    Response: The MSA delineations as well as the CBSA delineations are 
determined by the OMB. The OMB reviews its Metropolitan Area 
definitions preceding each decennial census to reflect recent 
population changes. We believe that the OMB's CBSA designations reflect 
the most recent available geographic classifications and are a 
reasonable and appropriate way to define geographic areas for purposes 
of wage index values. Over 10 years ago, in our CY 2006 HH PPS final 
rule (70 FR 68132), we finalized the adoption of the revised labor 
market area definitions as discussed in the OMB Bulletin No. 03-04 
(June 6, 2003). In the December 27, 2000 Federal Register (65 FR 82228 
through 82238), the OMB announced its new standards for defining 
metropolitan and micropolitan statistical areas. According to that 
notice, the OMB defines a CBSA, beginning in 2003, as ``a geographic 
entity associated with at least one core of 10,000 or more population, 
plus adjacent territory that has a high degree of social and economic 
integration with the core as measured by commuting ties.'' The general 
concept of the CBSAs is that of an area containing a recognized 
population nucleus and adjacent communities that have a high degree of 
integration with that nucleus. The purpose of the standards is to 
provide nationally consistent definitions for collecting, tabulating, 
and publishing federal statistics for a set of geographic areas. CBSAs 
include adjacent counties that have a minimum of 25 percent commuting 
to the central counties of the area. This is an increase over the 
minimum commuting threshold for outlying counties applied in the 
previous MSA definition of 15 percent.

[[Page 76721]]

    Based on the OMB's current delineations, as described in the July 
15, 2015 OMB Bulletin 15-01, the New Jersey counties of Bergen, Hudson, 
Middlesex, Monmouth, Ocean, and Passaic belong in the New York-Jersey 
City-White Plains, NY-NJ (CBSA 35614). In addition, other provider 
types, such as IPPS hospital, hospice, skilled nursing facility (SNF), 
inpatient rehabilitation facility (IRF), and the ESRD program, have 
used CBSAs to define their labor market areas for more than a decade.
    Comment: One commenter noted that the wage index for rural Maine 
continues to be the lowest in New England.
    Response: We believe that the wage index values are reflective of 
the labor costs in each geographic area as they reflect the costs 
included on the costs reports of hospitals in those specific labor 
market areas. The wage index values are based on data submitted on the 
inpatient hospital cost reports. We utilize efficient means to ensure 
and review the accuracy of the hospital cost report data and resulting 
wage index. The home health wage index is derived from the pre-floor, 
pre-reclassified wage index which is calculated based on cost report 
data from hospitals paid under the IPPS. All IPPS hospitals must 
complete the wage index survey (Worksheet S-3, Parts II and III) as 
part of their Medicare cost reports. Cost reports will be rejected if 
Worksheet S-3 is not completed. In addition, Medicare contractors 
perform desk reviews on all hospitals' Worksheet S-3 wage data, and we 
run edits on the wage data to further ensure the accuracy and validity 
of the wage data. We believe that our review processes result in an 
accurate reflection of the applicable wages for the areas given. The 
processes and procedures describing how the inpatient hospital wage 
index is developed are discussed in the Inpatient Prospective Payment 
System (IPPS) rule each year, with the most recent discussion provided 
in the FY 2017 IPPS final rule (81 FR 56761 through 57438). Any 
provider type may submit comments on the hospital wage index during the 
annual IPPS rulemaking cycle.
    Comment: Several commenters raised concerns around evolving minimum 
wage standards across the country and recommended that we consider ways 
to compensate certain geographic areas impacted by increasing minimum 
wage standards into the HH PPS wage index.
    Response: In regard to the rising minimum wage standards, we note 
that such increases will likely be reflected in future data used to 
create the hospital wage index to the extent that these changes to 
state minimum wage standards are reflected in increased wages to 
hospital staff.
    Comment: One commenter stated that rural areas are adversely 
impacted by the wage index due to increased travel costs due to time 
and mileage involved in traveling from patient to patient. The 
commenter recommends that CMS institute a population density adjustment 
to the wage index.
    Response: We do not believe that a population density adjustment is 
appropriate at this time. Rural HHAs cite the added cost of traveling 
from one patient to the next patient. However, urban HHAs cite the 
added costs associated with needed security measures and traffic 
congestion. The HH wage index values in rural areas are not necessarily 
lower than the HH wage index values in urban areas. The HH wage index 
reflects the wages that inpatient hospitals pay in their local 
geographic areas. In addition, HHAs already receive rural add-on 
payments for services provided to beneficiaries in rural areas. Section 
421(a) of the MMA, as amended by section 210 of the Medicare Access and 
CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10), provides for 
a payment increase of 3 percent for HH services provided in rural areas 
for episodes or visits ending on or after April 1, 2010, and before 
January 1, 2018.
    Comment: One commenter urges CMS to adjust the 2017 HH wage index 
to limit disparity between provider types within a given CBSA to no 
more than 10 percent.
    Response: With regard to issues mentioned about ensuring that the 
wage index minimizes fluctuations, we note that section 3137(b) of the 
Affordable Care Act required us to submit a report to the Congress by 
December 31, 2011 that included a plan to reform the hospital wage 
index system. This report describes the concept of a Commuting Based 
Wage Index as a potential replacement to the current Medicare wage 
index methodology. While this report addresses the goals of broad based 
Medicare wage index reform, no consensus has been achieved regarding 
how best to implement a replacement system. These concerns will be 
taken into consideration while we continue to explore potential wage 
index reforms. The report that we submitted is available online at 
http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/AcuteInpatientPPS/WageIndex-Reform.html.
Affordable Care Act Rebasing Adjustments
    Comment: MedPAC stated that the rebasing reduction will not 
sufficiently reduce home health payments. MedPAC projected that home 
health agencies will have Medicare margins of 8.8 percent in 2016, and 
the rebasing adjustment will not lower payments in 2017 due to the 
offsetting statutory payment update. MedPAC stated that Medicare has 
overpaid for home health care since the inception of the HH PPS and 
more reductions are necessary to stop this pattern from continuing. 
MedPAC recommended in their March 2016 report that Congress eliminate 
the payment update for CY 2017 and implement a rebasing reduction in 
the following 2 years to bring payments closer to costs. MedPAC stated 
that the decline in utilization since 2010 does not unduly raise 
concerns about beneficiaries' access to home health care and that the 
base payment for 2017 will not fall due to rebasing and should not have 
an impact on access to care. MedPAC recognized that the statute limits 
CMS' ability to reduce payments but reiterated their recommendation 
that further reductions are appropriate and would not negatively affect 
access to care.
    Response: As noted by MedPAC, we are constrained to comply with the 
statutory requirements in our rebasing adjustments. Our rebasing 
adjustments for CY 2014 through CY 2017 are in accordance with the 
statute.
    Comment: Commenters urged CMS to postpone or stop the 
implementation of the rebasing reductions. Commenters expressed 
concerns with the rebasing methodology, impact analysis, and process 
outlined in the CY 2014 HH PPS proposed and final rules and stated that 
a more comprehensive study is needed to evaluate the rebasing 
reductions. Commenters suggested alternatives to rebasing or alternate 
ways to implement the rebasing reductions.
    Response: We thank the commenters for their comments. We did not 
propose changes to the rebasing adjustments for CY 2014 through CY 2017 
finalized in the CY 2014 HH PPS final rule. A majority of the comments 
received regarding the rebasing adjustments were nearly identical to 
the comments submitted during the comment period for the CY 2014 HH PPS 
proposed rule. Therefore, we encourage commenters to review our 
responses to the comments we received on the rebasing adjustments in 
the CY 2014 HH PPS final rule (78 FR 72282-72294).
    Comment: Commenters were concerned that rebasing adjustments are

[[Page 76722]]

based on outdated and incomplete data and do not reflect current or 
future costs and do not take into account operational and financial 
challenges providers experience and trends in data. Commenters 
recommended that CMS perform analysis to determine the need for 
rebasing and include all costs providers incur. Commenters requested 
that CMS evaluate the rebasing and case-mix adjustments on ``real-
time'' data and work toward that goal going forward. Some commenters 
also recommended that CMS work in collaboration with the home 
healthcare community in finding and using current data to make 
assessments about the impact and appropriateness of payment reductions 
going forward. Commenters urged CMS to update its analysis to include 
data from 2015 cost reports to capture costs associated with the 
implementation of the physician face-to-face encounter requirement and 
therapy reassessment requirements and the implementation of ICD-10 in 
projecting profit margins. One commenter stated that the rebasing 
methodology relies too much on the very poor cost report system. Some 
commenters stated that the rebasing methodology was too complex and 
that the public could not understand the approach used.
    Response: We note that we proposed and finalized the rebasing 
adjustments in 2014 using the most current, complete data available at 
the time of rulemaking. We recommend commenters review the description 
of the calculation of the adjustments described in the CY 2014 final 
rule (78 FR 72276 through 72282). We also note that for the CY 2017 HH 
PPS 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 data used in calculating the rebasing adjustments. 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, respectively) would have been 
needed in order to align payments with costs (81 FR 43719, 43720). 
Given that 2012 through 2014 cost data has indicated the need for a 
larger reduction to the national, standardized 60-day episode payment 
rate than what was calculated with the 2011 cost data, we question 
whether the 2015 cost data will show that payments are low relative to 
the costs associated with providing care during a home health episode 
of care. However, we plan to continue to monitor costs and payments for 
any unintended effects of rebasing.
    As stated in our responses to comments in the 2014 final rule, we 
disagree with the commenter's claim that home health agencies have no 
incentives for ensuring the accuracy of their cost reports and that the 
cost report data are inaccurate and not representative of the costs 
that agencies actually incur. Each HH cost report is required to be 
certified by the Officer or Director of the home health agency as 
complete and accurate. We also note that any misrepresentation or 
falsification of any information on the cost report may be punishable 
by criminal, civil and administrative action, fine and/or imprisonment 
under federal law. As always, we encourage providers to fill out the 
Medicare cost reports as accurately as possible.
    Comment: Commenters were concerned with the impact of the payment 
reductions on vulnerable populations and on safety net providers and 
agencies that serve underserved regions and/or vulnerable 
beneficiaries. Commenters stated that CMS has not accounted for the 
effect of the rebasing adjustments on access to care for vulnerable 
populations and the adjustments will threaten the efficiency of the 
health care system. The commenter urged CMS to consider the potential 
impact of payment cuts on the patient population, and mitigate these 
risks where possible. One commenter urged CMS to more carefully and 
accurately measure access to home health services and to move beyond 
the consideration of zip code coverage as a measure of access to care. 
The commenter provided suggestions for the impact and monitoring 
analyses. Commenters urged CMS to conduct a more thorough analysis 
examining the cumulative impact of rebasing, rather than assessing only 
a one-year impact.
    Commenters also expressed concerns that the rebasing reductions put 
access to home care in jeopardy in various parts of the country. A 
commenter stated that CMS' approach ignores regional differences in 
operating margins. Commenters were concerned about the impact of the 
reductions on margins, citing negative margins. One commenter provided 
their projection of the percentage of agencies with negative margins in 
2017 by agency type and by state. Commenters wanted CMS to remove or 
adjust the rebasing adjustments and consult with Congress before 
considering additional reductions, including case-mix reductions, or 
further rebasing suggested by MedPAC.
    Response: The rebasing reductions were finalized in the 2014 HH PPS 
final rule and the statute required us to implement a 4-year phase-in 
of the rebasing reductions starting in CY 2014 and in equal increments 
over the 4-year period. As described in the CY 2016 HH PPS proposed 
rule, section 3131(a) of the Affordable Care Act required MedPAC to 
assess, by January 1, 2015, the impact of the mandated rebasing 
adjustments on quality of and beneficiary access to home health care. 
As part of this assessment, the statute required MedPAC to consider the 
impact on care delivered by rural, urban, nonprofit, and for-profit 
home health agencies. MedPAC's Report to Congress noted that the 
rebasing adjustments are partially offset by the payment update each 
year and across all 4 years of the phase in of the rebasing adjustments 
the cumulative net reduction would equal about 2 percent. MedPAC 
concluded that, as a result of the payment update offsets to the 
rebasing adjustments, HHA margins were likely to remain high under the 
current rebasing policy and quality of care and beneficiary access to 
care were unlikely to be negatively affected (80 FR 39846). In 
addition, in their March 2016 report to the Congress, MedPAC 
recommended that the Congress eliminate the payment update for 2017, 
and implement a rebasing reduction in the following 2 years to bring 
payments closer to costs in order to align payments with costs in CY 
2017.
    As we noted in the CY 2014 HH PPS final rule (78 FR 72291), 
MedPAC's past reviews of access to home health care found that access 
generally remained adequate during periods of substantial decline in 
the number of agencies. MedPAC stated that this is due in part to the 
low capital requirements for home health care services that allow the 
industry to react rapidly when the supply of agencies changes or 
contracts. In addition, in the CY 2017 HH PPS proposed rule, we noted 
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 (81 FR 
43720). Even if some HHAs were to exit the program due to possible 
payment concerns, the home health market would be expected to remain 
robust. We plan to continue to monitor for the effects of rebasing as 
data become available.

[[Page 76723]]

    In the CY 2017 proposed rule, we also described an alternate case-
mix model option, the Home Health Groupings Model (HHGM). If 
implemented, the Home Health Groupings Model could redistribute 
payments across the range of home health patients, improve payments for 
specific vulnerable populations, and help address disincentives to 
provide services to vulnerable populations. In the proposed rule, we 
noted that we planned to release a more detailed technical report in 
the future on this additional research and analysis conducted on the 
HHGM. Once the technical report is released, we will post a link on our 
Home Health Agency (HHA) Center Web site at https://www.cms.gov/center/
provider-Type/home-Health-Agency-HHA-Center.html to receive comments 
and feedback on the model.
    Comment: Commenters stated that CMS' own analysis of 2015 data has 
shown that the rebasing reductions have had an impact on access to 
care. Commenters stated that CMS' analysis shows a decrease in the 
number of home health episodes between 2013 and 2015 and a decrease in 
the number of Medicare beneficiaries receiving at least one episode of 
care. Commenters stated that rebasing should be suspended until 
stakeholders have had an opportunity to conduct a full analysis.
    In their comments on the HH PPS proposed rule, MedPAC noted that 
the decline in the number of episodes continues a trend since 2010, 
when utilization peaked at 6.8 million episodes. About 70 percent of 
the decline in volume since the peak has been attributable to lower 
volume in five states (Florida, Illinois, Louisiana, Tennessee, and 
Texas). However, even with the recent declines, these five states had 
levels of per-capita home health utilization greater than double the 
per-capita rate for the rest of the country.
    MedPAC stated that though service volume has declined, policy and 
economic changes other than Medicare payment policy likely account for 
a significant portion of this change. The number of hospital 
discharges, a common source of referrals, has declined since 2009, 
mitigating the demand for post-acute services. The period has also seen 
relatively low growth in economy-wide health care spending. In 
addition, several actions have been taken to curb fraud, waste, and 
abuse in Medicare home health care. The Department of Justice and other 
enforcement agencies have launched a number of investigative efforts 
that have scrutinized Medicare HHAs. The number of agencies declined by 
2 percent in 2014, with this decline concentrated in Florida, Michigan, 
and Texas. These factors likely affected spending and utilization in 
recent years.
    MedPAC stated that this decline follows a period of considerable 
growth. Home health utilization increased by 67 percent between 2002 
and 2010. Given this prior rapid growth, and the reasons for the 
decline in home health use since 2010, MedPAC believes that the decline 
in utilization since 2010 does not raise substantive concerns about 
beneficiaries' access to home health care.
    Response: As noted by MedPAC in their comments on the proposed 
rule, there are various reasons for the decline in home health use 
since 2010 and policy and economic changes other than Medicare payment 
policy likely account for a significant portion of this change. We note 
that we plan to continue to monitor for the effects of rebasing as data 
become available.
    Comment: Some commenters stated that there is an error in CMS's 
calculation of the proposed CY 2017 national, standardized 60-day 
episode payment rate that inappropriately inflates the rebasing 
adjustment. Commenters stated that the Affordable Care Act provision 
regarding the 4-year phased-in rebasing adjustment strictly limits 
CMS's authority to impose no more than $80.95 in annual rebasing 
adjustments from 2014 through 2017. Commenters stated that by 
subtracting the $80.95 from the rate calculation before adjusting for 
inflation, CMS has inflated the impact of the rebasing adjustment for 
CY 2017 from $80.95 to $82.81. Commenters stated that CMS has made this 
same calculation error for each of the 4 years that the rebasing 
adjustment has been in place. Commenters stated that compounding the 
cumulative impact over the 4 years, the proposed CY 2017 national, 
standardized 60-day episode payment rate is $7.19 less than if CMS had 
subtracted the rebasing adjustment after adjusting for inflation.
    Commenters recommended that CMS correct the calculation 
methodology, increase the proposed CY 2017 national, standardized 60-
day episode payment rate by $7.19, and retroactively adjust the 
national, standardized 60-day episode payment rates for years 2014 
through 2016 to comply with the statutory limitation on the rebasing 
adjustment.
    Response: The last sentence in section 1895(3)(A)(iii)(I) of the 
Act states that the rebasing adjustment shall be made before the update 
under subparagraph (B) is applied for the year. Subparagraph (B) 
describes the home health update percentage. Therefore, the statute 
requires that the rebasing adjustments be applied before the home 
health update percentage. The description of the limits is referring to 
the rebasing adjustments, which must be applied before the home health 
update percentage. Therefore, no error was made in applying the 
rebasing adjustment to the national, standardized 60-day episode 
payment rate before the home health payment percentage and in the CY 
2017 national, standardized 60-day episode payment amount or the 
amounts in CYs 2014 through 2016.
    Comment: One commenter stated that instead of the rebasing 
adjustments, CMS should start the development of a new payment 
methodology for the therapy component of the HH PPS that accurately 
bases payment on the severity level of the patient and the necessary 
resources to treat the condition at the requisite level of intensity.
    Response: While a new payment methodology for the therapy component 
of the HH PPS may redistribute payments for certain patients, the 
rebasing adjustments are meant to align the national, standardized 60-
day episode payment rate, the per-visit LUPA rates, and the NRS 
conversion factor with the cost of providing care.
Nominal Case-Mix Reduction
    Comment: MedPAC stated that they have long held it necessary for 
CMS to make adjustments to account for nominal case-mix change to 
prevent additional overpayments. MedPAC stated that the CMS' reduction 
to account for nominal case-mix growth is consistent with the agency's 
past findings on trends in case-mix change in the payment system and 
thus is warranted to ensure the accuracy of payments under the home 
health PPS. MedPAC stated that a reduction of 0.97 percent should not 
significantly affect access to care.
    Response: We thank MedPAC for their comments.
    Comment: Several commenters stated that they wanted CMS to rescind 
the case-mix reductions for CY 2017 and CY 2018. Some commenters stated 
that implementation of the nominal case-mix reductions in 2016, 2017, 
and 2018 violated the limits on payment reductions set out by the 
Congress and urged CMS to adhere to the statutory limits on home health 
rate cuts. Commenters expressed concerns with the data and methodology 
used to develop the proposed case-mix cuts and stated that the annual 
recalibration should have eliminated any practice of assigning an 
inaccurate code to increase

[[Page 76724]]

reimbursement. Some commenters stated that the nominal case-mix 
reductions were duplicative of the rebasing reductions. A few 
commenters stated that the baseline used in calculating the amount of 
case-mix growth was inappropriate. Commenters stated that the estimate 
of real case-mix was outdated and needed to be updated. Commenters 
stated that any analysis of case mix in home care must be put in the 
context of the current environment and take into account initiatives 
and trends. Commenters urged CMS to conduct the necessary analyses of 
2012 through 2014 nominal case-mix change and share such analyses with 
stakeholders in the form of a new, evidence-based proposal. Commenters 
recommended that CMS withdraw the proposed case-mix reductions and 
consider alternative approaches. Some commenters stated that CMS should 
implement program integrity measures to control aberrant coding by some 
providers instead of imposing across-the-board case mix creep 
adjustments on all providers, and that CMS should not impose 
adjustments to payments until the completion of rebasing cuts (that is, 
2018 or later). Commenters requested that CMS reconsider negative 
adjustments or spread the adjustments over more years.
    Some commenters noted that actual program spending on home health 
was consistently less than Congressional Budget Office (CBO) estimates 
and questioned CMS' authority to implement case mix weight adjustments 
when home health spending was less than these estimates. Commenters 
stated that there was no increase in aggregate expenditures that 
warranted the application of this statutory authority, and CMS should 
withdraw its proposal. One commenter stated that CMS did not perform a 
detailed analysis of case mix growth for this year's proposed rule.
    Response: We thank the commenters for their comments. We finalized 
the case-mix reductions for CY 2016, CY 2017, and CY 2018 in the CY 
2016 HH PPS final rule and did not propose changes to the finalized 
reduction in the CY 2017 HH PPS proposed rule. The majority of the 
comments received regarding the payment reductions for nominal case-mix 
growth were very similar to the comments submitted during the comment 
period for the CY 2016 HH PPS proposed rule. Therefore, we encourage 
commenters to review our responses to the comments we received on the 
payment reductions for nominal case-mix growth in the CY 2016 HH PPS 
final rule (80 FR 68639-68646). We will continue to monitor real and 
nominal case-mix growth and may propose additional reductions for 
nominal case-mix growth, as needed, in the future.
    Final Decision: After considering the comments received in response 
to the CY 2017 HH PPS proposed rule, we are finalizing our proposal to 
use the pre-floor, pre-reclassified hospital inpatient wage index as 
the wage adjustment to the labor portion of the HH PPS rates. For CY 
2017, the updated wage data are for the hospital cost reporting periods 
beginning on or after October 1, 2012 and before October 1, 2013 (FY 
2013 cost report data). In addition, we are implementing the final year 
of the rebasing adjustments and the 0.97 percent payment reduction to 
account for nominal case-mix growth when finalizing the CY 2017 HH PPS 
payment rates. We note that the rebasing adjustments were finalized in 
the CY 2014 HH PPS final rule and the payment reductions to account for 
nominal case-mix growth from 2012 to 2014 were finalized in the CY 2016 
HH PPS final rule. No additional adjustments or reductions were 
proposed in the CY 2017 proposed rule.

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

1. Background
    In the CY 2017 HH PPS proposed rule (81 FR 43737 through 43742), we 
described the background and current method for determining outlier 
payments under the HH PPS. Section 1895(b)(5) of the Act allows for the 
provision of an addition or adjustment to the national, standardized 
60-day episode payment amount in the case of episodes that incur 
unusually high costs due to unusual variations in the type or amount of 
medically necessary care. Outlier payments are made for episodes whose 
estimated costs exceed a threshold amount for each Home Health Resource 
Group (HHRG). Currently, 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 is the episode payment amount for that group, or the partial 
episode payment (PEP) adjustment amount for the episode, plus a fixed-
dollar loss (FDL) amount that is the same for all case-mix groups.
    The outlier payment is defined to be a proportion of the wage-
adjusted estimated cost beyond the wage-adjusted threshold. The 
proportion of additional costs over the outlier threshold amount paid 
as outlier payments is referred to as the loss-sharing ratio, which is 
currently 0.80.
    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, 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. Changes to the Methodology Used To Estimate Episode Cost
    In the CY 2017 HH PPS proposed rule, we described that our analysis 
of outlier episodes, based on preliminary 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. In addition, we 
also noted in the proposed rule that outlier payments are predominately 
driven by the provision of skilled nursing services. As a result of the 
analysis of CY 2015 home health claims data, we stated that we are 
concerned that 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 if certain interventions are 
provided. 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

[[Page 76725]]

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\ These complex interventions 
could include total parenteral nutrition (TPN) therapy and central line 
catheter care. 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 generally require more intensive and frequent home health 
surveillance, increased home health care utilization, and 
costs.7 8
---------------------------------------------------------------------------

    \5\ Ellenbecker, C., Samia, L., Cushman, M., Alster, K. (AHRQ, 
April, 2008). Patient Safety and Quality in Home Health Care. 
Patient Safety and Quality: An Evidence-based Handbook for Nurses. 
Chapter 13.
    \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,
    \7\ 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.
    \8\ 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.'' 
\9\ 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 were ill, permanently disabled 
beneficiaries, and those beneficiaries with episodes of care that 
received outlier payments. The study found that only a small fraction 
of proxy demonstration patients had episodes of care that generated 
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.''
---------------------------------------------------------------------------

    \9\ 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 proposed 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. 
Table 19 shows the cost-per-unit payment rates for the calculation of 
outlier payments, updated with complete CY 2015 home health claims data 
(as of June 30, 2016). 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 up to, but no more than, 
2.5 percent of total payments as outlier payments in accordance with 
section 1895(b)(5)(A) of the Act.

                  Table 19--Cost-per-Unit Payment Rates for the Calculation of Outlier Payments
----------------------------------------------------------------------------------------------------------------
                                                        CY 2017
                                                    national  per-      Average      Cost-per-unit
                    Visit type                      visit  payment   minutes- per-   (1 unit = 15
                                                         rates           visit         minutes)
--------------------------------------------------------------------------------------------------
Home health aide..................................          $64.23            63.0          $15.29
Medical social services...........................          227.36            56.5           60.36
Occupational therapy..............................          156.11            47.1           49.72
Physical therapy..................................          155.05            46.6           49.91
Skilled nursing...................................          141.84            44.8           47.49
Speech-language pathology.........................          168.52            48.1           52.55
----------------------------------------------------------------------------------------------------------------

    In the CY 2017 proposed rule, we stated that 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.
    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 proposed 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 
proposed 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 noted 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 19. 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

[[Page 76726]]

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.
    Out of approximately 6.47 million episodes in our analytic file for 
2015, only 17,505 episodes or 0.3 percent of all home health episodes 
reported instances where over 8 hours of care were provided in a single 
day (some episodes of which could have resulted from data entry 
errors). Of those 17,505 episodes, only 8,305 would be considered 
outlier episodes under the proposed outlier methodology. Therefore, we 
estimate that approximately 8,300 episodes, out of 6.47 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 outlier payments do not exceed 2.5 percent of total 
payments (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 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. 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.
    In the CY 2017 HH PPS 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 estimated 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 the CY 2017 HH PPS proposed 
rule, we stated that we estimate that outlier payments would comprise 
approximately 2.58 percent of total HH PPS payments in CY 2017 under 
the current outlier methodology. This 15.7 percent 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 proposed to increase 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 did not 
propose a change to the loss-sharing ratio (0.80) as a loss-sharing 
ratio of 0.80 for the HH PPS would remain consistent with payment for 
high-cost outliers in other Medicare payment systems (for example, IRF 
PPS, IPPS, etc.). In the CY 2017 HH PPS proposed rule, we stated that 
under the current outlier methodology, the FDL ratio would need to be 
increased 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 estimated 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 would need to be increased 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 proposed to increase the FDL ratio 
from 0.45 to 0.56 for CY 2017. In the CY 2017 HH PPS proposed rule, we 
stated that we would update our estimate of outlier payments as a 
percent of total HH PPS payments for the final rule. Using complete CY 
2015 claims data as of June 30, 2016, we estimate that the FDL ratio 
would need to increase from 0.45 to 0.55 for CY 2017 in order to pay up 
to, but no more than, 2.5 percent of total payments as outlier 
payments.
    In the CY 2017 HH PPS proposed rule, we solicited 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 increase to the FDL ratio. The following is a summary of 
the comments and our responses.
    Comment: MedPAC was supportive of the proposed change to the 
outlier methodology, stating that the proposed policy improves the 
targeting of outlier funds and is similar to the method CMS uses when 
constructing the home health case-mix weights. MedPAC stated that the 
proposed method will better capture the variability in costs among home 
health agencies, will better align payments with agencies' actual 
costs, will reduce vulnerabilities, and will reduce incentives for 
agencies to not sufficiently treat patients who need longer than 
average visits under the HH PPS. Other commenters appreciated CMS' 
effort to develop an outlier policy that better aligns payment with 
cost and addresses disincentives to provide services to complex 
patients who need longer visits. A number of commenters requested that 
CMS finalize the proposed change to the outlier methodology.
    Response: We thank MedPAC and other commenters for their support. 
Our analysis shows that changing the outlier methodology using a 15-
minute unit approach better aligns payment with the cost of providing 
care and may help address some of the findings from the home health 
study and alleviate potential financial disincentives to treat patients 
with medically complex needs.
    Comment: Several commenters requested specific information or 
instructions on reporting visits and visit length. A few commenters 
requested more clarity on how the 15-minute units would be calculated 
and tracked by the agency. Some commenters expressed concerns that the 
proposed change in the outlier methodology could result in fraudulent 
calculation of the time necessary to provide the service. Commenters 
were concerned that some HHAs may artificially inflate the time spent 
with patients or misreport the units that were actually delivered. A 
commenter brought up a concern about the reliability of the paper-based 
reporting. Commenters were concerned that adjusting payment according 
to visit length may encourage overutilization and encouraged CMS to put 
into place screens and checks to prevent potential overestimation of 
time reporting. A few commenters suggested that CMS consider 
reimbursing partial 15 minute units on a pro-rata basis to increase 
payment accuracy and avoid a reporting cliff.
    Some commenters expressed concerns about whether HHAs have the data 
to

[[Page 76727]]

accurately capture the length of care provided by each of the six 
disciplines and whether HHAs and their software vendors will have 
adequate time to incorporate the proposed changes to their Medicare 
billing systems. A commenter recommended that CMS delay the particular 
change to the outlier methodology in order to provide HHAs time to work 
with their software billing vendors to update their systems and make 
changes to bill outlier payments correctly. A few commenters stated 
that the change in the methodology may result in additional costs from 
their electronic health record vendor to capture the cost per unit as 
well as staff training to document time in and out when in the home. A 
commenter stated that the extra expense and time resources should be 
captured in the estimate of the impact of this proposed change.
    Response: We did not propose to change the reporting of visits or 
visit length in the CY 2017 HH PPS proposed rule. The requirement to 
report visit length in 15 minute units is a statutory requirement that 
has been in place since the start of the HH PPS. We encourage providers 
to continue to bill visits and visit length according to previous 
guidance. Specifically, see Table 20, which will be added to the 
Medicare Claims Processing Manual, chapter 11 (Pub. 100-04).

               Table 20--Definition of the 15-minute units
------------------------------------------------------------------------
              Unit                                 Time
------------------------------------------------------------------------
1..............................  <23 minutes.
2..............................  = 23 minutes to <38 minutes.
3..............................  = 38 minutes to <53 minutes.
4..............................  = 53 minutes to <68 minutes.
5..............................  = 68 minutes to <83 minutes.
6..............................  = 83 minutes to <98 minutes.
7..............................  = 98 minutes to <113 minutes.
8..............................  = 113 minutes to <128 minutes.
9..............................  = 128 minutes to <143 minutes.
10.............................  = 143 minutes to <158 minutes.
------------------------------------------------------------------------

    Since we are not adding or changing reporting requirements, 
providers should not have an increase in burden due to this policy. 
Providers are already required to report visit length, in 15 minute 
increments, by discipline, on home health claims. We do not have minute 
data to pay partial 15 minute units on a pro-rated basis. Furthermore, 
we do not have the statutory authority to require HHAs to report visit 
lengths in timeframes other than in 15-minute increments in accordance 
with section 1895(c)(2) of the Act. We will monitor for changes in the 
reporting of visit lengths and may investigate HHAs with suspect 
billing patterns. As a reminder, any HHA misreporting information on 
their home health claims will be in violation of the False Claims Act 
and could be subject to civil penalties and damages and/or criminal 
prosecution.
    Comment: We received a question asking whether the rural add-on 
will be used in the calculation of the estimated cost of an episode, 
when applicable, under the proposed outlier policy.
    Response: Yes, the rural add-on will apply in this calculation. We 
will use rural versus non-rural per unit rates the same way we 
currently use rural versus non-rural per visit rates to calculate the 
imputed cost.
    Comment: A commenter stated that the outlier proposal rewards 
quantity, but does not take into account quality. One commenter 
encouraged CMS to focus on the identified ``bad actor'' agencies and 
not impose potential administrative burdens on compliant providers.
    Response: The proposed change in the outlier methodology is not 
meant to be punitive, but rather is meant to more accurately calculate 
the cost of an outlier episode of care and thus better align outlier 
payments with episode cost than the cost per visit approach. 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 HHAs to accept and care for 
medically complex beneficiaries who require longer visits. 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 only or 
primarily patients with less complex needs.
    Comment: One commenter urged CMS to release data to allow for a 
historical comparison of HH visits vs. HH units of service over 
multiple years and requested that CMS update the rate per unit 
computations with every year using the latest data available.
    Response: In the proposed rule, we described the average number of 
visits by discipline type for a Medicare home health 60-day episode of 
care from CY 2001 to CY 2015 (81FR 43739). While the number of visits 
by discipline has changed since 2001, visit length has been relatively 
stable from CY 2001 to CY 2015. From CY 2001 to CY 2015, the average 
number of 15-minute units reported for physical therapy visits and 
skilled nursing visits increased by .1 unit or 1.5 minutes, the average 
number of 15-minute units reported for occupational therapy visits 
decreased by .1 unit or 1.5 minutes, and the average number of 15-
minute units reported for home health aide services decreased by .2 
units or 3 minutes. From CY 2001 to CY 2015, the average number of 15-
minute units reported for speech-language pathology services and 
medical social services remained stable. We note that the per-unit 
rates used to estimate an episode's cost will be updated by the home 
health update percentage each year. While we do not plan to re-estimate 
the per-unit rates by discipline using new per-unit data every year, we 
will monitor the visit length by discipline as more recent data become 
available. If there are significant changes, we may propose to update 
the rates.
    Comment: One commenter supported the 10-percent cap on outlier 
payments. Another commenter disagreed with CMS' proposal to maintain 
the 10-percent cap on outlier payments and instead suggested that CMS 
include a minimum provider-specific number of percent of episodes that 
result in LUPAs. Some commenters stated that the shift to a bundled 
payment system as well as the shift to move care out of 
institutionalized settings and into home and community-based settings 
will lead to an influx of patients with more severe conditions being 
treated by HHAs. Commenters requested that CMS consider this when 
developing the final policy. Some commenters recommended that CMS 
conduct a more detailed analysis in the near future on whether the 
total outlier cap of 2.5 percent is adequate or whether it needs to be 
increased for future years. Another commenter recommended that CMS pay 
out more than 2.5 percent in outlier payments.
    Response: The 2.5 percent target of outlier payments to total 
payments and the 10 percent cap on outlier payments at the home health 
agency level are statutory requirements, as described in section 
1895(b)(5) of the Social Security Act. Therefore, we do not have the 
authority to adjust or eliminate the 10-percent cap or increase the 2.5 
percent target amount. In 2015, only about 1 percent of HHAs received 
10 percent of their total HH PPS payments as outlier payments, while 
almost 71 percent of HHAs received less than 1 percent of their total 
HH PPS payments as outliers. Therefore, the 10 percent agency-level cap 
does not seem to be significantly impacting a large portion of HHAs.

[[Page 76728]]

    Comment: Commenters were concerned with the proposal to increase 
the FDL ratio from 0.45 to 0.56, stating that the increase would reduce 
the number of episodes that qualify for outlier payment and reduce 
payments to providers. A commenter implied that the increase in the FDL 
ratio was solely due to the change in the outlier methodology 
calculation. The commenter stated that for those HHAs that provide the 
most outlier care services, Table 26 in the proposed rule (81 FR 43740) 
shows average minutes per visit jumping from 27.5 to 104.5 to receive 
outlier payments under the proposed methodology. The commenter stated 
that this increase drives the fixed dollar loss ratio increase from the 
current 0.45 to 0.56 in CY 2017, an almost 25 percent increase. Some 
commenters stated that raising the FDL will cause access issues for 
certain patients. Another commenter was concerned about the increase in 
the FDL ratio, stating that CMS has been overly conservative in their 
outlier projections in the past. The commenter stated that outlier 
payments have consistently fallen well below the 2.5 percent target the 
past several years and urged CMS to recalculate the FDL ratio using 
less conservative projections to ensure outlier payments are closer to 
the 2.5 percent target amount. A third commenter recommended that CMS 
retain the current FDL and consider an alternate method to meet the 
statutory limit placed on outlier payments, such as lowering the 
outlier payment to total payment cap.
    Response: To clarify, Table 26 in the proposed rule (81FR 43740) 
indicates that for those agencies with 10 percent of their payments as 
outlier payments, the average minutes per visit under the current 
methodology is 27.5, while the average number of minutes per visit 
under the proposed methodology is 104.5. However, as indicated in our 
response above, only about 1 percent of HHAs received 10 percent of 
their total HH PPS payments as outlier payments in 2015. The majority 
of agencies received less than 1 percent of their total HH PPS payments 
as outlier payments in 2015. As stated in the proposed rule, regardless 
of the change in the outlier methodology, we would need to raise the 
FDL in order to target 2.5 percent of total payments as outliers. We 
project that the percentage of outlier episodes will increase from 2016 
to 2017 as a result of the rebasing and nominal case-mix reductions to 
the national, standardized 60-day episode payment rate as well as 
increases to the per-visit rates due to the implementation of the 
fourth and final year of the rebasing adjustments. Since complete CY 
2016 or 2017 data are currently not available, we estimate outlier 
payments for CY 2016 and CY 2017 using 2015 home health utilization 
data and applying the CY 2016 and CY 2017 payment parameters. Using 
complete CY 2015 claims data as of June 30, 2016, we estimate that 
outlier payments will be 2.20 percent of total payments in CY 2016 and 
that outlier payments will be 2.84 percent of total payments in CY 2017 
when applying the CY 2017 payment parameters and the proposed changes 
to the outlier methodology. Therefore, we are increasing the FDL from 
0.45 to 0.55 to target 2.5 percent of payments as outliers, as required 
by statute. We note that other payment systems with outlier payments, 
such as the IRF PPS and IPPS, annually re-assess the fixed-loss cost 
outlier threshold amount. Adjusting the outlier threshold amount in 
order to target the statutorily required percentage of total payments 
as outlier payments is standard practice.
    Comment: A commenter expressed concerns about the proposed changes 
to the outlier methodology and urged CMS to withdraw the proposal and 
retain the current methodology in calculating outlier payments or delay 
implementation. Another commenter stated that instead of the proposed 
policy, CMS should keep the existing methodology and add an outlier 
add-on to pay for individuals with longer than average visits. Several 
commenters expressed concerns with CMS' proposal to give equal weight 
to each 15-minute increment of care, stating that there are certain 
fixed costs that do not vary with visit length. A few commenters stated 
that the volume of patients who might need longer than average visits 
is significantly smaller than the volume of patients who need shorter, 
but more frequent visits for services, such as insulin injections. A 
commenter also stated that the proposal needs to account for the costs 
to initiate a visit and that the beginning of the encounter is more 
resource-intensive than later in the encounter. Commenters stated that 
short visits would receive substantially less payment for fixed costs 
that do not vary based on the length of the visit, such as travel time, 
and the commenters encouraged CMS to refine the proposed policy to give 
greater weight to the first 15-minute unit of a visit. Commenters also 
stated that costs outside the actual HH visit, such as but not limited 
to documentation and back office costs, would not be captured through 
the proposed approach.
    Response: The purpose of the proposed change in the outlier 
methodology is to more accurately pay for outlier episodes by taking 
into account both the number of visits and the visit length by 
discipline when imputing episode cost. We remind commenters that the 
units of care per discipline will be summed up for each discipline for 
the entire episode and then multiplied by the cost per unit in order to 
estimate the estimated episode cost. Therefore, episodes with four 15-
minute skilled nursing visits a day for 10 days would receive the same 
cost estimate as five 2 hour skilled nursing visits in an episode. 
Episodes with 15-minute visits may still be able to qualify for outlier 
payments.
    We note that payment for the fixed costs of an episode, such as 
transportation, are already accounted for under the national, 
standardized 60-day episode payment rate and the national per-visit 
payment rates. CMS does not track transportation and other 
administrative costs for each visit or episode. Section 1895(b)(5)(A) 
of the Social Security Act states that outlier payments are to be made 
in the case ``of unusual variations in the type or amount of medically 
necessary care'' and not for unusual variations in fixed costs. Outlier 
payments are meant to help mitigate the incentive for HHAs to avoid 
patients that may have episodes of care that result in unusual 
variations in the type or amount of medically necessary care. Outlier 
payments serve as a type of ``reinsurance'' whereby, under the HH PPS, 
Medicare reimburses HHAs 80 percent of their costs for outlier cases 
once the case exceeds an outlier threshold amount. We have concerns 
with HHAs that may be developing business models around outlier 
payments and are trying to make a profit off of these episodes. The 
goal of this proposal is to more accurately pay for outlier episodes; 
we noted in the proposed rule that preliminary analysis indicates that 
a larger percentage of episodes of care for patients with a fragile 
overall health status will qualify for outlier payments. The outlier 
system is meant to help address extra costs associated with extra, and 
potentially unpredictable, medically necessary care. Therefore, using a 
linear relationship between costs and visit length aligns with the 
premise of the outlier payment system and with the statute.
    Comment: One commenter stated that additional information is needed 
to accurately assess the financial impact and ensure that CMS is paying 
outliers accurately. Other commenters were concerned that the outlier 
proposal may adversely impact access to home health

[[Page 76729]]

services or may result in inadequate payment for patients who require 
multiple short visits per day, such as insulin dependent diabetic 
patients who are unable to self-inject. Commenters stated that these 
patients may receive more expensive types of care at other settings or 
have unnecessary hospitalizations. Another commenter expressed concerns 
that changing the methodology could negatively impact physical therapy 
practicing in the home health setting. Commenters wanted to learn more 
about the types of patients that may not receive outlier payments under 
the proposed methodology and how this change may impact access to care 
for certain vulnerable patient groups. Another commenter stated that 
CMS should use current data to better understand the clinical 
characteristics of patients who are currently receiving outlier 
payments. A few commenters stated that the effects of any changes to 
the outlier methodology should be closely monitored.
    Response: The purpose of the proposed change in the outlier 
methodology is to better align outlier payments with the estimated cost 
per episode, accounting 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 medically less complex patients. As noted in our response 
above, episodes with short, frequent visits may also qualify for 
outlier payments. We estimate that over two-thirds of outlier episodes 
under the current payment system would continue to receive outlier 
payments under the proposed outlier methodology. We note that it is 
difficult to identify with absolute certainty, through administrative 
data, the visits and episodes for which the sole purpose was to provide 
insulin injections to insulin-dependent diabetics that cannot self-
inject and for which there is no able or willing caregiver that can 
assist with providing such injections. In 2015, about 358,000 episodes 
or 6.6 percent of episodes had diabetes as the primary diagnosis and 
1,241,000 or 22.9 percent of episodes had diabetes as the secondary 
diagnosis. Even though almost 30 percent of episodes had a diagnosis of 
diabetes, we cannot parse out the exact services provided during these 
episodes, as there were a variety of services that HHAs could have been 
providing to patients with diabetes. Given the limitations in the data, 
extensive impact analysis of insulin-dependent diabetics is not 
possible. However, we plan to monitor for any unintended results of 
this policy on insulin-dependent diabetics. We reiterate that the goal 
of the proposed change to the outlier methodology is to more 
appropriately pay for outlier episodes, not to create incentives to 
provide care only to a certain population of patients.
    Comment: Another commenter urged CMS to provide additional 
information on the methodology used to calculate episode costs and to 
provide maximum transparency throughout the development and 
implementation process. A commenter questioned whether the new 
methodology would be based on the episode end date or the service date 
for the outlier.
    Response: The outlier methodology will be based on the episode end 
date. Detailed information on our methodology is available in section 
III.D.1 and in our responses to comments above.
    Comment: Some commenters opposed the proposed 8-hour cap and wanted 
CMS to remove the cap, stating that it could negatively impact certain 
patient groups and could create disincentives for agencies to take on 
sicker patients who would be likely to be outlier patients. Commenters 
stated that the cap could result in patients receiving care in other 
settings and increase the overall healthcare expenditures. One 
commenter stated that outlier payments were already controlled for 
budget neutrality, and therefore the 8-hour cap was not needed. Another 
commenter stated that CMS should evaluate the medical complexity of the 
patients whose episodes may be affected by the 8-hour cap to avoid any 
unintended access barriers for patients who clinically warrant extra 
home health care and resources. Commenters also stated that CMS should 
remove the per-week cap of 28 hours. A commenter stated that capping 
the hours of care at 28 hours per week, with a review process which 
would allow up to 35 hours per week of care, was (1) inconsistent with 
the language in the program manual specifying less than eight hours per 
day OR less than six days per week; and (2) created an undue burden on 
providers by requiring additional paperwork in order to provide 
adequate care to outlier patients. A few commenters stated that CMS 
should modify the language in the program manual to recognize the 
importance of treating outlier patients and the need to do so outside 
of the traditional confines of the pre-existing definition of part-time 
and intermittent services. Another commenter urged CMS to carefully 
consider eliminating the per day and per week caps for certain 
vulnerable patient groups.
    Response: Where a patient is eligible for coverage of home health 
services, Medicare covers part-time or intermittent home health aide 
services and skilled nursing services, subject to statutory limits. 
Section 1861(m)(7)(B) of the Act states that the term ``part-time or 
intermittent services'' means skilled nursing and home health aide 
services furnished any number of days per week as long as they are 
furnished (combined) 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).'' 
Therefore, the weekly cap on the amount of skilled nursing and home 
health aide services combined is a statutory limit, not an additional 
regulatory requirement. As stated in the proposed rule, outlier 
payments are predominately driven by the provision of skilled nursing 
services. The 8-hour daily cap on services aligns with the statute, 
which requires that skilled nursing and home health aide services be 
furnished less than 8 hours each day.
    As noted earlier, out of approximately 6.47 million episodes in our 
analytic file for 2015, only 17,505 episodes or 0.3 percent of all home 
health episodes reported instances where over 8 hours of care were 
provided in a single day (which also could have resulted from data 
entry errors, as we currently do not use visit length for payment). Of 
those 17,505 episodes, only 8,305 would be classified as outlier 
episodes under the proposed outlier methodology. Therefore, we estimate 
that only 8,300 episodes or so, out of 6.47 million episodes, would be 
impacted due to the proposed 8 hour cap and we do not expect a 
significant impact on patients and providers. We plan to monitor for 
any unintended results of this policy as data become available.
    Comment: One commenter stated that the current outlier policy 
should be eliminated until CMS and the industry have had time to 
develop a more reasonable outlier provision. The commenter also stated 
that cost of medical supplies should be included in the imputed cost 
for episodes.
    Response: We will take this comment into consideration given the 
history of fraud and abuse associated with outlier payments. We note 
that there is a separate system that covers NRS costs and payments 
range from $14.16 to $552.58. We will take into consideration the 
comment about combining NRS

[[Page 76730]]

costs with episode costs. However, we note that in the 2014 HH PPS 
proposed rule, we stated that during our analysis of NRS costs and 
payments, we found that a significant number of providers listed 
charges for NRS on the home health claim, but those same providers did 
not list any NRS costs on their cost reports. Specifically, out of 
6,252 cost reports from FY 2011, 1,756 cost reports (28.1 percent) 
reported NRS charges in their claims, but listed $0 NRS costs on their 
cost reports. Given the findings from a sample of cost report audits 
performed and our analysis of NRS payments and costs, we are exploring 
possible additional edits to the cost report and quality checks at the 
time of submission to improve future cost reporting accuracy (78 FR 
40290). We encourage providers to provide accurate data on the cost 
report so NRS cost information can be used in the future.
    Final Decision: After consideration of all public comments, we are 
finalizing the proposed changes to the outlier methodology as proposed, 
as well as the proposed increase to the FDL ratio and the corresponding 
proposed changes in the regulations text at Sec.  484.240. The 
methodology to calculate outlier payments will change for CY 2017 to 
use a cost-per-unit approach as outlined above. The FDL will be set at 
0.55 for CY 2017 based on analysis of complete CY 2015 data (as of June 
30, 2016).

E. 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. 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 using a disposable 
device. A disposable NPWT device is a single-use integrated 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 devices 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.\10\
---------------------------------------------------------------------------

    \10\ Dumville JC, Land L, Evans D, Peinemann F. Negative 
pressure wound therapy for treating leg ulcers. Cochrane Database of 
Systematic Reviews 2015, Issue 7. Art. No.: CD011354. DOI: 10.1002/
14651858.CD011354.pub2.
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    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 a 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.
    As described above, 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, as described in section 50.4.1 of Chapter 7 of the Medicare 
Benefit Policy Manual.\11\ Supplies are classified into two categories, 
specifically:
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    \11\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/bp102c07.pdf.
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     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 reimbursed on an 
episodic basis for every Medicare home health patient regardless of 
whether 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 device 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 
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 
Healthcare Common Procedure Coding System or 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 https://www.cms.gov/Medicare/

[[Page 76731]]

Billing/TherapyServices/AnnualTherapyUpdate.html.
    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 a physician or a non-physician practitioner outside of a 
certified therapy plan of care. CPT[supreg] 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.\12\ CPT[supreg] 
codes 97607 and 97608 are subject to the HHA consolidated billing 
requirements, given that these two codes are considered ``sometimes'' 
therapy codes and the service can be performed by a therapist or non-
physician practitioner and given that these two codes include 
disposable NPWT devices, which are considered a non-routine supply.
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    \12\ https://www.cms.gov/regulations-and-guidance/guidance/manuals/internet-only-manuals-ioms-items/cms018912.html.
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2. The Consolidated Appropriations Act, 2016
    As described in the proposed rule, a disposable NPWT device is 
currently considered a non-routine supply and thus payment for the 
disposable NPWT device is included in the episodic reimbursement 
amount. However, the Consolidated Appropriations Act, 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 NPWT 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 1834(s)(3) of the Act, the 
separate payment amount for a disposable NPWT device 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 
HCPCS code, otherwise referred to as Current Procedural Terminology 
(CPT[supreg] 4) codes, for which the description for a professional 
service includes the furnishing of such a device.
    Under the OPPS, CPT[supreg] codes 97607 and 97608 (APC 5052--Level 
2 Skin Procedures), include furnishing the service as well as the 
disposable NPWT device. These 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. 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 proposed 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 proposed that since furnishing NPWT using 
a disposable device for an individual who receives home health services 
and for which payment is made under the Medicare home health benefit 
(that is, 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 as well as furnishing the service, the HHA must bill these 
visits separately under type of bill (TOB) 34x (used for some 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 disposable device would not be reported on the HH 
PPS claim (TOB 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 proposed 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 (TOB 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 an integrated, disposable device under TOB 34x 
along with the appropriate HCPCS code (97607 or 97608). Additionally, 
this same visit should also be reported on the HH PPS claim (TOB 32x), 
but only the time spent furnishing the services unrelated to the 
provision of NPWT using an integrated, disposable device.
    As noted in section III.E.1, since these two CPT[supreg] codes 
(97607 and 97608) are considered ``sometimes'' therapy codes, we 
proposed that NPWT using a disposable device for patients under a home 
health plan of care can be performed, in accordance with 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 descriptions for CPT[supreg] codes 97607 
and 97608 include performing a wound assessment, therefore in the 
proposed rule we stated 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).
    As outlined in the proposed rule, since the payment amount for both 
97607 and 97608 would be set equal to the amount of the payment that 
would be made under the OPPS, the payment amount would also be subject 
to the area wage adjustment policies in place under the OPPS in a given 
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, 2016 (Pub. L 114-113) also amends section 1833(a)(1) of the Act, 
which requires that furnishing NPWT using a disposable device be 
subject to beneficiary coinsurance in the amount of 20 percent. The 
amount paid to the HHA by Medicare would be equal to 80 percent of the 
lesser of the actual charge

[[Page 76732]]

or the payment amount as determined by the OPPS for the year.
    In the CY 2017 HH PPS proposed rule, we also noted that 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 
(81 FR 43744). 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 initial and comprehensive assessments as 
required by Sec.  484.55, and/or the 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, taking into 
account the unique medical condition of the patient. 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.\13\ 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. We solicited public comment on all aspects of the proposed 
payment policies for furnishing NPWT using a disposable device as 
articulated in this section as well as the corresponding proposed 
changes to the regulations at Sec.  409.50 in section VII of the 
proposed rule.
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    \13\ Corbett Lisa Q. and Ennis William J., What Do Patients 
Want? Patient Preferences in Wound Care. Advances in Wound Care. 
August 2014, 3(8): 537-543. doi:10.1089/wound.2013.0458.
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    The following is a summary of the comments we received regarding 
the proposal for the payment of NPWT using a disposable device.
    Comment: Many commenters expressed support of the proposed payment 
policies for the provision of NPWT using a disposable device.
    Response: We appreciate the positive feedback from the provider 
community as well as other stakeholders.
    Comment: Many commenters expressed confusion regarding how to bill 
for wound care visits that would not include the replacement of a 
disposable NPWT device and encouraged CMS to provide clarification as 
to how these wound care visits should be billed. In addition, several 
commenters requested guidance from CMS on how to track time and 
services related to NPWT using a disposable device in order to ensure 
they are complying with billing requirements.
    Response: We appreciate commenters' interest in wanting to 
appropriately track and bill for NPWT using a disposable device. We 
proposed that, where the sole purpose of a home health visit is to 
``furnish NPWT using a disposable device,'' we would not pay for the 
visit under the HH PPS. Rather, those services would be reported on a 
TOB 34x and paid for separately outside the HH PPS. Where NPWT is 
furnished using a disposable device, and other services that are 
unrelated to the NPWT are also furnished, the NPWT services would be 
billed and paid for separately outside the HH PPS (using TOB 34x), and 
the services unrelated to NPWT would be billed and paid for under the 
HH PPS (using TOB 32x).
    We hoped our explanation--that, when NPWT is furnished using a 
disposable device, both the device and the services associated with 
furnishing the device are paid for separately based on the OPPS amount 
(81 FR 43643)--would convey that a new device had to be furnished in 
order for the service to be separately paid outside the HH PPS. 
However, based on commenters' questions about which services HHAs must 
bill using bill types 34x and 32x, we believe we need to be clearer 
about what we meant by ``furnish NPWT using a disposable device'' in 
the proposed rule. We are clarifying here that, when a HHA ``furnishes 
NPWT using a disposable device,'' the HHA is furnishing a new 
disposable NPWT device. This means the HHA provider is either initially 
applying an entirely new disposable NPWT device, or removing a 
disposable NPWT device and replacing it with an entirely new one. In 
both cases, all the services associated with NPWT--for example, 
conducting a wound assessment, changing dressings, and providing 
instructions for ongoing care--must be reported on TOB 34x with the 
corresponding CPT[supreg] code (that is, CPT code 97607 or 97608); they 
may not be reported on the home health claim (TOB 32x). The 
reimbursement for all of these services is included in the OPPS 
reimbursement amount for those two CPT[supreg] codes. Any follow-up 
visits for wound assessment, wound management, and dressing changes 
where a new disposable NPWT device is not applied must be included on 
the home health claim (TOB 32x).
    We are codifying this definition of ``furnishing negative pressure 
wound therapy (NPWT) using a disposable device'' in our regulations at 
Sec.  484.202. This is a technical amendment that reflects the 
substance of our proposal without changes.
    In the interest of providing clarification on potential billing 
scenarios for HHAs furnishing NPWT using a disposable device, we are 
providing some examples below:
     Example #1:
    On Monday, a nurse assesses the patient's condition, assesses the 
wound, and applies a new disposable NPWT device. The nurse also 
provides wound care education to the patient and family. On the 
following Monday, the nurse returns, assesses the wound, and replaces 
the device that was applied the week before with an entirely new 
disposable NPWT device. In this scenario, the billing procedures are as 
follows:
    ++ For each visit, all the services provided by the nurse were 
associated with furnishing NPWT using a disposable device because the 
nurse applied a new disposable NPWT device during each visit. The nurse 
did not provide any services other than furnishing NPWT using a 
disposable device. Therefore, all the nursing services for both visits 
should be reported on TOB 34x with CPT[supreg] code 97607 or 97608. 
None of the services should be reported on TOB 32x.
     Example #2:
    On Monday, a nurse assesses the wound, applies a new disposable 
NPWT device, and provides wound care education to the patient and 
family. The nurse returns on Thursday for wound assessment and replaces 
the fluid management system (or dressing) for the existing disposable 
NPWT, but does not replace the entire device. The nurse

[[Page 76733]]

returns the following Monday, assesses the patient's condition and the 
wound, and replaces the device that had been applied on the previous 
Monday with a new disposable NPWT device. In this scenario, the billing 
procedures are as follows:
    ++ For both Monday visits, all the services provided by the nurse 
were associated with furnishing NPWT using a disposable device. The 
nurse did not provide any services that were not associated with 
furnishing NPWT using a disposable device. Therefore, all the nursing 
services for both Monday visits should be reported on TOB 34x with 
CPT[supreg] code 97607 or 97608. None of the services should be 
reported on TOB 32x.
    ++ For the Thursday visit, the nurse checked the wound, but did not 
apply a new disposable NPWT device, so even though the nurse provided 
care related to the wound, those services would not be considered 
furnishing NPWT using a disposable device. Therefore, the services 
should be reported on bill type 32x and no services should be reported 
on bill type 34x.
     Example #3:
     On Monday, the nurse applies a new disposable NPWT device. 
On Thursday, the nurse returns for a scheduled visit to change the 
beneficiary's indwelling catheter. While there, the nurse assesses the 
wound and applies a new fluid management system (or dressing) for the 
existing disposable NPWT device, but does not replace the device 
entirely. In this scenario, the billing procedures are as follows:
    ++ For the Monday visit, all the nursing services were associated 
with furnishing NPWT using a disposable device. The nurse did not 
provide any services that were not associated with furnishing NPWT 
using a disposable device. Therefore, the HHA should report the nursing 
visit on TOB 34x with CPT[supreg] code 97607 or 97608; the visit should 
not be reported on a 32x claim.
    ++ For the Thursday visit, while the nursing services included 
wound assessment and application of a component of the disposable NPWT 
device, the nurse did not furnish a new disposable NPWT device. 
Therefore, the nurse did not furnish NPWT using a disposable device, so 
the HHA should report all the nursing services for the visit, including 
the catheter change and the wound care, on TOB 32x.
     Example #4:
    On Monday, the nurse applies a new disposable NPWT device, and 
provides instructions for ongoing wound care. During this same visit, 
per the HH plan of care, the nurse changes the indwelling catheter and 
provides troubleshooting information and teaching regarding its 
maintenance. In this scenario, the billing procedures are as follows:
    ++ The visit included applying a new disposable NPWT device as well 
as services unrelated to that NPWT service, which means the HHA will 
submit both a TOB 34x and a TOB 32x.
    ++ For furnishing NPWT using a disposable device, that is, the 
application of the new disposable NPWT device and the time spent 
instructing the beneficiary about ongoing wound care, the HHA would 
bill using a TOB 34x with CPT[supreg] code 97607 or 97608.
    ++ For services not associated with furnishing NPWT using a 
disposable device, that is, for the replacement of the indwelling 
catheter and instructions about troubleshooting and maintenance, the 
HHA would bill under TOB 32x.
    Comment: Several commenters suggested that CMS' payment proposal 
for furnishing NPWT using a disposable device was not consistent with 
the intent of section 504 of the Consolidated Appropriations Act, 2016 
(Pub. L. 114-113), which they believe is to facilitate the use of less 
expensive disposable devices in place of more costly DME equipment for 
wound therapy. Commenters maintained that the payment amount required 
by the statute is only for the disposable NPWT device and does not 
incorporate the services associated with the device. They stated that, 
because the statute refers to a separate payment for the NPWT device, 
the payment amount is meant to be a payment over and above the home 
health payment for providing the service. Commenters asserted that, by 
not allowing the reporting of a home health visit associated with the 
application of a disposable NPWT device, we would be encouraging 
providers to continue to provide conventional DME equipment for NPWT 
rather than NPWT using a disposable device, which effectively limits 
treatment choices and ignores patient preferences, and is therefore 
inconsistent with the intent of the statute.
    Response: Section 1834(s)(3) of the Act, as added by section 504 of 
the Consolidated Appropriations Act, 2016, specifies that the payment 
amount for an applicable disposable device must be equal to the amount 
of payment that would be made under the hospital outpatient PPS for the 
HCPCS code ``for which the description for a professional service 
includes the furnishing of such device.'' The OPPS payment amounts 
associated with CPT[supreg] codes 97607 and 97608 include both the 
device cost and the related services for furnishing the device 
(including topical application(s), wound assessment, and instruction(s) 
for ongoing care). Therefore, the payments we will make for furnishing 
NPWT with a disposable device beginning CY 2017 will include amounts 
for both the device and the associated services, which we believe is 
consistent with the statute. We do not believe our policy will 
necessarily encourage or discourage the continued use of DME as a 
treatment option.
    We are codifying this policy in our regulations at Sec.  
484.205(b), where we state that the separate payment described here is 
not included in the episode payment. This is a technical amendment that 
reflects our proposed policy without any change.
    Comment: Several commenters requested more details regarding the 
definition of ``non-manual vacuum pump,'' as that term is used in 
section 1834(s)(2)(A) of the Act. Commenters also questioned if there 
are any disposable negative pressure wound therapy pumps that would not 
qualify for the separate payment.
    Response: Section 1834(s)(2) of the Act defines ``an applicable 
disposable device'' as ``a disposable device that, as determined by the 
Secretary, is--(A) 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; and (B) a substitute for, and used in lieu of, a 
negative pressure wound therapy durable medical equipment item that is 
an integrated system of a negative pressure vacuum pump, a separate 
exudate collection canister, and dressings that would otherwise be 
covered for individuals for such wound therapy.'' We interpret the term 
``non-manual'' in the definition to mean, not powered by hand, but 
rather, powered automatically, mechanically, or electronically. 
Additionally, a disposable NPWT device is one that stimulates tissue 
growth and does not simply collect wound exudate (for example,. a 
Jackson-Pratt drain), and is used in lieu of a DME NPWT system.
    We recognize that there are various disposable NPWT devices, and 
the decision to select one of these systems is usually determined by 
wound characteristics, indications for use, and in collaboration 
between the patient's physician and the patient to achieve desired 
outcomes. If the NPWT disposable device meets the statutory definition, 
as articulated in section 1834(s)(2) of the Act, then it would be 
eligible for the separate payment for

[[Page 76734]]

furnishing NPWT using a disposable device. Conversely, if a disposable 
NPWT device does not conform to the definition outlined in the 
Consolidated Appropriations Act, 2016, then it would not be considered 
an ``applicable disposable device.''
    Comment: Several commenters requested clarification on coverage for 
those patients who qualify for the Medicare home health benefit, but 
only receive services from a HHA for CPT[supreg] code 97607 or 97608 on 
a 34x claim. One commenter noted that some HHAs believe the proposed 
policies for furnishing NPWT using a disposable device will prevent 
them from billing for other skilled visits related to wound care that 
occur more frequently than once every seven days when the disposable 
NPWT device is scheduled to be replaced, and they requested 
clarification.
    Response: When a home health beneficiary receives only services 
related to furnishing NPWT using a disposable device, the HHA will 
submit only a TOB 34x. Although a HHA may not submit a TOB 32x, the 
beneficiary of those services is still recognized as a Medicare-covered 
home health patient. This instruction applies when the only home health 
service being provided in a visit is the furnishing of NPWT using a 
disposable device, that is, the initial application or replacement of 
the disposable NPWT device in its entirety. This policy will not 
prevent HHAs from billing for other skilled visits related to wound 
care that occur when a new device is not being applied or a device is 
being entirely replaced.
    Clinical practice guidelines for disposable NPWT devices recommend 
topical dressing changes at least one time per week in between those 
visits where a new disposable NPWT device is applied or replaced in its 
entirety.\14\ Therefore, if clinical practice guidelines are followed, 
there will be skilled nursing visits pertaining to wound management, 
other than for applying a disposable NPWT device in its entirety, and 
those services would be billed for on the HH PPS claim (TOB 32x), when 
medically reasonable and necessary.
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    \14\ Sandoz H., (2014). Negative pressure wound therapy: 
clinical utility. Chronic Wound Care Management and Research. Volume 
2. 71-79 doi.org/10.2147/CWCMR.S48885.
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    Comment: One commenter questioned how claims will be billed where 
the only skilled service is billed on a 34x claim but dependent 
services are also provided.
    Response: To ensure appropriate payment for dependent services (for 
example, home health aide visits, medical social services) dictated by 
the beneficiary's plan of care, we will permit TOB 32x home health 
claims to be used to bill dependent services when the only skilled 
service (furnishing NPWT using a disposable device) is billed on a 34x 
claim, as the commenter described. Specifically, we will permit those 
TOB 32x home health claims, as long as both (1) the patient qualified 
for home health on the basis of intermittent skilled nursing care that 
consisted of furnishing NPWT using a disposable device, and (2) 
condition code 54 (effective July 1, 2016) is used. This code indicates 
that, (1) the HHA provided no skilled services via the TOB 32x during 
the billing period (that is, the patient ceased to receive the skilled 
service that qualifies the patient for the home health benefit--skilled 
nursing (SN), physical therapy (PT), speech-language pathology services 
(SLP), or a continued need for occupational therapy after such time 
that the need for SN, PT or SLP, via the TOB 32x ceased), but that, (2) 
the HHA has documentation on file of an allowable circumstance for the 
provision of non-skilled services. The official instructions regarding 
use of condition code 54 can be found on the CMS Web site at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R3553CP.pdf.
    Comment: Several commenters stated that the OPPS payment amounts 
for CPT[supreg] codes 97607 and 97608 do not capture the administrative 
costs of a home health care plan, and requested clarification on how 
the HHA will be paid for these costs.
    Response: Section 1834(s) of the Act stipulates that payment for a 
disposable NPWT device must be equal to the amount of the payment that 
would be made under the OPPS amount for the HCPCS code for which the 
description for a professional service includes the furnishing of such 
device. While that payment amount will cover the costs of the device 
and related services, we understand the commenters are asking how the 
administrative costs of home health care that are not built into the 
OPPS payment amounts for CPT[supreg] codes 97607 and 97608 will be paid 
for. We expect that payment for furnishing NPWT using a disposable 
device will almost always be made in addition to a HH episode payment, 
which already includes reimbursement for overhead and administrative 
costs. These administrative costs are reported on HHA cost reports in 
accordance with Sec.  484.210, which states that one factor in the 
calculation of the national, standardized 60-day episode payment is 
``Medicare cost data on the most recent audited cost report data 
available.''
    Per the home health Conditions of Participation (CoPs) at Sec.  
484.18, a Medicare beneficiary receiving services from a Medicare-
certified HHA must be under the care of a physician and the services 
provided must be in accordance with the home health plan of care. A 
plan of care developed for a patient should cover all pertinent 
diagnoses, including mental status, types of services and equipment 
required, frequency of visits, prognosis, rehabilitation potential, 
functional limitations, activities permitted, nutritional requirements, 
medications and treatments, any safety measures to protect against 
injury, instructions for timely discharge or referral, and any other 
appropriate items. Therefore, even when a beneficiary requires NPWT 
furnished using a disposable device, for which payment will be made 
outside the HH PPS, the beneficiary will also be provided the services 
and supplies specified in the HH plan of care, and those other services 
will be paid a HH episode payment under the HH PPS. Additionally, if 
the HH PPS claim (32x) includes 4 or fewer visits, the national per-
visit payment rates paid account for administrative costs, and if the 
episode is the only episode or the first episode in a sequence of 
adjacent episodes separated by no more than a 60-day gap, the episode 
would be eligible for an add-on payment that accounts for the ``front-
loading'' of costs incurred in an episode of care (72 FR 49848 and 
49849). Therefore, we believe the existing payment policy approach for 
LUPA episodes represents appropriate payment for episodes that include 
the furnishing of NPWT using a disposable device as the LUPA payment, 
and any eligible LUPA add-on, take into account the administrative 
costs.
    Comment: A few commenters inquired as to the low-utilization 
payment adjustment (LUPA) payment policy as it relates to visits 
reported on both a 32x and 34x type of bill. Specifically commenters 
requested clarification on a scenario in which the total number of home 
health visits provided is more than four, but four or fewer of those 
visits are billed on a 32x claim, with the remaining visits billed on a 
34x claim. Commenters wanted to know whether or not the HHA would 
receive a LUPA payment or LUPA add-on payment.
    Response: If a HHA provides four or fewer visits on the HH PPS 
claim (32x), the HHA will be paid a standardized per visit payment 
instead of a 60-day episode payment. This payment adjustment is 
referred to as a low-

[[Page 76735]]

utilization payment adjustment, or LUPA. For the purposes of 
determining whether an episode receives the full episode payment amount 
or a LUPA, only visits on the 32x HH claim will be counted. Visits that 
are submitted via 34x claims will not count as a visit for purposes of 
determining whether a HHA receives a full episode payment or a LUPA. 
Services reported on 34x claims are for certain medical and other 
health services which are paid from the Part B that are paid outside 
the HH episode payment. Just as services reported on TOB 34x are not 
reimbursed under the HH 60-day episode payment, they are also not 
reimbursed as part of a LUPA.
    As indicated in the comment response above, if a LUPA episode is 
the first episode in a sequence of adjacent episodes or is the only 
episode of care the beneficiary received, Medicare makes an additional 
payment called a LUPA add-on payment. Similar to the policy regarding 
LUPAs, visits for furnishing NPWT using a disposable device will not 
count as visits for purposes of the LUPA add-on payment. The LUPA add-
on payment will still be made for any 32x claim that includes four or 
fewer visits that is considered the first episode in a sequence of 
adjacent episodes or is the only episode of care, regardless of whether 
additional visits are reported for disposable NPWT devices on the TOB 
34x.
    Comment: Several commenters stated that the implementation of the 
proposed policies for NPWT using a disposable device would pose a 
tremendous administrative and operational burden, citing that the 
policy would necessitate systems changes as well as changes to billing 
practices. Several commenters noted that they are concerned that the 
proposed billing approach is overly complicated and will result in both 
provider and beneficiary confusion.
    Response: In accordance with section 1833(a)(1)(AA) of the Act, the 
Medicare payment amount for furnishing NPWT using a disposable device 
will be 80 percent of the lesser of the actual charge or the amount 
equal to the established OPPS amount, and we are requiring HHAs to 
submit claims for those services on a TOB 34x. We understand some 
commenters are concerned about the systems and billing changes they may 
have to make to implement this new policy, but we note that certain 
services provided under a home health plan of care, but for which 
reimbursement is not covered under the HH PPS, are currently billed 
utilizing the TOB 34x (for example, osteoporosis injections and vaccine 
administration). In addition, certain services provided that are not 
under a home health plan of care are also billed by HHAs on the 34x 
(for example, diabetes self-management training, smoking and tobacco-
use cessation counseling services, bone mass measurements, etc.). 
Therefore, HHAs should already have familiarity with the procedures for 
billing as well as the systems requirements necessary for submitting 
the 34x claim type. However, we recognize the concerns about the 
education of providers, beneficiaries, and other stakeholders with 
regard to this new payment policy. We will utilize existing outreach 
and educational mechanisms such as Open Door Forums, Medicare Learning 
Network articles, and other products with the goal of educating 
stakeholders regarding this new payment policy for disposable NPWT 
devices.
    Comment: A few commenters suggested that CMS allow HHAs additional 
time to make the necessary internal system changes by extending the 
implementation deadline to July 1, 2017 or another future date. 
Commenters noted that the postponement would allow time for 
implementation and appropriate enforcement of the policy.
    Response: We acknowledge that some commenters would like additional 
time to prepare their systems, but section 1834(s)(1) of the Act 
specifies that the separate payment requirement for applicable 
disposable devices applies to such devices furnished on or after 
January 1, 2017.
    Comment: Some commenters suggested that requiring separate billing 
for disposable NPWT devices represents a shift in the benefit away from 
holistic, interdisciplinary home health care towards a more fragmented 
benefit.
    Response: We appreciate the concern regarding the provision of 
comprehensive care for home health beneficiaries. HH clinicians should 
continue to conduct home visits in a comprehensive, holistic manner. 
The HH plan of care is meant to meet the clinical, psychosocial, and 
daily living needs of the patient, and should remain focused on the 
appropriate care. However, accurate accounting of services provided is 
also an integral part of the provision of home health care through the 
Medicare benefit. In order for us to provide accurate payment, there 
must be proper accounting of the services provided by Medicare 
providers. Therefore, adherence to billing procedures and requirements, 
including the accurate accounting of services and interventions, is 
expected in conjunction with the provision of care.
    Comment: A few commenters requested clarification regarding which 
practitioners are permitted to provide NPWT using a disposable device, 
specifically wanting to know whether licensed practical nurses (LPNs) 
may do so.
    Response: Because specific services can be provided by either a 
therapist or a non-therapist, CMS created the designation ``sometimes 
therapy.'' When a code is designated as ``sometimes therapy,'' it may 
be performed by a qualified therapist (for example, physical therapist 
or occupational therapist) under a certified therapy plan of care or by 
another qualified clinician. As we discuss in the proposed rule (81 FR 
43743 and 43744), because CPT[supreg] codes 97607 and 97608 are 
considered ``sometimes therapy'' codes (as described in section 200.9 
of Chapter 4 of the Medicare Claims Processing Manual),\15\ furnishing 
NPWT using a disposable device for patients under a home health plan of 
care can be performed by either a physician or a non-physician 
practitioner, consistent with other CMS guidance. In the proposed rule, 
we specifically stated that ``sometimes'' therapy can be performed, in 
accordance with State law, by a registered nurse, physical therapist, 
or occupational therapist (81 FR 43743). While we believe that the 
complex nature of furnishing disposable NPWT would best be performed by 
a registered nurse, physical therapist, or occupational therapist, we 
recognize that LPNs often provide skilled services, including wound 
care, to HH beneficiaries in accordance with State law and per agency 
policies. Per Chapter 7 of CMS's Benefit Policy Manual; section 
40.1.2.8, wound care, which would include furnishing NPWT using a 
disposable device, is considered to be a skilled nursing service, for 
which the skills of a licensed nurse are usually reasonable and 
necessary. Skilled nursing services are those provided by skilled, 
licensed nursing professionals, which includes both LPNs and RNs. 
Therefore, LPNs also may furnish NPWT using a disposable device in 
accordance with State law and agency policies.
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    \15\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/clm104c04.pdf.
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    Comment: One commenter requested clarification regarding the 
application of the OPPS wage index to the payment amount for a 
disposable NPWT device.
    Response: Since the payment amount for both CPT[supreg] codes 97607 
and 97608 will be set equal to the amount of the payment that would be 
made under the

[[Page 76736]]

OPPS, the payment amount would also be subject to the area wage 
adjustment policies in place under the OPPS in a given year. We note 
that the wage index that will apply to this payment will be equal to 
the current OPPS wage index; for example, for CY 2017 payments for 
disposable NPWT devices, the CY 2017 OPPS wage index will apply.
    Comment: A few commenters urged CMS to provide guidance on how this 
new disposable NPWT device policy will affect clinical documentation 
requirements in the medical record.
    Response: There are no additional documentation requirements for 
the provision of NPWT using a disposable device. All existing policies 
and guidelines will still apply. HHAs may also follow their own 
internal policies and procedures for documenting clinical information 
in the patient's medical record beyond those required by regulation.
    Final Decision: After consideration of all public comments, we are 
finalizing our proposal as proposed including the corresponding 
proposed changes to the regulations at Sec.  409.50. A separate payment 
will be made to a HHA for furnishing NPWT using a disposable device to 
an individual who receives home health services for which payment is 
made under the Medicare home health benefit, for services furnished 
beginning January 1, 2017. The payment amount for furnishing NPWT using 
a disposable device under a HH plan of care will be equal to the lesser 
of the actual charges or the OPPS payment amount for CPT[supreg] codes 
97607 and 97608, and must be billed via the 34x TOB. HHAs may not bill 
for furnishing NPWT using a disposable device on a TOB 32x. Payment for 
HH visits related to wound care, but not requiring the furnishing of an 
entirely new disposable NPWT device, will still be covered by the HH 
PPS episode payment and must be billed using TOB 32x. Where a home 
health visit is exclusively for the purpose of furnishing NPWT using a 
disposable device, the HHA will submit only a TOB 34x. Where, however, 
the home health visit includes the provision of other home health 
services in addition to, and separate from, furnishing NPWT using a 
disposable device, the HHA will submit both a TOB 32x and TOB 34x--the 
TOB 32x for other home health services and the TOB 34x for furnishing 
NPWT using a disposable device. Physical therapists, occupational 
therapists, registered nurses, and licensed practical nurses are 
permitted to provide NPWT using a disposable device under a home health 
plan of care.
    Additionally, we are making a technical amendment to the language 
at 42 CFR 409.50 to update the language regarding beneficiary 
coinsurance liability for DME and applicable disposable devices. We 
proposed to amend Sec.  409.50 to account for the coinsurance liability 
of the beneficiary for applicable disposable devices as ``20 percent of 
the customary (as reasonable) charge for the services.'' In this final 
rule, consistent with section 1833(a)(1)(AA) of the Act, we are 
revising that language to specify that the coinsurance liability for an 
applicable disposable device is 20 percent of the payment amount for 
furnishing NPWT using a disposable device (as that term is defined in 
Sec.  484.202). The changes to Sec.  409.50 are found in section VIII. 
of this final rule.
    And, as part of this final rule, we are clarifying that furnishing 
NPWT using a disposable device means the HHA is furnishing a new 
disposable NPWT device, that is, the HHA provider is either initially 
applying an entirely new disposable NPWT device or removing a 
disposable NPWT device and replacing it with an entirely new one. As 
such, we are amending Sec.  484.202 to include the definition of 
``furnishing NPWT using a disposable device.'' We are also codifying 
our final policy, in Sec.  484.205(b), that separate payment is made 
for furnishing NPWT using a disposable device, which is not included in 
the episode payment. We did not propose to amend the regulations at 
Sec.  484.202 or Sec.  484.205, but we believe it is appropriate to 
include the new policy in the regulation text. The specific changes we 
are making in the regulations simply codify the final policies we 
described in the proposed rule and do not reflect any additional 
substantive changes.

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 the 
CY 2017 HH PPS proposed rule (81 FR 43744), we provided 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 the principal diagnosis based on 
the expected primary home health interventions that would be required 
during the episode of care for that diagnosis. 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, including timing of the episode, referral source, functional/
cognitive level, and comorbidity adjustment.
    While we did not solicit comments on the HHGM in the proposed rule, 
we received nine comments on the HHGM model. Commenters were generally 
supportive of the model, but stated that more detailed information is 
needed before they could provide any substantive comments. As stated in 
the proposed rule, we will be releasing a Technical Report which will 
provide more detail as to the research and the analysis conducted on 
the HHGM. Once the Technical Report is released, we will post a link on 
our Home Health Agency (HHA) Center Web site at https://www.cms.gov/
center/provider-Type/home-Health-Agency-HHA-Center.html to receive 
additional comments and feedback on the model.

G. Update on Future Plans to Group HH PPS Claims Centrally During 
Claims Processing

    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)

[[Page 76737]]

and non-routine medical supplies. 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. HHAs enter data collected from their patients' OASIS assessments 
into a free data collection software tool (JHAVEN) provided by CMS. 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 claim, ultimately enabling our claims processing system 
to reimburse the HHA for services provided to patients receiving 
Medicare home health services.
    We recently implemented a process where we match the claim and the 
OASIS assessment in order to validate the HIPPS code on the Medicare 
claim. In addition, we have conducted an analysis and prototype testing 
of a java-based grouper with our Fiscal Intermediary Shared System 
(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 of HIPPS codes on 
claims and decrease costs and burden to HHAs.
    In the CY 2017 HH PPS proposed rule, we solicited public comments 
on grouping HH PPS claims centrally with the claims processing system 
(81 FR 43746. If we group 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 will also 
address current payment vulnerabilities associated with the potential 
for misreporting HIPPS codes on the claim.
    The following is a summary of the comments we received regarding 
our future plans to group HH PPS claims centrally during claims 
processing.
    Comment: Several commenters supported CMS' proposal to implement 
centralized grouping of HH PPS claims. These commenters believed that 
centrally grouping HH claims should simplify and improve the accuracy 
of HIPPS code assignment and OASIS matching. The commenters would 
welcome a process that they expect will improve payment accuracy, 
decrease costs, and reduce administrative burden on providers. One 
commenter also noted that this proposal would decrease the potential 
that legitimate claims will be incorrectly identified as fraudulent.
    Response: We appreciate the commenters support and agree that 
grouping claims centrally within the claims processing system will 
reduce errors associated with reporting incorrect HIPPS codes and OASIS 
matching. In addition, we also expect that grouping claims centrally 
will reduce HHA costs and administrative burden. We also believe that 
it will lead to a more streamlined, efficient claims processing system 
and improved payment accuracy.
    Comment: Several commenters requested that CMS still continue to 
provide the grouper software and/or algorithm in order for providers to 
be able to calculate the HIPPS codes so that they can determine the 
expected reimbursement amount for each claim. The commenters further 
stated that the ability to value their account receivables is an 
important business function and necessary for financial reporting 
purposes.
    Response: We understand the importance of HHAs being able to value 
their account receivables as part of their business processes and 
planning and we will consider this recommendation as we continue to 
explore options for grouping HH PPS claims centrally during claims 
processing.
    Comment: One commenter requested that CMS develop an effective and 
timely communication process to provide the HIPPS codes resulting from 
the new grouper/claims process.
    Response: The HIPPS codes will not change as a result of grouping 
claims centrally within the claims processing system. We will provide 
HHAs and other interested parties with sufficient notice and updates 
regarding our future plans via future rulemaking, our HHA Center page 
located at https://www.cms.gov/Center/Provider-Type/Home-Health-Agency-HHA-Center.html, and our home health, hospice and DME open door forums.
    Comment: One commenter requested that CMS provide agencies the 
ability to review and correct their data submissions similar to what 
occurs now. If OASIS data corrections cause the assigned HIPPS code to 
change, the HHA should be able to cancel and resubmit the Request for 
Anticipated Payment (RAP).
    Response: If an OASIS correction results in a new HIPPS code, HHAs 
would still be able to cancel the RAP and resubmit. A new HIPPS code 
will be generated within the claims processing system once the new RAP 
is submitted.
    We appreciate the positive feedback and thoughtful comments that we 
have received regarding this proposal. We continue to believe that this 
process will increase payment accuracy and will reduce costs and burden 
to HHAs. We will continue to explore options for grouping HH PPS claims 
centrally during claims processing.

IV. Provisions of the Home Health Value-Based Purchasing (HHVBP) Model 
and Analysis of and Responses to Comments

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 CY 2018 based on performance on applicable measures. 
Payment adjustments will be increased incrementally over the course

[[Page 76738]]

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 and select 
claims data elements, and (2) three New Measures where points are 
achieved for reporting data.

B. Smaller- and Larger-Volume Cohorts

    As finalized in the CY 2016 HH PPS final rule, 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 into 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). 
As discussed in more detail below, we proposed, and are finalizing, the 
following changes to this methodology: (1) Calculation of the 
benchmarks and achievement thresholds at the state level rather than 
the state and size level and (2) a required minimum of 8 HHAs in a 
cohort.
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.
    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 were calculated for 
both the larger-volume cohort and for the smaller-volume cohort of HHAs 
in each state, based on a baseline period running from January 1, 2015 
through December 31, 2015. In the CY 2016 HH PPS final rule, 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 year 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 cohort use for 
benchmarking and threshold purposes because they have been used for 
several years in other CMS quality initiatives such as 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 OASIS benchmarks and 
achievement thresholds using 2015 data that was not available when we 
did the analyses included in the CY 2016 HH PPS final rule. We 
calculated the benchmarks and achievement thresholds for each OASIS 
measure 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. 
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 were concerned that this high 
variation was not the result of expected differences, like state 
regulatory policy, but was instead the result of (1) the cohort being 
so small that there were not enough HHAs in the cohort to calculate the 
values using the finalized methodology (mean of the top decile); or (2) 
the cohort being large enough to calculate the values using the 
finalized methodology, but there were not enough HHAs in the cohort to 
generate reliable values.
    We are including here Tables 21, 22, and 23, which were included as 
Tables 28, 29 and 30 in the proposed rule (81 FR 43748-43749), to help 
illustrate this issue below. 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 when the proposed rule was in development we did 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 21, Table 22 and 
Table 23 represent the OASIS measure benchmarks for the smaller-volume 
cohorts, larger-volume cohorts and the state level (which includes HHAs 
from both smaller- and larger-volume cohorts), respectively.
    For example, the differences in benchmark values for Iowa and 
Nebraska (two of the four states that

[[Page 76739]]

have smaller-volume cohorts) for the Improvement in Bed Transferring 
measure are: 13.1 (72.7 for Iowa and 85.8 for Nebraska) for the 
smaller-volume cohort (Table 21); 4.1 (78.1 for Iowa to 82.2 for 
Nebraska) for the larger-volume cohort (Table 22); and 5.5 (77.6 for 
Iowa to 83.1 for Nebraska) for the state level cohort (Table 23). We 
believe that the higher range for the smaller-volume cohorts in these 
states is a result of the smaller number of HHAs in these cohorts.

                                                       TABLE 21--Smaller-Volume Cohort Benchmarks
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            State
        Oasis-based measures        --------------------------------------------------------------------------------------------------------------------
                                          AZ           FL           IA           MA           MD           NC           NE           TN           WA
--------------------------------------------------------------------------------------------------------------------------------------------------------
Discharged to Community............         77.0         88.8         73.6         82.0  ...........         75.1         81.1         79.4  ...........
Drug Education on All Medications          100.0        100.0        100.0        100.0  ...........         98.5        100.0        100.0  ...........
 Provided to Patient/Caregiver
 during all Episodes of Care.......
Improvement in Ambulation-                  90.6         90.5         72.7         75.6  ...........         60.1         84.0         85.2  ...........
 Locomotion........................
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           63.0         74.0         58.4         62.0  ...........         62.8         65.8         58.9  ...........
 Medications.......................
Improvement in Pain Interfering             83.2         97.3         82.6         82.3  ...........         58.5         78.2         69.0  ...........
 with Activity.....................
Influenza Immunization Received for         73.4         89.8         90.8         83.8  ...........         89.2         83.6         88.9  ...........
 Current Flu Season................
Pneumococcal Polysaccharide Vaccine         95.8         91.5         95.8         95.3  ...........         83.6         97.0        100.0  ...........
 Ever Received.....................
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                        TABLE 22--Larger-Volume Cohort Benchmarks
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            State
        Oasis-based measures        --------------------------------------------------------------------------------------------------------------------
                                          AZ           FL           IA           MA           MD           NC           NE           TN           WA
--------------------------------------------------------------------------------------------------------------------------------------------------------
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           99.8        100.0         99.9        100.0         99.9         99.7         99.9         99.8         99.7
 Provided to Patient/Caregiver
 during all Episodes of Care.......
Improvement in Ambulation-                  76.4         92.4         76.7         76.1         76.5         75.2         80.8         77.2         70.8
 Locomotion........................
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           69.4         80.5         68.1         73.2         71.7         63.9         68.1         72.2         64.0
 Medications.......................
Improvement in Pain Interfering             88.6         96.7         81.0         89.5         84.4         81.5         86.0         81.7         75.5
 with Activity.....................
Influenza Immunization Received for         88.0         93.3         88.1         90.1         87.9         88.0         95.2         88.2         87.0
 Current Flu Season................
Pneumococcal Polysaccharide Vaccine         92.5         93.6         94.4         93.8         92.1         93.4         97.0         92.7         92.7
 Ever Received.....................
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                         TABLE 23--State Level Cohort Benchmarks
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            State
        Oasis-based measures        --------------------------------------------------------------------------------------------------------------------
                                          AZ           FL           IA           MA           MD           NC           NE           TN           WA
--------------------------------------------------------------------------------------------------------------------------------------------------------
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           99.8        100.0        100.0        100.0         99.9         99.7         99.9         99.8         99.7
 Provided to Patient/Caregiver
 during all Episodes of Care.......
Improvement in Ambulation-                  77.5         92.1         76.2         76.3         76.5         75.2         82.9         77.9         70.8
 Locomotion........................
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           69.1         79.6         67.3         72.0         71.7         64.1         68.3         72.2         64.0
 Medications.......................
Improvement in Pain Interfering             88.1         96.8         81.5         88.4         84.4         81.5         84.3         81.7         75.5
 with Activity.....................

[[Page 76740]]

 
Influenza Immunization Received for         87.6         92.9         88.9         90.1         87.9         88.3         94.4         88.2         87.0
 Current Flu Season................
Pneumococcal Polysaccharide Vaccine         92.9         93.3         94.8         94.2         92.1         93.4         97.0         93.3         92.7
 Ever Received.....................
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The three tables are based on the data available during the 
development of the proposed rule. The results highlight that there is a 
greater degree of inter-state 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 compared 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 described above, we are concerned that if we 
separate the 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 greater than the level of performance that HHAs in the 
larger-volume cohorts would be required to achieve. For this reason, we 
proposed 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 requested public 
comments on this proposal.
    Comment: Most of the comments we received supported this proposal. 
Several commenters supported this policy because it would reduce 
variability in performance standards. Some commenters stated that state 
level comparison cohorts would provide a more robust benchmark than the 
state level and size based cohort. Some commenters expressed some 
concern about the proposed change. One commenter suggested CMS should 
conduct ongoing research to determine the effectiveness of using state 
level and size based cohorts. One commenter, MedPAC, recommended that 
CMS calculate benchmarks and achievement thresholds at a national level 
because Medicare is a national program and there is the possibility 
that a state level focus could reward low quality agencies. Finally, 
one commenter stated that it does not make sense to compare disparate 
groups of HHAs whether the comparisons are done at the local, state, or 
national levels or even, as currently exists in the Model, among HHAs 
with similarly-sized patient cohorts but did not provide specific 
reasons for their view.
    Response: We appreciate commenters' support for our proposal to 
calculate benchmarks and achievement thresholds at the state level. 
Calculating the benchmarks and achievement thresholds at the state 
level, rather than at the state level and size cohort level, will 
eliminate the increased variation caused by having too few HHAs in a 
cohort. In addition, calculating the benchmarks and achievement 
thresholds at the state level, rather than the national level, is 
consistent with the factors considered in proposing selection at the 
state level, as discussed in the CY 2016 HH PPS final rule (81 FR 
68659), including that HHAs should be competing within the same market 
and that the Model should align with other CMS programs like Home 
Health Compare and Home Health Five Star that report by state. 
Calculating the benchmarks and achievement thresholds at the state 
level rather than at the national level also allows the Model to take 
into account the inter-state variation in quality measurement due to 
different state regulatory environments. We will continue to monitor 
and research the effectiveness of using state level cohorts.
    Comment: We received comments that were outside of the scope of our 
proposed change to the benchmark and achievement threshold 
calculations. Several commenters expressed concern that HHAs will not 
know what benchmarks are needed to avoid penalty until the end of the 
2016 performance year, and recommended that CMS establish prospective 
benchmarks based on historical performance so it is clear to HHAs the 
level of achievement necessary to avoid penalties. Commenters stated 
that agencies may not invest in quality improvement activities if the 
potential financial return is difficult to determine and recommended 
that CMS set benchmarks at a level where most providers have a 
reasonable expectation of achieving them. A few commenters supported 
2015 as the baseline year, and suggested providing HHAs with mid-course 
snapshots of their performance against the benchmarks. A commenter was 
concerned that using improvement scores was not sufficiently 
beneficiary-focused because what really matters are the agency's actual 
levels of performance. Several other commenters were concerned that 
using `improvement' scores may create inequities in payment and 
penalties because agencies with equal or better levels of achievement 
could score lower than agencies with lower achievement but higher 
improvement scores. Another commenter expressed concern that the 
limited state selection will not sufficiently represent the entire 
Medicare population due to the lack of measures relating to 
stabilization and maintenance. Finally, one commenter stated that 
improvement scores should only exist for the first 3 years of the 
Model.
    Response: As noted, these comments are outside of the scope of the 
proposed methodology change in the CY 2017 HH PPS proposed rule; 
however, we are clarifying here the calculation of the benchmarks and 
how HHAs are notified of the benchmarks. The methodology for 
calculating the achievement thresholds and benchmarks was described in 
the CY 2016 HH PPS final rule (80 FR 68681). The achievement threshold 
for each measure used in the Model is calculated as the median of all 
HHAs' performance on the specified quality measure during the baseline 
period (CY 2015). The benchmark is calculated as the mean of the top 
decile of all HHAs' performance on the specified quality measure during 
the baseline period (CY 2015). As noted above, we are finalizing a 
change to the methodology as described in the CY 2016 HH PPS final

[[Page 76741]]

rule to calculate benchmark and achievement thresholds at the state 
level, rather than at the state and cohort-size level.
    The preliminary complete set of benchmarks was based on 2015 data 
for all measures in the Model, calculated both at the state and cohort-
size level, was made available to competing HHAs on HHVBP Connect. 
HHVBP Connect was available beginning February 2016 and allows HHAs to 
attain general information about the Model, including the initial 
baseline benchmarks and achievement thresholds. The most current 
baseline achievement thresholds and benchmarks used 2015 quality data 
from the Model's OASIS measures (12 months), HHCAHPS measures (9 
months), and claims measures (9 months). This data was posted in April 
2016 on HHVBP Connect. The baseline achievement thresholds and 
benchmarks that was based on 12 months for the HHCAHPS measures and the 
claims measures were included in the Interim Performance Report posted 
in July 2016 on the HHVBP Secure Portal. The HHVBP Secure Portal was 
available in May 2016, which allows HHAs to view their own specific 
measures and scores. The quarterly Interim Performance Reports also 
allow HHAs to monitor their performance on the quality measures used to 
calculate their TPS. The Interim Performance Reports (IPRs) posted to 
the HHVBP Secure Portal in July 2016 included performance scores for 
the OASIS-based measures for the first quarter of CY 2016. The next 
IPRs, which are to be posted to the HHVBP Secure Portal in October 
2016, will include performance scores for HHCAHPS measures and claims-
based measures for the first quarter of CY 2016 as well as the 
performance scores for the OASIS-based measures for the second quarter 
of CY 2016. HHAs' performance on the 17 initial measures of the Model 
(as finalized in section IV.C of this final rule) for CY 2016 to CY 
2020 will be determined using state-level achievement thresholds and 
benchmarks, and individual HHA baseline values calculated using data 
from the 2015 baseline year; consistent with the finalized proposal to 
calculate benchmarks and achievement thresholds at the state-level. 
Performance scores to be posted on the HHVBP Secure Portal in October 
2016 will be calculated using the state-level cohort baseline 
benchmarks and achievement thresholds. HHAs will receive points if they 
achieve performance equal to or above the achievement threshold, 
calculated as the median of 2015 values.
    Final Decision: For the reasons stated above and in consideration 
of the comments received, we are finalizing our proposal to calculate 
the benchmarks and achievement thresholds at the state-level rather 
than the smaller- and larger-volume cohort level.
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 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. 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.
    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 37 of the proposed rule, which is also 
included as Table 37 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 38 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 38). 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

[[Page 76742]]

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 proposed 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 stated that 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 also proposed 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. We stated that if finalized, this 
change would apply to the CY 2018 payment adjustments and thereafter. 
We further stated that we will continue to analyze and review the most 
current cohort size data as it becomes available.
    We requested public comments on this proposal.
    Comment: Most of the commenters supported the proposed requirement 
for a minimum of eight HHAs in any size cohort. One commenter suggested 
that eight HHAs in a smaller-volume cohort could still be significantly 
impacted by an outlier. A commenter requested more information about 
how the minimum of 8 HHAs in the cohort was determined. Another 
commenter suggested that we use a minimum of 12 HHAs rather than 8 HHAs 
as the minimum number of HHAs required in the cohort. Another commenter 
suggested that CMS implement economies of scale between agencies to 
account for the business advantages that larger HHAs have over smaller 
ones but did not provide any more specific detail. Finally, one 
commenter suggested that CMS should compare HHAs nationally by altering 
qualification requirements so that states with a smaller number of 
qualified agencies can benchmark against national requirements.
    Response: We believe that a minimum of 8 HHAs per cohort represents 
a figure significant enough to mitigate the effect of outliers. As we 
discussed in the proposed rule, we analyzed performance results related 
to OASIS and claim-based measures, as well as HHCAHPS, using 2013 and 
2014 data to determine if an HHA in a cohort with a minimum number of 
HHAs would be at a disadvantage with respect to the impact of outlier 
HHAs on the payment adjustments, when compared to HHAs in larger size 
cohorts. With this information, we simulated the impact that outliers 
would have on cohort sizes ranging from 4 to 12 HHAs. We found that, in 
contrast to the calculation of the achievement thresholds and the 
benchmarks, the LEF had lower susceptibility to large variation caused 
by outliers even with a relatively small number of HHAs in the cohort. 
By running simulations using the data described above, we found that 
the distribution of payment adjustments was similar whether the number 
of HHAs in the cohort was 8, 12 or over 30 HHAs. More specifically, 
having 8, 12 or over 30 HHAs in the cohort permitted the LEF to 
distribute payments such that 80 percent of the payment adjustments was 
between -2.5 percent and + 2.5 percent. Further, we conducted a 
sensitivity analysis examining the difference in the impact that an 
outlier HHA would have on a cohort size of 8 HHAs as compared to a 
cohort size of 12 HHAs. By running simulations of adding an outlier to 
a cohort with 8 HHAs and a cohort of 12 HHAs, we identified that the 
difference in impact on the payment adjustment on the non-outlier HHAs 
in the cohort ranged from 0.1 percent to 0.13 percent. We believe that 
having a minimum of 8 HHAs in the cohort ensures that there are enough 
states in the Model with a smaller-volume cohort to analyze the impact 
on competition at the different cohort size levels, and that this 
outweighs the marginal difference in the impact of outliers as compared 
to using a minimum of 12 HHAs.
    Although it may be operationally possible to have all the smaller-
volume HHAs in the nine states compete against each other in a national 
pool, having HHAs compete at the state level (that is, all HHAs in a 
state or a cohort of HHAs in the same state) rather than at the 
national level enables the Model to address the issue of inter-state 
variation in quality measurement that could be related to different 
state regulatory environments. This is especially important when 
considering that performance incentives could flow from states with 
lower measure scores to states with higher measures scores because of 
state regulatory differences rather than the quality of care that HHAs 
provide.
    We will continue to monitor and research the impact of cohort size 
on different measurements.
    Final Decision: For the reasons stated above and in consideration 
of the comments received, we are finalizing the proposal that there 
must be a minimum of eight HHAs in any size cohort. Under this final 
policy, a smaller-volume cohort must have a minimum of 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. If a 
smaller-volume cohort in a state has fewer than eight HHAs, those HHAs 
will be included in the larger-volume cohort for that state for 
purposes of calculating the LEF and payment adjustment percentages.

C. Quality Measures

    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 through 68673) for the HHVBP Model to be used in 
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 \16\ (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 4a 
and 4b (inadvertently referred to as Figures 5 and 6 in the CY 2017 HH 
PPS proposed rule) 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).
---------------------------------------------------------------------------

    \16\ 2015 Annual Report to Congress, http://www.ahrq.gov/workingforquality/reports/annual-reports/nqs2015annlrpt.htm.

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

[[Page 76743]]

    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 proposed 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 October 1 and March 31?; and (4) Reason Pneumococcal Vaccine 
Not Received. We proposed to remove these four measures, for the 
reasons discussed below, beginning with the CY 2016 Performance Year 
(PY1) calculations, and stated that we 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. As discussed later in this section, we 
are finalizing the proposed revisions to the measure set, as set forth 
in Table 31 of the proposed rule and Table 24 of this final rule, which 
will be applicable to each performance year subject to any changes made 
through future rulemaking.
    We proposed 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 CY 2016 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 stated that 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 proposed 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 proposed 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 Model measure 
``Influenza Immunization Received for Current Flu Season'' and was not 
designed as an additional and separate measure of performance.
    We proposed 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 proposed 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 also 
proposed 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 finalized set of applicable measures is presented in Table 24, 
which excludes the four measures we proposed to remove. For the reasons 
stated below and in consideration of the comments received, we are 
finalizing this measure set for 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.
---------------------------------------------------------------------------

    \17\ 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 24--Measure Set for the HHVBP Model \17\
--------------------------------------------------------------------------------------------------------------------------------------------------------
           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.

[[Page 76744]]

 
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.
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.
                                   Health.                                                                         acute care         A home health stay
                                                                                                                   hospital in the     is a sequence of
                                                                                                                   60 days following   home health
                                                                                                                   the start of the    payment 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.
                                                                                                                   department use     A home health stay
                                                                                                                   and no claims for   is a sequence of
                                                                                                                   acute care          home health
                                                                                                                   hospitalization     payment 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) had   facility during
                                                                                                                   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 76745]]

 
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) received   regardless of
                                                                                                                   an influenza        clinical
                                                                                                                   vaccination         responsibility or
                                                                                                                   administered at     patient contact.
                                                                                                                   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. In the CY 2017 HH PPS proposed rule, we 
proposed 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 proposed 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. We stated that under this proposal, for 
PY1, HHAs would report on this measure in October 2016 and January 
2017. We further stated that HHAs would report on this measure in April 
2017 for PY2 and annually in April thereafter. We stated that we 
believe 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 did not propose 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, ``Advance Care Planning'', 
and ``Herpes zoster (Shingles) vaccination: Has the patient ever 
received the shingles vaccination?''
    We also proposed to increase the timeframe for submitting New 
Measures data from seven calendar days (80 FR 68675 through 68678) to 
fifteen calendar days following the end of each reporting period to 
account for weekends and holidays.
    We invited public comment on these proposals.
    Comment: Most commenters expressed support for the removal of the 
four identified quality measures. One commenter disputed the accuracy 
of the rationale for removing the prior functioning measure on the 
basis that it has never been collected by HHAs, citing use of AM-PAC 
[activity measure for post-acute care], which is based on NQF0430, and 
urged reconsideration or further development of a measure that 
considers function (ADLs and IADLs) as a focus of occupational therapy 
services to this population.
    Response: We appreciate the support regarding the proposed removal 
of these four measures. In regard to the one comment on the prior 
functioning measure, we determined that NQF0430 utilizes data from the 
AM-PAC (Activity Measure for Post-Acute Care), a proprietary tool that 
is not currently, and has never been collected by CMS or utilized in 
its home health quality programs. CMS will continue to consider how a 
prior functioning measure could inform a patient's potential for 
improving, along with its measure development work on functional 
status, caregiving, and other clinical indicators, to determine whether 
future modifications to the measure set would be appropriate. We are 
finalizing the removal of the following measures: (1) Care Management: 
Types and Sources of Assistance; (2) Prior Functioning ADL/IADL; (3) 
Influenza Vaccine Data Collection Period: Does this episode of

[[Page 76746]]

care include any dates on or between October 1 and March 31; and (4) 
Reason Pneumococcal Vaccine Not Received as proposed.
    Comment: Another commenter suggested that CMS move quickly to 
eliminate process measures that weakly correlate with health outcomes, 
and those that measure basic standards of care on which providers have 
achieved full performance.
    Response: We appreciate the perspective on how process measures may 
correlate with health outcomes. We believe that the process measures 
selected for use in this Model, which primarily relate to receiving 
recommended vaccines, are correlated with positive population health 
outcomes. Regarding those measures where providers have achieved `full 
performance', we are monitoring this and may propose in future 
rulemaking to remove one or more measures if we conclude that it is no 
longer appropriate for the Model.
    Comment: Multiple commenters expressed support for removing the 
phrase ``starter set'' in describing the initial quality measures set. 
One commenter stated that while they had no issues with eliminating the 
phrase ``starter set'' from the quality measures set, CMS should not 
imply that it is a static set of measures.
    Response: We appreciate the support regarding the proposed deletion 
of ``starter set'' from Sec. Sec.  484.305, 484.315, and 484.320. CMS 
will continue to reexamine and revise the measures as needed to develop 
a concise set of measures for the HHVBP Model. We are finalizing the 
deletion of ``starter set'' from Sec. Sec.  484.305, 484.315, and 
484.320 as proposed.
    Comment: One commenter urged CMS to align measures included in the 
HHVBP Model with measures being implemented under the provisions of the 
IMPACT Act when possible to align HHVBP Model measures with those in 
the HHQRP.
    Response: There is intra-agency collaboration at CMS to ensure that 
measure selection is aligned among the various CMS post-acute care 
initiatives. We continue to consider options to effectively align 
future HHVBP Model measures with other HH measures developed to 
implement requirements under the IMPACT Act.
    Comment: Multiple commenters stated their support to increase the 
New Measures data submission timeframe from 7 to 15 calendar days. 
There was no opposition to this change.
    Response: We appreciate the support regarding the proposal to 
increase the New Measures data submission timeframe from 7 to 15 
calendar days following the end of each reporting period. For the 
reasons stated in the proposed rule and in consideration of commenters' 
support for this modification, we are finalizing the 15-day submission 
timeframe for the New Measures as proposed.
    Comment: We received multiple comments, including from MedPAC that 
supported changing the reporting requirements for the Influenza 
Vaccination Coverage for Home Health Personnel New Measure from 
quarterly to annual, including the suggestion that we not require this 
information to be reported in January 2017 and instead initiate annual 
collection in April 2017.
    Response: We appreciate the suggestion regarding the revised 
submission timeframe for this measure and we agree. Because the measure 
refers to an event (flu vaccination) that usually only on an annual 
basis, we agree that annual reporting in April for the prior six-month 
period is appropriate. Given the time frame for release of this final 
rule, HHAs will already have submitted data on this measure for PY 1 in 
October 2016. HHAs will not be required to report on this measure in 
January 2017, as proposed, but will report for PY 2 in April 2017, for 
the period October 1, 2016 (or when the vaccine became available) 
through March 31, 2017, and annually in April thereafter, as this 
timing aligns with the influenza vaccination season.
    We are finalizing the annual reporting requirement for the 
Influenza Vaccination Coverage for Home Health Personnel measure with 
this modification.
    Comment: Several commenters suggested measures, or modifications to 
measures, to be considered for the HHVBP Model, including (1) 
pneumococcal vaccine in older adults (NQF#0043); (2) working with and 
supporting caregiving families; (3) changing the drug education measure 
from a process to outcome measure (examples: a measure of the HHA 
efforts regarding health literacy, or caregiver understanding of 
tasks); and (4) modifying the Acute Care Hospitalization: Unplanned 
Hospitalization during first 60 Days of Home Health measure.
    Response: These comments are outside the scope of our proposed 
changes to the measure set. In the CY 2016 HH PPS final rule, we 
delineated the principles for developing and retiring measures (80 FR 
68667-68669). We continue to review measure appropriateness in terms of 
statistical and clinical relevance to patient outcomes and will 
continue to consider additional applicable measures. We also will 
continue to seek input from the public on measures for consideration. 
Suggestions for specific measures that support the guiding principles 
articulated previously in this section for consideration for inclusion 
in future HHVBP Model measures sets may be submitted by emailing 
[email protected]. Please include the exact name of the 
measure(s), the specifications of how the measure is calculated, and 
the reason(s) why you believe the measure(s) would enhance the HHVBP 
Model.
    Comment: One commenter stated its view that CMS has changed the 
Model's implementation design, which the commenter described as 
limiting the performance analysis to traditional Medicare enrollees. 
The commenter stated that including all patients subject to OASIS, 
including Medicare Advantage and Medicaid patients, is inconsistent 
with the CY 2016 HH PPS final rule and inappropriate in a VBP model 
that only affects traditional Medicare payments, and that Medicare 
should not penalize or reward HHAs for their performance in other 
payment programs that are outside of traditional Medicare.
    Response: As discussed in the CY 2016 final rule, the majority of 
the measures finalized for use in the model will use OASIS data 
currently being reported by CMS-CCNs, to promote consistency and to 
reduce the data collection burden for providers (80 FR 68668). We 
explained further that using OASIS (and HHCAHPS) data allows the Model 
to leverage reporting structures already in place to evaluate 
performance and identify weaknesses in care delivery. OASIS and HHCAHPS 
measures are collected for applicable Medicare and Medicaid patients 
for whom the data is collected. Each of these measures is risk adjusted 
to take into account wide variation in the data.
    OASIS and HHCAHPS performance scores utilize data for patients of 
HHAs for whom we require completion of these instruments, without 
separate scoring based on data for Medicare beneficiaries. This is also 
true of measure rates that are publicly reported on Home Health 
Compare, as well as the performance scoring under this Model. 
Consistent with this, the term patient is generally used throughout the 
section of the CY 2016 HH PPS final rule describing the HHVBP Model 
applicable measure set.
    This is also consistent with our implementation of the Model to 
date. In December 2015 and January 2016, we

[[Page 76747]]

provided webinars to educate the HHAs on the Model design, how the TPS 
was calculated, how data was collected, as well as the details and use 
of the quality measures. In July 2016, we posted the Interim 
Performance Reports for each competing HHA on the HHVBP Secure Portal, 
reflecting measure performance derived from OASIS and HHCAHPS, as well 
as claim-based measures. In addition, HHAs are informed when the HHAs 
log into the HHVBP Secure Portal that the Total Performance Score on a 
set of measures collected via OASIS and HHCAHPS for all patients 
serviced by the HHA. We note that we have not received any concerns or 
recalculation requests relating to the scope of quality measure data 
used to generate these reports.
    Comment: We received several additional comments regarding the 
measure set that were outside the scope of our proposed changes. Some 
commenters expressed concern that the performance measures do not 
reflect the patient population served under the Medicare Home Health 
benefit as the outcome measures focus on a patient's clinical 
improvement and do not address patients with chronic illnesses; 
deteriorating neurological, pulmonary, cardiac, and other conditions; 
and some with terminal illness. These commenters opined that the value 
of including stabilization measures in the HHVBP Model is readily 
apparent as it aligns the Model with the Medicare Home Health benefit. 
Commenters also expressed concerns that 'improvement' is not always the 
goal for each patient and that stabilization is a reasonable clinical 
goal for some. Commenters suggested the addition of stabilization or 
maintenance measures be considered for the HHVBP Model. However, no 
specific measures were suggested by commenters. Several commenters 
cited the Jimmo v. Sebelius settlement. Many of the commenters objected 
to the use of improvement measures in the HHVBP Model.
    Response: We appreciate the comments on the measures methodology 
and, as discussed in the CY 2016 HH PPS final rule, acknowledge that 
skilled care may be necessary to improve a patient's current condition, 
to maintain the patient's current condition, or to prevent or slow 
further deterioration of the patient's condition, as was clarified 
through the manual provisions revised as part of Jimmo v. Sebelius 
settlement (80 FR 68669). As further stated in that rule, this 
settlement agreement pertains only to the clarification of CMS's manual 
guidance on coverage standards, not payment measures like those at 
issue here, and expressly does not pertain to or prevent the 
implementation of new regulations, including new regulations pertaining 
to the HHVBP Model. We refer readers to the CY 2016 HH PPS final rule 
(80 FR 68669 through 68670) for additional discussion of our analyses 
of measure selection, including our analyses of existing measures 
relating to improvement and stabilization. As discussed in that rule, 
the HHVBP Model is designed such that any measures determined to be 
good indicators of quality will be considered for use in the HHVBP 
Model in future years and may be added through the rulemaking process. 
We will also continue to seek input from the public on the measure set 
for the HHVBP Model as discussed previously.
    Comment: Two commenters stated that OASIS measures can be 
manipulated and the HHVBP Model should only use claims-based measures 
because they are more objective. Another commenter suggested that the 
claim-based measures be weighted greater than OASIS measures for that 
same reason. Two commenters suggested that CMS use risk adjustment to 
account for areas where there is ``lack of access to health care or 
economic disparities''. One commenter posited that data indicates that 
the margin of error for a sample size of 20 surveys is large when 
considering typical performance on HHCAHPS measures, and recommends 
that a minimum of 100 HHCAHPS surveys be established for inclusion 
within the HHVBP Model.
    Response: Although these comments were outside the scope of our 
proposed changes, we appreciate the issues raised for possible 
consideration to improve the HHVBP Model in future rulemaking. We 
conducted extensive testing and consultation in developing the measure 
set and considered if socioeconomic status could be risk adjusted. 
OASIS is continuously reviewed and monitored for accuracy in reporting. 
More information about OASIS can be found at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/OASIS/Regulations.html. We will continue to seek input from all stakeholders 
on the measure set for the HH VBP Model as discussed previously.
    Final Decision: For the reasons stated and in consideration of the 
comments received, we are finalizing the removal of the four measures 
from the measure set for PY 1 and subsequent performance years, as 
reflected in Table 24: (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 October 1 and March 31; and (4) Reason Pneumococcal Vaccine Not 
Received. In addition, we are also finalizing as proposed, the deletion 
of the reference to starter set in Sec. Sec.  484.305, 484.315, and 
484.320, and the 15-day submission timeframe for New Measures data. We 
are also finalizing an annual submission of the ``Influenza Vaccination 
Coverage for Home Health Personnel'' New Measure, with the first annual 
submission in April 2017 for PY2, for the prior 6-month reporting 
period of October 1 2016-March 31, 2017 to coincide with the flu 
season.

D. Appeals Process

    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. 
In the CY 2017 HH PPS proposed rule, we proposed 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 
proposed, and a 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 Reports 
were posted to the HHVBP Secure Portal in July 2016 and included 
performance scores for the OASIS-based measures for the first quarter 
of CY 2016. See Table 25 for data provided in each report. Table 25 is 
similar to Table 32 included in the proposed rule (81 FR 43754) except 
that it has been revised to reflect that every report contains 12 
months of rolling data including the quarters identified in Table 32 of 
the proposed rule. The quarterly Interim Performance Reports 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.

[[Page 76748]]

    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 proposed 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 Model 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.
    We proposed adding 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 the 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 
modifications described later in this section. We proposed 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 described later in this section. We stated that 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 and Hospital Value-Based Purchasing Program, as well as 
the appeals policy for the Comprehensive Care for Joint Replacement 
Model that is being tested by the Center for Medicare and Medicaid 
Innovation (Innovation Center).
    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 25--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.................  12 months ending 9/30    12 months ending 6/30
                                                                 of previous PY.          of previous PY.
Interim Performance Scores..........  April...................  12 months ending 12/31   12 months ending 9/30
                                                                 of previous PY.          of previous PY.
Interim Performance Scores..........  July....................  12 months ending 3/31    12 months ending 12/31
                                                                 of current PY.           of previous PY.
Interim Performance Scores..........  October.................  12 months ending 6/30    12 months ending 3/31
                                                                 of current PY.           of current PY.
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
Annual TPS and Payment Adjustment     August..................     Entire 12 months of previous PY [Jan-Dec].
 Percentage.
rrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr
Annual TPS and Payment Adjustment     December................   Entire 12 months of previous PY [Jan-Dec] after
 Percentage (Final).                                                          all recalculations and
                                                                       reconsideration requests processed.
----------------------------------------------------------------------------------------------------------------

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 proposed 
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 proposed 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

[[Page 76749]]

(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 proposed 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 proposed 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 proposed 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 for the 
applicable performance year. We invited comments on this proposed 
timeframe for recalculation requests, as well as any alternatives.
2. Reconsideration
    We proposed 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 proposed 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 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 proposed 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 for the applicable performance year.
    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. In the CY 2017 HH PPS 
proposed rule, we proposed 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 solicited 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.
    Comment: Many commenters supported the proposed reconsideration 
process, which would allow a HHA to request reconsideration for the 
outcome of a recalculation request for its Annual TPS and Payment 
Adjustment Report.
    Response: We appreciate the support to add reconsideration as the 
second level of review in addition to the recalculation process.
    Comment: Many commenters supported the proposed changes to the 
timeline for submitting recalculation requests. One commenter noted 
that while they understood the need to shorten the timeframe, they 
encourage CMS to enforce firm timelines by which HHAs will be notified 
of the decision of their appeal and for CMS to appropriately staff the 
appeals team to meet these targets. Another commenter suggested that 
CMS provide educational tools, such as webinars and/or conference 
calls, to help HHAs determine inaccuracies in their reports so HHAs can 
make accurate determinations and submit appeals in a timely manner.
    Response: We appreciate the comments supporting the proposed

[[Page 76750]]

changes to the timeframes for submitting recalculation requests. We 
expect to provide timely and transparent adjudication of appeals and 
notifications to the HHAs. We will continue to offer educational tools, 
such as webinars and conference calls, to help HHAs in reviewing their 
performance report so that they may submit any appeals in a timely 
manner.
    Comment: A few commenters disagreed with the proposal to shorten 
the timeframe for recalculation requests from 30 calendar days to 15 
calendar days for both the Interim Performance Reports and the Annual 
TPS and Payment Adjustment Reports. These same commenters did not agree 
with the 15-calendar day submission timeline for reconsideration 
requests. Commenters expressed concern that 15 calendar days does not 
provide a sufficient amount of time for HHAs to review the reports and 
determine whether an appeal is needed, collect supporting data, and 
submit their requests. One commenter also requested that CMS commit to 
a specific release date for each of the Interim Performance Reports, 
specifically the 1st day of each publication month, and improve 
functionality and accessibility of the HHVBP Secure Portal in order for 
agencies to adequately review the Interim Performance Reports within 
the 15-calendar day timeframe.
    One commenter ``cautiously supports'' the proposal to provide each 
HHA with its payment adjustment percentage no later than 30 calendar 
days before the payment adjustment is applied to allow extra time for 
the appeals process to take place. While the commenter supports more 
time for HHAs to receive their payment adjustment reports so that they 
can operationalize the payment adjustments, it stated that it 
understands this balances additional time for the appeals process. 
Commenters stated that with this additional time they expect a timely 
and transparent adjudication of appeals and notification to HHAs.
    Response: We proposed to shorten the timeframe for recalculations 
and reconsiderations to accommodate the time needed to generate and 
submit the final data file to the FISS to meet the January payment 
adjustment implementation date for each model year. As described in the 
proposed rule, we believe that HHAs' ability to review their quarterly 
Interim Performance Reports and submit recalculation requests provides 
HHAs with a mechanism to address potential errors in advance of 
receiving the Annual TPS and Payment Adjustment Report and we expect 
that in many cases, the reconsideration requests would result in a 
mechanical review of the application of the formulas for the TPS and 
LEF. We therefore believe that 15 calendar days is a sufficient amount 
of time to determine whether an appeal is needed, collect supporting 
data, and submit a recalculation request following the posting of the 
Annual TPS and Payment Adjustment Reports. We do not provide dates for 
the release of the Interim Performance Reports or the Annual TPS and 
Payment Adjustment Reports because the availability of data varies. We 
expect to provide timely and transparent adjudication of appeals and 
notifications to the HHAs and are always looking for ways to improve 
the functionality and accessibility of the HHVBP Secure Portal.
    Comment: One commenter requested that CMS maintain the decision to 
release final reports no later than 60 calendar days prior to payment 
adjustments taking effect so that HHAs have enough time to prepare for 
the impact of the payment adjustment.
    Response: We proposed 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 believe that this revised timeframe 
would provide sufficient notice to HHAs of their payment adjustment in 
advance of the payment adjustment being applied while at the same time 
allowing for the proposed second level of appeals. CMS aims to provide 
the final TPS and payment adjustment percentage to HHAs as far in 
advance of the payment year as possible following the resolution of the 
reconsideration process.
    Comment: One commenter requested that we clarify whether a 
successful appeal that changes the performance scores for a particular 
HHA correspondingly changes the performance rankings of the HHAs in 
that cohort and whether it would affect their payment adjustments. The 
commenter also questioned how HHAs will be notified, as well as whether 
there are further appeal rights.
    Response: As noted above, we proposed that if we deny an HHA's 
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. After a determination has 
been made on any such reconsideration requests, a final payment 
adjustment report will be posted that reflects any changes to the 
payment adjustments as a result of the reconsideration decisions, both 
for those HHAs that requested the reconsiderations and all other HHAs, 
and a system generated notification will go to each HHA. If the TPS 
score or payment adjustment is recalculated for an HHA as a result of 
that HHA's reconsideration request, the payment adjustments will have 
to be recalculated for all HHAs in the same cohort. Figure 9 of the CY 
2016 HH PPS final rule (80 FR 68688) provides an illustration of how 
the LEF is calculated. Columns C1-C5 of Figure 9 demonstrate that the 
LEF coefficient is dependent on the TPS and volume of service for each 
HHA in the cohort. As a result, if an HHA's reconsideration request 
results in a change to that HHA's TPS, all other HHAs in the same 
cohort may experience a minimal change to their respective payment 
adjustment. We would expect the change to the other HHAs' payment 
adjustments to be minimal because the magnitude of change would be 
divided among all the other HHAs in the cohort. We are finalizing in 
this rule the process for an HHA to request recalculation or 
reconsideration, following a decision on that HHA's request for 
recalculation, if the HHA has concerns that its TPS or payment 
adjustment is miscalculated. There is no further appeal process under 
the HHVBP model following a decision on the reconsideration request.
    Final Decision: For the reasons stated and in consideration of the 
comments received, we are finalizing the appeals process as proposed 
and the associated regulation text at Sec.  484.335, titled ``Appeals 
Process for the Home Health Value-Based Purchasing Model'', with a 
modification to Sec.  484.335(a)(3)(iv) to correct an erroneous 
reference to ``reconsideration'' to ``recalculation'' and modifications 
to Sec.  484.335(b)(1) for clarity and internal consistency. That is, 
we are finalizing the reconsideration process; the requirement that 
recalculation requests be submitted within 15 calendar days of the 
Interim Performance Report or the Annual TPS and Payment Adjustment 
Report being posted on the HHVBP Secure Portal; the requirement that 
reconsideration requests be submitted within 15 days of being notified 
of the results of the recalculation request; and that the final TPS and 
payment adjustment percentage is provided to competing HHAs in a final 
report no later than 30 calendar days in advance of the payment 
adjustment taking effect.

[[Page 76751]]

E. Discussion of the Public Display of Total Performance Scores

    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 public reports would 
inform home health industry stakeholders (consumers, physicians, 
hospitals), as well as all competing HHAs delivering care to Medicare 
beneficiaries within selected state boundaries, on their level of 
quality relative to both their peers and their own past performance. 
These public reports would provide home health industry stakeholders, 
including providers and suppliers that refer their patients to HHAs, an 
opportunity to confirm that those beneficiaries 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 commenters 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, webinars, updates to the 
HHVBP Model Innovation Center Web page (https://innovation.cms.gov/initiatives/home-health-value-based-purchasing-model), a dedicated help 
desk, and a web-based forum where regularly frequently asked questions 
are published. 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, HHAs have been required to collect 
OASIS data since 1999 and report HHCAHPS data since 2012.
    We are considering various public reporting platforms for the HHVBP 
Model including Home Health Compare (HHC) and the Innovation Center 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 Model data elements 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.
    Comment: One commenter suggested that CMS not consider public 
display until after the Model was evaluated and a decision would be 
made as to whether or not to scale the Model nationally. The commenter 
stated that it was not appropriate to report outcomes for some HHAs 
when only those in the nine designated states could be reported, and 
not all agencies in the United States, potentially putting the reported 
agencies at a disadvantage. One commenter favored the public display of 
the TPS, but urged CMS to: (1) Employ a transparent process and involve 
stakeholders in deciding what is reported; (2) provide a review period 
with a process for review and appeal before reporting; and (3) provide 
a clear explanation of what the TPS does and does not say to ensure 
appropriate consumer understanding and decision making. Finally, 
several commenters suggested that CMS post the information on the 
Innovation Center Web site, and not on the HHC Web site. The commenters 
suggested that posting this information on the Innovation Center Web 
site would clearly separate the information from national public 
reporting of all HHAs and be less likely to confuse consumers from non-
participating states.
    Response: We support providing the public with information to make 
an informed decision when choosing a Medicare-certified HHA. Similar to 
current reporting mechanisms for providing information on home health 
performance, including Home Health Compare and the Home Health Quality 
Reporting Program (HHQRP), the HHVBP Model's public display would 
provide all stakeholders in the selected states with additional 
information as they identify the home health services that best meet 
their needs. As we expect stakeholders to access publicly reported 
information for the state in which they are interested in finding 
services, we would not expect those stakeholders in non-participating 
states to utilize this information. We do not believe public display of 
information regarding performance in the Model would create a 
disadvantage for participating HHAs in their own states because all 
HHAs in a selected state must participate.
    Current CMS public information Web sites, such as Hospital Compare 
and Nursing Home Compare, help consumers and others choose among 
providers based on the quality of care and services. We intend to 
continue to provide opportunities for stakeholder input as we develop a 
mechanism for public reporting under the HHVBP Model. We appreciate the 
commenters' concern about avoiding confusion with other public 
reporting by HHAs. We believe it is also important to make the 
information available where it is most likely to be accessed by a 
variety of stakeholders. We are considering an approach that balances 
access and reduces the likelihood for confusion by perhaps providing a 
link from the Home

[[Page 76752]]

Health Compare Web site (a site with high visibility that is frequently 
used by consumers of home health services) to the Innovation Center Web 
site, where stakeholders in the selected states or others may access 
it.
    We appreciate the comments and will continue to gather information 
from the public as we consider mechanisms for public reporting under 
the HHVBP Model.

V. Updates to the Home Health Care Quality Reporting Program (HH QRP) 
and Analysis of and Responses to Comments

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 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 (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,\18\ which 
incorporates the three broad aims of the National Quality Strategy.\19\ 
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.
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    \18\ http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/CMS-Quality-Strategy.html.
    \19\ http://www.ahrq.gov/workingforquality/nqs/nqs2011annlrpt.htm.
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    We proposed 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 proposed 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

[[Page 76753]]

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 proposed 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 these proposed measures in the HH setting.
    The following is a summary of the comments we received for general 
consideration regarding our proposals for the HH QRP.
    Comment: One commenter supported the criteria that measures 
selected for the HH QRP be valid, reliable, and relevant, but noted 
that these criteria did not address the fact that maintaining function 
through skilled care was a valid goal for home health.
    Response: We appreciate the commenter's support regarding the 
criteria that measures selected for the HH QRP be valid, reliable, and 
relevant and confirm that maintenance of function is a valid goal for 
some home health patients.
    Comment: We received several comments regarding NQF endorsement of 
the measures. Several commenters expressed concern about the lack of 
NQF endorsement for measures. In addition, several commenters 
recommended that CMS delay implementing the proposed measures until NQF 
has completed its review and has endorsed the measures. Several 
commenters noted the NQF MAP committee did not endorse the proposed 
measures. Additionally, commenters recommended NQF endorsement prior to 
finalization of use in public reporting. A number of commenters 
recommended that CMS test new measures for reliability and validity 
prior to implementation, and encouraged CMS to analyze data to ensure 
comparability across post-acute care settings. Commenters also 
requested that testing results be made available to stakeholders.
    Response: We acknowledge the commenters' recommendation to delay 
implementation of the measures until they are NQF-endorsed. While we 
appreciate the importance of consensus endorsement and intend to seek 
such endorsement, we must balance the need to address gaps in quality 
and adhere to statutorily-required timelines as in the case of the 
quality and resource use measures proposed in order to meet the 
requirements of the IMPACT Act. We consider and propose appropriate 
measures that have been endorsed by the NQF whenever possible. We 
recognize the importance of consensus endorsement and, where possible 
in light of the statutory deadlines imposed by the IMPACT Act, have 
adopted measures for the HH QRP that are endorsed by the NQF. However, 
when this is not feasible because there is no NQF-endorsed measure, we 
utilize our statutory authority that allows the Secretary to specify a 
measure for the HH QRP that is not NQF-endorsed where, as in the case 
for the proposed measures, we have not been able to identify other 
measures that are endorsed or adopted by a consensus organization.
    For measures that do not have NQF endorsement, or which are not 
fully supported by the MAP for use in the HH QRP, we proposed for the 
HH QRP for the purposes of satisfying the measure domains required 
under the IMPACT Act, measures that closely align with the national 
priorities identified in the National Quality Strategy (http://www.ahrq.gov/workingforquality/) and for which the MAP supports the 
measure concept. Further discussion as to the importance and high-
priority status of these proposed measures in the HH setting is 
included under each quality measure in this final rule. To the extent 
that we have adopted measures under our exception authority, we intend 
to seek NQF-endorsement of those measures and will do so as soon as is 
feasible. Regardless of whether the measures are or are not NQF-
endorsed at the time we adopt them, they have all been tested for 
reliability and/or validity and we believe that the results of that 
testing support our conclusion that they are sufficiently reliable and 
valid to warrant their adoption in the HH QRP. The results of our 
reliability and validity testing for these measures may be found in the 
Measure Specifications for Measures Proposed in CY 2017 HH QRP Final 
Rule, posted on the CMS HH QRP Web page at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIQualityMeasures.html. In regard to 
additional measure development, testing, and measure refinement, we 
will continue to test, monitor and validate these measures as part of 
measure maintenance.
    Comment: We received many comments regarding risk-adjusting measure 
results by socioeconomic status (SES) or sociodemographic status (SDS). 
A few commenters, including MedPAC, did not support risk-adjustment of 
measures by SES or SDS status. MedPAC stated that risk adjustment can 
hide disparities in care and suggested that risk-adjustment reduces 
pressure on providers to improve quality of care for low-income 
Medicare beneficiaries. MedPAC supported peer provider group 
comparisons with providers of similar low-income beneficiary 
populations. The majority of commenters supported the use of SES or SDS 
for risk adjustment to account for varying acuity levels of patients in 
different settings of care, as well as other differences in patient 
characteristics that could affect health outcomes. The commenters noted 
in particular the many factors outside the control of home health 
providers, including access to food and primary care, income, informal 
caregivers and the condition of a patient's home that should be 
considered. These

[[Page 76754]]

commenters expressed concern that lack of risk-adjustment for these 
factors may compromise credibility, provide disincentives to serve 
certain patients and make it difficult to validly compare providers 
across PAC settings. A few commenters suggested that CMS could take 
advantage of the National Quality Forum's sociodemographic adjustment 
trial period.
    Response: We appreciate the considerations and suggestions conveyed 
in relation to the measures and the importance in balancing appropriate 
risk adjustment along with ensuring access to high quality care. We 
note that in the measures that are risk adjusted, we do take into 
account characteristics associated with medical complexity, as well as 
factors such as age where appropriate to do so. With regard to the 
incorporation of additional factors including patient characteristics, 
such as cognitive impairment and function, we have and will continue to 
take such factors into account, which would include further testing as 
part of our ongoing measure development monitoring activities. With 
regard to the suggestions pertaining to the incorporation of 
socioeconomic factors as risk-adjustors for the measures, 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. This trial 
entails 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 encouraged to submit information such as 
analyses and interpretations, as well as performance scores with and 
without sociodemographic factors in the risk adjustment model. Several 
measures developed or maintained by CMS have been brought to NQF since 
the beginning of the trial. CMS, in compliance with NQF's guidance, has 
tested sociodemographic factors in the measures' risk models and made 
recommendations about whether or not to include these factors in the 
endorsed measures. We intend to continue engaging in the NQF process as 
we consider the appropriateness of adjusting for sociodemographic 
factors in our outcome measures.
    Furthermore, the HHS 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. For each of the proposed 
measures, we applied consistent models where feasible to develop their 
definitions, other technical specifications and approach to risk-
adjustment. We also intend to continue to monitor the reliability and 
validity of the HHQRP measures, including whether the measures are 
reliable and valid for cross-setting purposes.
    Comment: Two commenters encouraged CMS to give consideration to 
burden when developing quality measures, and one additionally noted 
that even measures that rely on existing claims data can pose 
additional administrative burden, such as time and effort to compile 
and validate data.
    Response: With all new measure development, we are committed to 
assessing the burden and utility of proposed measures, through 
Technical Expert Panels, public comment periods and other opportunities 
for stakeholder input. Of the four measures proposed in the proposed 
rule, one will be calculated using assessment items already in OASIS 
instrument and, for that reason, adds no new burden for HHAs. The other 
three proposed measures are claims-based, and consistent with our 
general policy for claims-based measures, are calculated using claim 
files that should have been already compiled and validated by HHAs for 
other purposes, including reimbursement. Therefore, we do not believe 
that the adoption of claims-based measures creates a new administrative 
burden for providers.
    Comment: Two commenters expressed support and appreciation for the 
transparent process employed in developing measures to satisfy the 
requirements of the IMPACT Act. Other commenters expressed concern over 
the short timeframe available for stakeholder input into measure 
development.
    Response: We appreciate the support for our transparent process and 
wish to confirm our commitment to ongoing stakeholder involvement. We 
appreciate the feedback regarding the timing issues related to IMPACT 
Act implementation. It is our intent to move forward with IMPACT Act 
implementation in a manner in which the measure development process 
continues to be transparent, and includes input and collaboration from 
experts, the PAC provider community, and the public at large. It is of 
the utmost importance to us to continue to engage stakeholders, 
including providers, patients and their families, throughout the 
measure development lifecycle through their participation in our 
measure development public comment periods, the pre-rulemaking process, 
TEPs convened by our measure development contractors, open door forums 
and other opportunities. With that, we note that with regard to the 
measure development process we have provided the various opportunities 
as previous described and we have provided multiple opportunities for 
stakeholder input on the proposed measures, including soliciting 
feedback from a TEP, and pre-rulemaking public comment periods. 
Specifically and in addition to the various opportunities for the 
stakeholder input previously described, we have also worked to be 
responsive to stakeholder concerns pertaining to the length of various 
comment periods, and in response to those concerns, we have extended 
our public comment periods for measures under development on several 
occasions. We also encourage feedback through our IMPACT Act PAC 
Quality Initiative resource and feedback mailbox at 
[email protected] or at the SNF QRP resource and 
feedback mailbox at [email protected]. We thank all 
stakeholders for their thoughtful feedback on and engagement with the 
measure development and rulemaking process.
    Comment: One commenter thanked CMS for clarifying that OASIS 
assessments are used for Home Health beneficiaries that are in 
Medicaid, MA, and FFS, and commended CMS for providing education on the 
changes coming for the HH QRP.
    Response: We thank the commenter for their support.

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 proposed that when we 
initially adopt a measure for the HH QRP for a payment determination, 
this measure would be automatically retained for all subsequent payment 
determinations

[[Page 76755]]

unless we proposed to remove or replace the measure, or unless the 
exception discussed below applied.
    We proposed 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 
would no longer be collected for purposes of the HH QRP, and the 
performance data for the measure would no longer be displayed on HH 
Compare. We also proposed 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 would still appear on OASIS for 
previously established purposes that are non-related to our HH QRP. 
HHAs would be able to access these reports using the Certification and 
Survey Provider Enhanced Reports (CASPER) system and could use the 
information for their own monitoring and quality improvement efforts.
    Further, we proposed 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 proposed that any such ``removal'' or ``replacement'' would take 
place through notice and comment rulemaking, unless we determined that 
a measure was causing concern for patient safety. Specifically, in the 
case of a HH QRP measure for which there was a reason to believe that 
the continued collection raised possible safety concerns or would cause 
other unintended consequences, we proposed to promptly remove the 
measure and publish the justification for the removal in the Federal 
Register during the next rulemaking cycle. In addition, we would 
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 invited public comment on our proposed policy for retaining, 
removing and replacing previously adopted quality measures, including 
the criteria we proposed to use when considering whether to remove a 
quality measure from the HH QRP
    Comment: One commenter expressed support for the proposed criteria 
to remove or replace measures from the HH QRP and no longer display 
them on HH Compare. Another commenter expressed concern that the 
criterion ``performance or improvement on a measure does not result in 
better patient outcomes'' could be interpreted as equating to 
functional improvement and exclude patients who need skilled care to 
maintain function. This commenter also requested clarification of the 
word ``topic'' in the criterion ``a measure that is more proximal in 
time to desired patient outcomes for the particular topic is 
available.''
    Response: We appreciate the support for our policy for determining 
when HH QRP measures should be removed or replaced. We wish to clarify 
that ``improvement'' on a measure means an improved agency performance 
score and that better patient outcomes can encompass both functional 
stabilization and improvement. In addition, we wish to clarify that the 
word ``topic'' in the referenced criterion refers to the measure focus 
area, such as pain management.
    Final Decision: After consideration of the comments received, we 
are finalizing our proposed policy on the process for retaining, 
removing, and replacing previously adopted HH QRP measures.

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 that 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 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 proposed 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. 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 proposed 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 supported our proposal to remove the 
six process

[[Page 76756]]

measures can be found at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIQualityMeasures.html.
    We invited public comment on the above proposal to remove 6 process 
measures from the HH QRP.
    Comment: We received many comments in favor of the removal of 28 
measures from the HHQI and the proposed removal of 6 measures from the 
HH QRP. MedPAC and other commenters supported removal of measures that 
were ``topped out'' and limited in their ability to distinguish between 
providers. One commenter suggested CMS review the National Academy of 
Medicine's recent report to help identify high priority measures for a 
smaller measure set, while another suggested a dashboard of measures 
aligned across home health quality initiatives, including star ratings, 
Home Health Compare and the home health value-based purchasing 
demonstration. Some commenters recommended that removed measures be 
replaced by claims-based measures that can be independently verified, 
outcome measures or measures of patient stabilization. One commenter 
opposed removal of the Improvement in Grooming, Improvement in 
Toileting Hygiene, Improvement in Light Meal Preparation, and 
Improvement in Phone Use measures from the HHQI, citing these as 
important indicators of safety at home; the commenter also stressed the 
importance of fall prevention. Another commenter requested that CMS 
seek additional stakeholder input before removing measures. A few 
commenters requested that information for removed measures continue to 
be collected and made available to agencies for quality improvement 
purposes. One commenter recommended that CMS monitor removed topped out 
measures to assure that quality does not decrease. One commenter 
recommended that the measures be removed from the CASPER reporting 
system as well, while another requested removal from OASIS.
    Response: We appreciate the support from MedPAC and other 
commenters for a more focused measure set. We wish to clarify that the 
data for the measures no longer included in the HHQI or removed from 
the HH QRP may still appear on OASIS for previously established 
purposes that are not related to our HH QRP, and if still collected 
will be available to home health agencies, via the CASPER on-demand 
reports, for the purpose of monitoring and improving quality efforts.
    Final Decision: After consideration of the comments we received, we 
are finalizing our proposal to remove 6 process measures from the HH 
QRP.

E. Process for Adoption of Updates to HH QRP Measures

    We believe that it is important to have in place a subregulatory 
process to incorporate non-substantive updates into the measure 
specifications so that these measures remain up-to-date. We also 
recognize that some changes are substantive and might not be 
appropriate for adoption using a subregulatory process.
    Therefore, in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53504 and 
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 proposed to implement the same process for adopting updates to 
measures in the HH QRP, and to 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 invited public comment on this proposal. We received no comments 
on this proposal.
    Final Decision: We are finalizing our proposed process for adopting 
updates to HH QRP measures as proposed.

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

    We proposed modifications to our coding guidance 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 will use this 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,\20\ 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. To align with reporting guidance in other post-acute care 
settings, effective January 1, 2017, once a graft is applied to a 
pressure

[[Page 76757]]

ulcer, the wound will be reported on OASIS as a surgical wound, and no 
longer be reported as a pressure ulcer.
---------------------------------------------------------------------------

    \20\ http://www.npuap.org/wp-content/uploads/2012/01/Reverse-Staging-Position-Statement.pdf.
---------------------------------------------------------------------------

    The following is a summary of the comments we received regarding 
our proposal for new pressure ulcer guidelines.
    Comment: We received two comments addressing the proposal for new 
pressure ulcer coding guidelines, effective January 1, 2017. One 
commenter concurred that full thickness (Stage 3 or 4) pressure ulcers 
should not be reported as unhealed once re-epithelialized, but did not 
agree that once a graft is applied to a pressure ulcer, the wound 
should be reported as a surgical wound instead of a pressure ulcer. 
This commenter suggested that CMS clearly specify which grafts change 
the classification of a pressure ulcer to a surgical wound. The 
commenter also suggested that ``urinary diversions'' and ``arterial 
ulcers exempt from the stasis ulcer category'' be added to the OASIS 
item set for the purpose of adding case mix points. Another commenter 
noted the pressure ulcer related guidance and item changes would cause 
confusion and require extensive re-education and review of every 
comprehensive assessment, thus resulting in an administrative and 
clinician burden with risk for error. They added that caring for these 
ulcers without adequate reimbursement could result in poor patient 
outcomes and quality measure scores.
    Response: We appreciate the comments and suggestions. These 
proposals were made to allow OASIS data collection to conform to 
professional clinical guidelines, and align with pressure ulcer 
reporting practices in other post-acute care settings to support cross-
setting quality measurement related to pressure ulcers. Additional 
guidance and ongoing provider support will be available through the 
OASIS Q&A Help Desk and the OASIS Q&As, both available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/OASIS/HHAQA.html. After considering the comments received, 
we are making the changes to this measure as proposed.

G. 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 stated that we would retain if our 
proposed policy on retaining measures is finalized, we proposed to 
adopt four new measures. These four measures were developed to meet the 
requirements of the IMPACT Act. These 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, 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.
1. Measure That Addresses the IMPACT Act Domain of Resource Use and 
Other Measures: MSPB-PAC HH QRP
    We proposed an MSPB-PAC HH QRP measure for inclusion in the HH QRP 
for the CY 2018 payment determination and subsequent years. Section 
1899B(d)(1)(A) of the Act requires the Secretary to specify resource 
use measures, including total estimated Medicare spending per 
beneficiary, on which PAC providers consisting of SNFs, IRFs, LTCHs, 
and HHAs are required to submit necessary data specified by the 
Secretary. 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.\21\ 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.\22\
---------------------------------------------------------------------------

    \21\ MedPAC, ``A Data Book: Health Care Spending and the 
Medicare Program,'' (2015). 114.
    \22\ 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 proposed 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 of the Act 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, and we have given due consideration to 
measures that have been endorsed or adopted by a consensus organization 
identified by the Secretary. Given the current lack of resource use 
measures for PAC settings, our MSPB-PAC HH QRP measure would provide 
valuable information to HHAs on their relative Medicare spending in 
delivering services to approximately 3.5 million Medicare 
beneficiaries.\23\
---------------------------------------------------------------------------

    \23\ Figures for 2013. MedPAC, ``Medicare Payment Policy,'' 
Report to the Congress (2015). xvii-xviii.
---------------------------------------------------------------------------

    The 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

[[Page 76758]]

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 was critical for 
improving efficiency, others believed that resource use measures did 
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). 
Furthermore, it is important that the cost of care be explicitly 
measured so that, in conjunction with other quality measures, we can 
publicly report HHAs that are involved in the provision of high quality 
care at lower cost.
    We developed an MSPB-PAC measure for each of the four PAC settings. 
In addition to this measure, we finalized a LTCH-specific MSPB-PAC 
measure in the FY 2017 IPPS/LTCH final rule (81 FR 57199 through 
57207), an IRF-specific MSPB-PAC measure in the FY 2017 IRF PPS final 
rule (81 FR 52087 through 52095), and a SNF-specific MSPB-PAC measure 
in the FY 2017 SNF PPS final rule (81 FR 52014 through 52021). These 
four setting-specific MSPB-PAC measures are aligned to the greatest 
extent possible, in terms of episode construction and measure 
calculation given the differences in the payment systems for each 
setting, and types of patients served in each setting, to ensure the 
accuracy of the measures in each PAC setting. The setting-specific 
measures account for differences between settings and between episode 
types within the home health setting, in payment policy, the types of 
data available, and the underlying health characteristics of 
beneficiaries. Each of the MSPB-PAC measures assess Medicare Part A and 
Part B spending during an episode, and the numerator and denominator 
are defined as similarly as possible across the MSPB-PAC measures. In 
recognition of the differences between home health episode types, 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. A PEP is a pro-rated 
adjustment for shortened episodes as a result of patient discharge and 
readmission to the same provider within the same 60-day home health 
claim, or patient transfer to another HHA with no common ownership 
within the same 60-day claim. If a patient is discharged to a hospital, 
SNF, or IRF, and readmitted to the same HHA within the 60-day claim, a 
PEP adjustment does not apply. A LUPA adjustment applies where there 
are four or fewer visits in a home health claim.
    The MSPB-PAC measures mirror the general construction of the 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).\24\ The hospital 
MSPB measure evaluates hospitals' Medicare spending relative to the 
Medicare spending for the national median hospital during a hospital 
MSPB episode which starts 3 days prior to admission and ends 30-days 
after discharge. 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.25 26 Similarly, the MSPB-PAC 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). There are differences between the 
MSPB-PAC measures and the hospital MSPB measure to reflect differences 
in payment policies and the nature of care provided in each PAC 
setting. The MSPB-PAC measures exclude a limited set of services 
determined to be clinically unrelated that are provided to a 
beneficiary during the episode window while the hospital MSPB measure 
includes all Part A and Part B services and does not exclude services 
based on clinical relatedness.\27\
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    \24\ QualityNet, ``Measure Methodology Reports: Medicare 
Spending Per Beneficiary (MSPB) Measure,'' (2015). http://www.qualitynet.org/dcs/ContentServer?pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772053996.
    \25\ QualityNet, ``Measure Methodology Reports: Medicare 
Spending Per Beneficiary (MSPB) Measure,'' (2015). http://www.qualitynet.org/dcs/ContentServer?pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772053996
    \26\ FY 2012 IPPS/LTCH PPS final rule (76 FR 51619).
    \27\ FY 2012 IPPS/LTCH PPS final rule (76 FR 51620).
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    As noted above, the hospital-level MSPB measure includes a period 
spanning from three days prior to a hospitalization through 30 days 
post-discharge. 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 would 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 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

[[Page 76759]]

options for members: Encourage continued development, do not encourage 
further consideration, and insufficient information.\28\ The MAP PAC/
LTC Workgroup voted to ``encourage continued development'' for each of 
the MSPB-PAC measures.\29\ The MAP PAC/LTC Workgroup's vote of 
``encourage continued development'' was affirmed by the MAP 
Coordinating Committee on January 26, 2016.\30\ 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.31 32
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    \28\ 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.
    \29\ 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.
    \30\ 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.
    \31\ 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.
    \32\ 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.
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    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 MSPB-PAC measures. The 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 
extended to 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.\33\ The MSPB-PAC Public Comment Summary Report is 
available at 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 the MSPB-PAC 
Public Comment Supplementary Materials are available at 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_supplementary_materials.pdf. These documents contain the public comments (summarized and 
verbatim), along with our responses including statistical analyses. The 
MSPB-PAC HH QRP measure, along with the other MSPB-PAC measures, as 
applicable, will be submitted for NQF endorsement when feasible.
---------------------------------------------------------------------------

    \33\ 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.
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    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 MSPB-PAC measures, including the MSPB-PAC HH QRP 
measure in this rule, are available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIQualityMeasures.html.
a. Episode Construction
    We proposed that an MSPB-PAC HH QRP episode would begin at the 
episode trigger, which is defined as the first day of a patient's home 
health claim with 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 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 HH PPS payment policy. MSPB-PAC HH Standard, PEP, 
and LUPA episodes would be compared only with MSPB-PAC HH Standard, 
PEP, and LUPA episodes, respectively. Differences in episode 
construction between these three episode types are noted below; they 
otherwise share the same definition.
    We proposed that the episode window would be comprised of a 
treatment period and an associated services period.
    The definition of the treatment period depends on the type of MSPB-
PAC HH QRP episode. For MSPB-PAC HH Standard and LUPA QRP episodes, the 
treatment period begins at the episode trigger (that is, on the first 
day of the home health claim) and ends after 60 days after the episode 
trigger. For MSPB-PAC HH PEP QRP episodes, the treatment period begins 
at the episode 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 by the HHA.
    The associated services period is the time during which Medicare 
Part A and Part B services that are not treatment services are counted 
towards the episode, subject to certain exclusions, such as planned 
admissions and organ transplants that are clinically unrelated services 
as discussed in detail below. The definition of the associated services 
period is the same for each of the MSPB-PAC HH QRP episode types: The 
associated services period begins at the episode trigger and ends 30 
days after the end of the treatment period. The length of the episode 
window varies between episode types: since the treatment period for the 
MSPB-PAC HH Standard and LUPA QRP episodes is defined as being 60 days 
from the episode trigger, the length of the episode window--that is, 
treatment period plus associated services period--will be a total of 90 
days. In contrast, as the treatment period for MSPB-PAC HH PEP QRP 
episodes is defined as being from the episode trigger to discharge, the 
length of the episode window will vary depending on the length of time 
that the patient is under the care of the HHA.
    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

[[Page 76760]]

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 access to care for beneficiaries with 
certain conditions and complex care needs. 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 appear more 
expensive due to these services and do not have disincentives to treat 
patients with certain conditions or complex care needs.
    An MSPB-PAC episode may begin during the post-treatment associated 
services period of an MSPB-PAC HH QRP episode, that is, during the 30 
days after the end of the treatment period as defined above for the 
different MSPB-PAC HH QRP episode types. One possible scenario occurs 
where a beneficiary leaves the care of the HHA and is then admitted to 
a SNF within 30 days (that is, during the post-treatment phase of the 
associated services period
    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 QRP 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 post-treatment associated 
services period of another MSPB-PAC HH QRP episode, that is, during the 
30 days after the end of the treatment period. 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. If a patient transfers from one HHA to 
another during the standard 60-day home health claim (for example, 
after 30 days), this first home health claim would be subject to a PEP 
adjustment in accordance with the HH PPS. This PEP claim would trigger 
an MSPB-PAC HH PEP QRP episode, and since the treatment period for an 
MSPB-PAC HH PEP QRP episode ends at discharge, the second MSPB-PAC HH 
QRP episode (of any type) would begin during the associated services 
period of the MSPB-PAC HH PEP QRP episode.
    The MSPB-PAC HH QRP measure was 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 Standard, PEP, and 
LUPA QRP episodes to ensure that they are compared only to other MSPB-
PAC HH Standard, PEP, and LUPA episodes, respectively. The final MSPB-
PAC HH QRP measure is the episode-weighted average of the average 
scores for each type of episode, 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 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 be 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 proposed 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 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).\34\
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    \34\ QualityNet, ``CMS Price (Payment) Standardization--Detailed 
Methods'' (Revised May 2015) https://qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier4&cid=1228772057350.

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[[Page 76761]]

    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. As part of the risk adjustment 
methodology for MSPB-PAC HH QRP episodes, we adjust for demographics 
(through age brackets) at the time of the episode trigger and using 
diagnostic information in the recent past, up to the start of the 
episode. 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 HH patient population, and allow us to more 
accurately estimate Medicare spending. Our 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 proposed 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 will 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 and proposed 
to adjust by age brackets as a demographic factor, we did not propose 
to adjust the MSPB-PAC HH measure for socioeconomic factors. 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 invited public comment on how socioeconomic and 
demographic factors should be used in risk adjustment for the MSPB-PAC 
HH QRP measure.
    The comments we received on this topic, with their responses, 
appear below.
    Comment: Several commenters recommended that the risk adjustment 
model for the MSPB-PAC HH QRP measure include variables for SES/SDS 
factors. A commenter recommended that a ``fairer'' approach than using 
SES/SDS factors as risk adjustment variables would be to compare 
resource use levels that have not been adjusted for SES/SDS factors 
across peer providers (that is, providers with similar shares of 
beneficiaries with similar SES characteristics).
    Response: We refer readers to section V.G. where we also discuss 
these topics.
    Comment: Several commenters recommended that additional variables 
be included in risk adjustment to better capture clinical complexity. A 
few commenters suggested the inclusion of functional status and other 
patient assessment data. Commenters recommended that additional 
variables should include obesity, amputations, CVAs (hemiplegia/
paresis), and ventilator status. Some commenters recommended that 
caregiver support be included in the risk adjustment model. One 
commenter recommended accounting for medical and post-surgical 
patients. One commenter recommended excluding high-cost and outlier 
patients, and a few commenters requested data be made available to 
stakeholders to allow them to evaluate predictors of spending.
    Response: We thank the commenters for their suggestions. The risk 
adjustment model includes HCC indicators to account for amputations, 
hemiplegia, and paresis. We believe that the other risk adjustment 
variables adequately adjust for ventilator dependency and obesity 
through variables for HCCs, clinical case mix categories, and prior 
inpatient and ICU length of stay. We account for medical and post-
surgical patients through clinical case mix categories which 
distinguish between beneficiaries coming to the HHA from a prior 
medical or surgical stay. The clinical case mix category for prior 
inpatient medical stays is further broken down into ICU and non-ICU 
stays, and the clinical case mix category for prior inpatient surgical 
stays is further broken down into orthopedic and non-orthopedic stays. 
We believe that our risk adjustment model and measure calculation 
accounts for high-cost and outlier patients; further details can be 
found in the MSPB-PAC Measure Specifications, a link for which has been 
provided above. Details on the coefficients of the MSPB-PAC risk 
adjustment models are provided in the MSPB-PAC Public Comment 
Supplementary Materials, a link for which has been provided above.
    We understand the commenter's view of the importance of caregiver 
support for ensuring a successful outcome. We note that the MSPB-PAC HH 
QRP measure is based upon claims data, which does not include data on 
the availability of family or caregiver support. We considered the 
potential use of information about caregiver support in the risk 
adjustment model for the MSPB-PAC HH QRP measure.

[[Page 76762]]

However, as noted in the MSPB-PAC Public Comment Summary Report, a link 
for which has been provided above, even where non-claims data on 
caregiver support are available; there may be inherent subjectivity in 
determining the availability of such support. More details of the MSPB-
PAC HH QRP risk adjustment model are provided in the MSPB-PAC Measure 
Specifications, and the coefficients for the MSPB-PAC risk adjustment 
models are included in the MSPB-PAC Public Comment Supplementary 
Materials; the links for these documents have been provided above.
    We recognize the importance of accounting for beneficiaries' 
functional and cognitive status in the calculation of predicted episode 
spending. We considered the potential use of functional status 
information in the risk adjustment models for the MSPB-PAC measures. As 
with the caregiver support information discussed above, we decided to 
not include information derived from current setting-specific 
assessment instruments given that we are migrating towards standardized 
data as mandated by the IMPACT Act. We will revisit the inclusion of 
functional status in these measures' risk adjustment models in the 
future when the standardized functional status data mandated by the 
IMPACT Act-mandated become available. Once they are available, we will 
take a gradual and systematic approach in evaluating how they might be 
incorporated. We intend to implement any changes if appropriate based 
on testing.
(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, 
calculate the average of the ratio of the standardized spending for HH 
Standard episodes over the expected spending (as predicted in risk 
adjustment) for HH Standard episodes, the average of the ratio of the 
standardized spending for HH PEP episodes over the expected spending 
(as predicted in risk adjustment) for HH PEP episodes, and the average 
of the ratio of the standardized spending for HH LUPA episodes over the 
expected spending (as predicted in risk adjustment) for HH 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):
[GRAPHIC] [TIFF OMITTED] TR03NO16.019

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. The claims are 
payment standardized to adjust for geographic and other differences, as 
discussed above.
b. Cohort
    The measure cohort includes Medicare FFS beneficiaries with a HH 
treatment period ending during the data collection period.
c. Reporting and Reliability
    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 proposed to 
use 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).
    The comments we received on this topic, with their responses, 
appear below.
    Comment: Several commenters believed that the MSPB-PAC HH QRP 
treatment period should end at discharge, rather than 60 days after the 
episode trigger. A few commenters expressed concern about double-
counting services through overlapping MSPB-PAC HH QRP episodes. A 
commenter recommended collapsing consecutive MSPB-PAC HH QRP episodes 
into one episode to better account for the treatment of chronically ill 
patients.
    Response: We appreciate the commenters' feedback. The length of the 
MSPB-PAC HH QRP treatment period is 60 days for standard episodes to 
reflect that HHAs are paid under the HH PPS at a rate based on a 60-day 
period as determined by the Home Health Resource Groups (HHRGs), 
regardless of when the last visit actually takes place. Defining the 
MSPB-PAC HH QRP treatment period based on the relevant Medicare payment 
policy aligns with

[[Page 76763]]

the definition of the treatment periods for the other MSPB-PAC 
measures. Allowing an MSPB-PAC HH QRP episode to begin during the post-
treatment associated services period of another MSPB-PAC HH QRP episode 
ensures that HHAs have continuous accountability and aligned incentives 
throughout a beneficiary's care trajectory. We note that the MSPB-PAC 
HH QRP measure is not a simple sum of spending across an HHA's 
episodes, mitigating concerns about double-counting. Instead, the 
construction of the numerator and denominator is such that the ratio of 
observed and predicted episode spending are averaged across all of a 
given providers' episodes. That is, the MSPB-PAC HH QRP measure 
compares the observed and expected episode spending levels for each of 
the MSPB-PAC HH QRP episode types (that is, Standard, PEP, and LUPA 
episodes) to generate the provider score. As noted in the MSPB-PAC 
Measure Specifications, a link for which has been provided above, 
patient characteristics and treatment regimens can change significantly 
during long sequences of consecutive home health claims. Allowing each 
home health claim to trigger a new episode promotes the accuracy of 
predicted MSPB-PAC HH QRP episode spending by using the most recent 
patient information for each claim in the risk adjustment model.
    Comment: Several commenters recommended that a geographic-specific 
(for example, state or regional) median should be used instead of the 
national median, citing differences in cost, and patient population.
    Response: We appreciate the commenters' input. We proposed to use 
the same payment standardization methodology as that used in the NQF-
endorsed hospital MSPB measure to account for variation in Medicare 
spending. This methodology removes geographic payment differences, such 
as wage index and geographic practice cost index (GPCI), incentive 
payment adjustments, and 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). Given the use of payment standardization, as well as 
risk adjustment, calculating PAC provider resource use relative to the 
national median provider of the same type may also be useful in 
identifying variation in utilization and encouraging providers to 
reduce this variation, in accordance with the measures' goals of 
providing actionable, transparent information to providers. We believe 
that this approach accounts for the differences that the commenters 
raise while also maintaining consistency with the NQF-endorsed hospital 
MSPB measure's methodology for addressing regional variation through 
payment standardization.
    Comment: A few commenters, including MedPAC, recommended the use of 
uniform single MSPB-PAC measure that could be used to compare 
providers' resource use across settings, but recognized that we do not 
have a uniform PPS for all the PAC settings currently. In the absence 
of a single PAC PPS, they recommended a single MSPB-PAC measure for 
each setting that could be used to compare providers within a setting. 
In addition, they recommended that under a single measure, the episode 
definitions, service inclusions/exclusions, and risk adjustment methods 
should be the same across all PAC settings.
    Response: The four separate MSPB-PAC measures reflect the unique 
characteristics of each PAC setting and the population they serve. The 
four setting-specific MSPB-PAC measures are defined as consistently as 
possible across settings given the differences in the payment systems 
for each setting, and types of patients served in each setting. We have 
taken into consideration these differences and aligned the 
specifications, such as episode definition, service inclusions/
exclusions and risk adjustment methods for each setting, to the extent 
possible while ensuring the accuracy of the measures in each PAC 
setting.
    Each of the measures assess Medicare Part A and Part B spending 
during the episode window which begins upon admission to the provider's 
care and ends 30 days after the end of the treatment period. The 
service-level exclusions are harmonized across settings. The definition 
of the numerator and denominator is the same across settings. However, 
specifications differ between settings when necessary to ensure that 
the measures accurately reflect patient care and align with each 
setting's payment system. For example, LTCHs and IRFs are paid a stay-
level payment based on the assigned MS-LTC-DRG and CMG, respectively, 
while SNFs are paid a daily rate based on the RUG level and HHA 
providers are reimbursed based on a fixed 60-day period for standard 
home health claims. While the definition of the episode window as 
consisting of a treatment period and associated services period is 
consistent across settings, including a post-discharge period, the 
duration of the treatment period varies to reflect how providers are 
paid under the payment policy in each setting, as discussed above. The 
duration of the associated services period that ends 30 days after the 
end of the treatment period is consistent between settings. The MSPB-
PAC HH QRP measure distinguishes between episodes triggered by standard 
home health claims (that is, those to which neither a PEP nor LUPA 
adjustment applies), and claims subject to a PEP or LUPA adjustment to 
reflect the provisions of the HH PPS.
    There are also differences in services included in consolidated 
billing for each setting: For example, durable medical equipment, 
prosthetics, orthotics, and supplies (DMEPOS) claims are covered by the 
LTCH, IRF, and SNF PPSs but are not paid through the HH PPS. This 
affects the way certain first-day service exclusions related to prior 
institutional care are defined for each measure. Readmissions of the 
same patient to the same provider within 7 or fewer days are collapsed 
into one treatment period for the MSPB-PAC SNF, IRF, and LTCH QRP 
measures but are not in the MSPB-PAC HH QRP measure. This is due to the 
existence of many long sequences of consecutive home health claims, 
during which time patient characteristics and care regimens can change 
significantly, as discussed above.
    We recognize that there is considerable overlap in where 
beneficiaries are treated for similar PAC needs but believe there are 
some important differences between the care profiles of certain types 
of beneficiaries that are difficult to capture in a single measure that 
performs comparisons across settings.
    In addition, the risk adjustment models for the MSPB-PAC measures 
share the same covariates to the greatest extent possible to account 
for patient case mix; however, certain settings' measures also 
incorporate additional setting-specific information where available to 
increase the predictive power of the risk adjustment models. For 
example, the MSPB-PAC LTCH QRP risk adjustment model uses MS-LTC-DRGs 
and Major Diagnostic Categories (MDCs) and the MSPB-PAC IRF QRP model 
includes Rehabilitation Impairment Categories (RICs). The HH and SNF 
settings do not have analogous variables that directly reflect a 
patient's clinical profile.
    We will continue to work towards a more uniform measure across 
settings as we gain experience with these measures, including further 
research and analysis about comparability of resource use measures 
across settings for clinically similar patients, different

[[Page 76764]]

treatment periods and windows, risk adjustment, service exclusions, and 
other factors.
    Comment: A few commenters expressed concern that the MSPB-PAC HH 
QRP measure will give incentive to HHAs to avoid medically complex 
beneficiaries, such as those with chronic conditions like end-stage 
renal disease (ESRD), which would result in unintended consequences.
    Response: To mitigate the risk of creating incentives for HHAs to 
avoid medically complex beneficiaries, who may be at higher risk for 
poor outcomes and higher costs, we have included factors related to 
medical complexity in the risk adjustment methodology for the MSPB-PAC 
HH QRP measure, including an indicator for ESRD. We also exclude 
certain services from the MSPB-PAC HH QRP measure that are clinically 
unrelated to HHA care and/or because HHAs may have limited influence 
over those services delivered by other providers during the episode 
window, such as dialysis for ESRD.
    Comment: Two commenters expressed support for the MSPB-PAC HH QRP 
measure; one commenter noted that the MSPB-PAC measures are resource 
use measures that are not a standalone indicator of quality.
    Response: As part of the HH QRP, the MSPB-PAC HH QRP measure will 
be reported with quality measures; we direct readers to section V.H. 
for a discussion of quality measures. We believe it is important that 
the cost of care be explicitly measured so that, in conjunction with 
other quality measures, we can publicly report which HHAs are involved 
in the provision of high quality care at lower cost.
    Comment: One commenter noted that the MSPB-PAC HH QRP measure is 
complicated and may be difficult for providers to understand.
    Response: With regard to the concerns regarding the complexity of 
the measures, we direct readers to the documentation on the MSPB-PAC 
measures, links for which have been provided above. In particular, the 
MSPB-PAC Measure Specifications include a high-level summary of the 
measures and simplified example of the calculation. To further clarify, 
please see Table 26 and Diagram 1, which further illustrate the MSP-PAC 
HH QRP measure's construction:

                Table 26--MSPB-PAC HH QRP Episode Windows
------------------------------------------------------------------------
                                                     Associated services
        Episode type            Treatment period           period
------------------------------------------------------------------------
MSPB-PAC HH Standard........   Begins at     Begins at
                               episode trigger.      episode trigger.
MSPB-PAC HH LUPA............   Ends 60       Ends 30
                               days after episode    days after the end
                               trigger.              of the treatment
                                                     period.
MSPB-PAC HH PEP.............   Begins at     Begins at
                               episode trigger.      episode trigger.
                               Ends at       Ends 30
                               discharge.            days after the end
                                                     of the treatment
                                                     period.
------------------------------------------------------------------------

    This concept of an episode window consisting of a treatment period 
and associated services period is illustrated below in Figure 1.
[GRAPHIC] [TIFF OMITTED] TR03NO16.020

    Regarding the commenter's concern about how the MSPB-PAC HH QRP 
measure will be communicated to providers, we refer readers to section 
V.G. where we also discuss these topics.
    Comment: One commenter suggested that descriptive statistics on the 
measure scores by provider-level characteristics (for example, rural/
urban status and bed size) would be useful to evaluate measure design 
decisions.
    Response: Table 27 shows the MSPB-PAC HH provider scores by 
provider characteristics, calculated using FY 2014 data.

[[Page 76765]]



                                                 Table 27--MSPB-PAC HH Scores by Provider Characteristic
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Score percentile
                  Provider characteristic                     Number of     Mean   ---------------------------------------------------------------------
                                                              providers    score       1st      10th      25th      50th      75th      90th      99th
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Providers                                                    11,829       0.97      0.47      0.75      0.87      0.97      1.06      1.16      1.48
Urban/Rural:
    Urban..................................................       9,798       0.96      0.46      0.74      0.86      0.97      1.06      1.16      1.48
    Rural..................................................       2,025       0.98      0.52      0.80      0.89      0.98      1.06      1.15      1.48
    Unknown................................................           6       0.94      0.76      0.76      0.79      0.97      1.06      1.07      1.07
Ownership Type:
    For profit.............................................       9,360       0.97      0.46      0.74      0.86      0.97      1.07      1.17      1.48
    Non-profit.............................................       1,856       0.96      0.54      0.80      0.89      0.96      1.02      1.10      1.47
    Government.............................................         613       0.97      0.42      0.76      0.87      0.96      1.06      1.19      1.64
Census Division:
    New England............................................         354       0.98      0.37      0.79      0.92      0.99      1.06      1.13      2.08
    Middle Atlantic........................................         541       0.96      0.24      0.77      0.90      0.97      1.06      1.14      1.46
    East North Central.....................................       2,432       0.95      0.43      0.72      0.84      0.95      1.06      1.15      1.54
    West North Central.....................................         746       0.98      0.42      0.74      0.87      0.97      1.06      1.20      1.64
    South Atlantic.........................................       2,008       1.02      0.55      0.85      0.93      1.02      1.11      1.20      1.45
    East South Central.....................................         439       1.03      0.65      0.89      0.97      1.03      1.10      1.17      1.34
    West South Central.....................................       3,234       0.95      0.51      0.73      0.84      0.95      1.06      1.16      1.45
    Mountain...............................................         698       0.97      0.46      0.77      0.88      0.97      1.07      1.16      1.63
    Pacific................................................       1,330       0.92      0.52      0.74      0.83      0.92      1.00      1.09      1.34
    Other..................................................          47       0.80      0.56      0.67      0.74      0.79      0.85      0.92      1.06
No. of Episodes:
    0-99...................................................       3,395       0.92      0.30      0.60      0.75      0.90      1.06      1.24      1.89
    100-249................................................       3,011       0.96      0.65      0.77      0.86      0.96      1.05      1.15      1.34
    250-499................................................       2,523       0.98      0.70      0.82      0.89      0.97      1.06      1.14      1.28
    500-1000...............................................       1,665       1.00      0.75      0.87      0.93      1.00      1.07      1.14      1.29
    1000 +.................................................       1,235       1.02      0.81      0.91      0.96      1.01      1.08      1.15      1.28
--------------------------------------------------------------------------------------------------------------------------------------------------------

Final Decision
    After careful consideration of the public comments, we are 
finalizing our proposal to adopt the measure, Medicare Spending Per 
Beneficiary--Post Acute Care for the Home Health Quality Reporting 
Program, beginning with the CY 2018 HH QRP, as proposed. A link for the 
MSPB-PAC Measure Specifications has been provided above.
    To summarize, we are finalizing the definition of an MSPB-PAC HH 
QRP episode, beginning from episode trigger. An episode window is 
comprised of a treatment period beginning at the episode trigger. The 
treatment periods ends 60 days after the episode trigger for MSPB-PAC 
HH Standard and LUPA QRP episodes, while the treatment period ends upon 
discharge for MSPB-PAC HH PEP QRP episodes. The associated services 
period begins at the episode trigger and ends 30 days after the end of 
the treatment period for each of the MSPB-PAC HH QRP episodes.
    We exclude certain services that 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. We also exclude certain episodes in their entirety from the 
MSPB-PAC HH QRP measure, such as where a beneficiary is not enrolled in 
Medicare FFS for the entirety of the lookback period plus episode 
window.
    We are finalizing the inclusion of Medicare payments for Part A and 
Part B claims for services included in the MSPB-PAC HH QRP episodes to 
calculate the MSPB-PAC HH QRP measure.
    We are finalizing our proposal to risk adjust using covariates 
including age brackets, HCC indicators, prior inpatient stay length, 
ICU stay length, clinical case mix categories, indicators for 
originally disabled, ESRD enrollment, and long-term care status, and 
hospice claim in episode window. The measure also adjusts for 
geographic payment differences such as wage index and GPCI, and adjust 
for Medicare payment differences resulting from IME and DSH.
    We calculate the individual providers' MSPB-PAC Amount, which is 
inclusive of MSPB-PAC HH QRP observed episode spending over the 
expected episode spending as predicted through risk adjustment. MSPB-
PAC HH Standard, PEP, and LUPA QRP episode spending is compared only 
with MSPB-PAC HH Standard, PEP, and LUPA QRP episode spending, 
respectively. The final MSPB-PAC HH QRP measure is the episode-weighted 
average of the average scores for each type of episode.
2. Measure That Addresses 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 proposed 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 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 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

[[Page 76766]]

defined as home/self-care, without home health services, based on 
Patient Discharge Status Codes 01 and 81 on the Medicare FFS 
claim.35 36 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.
---------------------------------------------------------------------------

    \35\ Further description of patient discharge status codes can 
be found, for example, at https://med.noridianmedicare.com/web/jea/topics/claim-submission/patient-status-codes.
    \36\ 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.37 38
---------------------------------------------------------------------------

    \37\ 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.
    \38\ 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.39 40 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.\41\ In addition, 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.\42\ For patients who 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.\43\
---------------------------------------------------------------------------

    \39\ 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.
    \40\ Gage B, Morley M, Spain P, Ingber M. Examining Post Acute 
Care Relationships in an Integrated Hospital System Final Report. 
RTI International;2009.
    \41\ 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.
    \42\ 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.
    \43\ 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.\44\ 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.\45\
---------------------------------------------------------------------------

    \44\ Gage B, Morley M, Spain P, Ingber M. Examining Post Acute 
Care Relationships in an Integrated Hospital System. Final Report. 
RTI International;2009.
    \45\ 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.46 47 48 49 50 51 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.\52\ A single-center study revealed that 31 percent of LTCH 
hemodialysis patients were discharged to home.\53\ 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 \54\ and a second study noted 
that between 58 percent and 63 percent of beneficiates were discharged 
to home with rates varying by admission site.\55\ However, significant 
numbers of patients were admitted to hospitals (29 percent) and lesser 
numbers to SNFs (7.6 percent),

[[Page 76767]]

IRFs (1.5 percent), home health (7.2 percent) or hospice (3.3 
percent).\56\
---------------------------------------------------------------------------

    \46\ 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.
    \47\ 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.
    \48\ March 2015 Report to the Congress: Medicare Payment Policy. 
Medicare Payment Advisory Commission;2015.
    \49\ 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.
    \50\ 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.
    \51\ 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.
    \52\ 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.
    \53\ 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.
    \54\ 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.
    \55\ 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.
    \56\ Ibid.
---------------------------------------------------------------------------

    Discharge to community is a desirable health care outcome, as 
targeted interventions have been shown to successfully increase 
discharge to community rates in a variety of post-acute 
settings.57 58 59 60 61 Many of these interventions involve 
discharge planning or specific rehabilitation strategies, such as 
addressing discharge barriers and improving medical and functional 
status. 62 63 64 65 66 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.
---------------------------------------------------------------------------

    \57\ 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.
    \58\ 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.
    \59\ 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.
    \60\ 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.
    \61\ 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.
    \62\ 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.
    \63\ 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.
    \64\ 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.
    \65\ 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.
    \66\ 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.
    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's review and recommendation of continued development, 
we have continued to refine the risk adjustment model and conduct 
measure testing for this measure, as recommended by the MAP. This 
measure is consistent with the information submitted to the MAP and is 
scientifically acceptable for current specification in the HH QRP. As 
discussed with the MAP, we intend to perform additional analyses as the 
measure steward.
    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 proposed 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 proposed to use data from the Medicare FFS claims and Medicare 
eligibility files to calculate this measure. We proposed 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 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, we proposed 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 measure is calculated 
utilizing 2 years of data as defined below. We proposed a minimum of 20 
eligible episodes in a given HHA for public reporting of the measure 
for that

[[Page 76768]]

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 measure denominator is 
the risk-adjusted expected number of discharges to community. The 
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
    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 measure to the 
NQF for consideration for endorsement.
    We invited public comment on our proposal to adopt the measure, 
Discharge to Community-PAC HH QRP for the HH QRP. The following is 
summary of the comments we received.
    Comment: Commenters noted the importance of home and community 
supports such as caregiver availability, willingness, and ability to 
support the person in the community; availability of an established 
home, and community supports in determining a beneficiary's ability to 
be discharged to community and remain in their home or community 
setting. Several commenters expressed concern that the risk adjustment 
methodology does not include adjustment for sociodemographic or 
socioeconomic status. Commenters believed that sociodemographic and 
socioeconomic factors were strong predictors of return to the 
community, and since they were outside a provider's control, they 
should be accounted for in risk adjustment. One commenter noted that 
the measure does not adjust for regional differences in community-based 
needs and supports that result from factors such as geographic variance 
in availability of affordable housing. Another commenter expressed 
concern that more than half of home health patients do not have an 
acute care stay within 30 days prior to admission to the HHA, and 
therefore, may not have the principle diagnosis and comorbidity 
included in the risk adjustment model.
    Response: We understand the importance of home and community 
supports for ensuring a successful discharge to community outcome. The 
discharge to community measure is a claims-based measure and currently, 
there are no standardized data on variables such as living status or 
family and caregiver supports across the four PAC settings. We 
appreciate and will consider the commenter's suggestion to account for 
potential challenges of discharging patients to the community in 
different geographic areas. With regard to the suggestions pertaining 
to risk adjustment methodologies pertaining to sociodemographic 
factors, we refer the readers to section III.D.2.f where we also 
discuss these topics. For patients for whom index inpatient claims are 
not available, earlier inpatient claims, as well as physician and other 
claims, will be used to capture comorbidities and other covariates. 
These include principal diagnoses, surgical procedures, ESRD or 
disability as reason for entitlement, dialysis, prior hospitalizations 
and length of any previous acute hospital stays.
    Comment: MedPAC and other commenters expressed concern about 
relying on discharge coding to determine discharge to community 
settings. MedPAC and other commenters recommended that we confirm 
discharge to a community setting with the absence of a subsequent claim 
to a hospital, IRF, SNF, or LTCH, to ensure that discharge to community 
rates reflect actual facility performance. Two commenters suggested 
additional measure testing and development to assess the reliability of 
patient discharge codes.
    Response: We are committed to developing measures based on reliable 
and valid data. This measure does confirm the absence of hospital or 
LTCH claims following discharge to a community setting. Unplanned 
hospital and PAC readmissions following the discharge to community, 
including those on the day of HHA discharge, are considered an 
unfavorable outcome. We will consider verifying the absence of IRF and 
SNF claims following discharge to a community setting, as we continue 
to refine this measure. Nonetheless, we would like to note that an ASPE 
report on post-acute care relationships found that, following discharge 
to community settings from IRFs, LTCHs, or SNFs in a 5 percent Medicare 
sample, IRFs or SNFs were very infrequently reported as the next site 
of post-acute care. Because the discharge to community measure is a 
measure of discharge destination from the PAC setting, we have chosen 
to use the PAC-reported discharge destination (from the Medicare FFS 
claims) to determine whether a patient/resident was discharged to the 
community (based on Discharge Status Codes 01 and 81). We examined 
accuracy of determining discharge to a community setting using the 
``Patient Discharge Status Code'' on the PAC claim by examining 
agreement with discharge to community as determined using assessment 
data; we found strong agreement between the two data sources. We found 
excellent agreement between the two data sources in all PAC settings 
for the status of ``discharge to the community,'' 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 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 
claims ``Patient Discharge Status Code'' for determining discharge to a 
community setting for this measure. The use of the claims discharge 
status code to identify discharges to the community was discussed at 
length with the TEP convened by our measure development contractor. TEP 
members did not express significant concerns regarding the accuracy of 
the claims discharge status code in coding community discharges, nor 
about our use of the discharge status code for defining this quality 
measure. A summary of the TEP proceedings is available on the PAC 
Quality Initiatives Downloads and Videos Web site at https://

[[Page 76769]]

www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-
Instruments/Post-Acute-Care-Quality-Initiatives/IMPACT-Act-of-2014/
IMPACT-Act-Downloads-and-Videos.html.
    Comment: One commenter raised concern that the measure does not 
adjust for factors that are unique to certain specific provider types, 
such as providers offering dedicated services to patients with certain 
medical conditions. The commenter noted that providers caring for these 
populations might encounter greater challenges in discharging patients 
to the community due to special needs such as affordable and safe 
housing, mental health and substance abuse counseling, and medication 
management and supports. Another commenter noted that the measure could 
incentivize agencies to not treat patients who pose a financial risk, 
such as those with chronic conditions like end stage renal disease.
    Response: We appreciate the commenters' suggestion that the 
discharge to community measure should adjust for providers primarily 
caring for specialty populations that may encounter greater challenges 
with discharge to community settings. Our risk adjustment model 
accounts for a comprehensive list of diagnoses and comorbidities. We 
will use the feedback gathered from the comment period to better assess 
how we can inform further testing of the association between providers 
primarily caring for specialty populations and discharge to community 
outcomes as we refine this measure.
    Comment: Some commenters expressed concern regarding the use of the 
Patient Discharge Status Code variable to define community discharges, 
noting that home health agencies typically do not use code ``81'' and 
noted that including it in the measure specifications could increase 
burden and require administrative changes. Commenters additionally 
urged CMS to review the use discharge codes 01 and 02. Two commenters 
also noted that the measure specifications use ICD-9, and not ICD-10, 
codes and recommended a crosswalk between the two.
    Response: We would like to clarify that this proposed measure only 
captures discharges to home- and community-based settings based on the 
presence of Patient Discharge Status Codes ``01'' and ``81'' on the 
Medicare FFS claim. Code ``01'' on the Medicare FFS claim is used to 
determine discharge to home/self-care (routine discharge). Code ``81'' 
on the Medicare FFS claim is used to determine discharge to home or 
self-care with a planned acute care hospital readmission. This proposed 
measure does not include any claims where the HHA used Patient 
Discharge code ``02'' because that code assesses discharges to hospital 
inpatient care, a discharge setting that is not included in the outcome 
of this discharge to community measure. Codes ``01'' and ``81'' were 
chosen for the calculation of this measure because they are commonly 
used for all home health Medicare FFS claims. We disagree that the 
inclusion of code ``81'' in the measure will create a new burden for 
HHAs because HHAs should already be using that code if it accurately 
describes the beneficiary's discharge status.
    We agree with commenters that it is important to assess the impact 
of the ICD-9 to ICD-10 transition on the discharge to community 
measure. We are committed to maximizing accuracy and validity of our 
measures. We are developing an ICD-9 to ICD-10 crosswalk for the 
discharge to community measure, as well as other measures that use ICD 
codes.
    Comment: Several commenters expressed concern that there was 
overlap between the current OASIS-derived measure Discharge to 
Community HH QI measure and the proposed claims-based cross-setting 
Discharge to Community measure. The commenters noted that using two 
separate measures might be confusing to consumers and providers, making 
it challenging for HHAs to track and improve performance on these 
metrics. The commenters recommended that only one measure be publicly-
reported or that we do not use one of the two measures. One commenter 
noted that the Discharge to Community measure was essentially a 
hospitalization measure and supported the use of a single acute care 
hospitalization measure in the HH QRP.
    Response: We acknowledge that we currently have two measures 
addressing the topic of ``discharge to community'' but note that the 
overlap between the two measures is limited. We do not believe that the 
two measures will be confusing to providers and consumers. The proposed 
discharge to community measure, Discharge to Community PAC HH QRP, is 
unique in that it incorporates both within-stay and post-discharge 
hospitalization and mortality in the measure. The claims based 
discharge to community measure assesses broader outcomes; it first 
examines whether or not a patient was discharged to the community from 
the PAC setting and for patients discharged to the community, this 
measure examines whether they remained alive in the community without 
an unplanned readmission in the 31-day window following discharge to 
the community. The overall goal of CMS is to develop measures that are 
meaningful to patients and consumers, and assist them in making 
informed choices when selecting post-acute providers. Since the goal of 
PAC for most patients and family members is to be discharged to the 
community and remain in the community, from a patient/consumer 
perspective, it is important to assess whether a patient remained in 
the community after discharge and to separately report discharge to 
community rates. For these reasons, we believe that the measure, 
Discharge to Community-PAC HH QRP, is sufficiently different from OASIS 
derived measure so as not to be duplicative. Nonetheless, we intend to 
engage in public communication efforts for providers and other 
stakeholders to clarify the intent of the cross-setting measure and to 
distinguish it from the current OASIS-based measure so that HHAs are 
able to appropriately track and improve performance on these measure 
metrics.
    Comment: One commenter suggested that the discharge to community 
measure examine emergency room visits in the post-discharge observation 
window, in addition to unplanned readmissions. The commenter noted that 
this addition would impose no additional data collection burden on HHAs 
or hospitals, since these data are already collected by CMS.
    Response: The discharge to community measure captures patients that 
are discharged to the community and remain in the community post-
discharge. An emergency department visit that does not result in 
hospitalization would not be considered a failure to remain in the 
community. Nevertheless, we will assess emergency department visit 
rates in the post-discharge observation window to monitor for 
increasing rates, and potential indication of poor quality of care or 
inappropriate community discharges.
    Comment: One commenter supported including functional status in the 
risk adjustment for the discharge to community measure. They noted that 
functional status is associated with increased risk of 30-day all-cause 
hospital readmissions, and since readmissions and discharge to 
community are closely related, functional status risk adjustment is 
also important for this measure.
    Response: We appreciate the commenter's support. As mandated by

[[Page 76770]]

the IMPACT Act, we are moving toward the goal of collecting 
standardized patient assessment data for functional status across PAC 
settings. Once standardized functional status data become available 
across settings, it is our intent to use these data to assess patients' 
functional gains during their PAC stay, and to examine the relationship 
between functional status, discharge destination, and patients' ability 
to discharge to community. As we examine these relationships between 
functional outcomes and discharge to community outcomes in the future, 
we will assess the feasibility of leveraging these standardized patient 
assessment data to incorporate functional outcomes into the discharge 
to community measure in all PAC settings. Standardized cross-setting 
patient assessment data will also allow us to examine 
interrelationships between the quality and resource use measures in 
each PAC setting, to understand how these measures are correlated.
    Comment: One commenter encouraged us to provide PAC settings with 
access to measure performance data as early as possible so providers 
have time to adequately review these data, and implement strategies to 
decrease readmissions where necessary.
    Response: We intend to provide initial confidential feedback to PAC 
providers, prior to public reporting of this measure, based on Medicare 
FFS claims data from discharges in CY 2016.
    Comment: Some commenters expressed concern that the Discharge to 
Community HH QRP measure differs from the version for other PAC 
settings, and recommended that the denominator be limited to those 
patients admitted to home health within 30 days of discharge from an 
acute care hospital to allow for valid comparisons between PAC 
settings. Another commenter noted that home health patients are already 
``in the community'' and that agencies have limited control over 
patient outcomes after discharge.
    Response: The Discharge to Community measure is aligned across PAC 
settings in terms of risk-adjustment, exclusions, numerator and measure 
intent. For the target population and denominator, which is the risk-
adjusted expected number of discharges to community, our analyses 
revealed that the majority of HHA patients (56 percent) did not have an 
acute care stay within the 30 days preceding their HHA episode. 
Further, there was significant heterogeneity in HHA size, with many 
small agencies. As a result, requiring a prior acute stay for this 
measure would result in approximately 31.9 percent of HHAs not having 
the minimum number of episodes necessary to report a measure result 
with two years of data. In general, our policy is to develop measures 
that can capture the quality of care furnished to the maximum number of 
Medicare beneficiaries.
    We adjusted this proposed measure for a recent prior acute care 
stay in the risk adjustment model to accommodate the inclusion of both 
patients with and without a prior proximal hospitalization. For 
patients for whom index inpatient claims are not available, earlier 
inpatient claims, as well as physician and other claims, will be used 
to capture comorbidities and other covariates. Finalized measures such 
as the Acute Care Hospitalization (NQF #0171) and Emergency Department 
Use without Hospitalization (NQF #0173) have also found prior 
hospitalizations to be a significant predictor in the risk adjustment 
model but do not require that all patients have a prior acute care 
stay. Due to this measurement approach, we did not leverage the prior 
proximal hospitalization in this proposed measure. Similar to this 
proposed discharge to community measure, these finalized measures, NQF 
#0173 and NQF #0171, do not require episodes to have a prior acute care 
stay.
    We recognize that home health patients are by definition not in 
institutional settings, and we note that the proposed measure assesses 
continued successful community tenure post-discharge. To ensure we are 
able to adequately assess continued successful community tenure post-
discharge, this proposed measure is risk-adjusted to address initial 
patient characteristics that are predictors of failed community 
discharge.
    Comment: A few commenters requested clarification on whether 
patients who are discharged to home under hospice care qualify as a 
discharge to community for the purposes of the measure. One commenter 
suggested that patients who die on hospice within the post-discharge 
observation window be excluded from the discharge to community 
measures. Two commenters recommended that the measure exclude any 
patients who have been discharged to the community and expire within 
the post-discharge observation window.
    Response: The discharge to community measure excludes patients 
discharged to home- or facility-based hospice care. Thus, discharges to 
hospice are not considered discharges to community, but rather are 
excluded from the measure calculation. With respect to the suggestion 
that any patients who expire within the post-discharge window be 
excluded, we wish to note that including 31-day post-discharge 
mortality outcomes is intended to identify successful discharges to 
community, and to avoid the potential unintended consequence of 
inappropriate community discharges. We do not expect facilities to 
achieve a 0 percent death rate in the measure's post-discharge 
observation window; the focus is to identify unexpectedly high rates of 
death for quality monitoring purposes.
    Comment: One commenter noted the importance of patient education, 
engagement, coaching, accountability and commitment to their goals of 
care is critical to a successful discharge to the community.
    Response: We appreciate the comments and acknowledge the importance 
of patient engagement in successful community discharge. We intend to 
provide provider education for appropriate coding of discharge status 
to aid in their understanding of how discharge codes are used in the 
measure.
    Comment: One commenter recommended that patients discharged to long 
term care facilities paid by sources other than Medicare be excluded 
from the home health version of this measure.
    Response: The discharge to community measure only captures 
discharges to home and community based settings as discharges to 
community, based on Patient Discharge Status Codes 01 and 81on the 
Medicare FFS PAC claim.\1\ Code ``01'' on the Medicare FFS claim is 
used to determine discharge to home/self-care (routine discharge). Code 
``81'' on the Medicare FFS claim is used to determine discharge to home 
or self-care with a planned acute care hospital readmission. Codes 
``01'' and ``81'' do not include discharges to long-term care nursing 
facilities or any other institutional setting.
    Final Decision: After careful consideration of the public comments, 
we are finalizing our proposal to adopt the measure, Discharge to 
Community-Post Acute Care for the Home Health Quality Reporting 
Program, beginning with the CY 2018 HH QRP.
3. Measure That Addresses 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

[[Page 76771]]

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 proposed the 
measure Potentially Preventable 30-Day Post-Discharge Readmission (PPR) 
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 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 providers, are common, costly, and often 
preventable.67 68 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.'' \69\ 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.\70\ 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.\71\ 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.\72\ 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.\73\ 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).\74\ 
Fewer studies have investigated potentially preventable readmission 
rates from other post-acute care settings.
---------------------------------------------------------------------------

    \67\ 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.
    \68\ 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.
    \69\ 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.
    \70\ Ibid.
    \71\ Ibid.
    \72\ 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.
    \73\ 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.
    \74\ 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 settings. 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).\75\ 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.
---------------------------------------------------------------------------

    \75\ 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 HHS 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.\76\ \77\ \78\ 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.\79\ \80\ 
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.\81\ \82\ \83\
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    \76\ 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/.
    \77\ National Quality Forum: Prevention Quality Indicators 
Overview. 2008.
    \78\ 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.
    \79\ 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.
    \80\ 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.
    \81\ 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.
    \82\ 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.
    \83\ 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.

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[[Page 76772]]

    Potentially Preventable Readmission (PPR) 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 (PPR) 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 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, to ensure the statistical reliability of this 
measure for smaller agencies. In addition, we proposed 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 were either 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.

[[Page 76773]]

    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 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 proposed 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.
    Due to timeline limitations we have not yet submitted the proposed 
measure to the NQF for consideration of endorsement, but we intend to 
do so in the future. We also stated in the proposed rule that 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 also stated that we intend to 
publicly report this measure using claims data from CYs 2015, 2016 and 
2017.
    We invited public comment on our proposal to adopt the measure, 
Potentially Preventable 30-Day Post-Discharge Readmission Measure for 
HH QRP. The following is summary of the comments we received.
    Comment: MedPAC and other commenters expressed general support for 
the proposed Potentially Preventable 30-Day Post-Discharge Readmission 
Measure for HH QRP. One commenter specifically stated their support for 
the infectious conditions defined as potentially preventable, stating 
that many of these conditions are preventable using appropriate 
infection prevention interventions.
    Response: We agree that the measure will provide strong incentives 
for care coordination and will appropriately capture preventable 
readmissions, including infection-related readmissions.
    Comment: Several commenters expressed concern over the overlap 
between the proposed PPR measure and other HH QRP measures, including 
the existing all-cause readmission measure. Commenters noted that 
public reporting of more than one hospital readmission measure for HHAs 
may result in confusion among the public; the commenters also noted 
that HHAs could face confusion over two distinct but similar measures, 
which could potentially pose challenges for quality improvement 
efforts. One commenter noted that the proposed PPR measures and the 
existing all-cause measure are distinct yet overlapping, adding that 
the PPR measure is a subset of the all-cause readmission measure. Given 
this overlap, one commenter expressed concern that providers who 
perform poorly on the all-cause readmission measure are also likely to 
perform poorly on the proposed PPR measure, and suggested CMS not adopt 
the measure until it could evaluate the necessity of each measure. Some 
commenters requested that CMS clarify the overlap and intent of these 
measures, and provide more education to providers and the public on the 
multiple HH QRP readmission measures.
    Response: With regard to overlap with the existing HH QRP 
readmission measure, we wish to clarify that there are distinct 
differences between the all-cause readmission measure and the PPR 
measure. The all-cause measure assesses readmissions occurring within 
the first 30 days following the start of a home health stay, during 
which time a patient is in the HHA's care, and the potentially 
preventable measure assesses readmissions during the first 30 days 
post-discharge from the HHA. While a small overlap between the two 
measures is expected, the all-cause performance rates are more heavily 
driven by within-stay re-hospitalizations while PPR performance rates 
are driven purely by post-discharge re-hospitalizations. We are 
committed to ensuring that measures in the HH QRP are useful in 
assessing quality and will continue to evaluate all readmission 
measures over time.
    Comment: Several commenters provided feedback on the PPR 
definitions or lists of conditions for which readmissions would be 
considered potentially preventable. Some commenters believed that the 
definitions were too broad or were concerned about the applicability of 
the PPR conditions to the HH setting. MedPAC commented that the measure 
definitions and risk adjustment should be identical across PAC settings 
so that potentially preventable readmission rates can be compared 
across settings. In addition to general comments about the PPR 
definitions, we also received feedback on specific conditions and 
received suggestions to add or remove conditions. One commenter 
specifically supported the inclusion of infectious conditions in the 
``inadequate management of infections'' and ``inadequate management of 
other unplanned events'' categories in the measure's definition of 
potentially preventable hospital readmissions. Other commenters 
specifically requested conditions--specifically patient falls and 
behavioral health diagnoses--be excluded from this measure until 
further study is conducted. Additionally, two commenters suggested that 
it was inappropriate for the measure to include conditions unrelated to 
the reason for HH admission. A few commenters recommended that CMS 
continue evaluating and testing the measure to ensure that the codes 
used for the PPR definition are clinically relevant.
    Response: The PPR list of conditions for which readmissions would 
be considered potentially preventable is aligned for measures with the 
same readmission window, regardless of PAC setting. Specifically, the 
post-PAC discharge PPR measures that were developed for each of the PAC 
settings contain the same list of PPR conditions (available on the CMS 
Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/Proposed-Measure-Specifications-for-Measures-Proposed-in-CY-2017-HH-QRP-NPRM.pdf). Although there are some minor differences in the 
specifications across the measures (for example, years of data used to 
calculate the measures to ensure reliability and some of the measure 
exclusions necessary to attribute responsibility to the individual 
settings), the IMPACT Act PPR measures are standardized. The 
statistical approach for risk adjustment is also aligned across the 
measures;

[[Page 76774]]

however, there is variation in the exact risk adjusters. The risk 
adjustment models are empirically driven and differ between measures as 
a consequence of case mix differences, which is necessary to ensure 
that the estimates are valid. The approach for defining PPRs for these 
measures was based on comprehensive reviews of the scientific 
literature, input from clinical experts, and recommendations from our 
TEP, including TEP members' in-person feedback and their written 
ratings of the conditions.
    Though readmissions may be considered potentially preventable even 
if they may not appear to be clinically related to the patient's 
original reason for HH admission, there is substantial evidence that 
the conditions included in the definition may be preventable with 
adequately planned, explained, and implemented post-discharge 
instructions, including the establishment of appropriate follow-up 
ambulatory care. Furthermore, this measure is based on Medicare FFS 
claims data and it may not always be feasible to determine whether a 
subsequent readmission is or is not clinically related to the reason 
why the patient was receiving inpatient rehabilitation. We intend to 
conduct ongoing evaluation and monitoring of this measure to ensure 
that the PPR definition codes remain clinically relevant.
    Comment: Commenters sought clarification on whether emergency 
department (ED) visits were included in the measure. One commenter 
suggested that the PPR measure incorporate both inpatient and emergency 
department (ED) visits to enhance consumer understanding.
    Response: The PPR measure was developed to fulfill the IMPACT Act's 
statutory requirement for a measure to address the domain of 
potentially preventable hospital readmissions. We agree that ED visits 
are also an important outcome, but they do not fall under the same 
domain as hospital readmissions and are not included in the measure.
    Comment: We received several comments encouraging additional 
testing and evaluation of the measure prior to implementation. 
Specifically, several comments suggested that CMS should not finalize 
this measure because the measure was still under development and the 
MAP did not vote to support it, but instead encouraged continued 
development. Commenters also recommended that the measure be submitted 
for NQF endorsement and that CMS only propose NQF-endorsed measures for 
use in the HHQRP.
    Response: We intend to submit this measure to NQF for consideration 
of endorsement.
    Although the measure is not currently endorsed, we did conduct 
additional testing subsequent to the MAP meeting. Based on that 
testing, we were able to complete the risk adjustment model and 
evaluate facilities' PPR rates, and we made the results of our analyses 
available at the time of the proposed rule. We found that testing 
results were similar to the current home health all-cause readmission 
measures (NQF #2380) and allowed us to conclude that the measure is 
sufficiently developed, valid and reliable for adoption in the HH QRP. 
We would also like to clarify that the finalized risk-adjustment models 
and coefficients are included in the measure specifications available 
at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/Proposed-Measure-Specifications-for-Measures-Proposed-in-CY-2017-HH-QRP-NPRM.pdf. We will make additional testing results available in the 
future.
    Comment: Two commenters requested that CMS cross-walk the ICD-9 to 
ICD-10 codes for the lists of conditions for which readmissions may be 
considered potentially preventable, and one further requested this 
information be made publicly available.
    Response: Our measure development contractors have developed 
preliminary ICD-10 cross-walks for the lists of conditions. The current 
ICD-10 cross-walks can be found in the link for the technical 
specifications posted below, and any adjustments made to the cross-
walks will be implemented in future rulemaking. With regard to the 
planned readmission approach, we also direct readers to the technical 
specifications for the measure, which is available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Post-Acute-Care-Quality-Initiatives/Downloads/Proposed-Measure-Specifications-for-Measures-Proposed-in-CY-2017-HH-QRP-NPRM.pdf.
    Comment: While we received comments in support of risk adjustment, 
several commenters raised concern over the specific risk adjustment 
approach for the PPR measures. Specifically, commenters were concerned 
that the approach is insufficient or does not adequately take into 
account patient frailty, prior PAC stays, multiple comorbidities, or 
sociodemographic factors to address income, and caregiver support. 
Several commenters expressed concern that this measure would capture 
outcomes that are outside of HH providers' control, specifically for 
chronically ill patients, instances of poor patient compliance, 
unhealthy choices, and various SDS factors, such as lack of resources 
or limited access to follow up or primary care. Several commenters 
suggested that CMS risk adjust for cognitive impairments/behavioral 
health, whether or not the patient had a follow-up visit with a 
physician, and for functional status and activities of daily living 
(ADL) scores, in all settings.
    Response: The risk adjustment approach developed for these measures 
is comprehensive and captures a variety of patient case mix 
characteristics, including sociodemographic characteristics (age, sex, 
original reason for entitlement), principal diagnosis during the prior 
proximal hospital stay, body system specific surgical indicators, 
comorbidities, and prior service utilization. The measure's 
comprehensive risk-adjustment approach and exclusion criteria are 
intended to capture many of these factors. As described above, there is 
substantial evidence that the conditions included in the definition may 
be preventable with adequately planned, explained, and implemented 
post-discharge instructions, including the establishment of appropriate 
follow-up ambulatory care. We would like to clarify that the focus of 
the PPR measure is to identify excess PPR rates for the purposes of 
quality improvement. With regard to the suggestions that the model 
include sociodemographic factors and the suggestion pertaining to an 
approach with which to convey data comparisons, we refer the readers to 
section V. B of this final rule where we discuss these topics. This 
risk adjustment approach was designed to harmonize with approaches 
developed and refined over several years and used for other claims-
based NQF-endorsed hospital readmission measures by CMS in inpatient, 
as well as PAC quality reporting programs. As described for all IMPACT 
Act measures in section V.G., the statistical approach for risk 
adjustment is also aligned across the measures; however, there is 
variation in the exact risk adjusters. The risk-adjustment models are 
empirically driven and differ between measures as a consequence of case 
mix differences, which is necessary to ensure that the estimates are 
valid. The risk-adjustment model takes into account medical complexity, 
as patients with multiple risk factors will rate as having higher risk 
of readmission. For those cross-setting post-acute measures such as 
those intended to satisfy the IMPACT

[[Page 76775]]

Act domains that use the patient assessment-based data elements for 
risk adjustment, we have either made such items standardized, or intend 
to do so as feasible.
    Comment: Two commenters expressed concern over using claims data 
for hospital readmissions, noting that these data may not be accurate. 
A commenter additionally suggested that CMS add a system to support 
providers to understand how data were calculated, to report errors, and 
to promote quality improvement purposes.
    Response: The claims data used to calculate this measure are 
validated and are used for several NQF endorsed measures adopted for 
CMS programs, including the HH QRP, for example, the home health Acute 
Care Hospitalization and Emergency Department Use without 
Hospitalization measures (NQF 0171 and 0173, respectively). Multiple 
studies have been conducted to examine the validity of using Medicare 
hospital claims for several NQF endorsed quality measures used in 
public reporting such as 30-day mortality rates for pneumonia patients, 
30-day all-cause readmission rates among patients with heart failure 
and 30-day mortality rates among patients with heart 
failure.84 85 86 These studies supported the use of claims 
data as a valid means for risk adjustment and assessing hospital 
readmissions. Additionally, although assessment and other data sources 
may be valuable for risk adjustment, we are not aware of another data 
source aside from Medicare claims data that could be used to reliably 
assess the outcome of potentially preventable hospital readmissions 
post-HHA discharge.
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    \84\ Bratzler DW, Normand SL, Wang Y, et al. An administrative 
claims model for profiling hospital 30-day mortality rates for 
pneumonia patients. PLoS One 2011;6(4):e17401.
    \85\ Keenan PS, Normand SL, Lin Z, et al. An administrative 
claims measure suitable for profiling hospital performance on the 
basis of 30-day all-cause readmission rates among patients with 
heart failure. Circulation 2008;1(1):29-37.
    \86\ Krumholz HM, Wang Y, Mattera JA, et al. An administrative 
claims model suitable for profiling hospital performance based on 
30-day mortality rates among patients with heart failure. 
Circulation 2006;113:1693-1701.
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    Comment: Two commenters cautioned against potential unintended 
consequences of the measure, in particular, noting that the measure 
could incentivize HHAs to delay necessary readmission to the hospital. 
One commenter noted that the measure could cause HHAs to be selective 
about the patients they admit.
    Response: We intend to conduct ongoing monitoring to assess for 
potential unintended consequences associated with the implementation of 
this measure. A major goal of risk adjustment is to ensure that patient 
case mix is taken into account in order to allow for fair comparisons 
of facilities. Given that this is a post-HHA discharge measure; HHAs 
would have no ability to delay hospital readmissions as the patient is 
no longer in the care of the HHA.
    Final Decision: After consideration of the public comments 
received, we are finalizing our proposal to adopt the measure, 
Potentially Preventable 30-Day Post-Discharge Readmission Measure for 
HH QRP beginning with the CY 2018 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 proposed 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 measure assesses whether PAC providers were responsive to 
potential or actual clinically significant medication issue(s) when 
such issues were identified. Specifically, the 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 
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 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 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.\87\ This measure is applied uniformly across the PAC settings.
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    \87\ Institute of Medicine. Preventing Medication Errors. 
Washington DC: National Academies Press; 2006.
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    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.\88\ 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.\89\ 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.\90\ There is universal 
agreement that medication reconciliation directly addresses patient 
safety issues that can result from medication miscommunication and 
unavailable or incorrect information.91 92 93 94
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    \88\ Leotsakos A., et al. Standardization in patient safety: the 
WHO High 5s project. Int J Qual Health Care. 2014:26(2):109-116.
    \89\ The Joint Commission. 2016 Long Term Care: National Patient 
Safety Goals Medicare/Medicaid Certification-based Option. 
(NPSG.03.06.01).
    \90\ 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.
    \91\ 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.
    \92\ Leotsakos A., et al. Standardization in patient safety: the 
WHO High 5s project. Int J Qual Health Care. 2014:26(2):109-116.
    \92\ The Joint Commission. 2016 Long Term Care: National Patient 
Safety Goals Medicare/Medicaid Certification-based Option. 
(NPSG.03.06.01).
    \93\ 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.
    \94\ The Joint Commission. 2016 Long Term Care: National Patient 
Safety Goals Medicare/Medicaid Certification-based Option. 
(NPSG.03.06.01).

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[[Page 76776]]

    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,95 96 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.\97\
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    \95\ Jha AK, Kuperman GJ, 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.
    \96\ Hohl CM, Nosyk B, Kuramoto L, et al. Outcomes of emergency 
department patients presenting with adverse drug events. Ann Emerg 
Med. 2011;58:270-279.
    \97\ Kohn LT, Corrigan JM, Donaldson MS, ``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.98 99 100 101 102 103 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.104 105
---------------------------------------------------------------------------

    \98\ Institute of Medicine. To err is human: building a safer 
health system. Washington, DC: National Academies Press; 2000.
    \99\ Lesar TS, Briceland L, Stein DS. Factors related to errors 
in medication prescribing. JAMA. 1997:277(4): 312-317.
    \100\ Bond CA, Raehl CL, & Franke T. Clinical pharmacy services, 
hospital pharmacy staffing, and medication errors in United States 
hospitals. Pharmacotherapy. 2002:22(2): 134-147.
    \101\ Bates DW, Cullen DJ, Laird N, Petersen LA, Small SD, et 
al. Incidence of adverse drug events and potential adverse drug 
events. Implications for prevention. JAMA. 1995:274(1): 29-34.
    \102\ Barker KN, Flynn EA, Pepper GA, Bates DW, & Mikeal RL. 
Medication errors observed in 36 health care facilities. JAMA. 2002: 
162(16):1897-1903.
    \103\ Bates DW, Boyle DL, Vander Vliet MB, Schneider J, & Leape 
L. Relationship between medication errors and adverse drug events. J 
Gen Intern Med. 1995:10(4): 199-205.
    \104\ Institute of Medicine. To err is human: building a safer 
health system. Washington, DC: National Academies Press; 2000.
    \105\ 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.\106\ 
Potential medication problems upon admission to HHAs have been reported 
as occurring at a rate of 39 percent of reviewed charts \107\ and mean 
medication discrepancies between 2.0  2.3 and 2.1  2.4.\108\ Similarly, medication discrepancies were noted as 
patients transitioned from the hospital to home health settings.\109\ 
An estimated fifty percent of patients experienced a clinically 
important medication error after hospital discharge in an analysis of 
two tertiary care academic hospitals.\110\
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    \106\ Wong, JD., et al. ``Medication reconciliation at hospital 
discharge: evaluating discrepancies.'' Annals of Pharmacotherapy 
42.10 (2008): 1373-1379.
    \107\ Vink J, Morton D, Ferreri S. Medication-Related Problems 
in the Home Care Setting. The Consultant Pharmacist. Vol 26 No 7 
2011 478-484.
    \108\ Setter SM, Corbett CF, Neumiller JJ, Gates BJ, 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.
    \109\ Zillich AJ, Snyder ME, Frail CK, Lewis JL, 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.
    \110\ 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.111 112 Hospital discharge has been 
identified as a particularly high risk time point, with evidence that 
medication reconciliation identifies high levels of 
discrepancy.113 114 115 116 117 118 Also, there is evidence 
that medication reconciliation discrepancies occur throughout the 
patient stay.119 120 For older patients who may have 
multiple comorbid conditions and thus multiple medications, transitions 
between acute and post-acute care settings can be further 
complicated,\121\ and medication reconciliation and patient knowledge 
(medication literacy) can be inadequate post-discharge.\122\ The 
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.
---------------------------------------------------------------------------

    \111\ 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.
    \112\ 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.
    \113\ Coleman EA, Smith JD, Raha D, Min SJ. Post hospital 
medication discrepancies: prevalence and contributing factors. Arch 
Intern Med. 2005 165(16):1842-1847.
    \114\ Wong JD, Bajcar JM, Wong GG, et al. Medication 
reconciliation at hospital discharge: evaluating discrepancies. Ann 
Pharmacother. 2008 42(10):1373-1379.
    \115\ Hawes EM, Maxwell WD, White SF, Mangun J, Lin FC. 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.
    \116\ Foust JB, Naylor MD, Bixby MB, Ratcliffe SJ. Medication 
problems occurring at hospital discharge among older adults with 
heart failure. Research in Gerontological Nursing. 2012, 5(1): 25-
33.
    \117\ Pherson EC, Shermock KM, Efird LE, et al. Development and 
implementation of a post discharge home-based medication management 
service. Am J Health Syst Pharm. 2014; 71(18): 1576-1583.
    \118\ 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.
    \119\ Bates DW, Cullen DJ, Laird N, Petersen LA, Small SD, et 
al. Incidence of adverse drug events and potential adverse drug 
events. Implications for prevention. JAMA. 1995:274(1): 29-34.
    \120\ 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.
    \121\ 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.
    \122\ Hume K, Tomsik E. Enhancing Patient Education and 
Medication Reconciliation Strategies to Reduce Readmission Rates. 
Hosp Pharm; 2014; 49(2):112-114.
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    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-

[[Page 76777]]

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 measure. The public comment summary report for the 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 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 measure in 
compliance with the MAP's recommendations. The measure is both 
consistent with the information submitted to the MAP and supports its 
scientific acceptability for use in the HH QRP. Therefore, we proposed 
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 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 proposed 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 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 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 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 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 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, we proposed 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 quality measure will be based on the data 
collection of three standardized items that will be added to the OASIS. 
The collection of data by means of the standardized items will be 
obtained at start or resumption of care and end of care. For more 
information about the data submission required for this 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 quality measure would 
replace existing items currently used for data collection within the 
OASIS. The measure denominator is the number of patient episodes with 
an end of care assessment during the reporting period. The 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 measure, including information 
about the measure calculation and discussion pertaining to the 
standardized items used to calculate this measure, we refer readers to 
the

[[Page 76778]]

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 invited 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. 
The following is summary of the comments we received regarding our 
proposal.
    Comment: Several commenters expressed support for the proposed 
quality measure, expressing appreciation to CMS for proposing a quality 
measure to address the IMPACT Act domain, Medication Reconciliation 
that acknowledges the importance of medication reconciliation to 
address patient safety issues. Two commenters additionally emphasized 
the importance of preventing and responding to ADEs to reduce health 
services utilization and associated healthcare costs, and emphasized 
that medication reconciliation is fundamental to patient safety during 
care transitions.
    Response: We agree that medication reconciliation is an important 
patient safety process for addressing medication accuracy during 
transitions in patient care and identifying preventable ADEs, which may 
lead to reduced health services utilization and associated costs.
    Comment: We received several comments expressing concern about the 
timely follow-up component of this measure. Several commenters 
addressed the issue of timely physician response to communication about 
potential clinically significant medication issues and physician 
accountability in this process measure. Many commenters noted the 
challenge of obtaining a physician response within one calendar day, 
which may be impeded by events such as physician vacations or contact 
after hours or during holidays. One commenter specifically recommended 
a more flexible timeframe to accommodate holidays and weekends. Another 
commenter noted that HHAs have limited access to pharmacists, as well 
as multiple physicians who may be involved in a patient's care, and 
that this lack of access presents a barrier to timely follow-up. 
Several commenters recommended that HHAs only be held accountable for 
contacting a physician or physician-designee, but not for completing 
follow-up actions, within the measure timeframe. One commenter 
requested guidance from CMS as to whether HHAs will be held accountable 
for the physician's own timely response. One commenter recommended 
revising the OASIS-C2 guidance manual to align with the previous 
guidance for OASIS-C1 items M2002 and M2004 that require physician 
notification only.
    Response: The intervention timeline of midnight of the next 
calendar day is consistent with clinical practice when a clinically 
significant medication issue arises requiring intervention. We believe 
that high quality care should be provided wherever healthcare services 
are provided, and that this measure helps to ensure that high quality 
care services are furnished and that patient harm is avoided. The OASIS 
C2 guidance manual will be updated to reflect information on how to 
collect and code for these revised items that will be used to calculate 
the proposed measure.
    Comment: Four commenters expressed concern that this measure will 
create additional burden for HH clinicians. Three commenters 
specifically noted the lookback period for the measure, the entire 
episode of care, is a source of additional burden.
    Response: This measure is calculated using items that are already 
collected in the OASIS and that capture good clinical care. The intent 
of the measure is to capture timely follow up for all ``potential 
clinically significant issues.'' Although we acknowledge that the 
measure may create a new burden for some HHAs, we believe the timely 
review and follow up of potential clinically significant medication 
issues at every assessment time period and across the patient's episode 
of care is essential for providing the best quality care for patients. 
Documenting that this review has occurred is an important component of 
safe and high-quality care.
    Comment: We received several comments requesting CMS further 
clarify the definition of key terms used in the measure, most often 
``potentially clinically significant'' medication issues, but also 
``significant drug interactions,'' ``significant side effects,'' ``any 
potential adverse effects'' and ``physician-designee.'' Several 
commenters were concerned that these terms could be interpreted 
differently by clinicians, and that this could result in a challenge to 
collect reliable and accurate data for this quality measure. One 
commenter recommended that the definition of ``potentially clinically 
significant medication issues'' not change for drug regimen review from 
the published OASIS-C2 item intent and instructions, and the recently 
released FY17 SNF PPS final rule.
    Response: For this measure, potential clinically significant 
medication issues are defined as those issues that, in the clinician's 
professional judgment, warrant interventions, such as alerting the 
physician and/or others, and the timely completion of any recommended 
actions (by midnight of the next calendar day) so as to avoid and 
mitigate any untoward or adverse outcomes. The process to identify 
``clinically significant'' medication issues depends on the clinical 
situation at any given time where providers apply appropriate clinical 
judgment to ensure an adequate response. We recognize that there may be 
instances in which a provider identifies clinically significant 
medication issues that require immediate attention, and therefore, 
timely interventions would include immediate actions by the HHA. The 
definition of ``potentially clinically significant medication issues'' 
has not changed from the published OASIS-C2 item intent and 
instructions or the recently published FY 2017 SNF PPS Final Rule.
    The OASIS-C2 manual defines ``medication interactions'' as the 
impact of another substance (such as another medication, nutritional 
supplement including herbal products, food, or substances used in 
diagnostic studies) upon a medication, and adverse drug reactions as 
``a form of adverse consequences.'' It may be either a secondary effect 
of a medication that is usually undesirable and different from the 
therapeutic effect of the medication or any response to a medication 
that is noxious and unintended and occurs in doses for prophylaxis, 
diagnosis, or treatment''. Further the physician designee is defined by 
the physician's office within the legal scope of practice in the area 
where the agency operates. Of note, the OASIS-C2 manual is available at 
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HomeHealthQualityInits/HHQIOASISUserManual.html.
    We note that the guidance as delineated in the guidance manual 
should be utilized to guide definitional interpretation and coding for 
these items that are used to calculate this proposed quality measure. 
However, guidance should not supersede the immediate actions needed by 
the HHA for appropriate clinical care.

[[Page 76779]]

    Comment: Two commenters requested that we test this measure prior 
to implementing it as part of the quality reporting system and 
expressed concern that the measure was not NQF endorsed.
    Response: This measure is calculated using existing OASIS items 
that have been slightly modified for cross-setting purposes. Therefore, 
since these items have been collected by HHAs in past versions of the 
OASIS, we believe these items will be feasible to collect. In order to 
test measure performance, we applied the measure specifications to the 
current OASIS-C1 items and found a median rate of 84.3 percent, with an 
interquartile range of 22.7 percent across HHAs nationwide based on 
2013 data. We plan to submit the measure to NQF for consideration of 
endorsement.
    Comment: Some commenters indicated that the quality measure focuses 
on drug regimen review rather than medication reconciliation. 
Commenters recommended that the measure explicitly include medication 
reconciliation to meet the medication reconciliation domain of the 
IMPACT Act.
    Response: We believe that the proposed measure not only squarely 
addresses medication reconciliation, as mandated by the IMPACT Act, but 
does so in a manner that also allows for the assessment of drug regimen 
review, which is a process we believe goes hand in hand with medication 
reconciliation. Specifically, we believe that medication reconciliation 
is the initial step of the drug regimen review process and that the 
latter is actually dependent on the identification of an accurate 
medication list.
    Comment: Several commenters addressed the challenge and importance 
of medication reconciliation across the continuum of care. They cited 
the importance of a discharge summary from the prior care setting that 
includes a current medication list, by indication, in avoiding 
medication discrepancies. One commenter suggested that we consider the 
need for increased collaboration with hospitals to address this issue. 
Other commenters suggested that we develop a measure that evaluates 
whether agencies are sending medication lists to the next level of 
care. Another commenter recommended that we add a medication management 
measure to fully address patients' medication management routine needs 
in order to prepare patients for discharge to PAC settings or the 
community.
    Response: We believe that all providers should strive to ensure 
accurate, sufficient, and efficient patient-centered care during their 
care transitions across the continuum, including medication oversight. 
Thus while we may implement quality measures that address gaps in 
quality, such as information exchange during care transitions, 
ultimately providers must act to ensure that such coordination is 
taking place. We appreciate the interest in future quality measure 
development, including measures related to sending a medication list at 
discharge and adding a medication management measure. As a requirement 
of this measure and as with common clinical practice, HHAs are expected 
to document information pertaining to the process of drug regimen 
review, which includes medication reconciliation. However, we will take 
the commenters recommendations into consideration as we continue to 
develop additional quality measures under the domain of Medication 
Reconciliation
    Comment: One commenter expressed concern about the appropriateness 
of a cross-setting measure on medication reconciliation in home-based 
settings, noting that relative to other PAC settings, home health 
agencies have limited control over medications.
    Response: This measure is consistent with standard clinical 
practice requirements of ongoing review, documentation, and timely 
reconciliation of all patient medications, with appropriate follow up 
to address all clinically significant medication concerns. Thus, the 
documentation of drug regimen review, along with timely follow-up, 
aligns with professional practice standards expected of all PAC 
providers to ensure adherence to providing quality care. Further, we 
wish to note that this measure is based on items that have been 
modified from existing OASIS items, which have been collected for 
several years.
    Comment: One commenter stated that the proposed measure would not 
capture process gaps to improve performance related to medication 
reconciliation and recommended that individual steps in the process be 
measured separately.
    Response: This proposed measure assesses whether medication 
reconciliation and the other components of drug regimen review, 
including timely follow-up, were completed. The clinician is required 
to assess at the start of care, resumption of care, or at discharge 
assessment whether any concerns related to medication reconciliation 
has occurred. Completion of this measure is required at any assessment 
performed during a patient's time in the care of an agency. Any process 
gaps will be reflected in the measure outcome, as all processes of the 
drug regimen review and the medication reconciliation must be performed 
to meet the numerator criteria. Through the collection of the data, 
providers will be able to determine what areas of improvement are 
required and whether any systematic gaps in appropriate care are 
present for their agency.
    Comment: One commenter requested that an ED visit as directed by 
the HHA, when a physician does not respond to a clinically-significant 
medication issue, should not always be included in the ``unplanned 
emergency department (ED) use'' statistical measurement outcome.
    Response: This measure is not a measure of emergency department use 
nor is this measure related to the measures ``Emergency Department Use 
without Hospitalization'' (NQF #0173) or Emergency ``Department Use 
without Hospital Readmission During the First 30 Days of Home Health'' 
(NQF #2505) that are currently used in the Home Health Quality 
Reporting Program. While we understand the commenter's concern, the 
methodologies behind these measures are not being proposed for change, 
and therefore the comment is outside the scope of this rulemaking.
    Comment: One commenter expressed concern that the process of 
documenting medication follow-up in the OASIS via a check box does not 
provide sufficient information on the processes completed or 
opportunities to assess and improve the quality of medication 
reconciliation. This commenter recommended that CMS delay this measure 
to develop an improved approach to data collection on the medication 
reconciliation process.
    Response: The items used to assess the documentation of medication 
follow-up have been used in versions of the OASIS for some time. These 
items, as with many others in the OASIS instrument, have been carefully 
considered to provide the amount of information that address the 
important issue of drug regimen review without adding undue burden to 
clinicians. In order to appropriately respond to the correct response 
categories via checkbox, clinicians must review the medical record in 
order to attest that the follow up was done each time, which should 
provide information to the HHA about the processes and quality of 
review. That is, this proposed measure will inform HHA's quality 
improvement efforts by indicating how often these processes are 
completed correctly. Agencies can use these results to conduct 
additional review of these processes and improve the quality of 
medication reconciliation.
    Final Decision: After consideration of the public comments, we are 
finalizing

[[Page 76780]]

our proposal to adopt the measure, Drug Regimen Review Conducted with 
Follow-Up for Identified Issues for the HH QRP beginning with the CY 
2018 HH QRP.

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

    We invited public comment on the importance, relevance, 
appropriateness, and applicability of each of the quality measures 
listed in Table 28 for use in future years in the HH QRP.

 Table 28--HH QRP Quality Measures Under Consideration for Future Years
------------------------------------------------------------------------
 
------------------------------------------------------------------------
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.
IMPACT Act Measure................   Transfer of health
                                     information and care preferences
                                     when an individual transitions.
IMPACT Act Domain.................  Incidence of major falls.
IMPACT Act Measure................   Application of NQF #0674--
                                     Percent of Residents Experiencing
                                     One or More Falls with Major Injury
                                     (Long Stay).
IMPACT Act Domain.................  Functional status, cognitive
                                     function, and changes in function
                                     and cognitive function.
IMPACT Act Measure................   Application of NQF #2631--
                                     Percent of Long-Term Care Hospital
                                     (LTCH) Patients with an Admission
                                     and Discharge Functional Assessment
                                     and a Care Plan That Addresses
                                     Function.
NQS Priority......................  Patient- and Caregiver-Centered
                                     Care.
Measures..........................   Application of NQF #2633--
                                     Change in Self-Care Score for
                                     Medical Rehabilitation Patients.
                                     Application of NQF #2634--
                                     Change in Mobility Score for
                                     Medical Rehabilitation Patients.
                                     Application of NQF #2635--
                                     Discharge Self-Care Score for
                                     Medical Rehabilitation Patients.
                                     Application of NQF #2636--
                                     Discharge Mobility Score for
                                     Medical Rehabilitation Patients.
                                     Application of NQF #0680--
                                     Percent of Residents or Patients
                                     Who Were Assessed and Appropriately
                                     Given the Seasonal Influenza
                                     Vaccine (Short Stay).
------------------------------------------------------------------------

    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, we are considering 
development of measures that assess if functional abilities were 
maintained during a care episode and composite measures that combine 
multiple evidence-based processes. We invited feedback on the 
importance, relevance, appropriateness, and applicability of these 
measure constructs.
    We invited public comment on the importance, relevance, 
appropriateness, and applicability of each of the quality measures 
listed in Table 28 for use in future years in the HH QRP. The following 
is summary of the comments we received regarding our measure concepts 
under consideration for future years.
    Comment: Some commenters remarked on the limited number of 
standardized items under consideration for measure development related 
to communication, cognition, and swallowing and noted that these three 
domains stand as major obstacles to validly determine the status, 
needs, and outcomes of individuals with neurological disorders. They 
recommended adding functional cognitive assessment items to the OASIS. 
One commenter further encouraged us to adopt a specific screening tool, 
the Montreal Cognitive Assessment (MoCA), or similar screening tools 
and assessment tools (that is, CARE-C) to best meet the needs of 
Medicare beneficiaries and the intent of the IMPACT Act.
    Response: We agree that future measure development should include 
other areas of function, such as communication, cognition, and 
swallowing. We will continue to engage stakeholders in future measure 
development and will take these suggested quality measure concepts and 
recommendations regarding measure specifications into consideration in 
our ongoing measure development and testing efforts.
    Comment: Several comments addressed future measure development 
related to patient functioning. One commenter expressed support for a 
core set of functional measures to assess patients consistently across 
the continuum of care. Three commenters encouraged CMS to develop 
measures that assess stabilization in patient functioning, and another 
commenter opposed development of measures that assess change in 
function as compared to the expected function of a patient. This 
commenter noted that these measure constructs imply an expectation of 
improvement and do not reflect the role of the home health benefit in 
maintaining function and reducing deterioration. Another commenter 
suggested that CMS should clarify if home health versions of the 
function measures listed in Table 29 would be developed, noting that 
the

[[Page 76781]]

NQF-endorsed measures reference ``Medical Rehabilitation Patients''. 
One commenter encouraged no more development of process measures, while 
two other supported aligning measures across Home Health Compare, 
CASPER, star ratings and value-based purchasing, and one further 
supported a single acute care hospitalization measure. Finally, one 
commenter recommended that future measure development be limited to 
measures required by the IMPACT Act.
    Response: We believe that maintenance of function and avoidance or 
reduction in functional decline are appropriate goals for some home 
health patients. As we continue to develop and refine standardized 
function measures, we will continue to assess and account for the 
unique characteristics of home health patients and the home health 
setting. In addition, we note our support for outcome measures and the 
six measures proposed for removal from the HH QRP are all process 
measures.
    Comment: Two commenters expressed support for developing measures 
related to the IMPACT Act domain, accurately communicating the 
existence of and providing for the transfer of health information and 
care preferences when the individual transitions. These commenters 
cited the importance of patient and family engagement in care 
decisions. One commenter further encouraged CMS to add quality measures 
that include consumer-reported experience of care, as well as one or 
more measure(s) regarding HHA interaction with and support of family 
caregivers. They cited the important role that family caregivers play 
in discharge planning and suggested measurement constructs including 
documenting the presence of an informal caregiver, caregivers' ability 
to provide supports and referrals to caregivers for available supports.
    Response: We appreciate the support for future development of 
measures to assess accurately communicating the existence of and 
providing for the transfer of health information and care preferences 
of an individual. We concur with the importance of experience-of-care 
measures. We additionally acknowledge the important role of family 
caregivers in home health and appreciate the suggestion for future 
measure development.
    Comment: We received two comments regarding future development of a 
standardized measure of falls with major injury for home health 
patients. One commenter noted that home health agencies would have 
unique challenges with measures related to falls in people over 65 in 
home-based settings, given limited control over the home setting and 
other risk factors. This commenter expressed support for the goal of 
minimizing patient falls, but encouraged CMS not to compare outcomes to 
facility-based providers, given the challenges of the home setting. 
Another commenter noted that if a home health appropriate version of 
the standardized Falls with Major Injury measure were implemented, 
agencies would need information from the removed HH QI measures 
Emergent Care for Injury Caused by Fall, and Improvement in Urinary 
Incontinence to assess their status in this area and potentially make 
improvements.
    Response: We note this measure is restricted to falls with major 
injuries, which should be never events for home health patients. We 
additionally wish to clarify that data for the two removed measures, 
Emergent Care for Injury Caused by Fall and Improvement in Urinary 
Incontinence, will continue to be available to agencies through the 
CASPER reporting system.
    Comment: One commenter recommended developing quality measures 
assessing outcomes beyond the immediate post-discharge timeframe, such 
as 60 days after the end of an episode. They noted that such a measure 
could reflect occupational therapists' contributions to long-term 
success for post-discharge.
    Response: We will take these measure recommendations into 
consideration.
    Comment: One commenter expressed support for future application of 
the standardized measure ``Percent of Residents or Patients Who Were 
Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short 
Stay).'' This commenter noted the importance of adult immunization 
measures in reducing rates of morbidity and mortality from preventable 
conditions.
    Response: We appreciate the commenter's support for a future 
standardized measure of seasonal influenza vaccination.
    We thank commenters for these suggestions. We will consider these 
comments when we develop future measure proposals.

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 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

[[Page 76782]]

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.
    We did not propose any additional policies related to the pay-for-
reporting performance requirement. However, we received several 
comments regarding pay for reporting, while they are out of scope of 
the current rule we summarize them below.
    Comment: One commenter thanked CMS for clarifying how the state-
based OASIS submission system had converted to a new national OASIS 
submission system known as the Assessment Submission and Processing 
(ASAP). Other commenters addressed the submission of quality data to 
meet pay-for-reporting requirements under the HH QRP. Two commenters 
expressed support for the increased threshold, and two commenters 
requested CMS monitor the implementation of the new thresholds, as well 
as release the revised Conditions of Participation as soon as possible. 
One commenter requested that CMS to extend the timeframe for agencies 
request a reconsideration.
    Response: While we did not propose any additional policies related 
to the pay-for-reporting performance requirement, we appreciate the 
considerations and suggestions conveyed. On January 1, 2015, we 
transitioned the state based OASIS transmission to the ASAP system. We 
finalized the collection of OASIS data through the ASAP system in the 
CY 2015 HH PPS rule published in the November 6, 2014 Federal Register 
(79 FR 66031). Please see the comments received and our responses on 
pages 66078 and 66079. Additionally, we finalized the pay-for-reporting 
threshold requirements in the CY 2016 HH PPS rule, published in the 
November 5, 2015 Federal Register (80, FR 68624). Please see the 
comments received and our responses on page 68705).
4. Timeline and Data Submission Mechanisms for Measures 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 proposed in the 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 section V.G., for the Discharge 
to Community-PAC HH QRP measure, we proposed 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 proposed 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 
proposed 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.
b. Assessment-Based Measures Using OASIS Data Collection
    As discussed in section V.G of the 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 proposed 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 proposed 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/

[[Page 76783]]

Medicare/Quality-Initiatives-Patient-Assessment-Instruments/
HomeHealthQualityInits/HHQIQualityMeasures.html.
    We invited public comments on the proposed HH QRP data collection 
requirements for the proposed measures affecting CY 2018 payment 
determination and subsequent years. We received no comments on this 
proposal.
    Final Decision: We are finalizing the timeline and data submission 
mechanisms for measures for the CY 2018 Payment Determination and 
Subsequent Years.
5. 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 proposed 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 invited 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. The following is summary of 
the comments we received regarding our proposal.
    Comment: One commenter recommended that CMS not use data collected 
in the first 6 months of any new measure in public reporting and 
specifically cited the application of NQF#0678 and on Drug Regimen 
Review Conducted with Follow-Up for Identified Issues.
    Response: We wish to clarify that this proposal specifically 
pertained to the use of the first 6 months of data collection for these 
two measures for the purpose of determining compliance with our CY 2018 
HHA QRP reporting requirements. Timeframes for which data are used for 
public reporting purposes is outside the scope of this proposal. For 
additional information regarding proposals related to public reporting 
we refer readers to section V.J. of this rule.
    Final Decision: Based on the comments, we are finalizing as 
proposed a calendar year data collection time frame, using an initial 
6-month reporting period from January 1, 2017, to June 30, 2017 for 
determining compliance with our CY 2018 reporting requirements, 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 proposed 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 proposed to continue to use the same 12-month 
timeframe of July 1-June 30 for these measures for subsequent years for 
APU determinations.
    We invited comment on the proposals for the data collection 
timelines and requirements. We did not receive any comments relevant to 
those proposals.
    Final Decision: We are finalizing our use of a July 1-June 30 time 
frame for HH QRP payment determinations. This is in alignment with the 
previously established data collection timeline for a given calendar 
year HH QRP payment determination time period, beginning with the CY 
2019 for measures finalized for adoption in the HH QRP.
7. 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 proposed 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 proposed 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 Review and Correct 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 occurred, 
the data are ``frozen'' and calculated for public reporting and 
providers can no longer submit any corrections. As detailed in Table 
29, 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

[[Page 76784]]

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 
noted that the proposal to review and correct data does not replace 
other requirements associated with timely data submission. We also 
stated that 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.

   Table 29--Proposed CY Data Collection/Submission Quarterly Reporting Periods and Data Submission Deadlines*
                                Affecting Finalized and Assessment-Based Measures
----------------------------------------------------------------------------------------------------------------
                                                                                               Quarterly review
                                                                                                and correction
                                    Data  collection   Data collection/submission quarterly    periods and data
        Quality measures                 source                 reporting period *                submission
                                                                                             quarterly deadlines
                                                                                                      *
----------------------------------------------------------------------------------------------------------------
NQF #0678:Application of Percent  OASIS..............  CY 17 Q1                              CY 2017 Q1
 of Patients or Residents with                         1/1/2017-3/31/2017                     Deadline:
 Pressure Ulcers that are New or                                                             August 15, 2017
 Worsened.
                                                       CY 17 Q2                              CY 2017 Q2
                                                       4/1/2017-6/30/17                       Deadline:
                                                                                             November 15, 2017
Drug Regimen Review Conducted                          CY 17 Q3                              CY 2017 Q3
 with Follow-Up for Identified                         7/1/2017-9/30/2017                     Deadline:
 Issues-PAC HH QRP.                                                                          February 15, 2018
                                                       CY 17 Q4                              CY 2017 Q4 Deadline
                                                       10/1/2017-12/31/2017                  May 15, 2018
----------------------------------------------------------------------------------------------------------------
* 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 invited 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.
    We did not receive any comments relevant to this proposal.
    Final Decision: We are finalizing, as proposed, our proposal to 
establish a 4.5 month period of time for review and correction 
beginning with CY 2017 as outlined in Table 29 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 proposed 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 30 for all 
reporting years unless otherwise specified. We stated that this policy 
would apply to all proposed and finalized assessment-based measures in 
the HH QRP.

  Table 30--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
----------------------------------------------------------------------------------------------------------------
                                                              Quarterly review and
                                      Data collection/       correction periods and
   CY Data collection quarter       submission quarterly         data submission        Correction  deadlines *
                                      reporting period        quarterly 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 invited 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. We did not receive any comments on this proposal.
    Final Decision: In alignment with the previously established 
timeframe data collection for a given calendar year APU determination 
time period, we are finalizing our proposal to use 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 as outlined in Table 30.

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

[[Page 76785]]

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 public. 
Under section 1899B(g)(2) of the Act, 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 the proposed rule, we proposed 
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. 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 28, for assessment-
based measures, we proposed 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 also proposed that these confidential feedback reports that 
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, 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 
proposed that, in addition to the data submission/correction and review 
period, HHAs would 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 further proposed 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 proposed 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 proposed 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 invited public comment on these proposals; the following is a 
summary of the comments received.
    Comment: MedPAC supported public reporting of the cross-setting 
quality measures. We received one comment recommending that prior to 
public reporting of any data collected under these requirements that 
CMS conduct analysis to determine whether it is possible to compare the 
data across settings as intended.
    Response: We strive to promote high quality and efficiency in the 
delivery of

[[Page 76786]]

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. QRPs, coupled with public reporting of quality 
information, are critical to the advancement of health care quality 
improvement efforts. CMS is committed to ensuring valid, reliable, and 
relevant quality measures and are fundamental to the effectiveness of 
our QRPs. This includes ongoing analysis of collected data prior to 
public reporting, including comparability of data.
    Final Decision: After considering the comments received, we are 
finalizing our proposal to allow individual HHAs to review and correct 
their assessment-based measure data including and information on IMPACT 
Act measures that are to be made public before those measure data are 
made public.
2. Review and Correction of Data Used To Calculate Claims-Based 
Measures Prior to Public Display
    In addition to assessment-based measures, we 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 proposed 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 
proposed to make available through the CASPER system a confidential 
preview report that will contain information pertaining 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 proposed 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 proposed 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 the 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 proposed 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. We stated that if this proposal was 
finalized, we intended 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 in V.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 invited public comment on these proposals for the public display 
of

[[Page 76787]]

quality measure data. The following is summary of the comments we 
received.
    Comment: One commenter expressed concern about the 90 day post-
discharge time frame proposed for calculating claims-based measures and 
the subsequent prohibition on correcting or filing new claims. They 
recommended that we continue to use our current claim filing and 
correction practices.
    Response: We seek to have as complete a data set as possible. We 
recognize that the 90-day ``run-off'' period, when we will run the data 
extract to calculate the claims-based measures, is shorter than the one 
year period that providers have under Medicare's timely claims filing 
policy to submit and correct claims. We considered a number of factors 
in determining that a 90-day run-off 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 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 will not be able to deliver the calculations to 
HHAs sooner than 18 to 24 months after the last discharge. We believe 
this will create an unacceptably long delay both for HHAs and for us to 
deliver timely calculations to HHAs for internal quality improvement.
    Final Decision: After careful consideration of the public comments, 
we are finalizing as proposed, our policies and procedures for the 
review and correction of claims-based measures prior to public display.

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 proposed 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 proposed 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 proposed 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 invited public comment on this proposal to satisfy the 
requirement to provide confidential feedback reports to HHAs specific 
to the requirements of the Act. The following is summary of the 
comments we received.
    Comment: Two commenters requested that CMS provide patient-level 
data for the three proposed claims-based measures more frequently than 
once a year, and suggested quarterly updates. They noted that more 
frequent reporting would support using the measures for quality 
improvement.
    Response: The decision to update claims-based measures on an annual 
basis was to ensure that the amount of data received during the 
reporting period was sufficient to generate reliable measure rates. 
However, we will look into the feasibility of providing HHA's with 
information more frequently.
    Final Decision: As a result of the comments received, we are 
finalizing our proposal to provide confidential feedback reports to 
HHAs through the CASPER system as proposed above.

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 continue 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 AHRQ's Consumer Assessment 
of Healthcare Providers and Systems (CAHPS[supreg]) program and 
endorsed by the 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,

[[Page 76788]]

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. For CY 2017 and forward, we continue to state that 
HHCAHPS survey vendors are to participate in HHCAHPS oversight 
activities. The purpose of the oversight activities is to ensure that 
approved HHCAHPS survey vendors follow the HHCAHPS Protocols and 
Guidelines Manual. When all HHCAHPS survey vendors follow the HHCAHPS 
Protocols and Guidelines Manual, it is most likely that the national 
survey implementation will occur the same way for all HHA providers 
participating in the HHCAHPS Survey.
    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 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., eastern daylight time (e.d.t.) 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., e.d.t. 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., e.s.t. on April 20, 
2017; and for the first quarter 2017 by 11:59 p.m., e.d.t. 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., e.d.t. 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

[[Page 76789]]

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., e.d.t. on October 19, 
2017; for the third quarter 2017 by 11:59 p.m., e.s.t. on January 18, 
2018; for the fourth quarter 2017 by 11:59 p.m., e.d.t. on April 19, 
2018; and for the first quarter 2018 by 11:59 p.m., e.d.t. 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., e.d.t. 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., e.d.t. on October 18, 
2018; for the third quarter 2018 by 11:59 p.m., e.s.t. on January 17, 
2019; for the fourth quarter 2018 by 11:59 p.m., e.d.t. on April 18, 
2019; and for the first quarter 2019 by 11:59 p.m., e.d.t. 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., e.d.t. 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 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 receive comments for HHCAHPS in the 60-day comment 
period. We are finalizing the HHCAHPS Survey section as proposed. There 
are no changes to the HHCAHPS participation requirements, or to the 
requirements pertaining to the implementation of the Home Health 
CAHPS[supreg] Survey. In this rule, 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 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 final 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

[[Page 76790]]

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. To facilitate the reporting of OASIS data as it relates to the 
implementation of ICD-10, we submitted a new request for approval to 
OMB for the OASIS-C1/ICD-10 version under the Paperwork Reduction Act 
(PRA) process. The extension of OASIS-C1/ICD-9 will be discontinued as 
the 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. 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. We are requesting a new OMB control number for the 
OASIS-C2 version under the PRA process (81 FR 18855). The new 
information collection request is currently pending OMB approval.

VII. 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 
applicable percentage increase. Section 1895(b)(4) of the Act governs 
the payment computation. Sections 1895(b)(4)(A)(i) and (b)(4)(A)(ii) of 
the Act require the standard prospective payment amount to be adjusted 
for case-mix and geographic differences in wage levels. Section 
1895(b)(4)(B) of the Act requires the establishment of appropriate 
case-mix adjustment factors for significant variation in costs among 
different units of services. Lastly, section 1895(b)(4)(C) of the Act 
requires the establishment of wage adjustment factors that reflect the 
relative level of wages, and wage-related costs applicable to HH 
services furnished in a geographic area compared to the applicable 
national average level.
    Section 1895(b)(3)(B)(iv) of the Act provides the Secretary with 
the authority to implement adjustments to the standard prospective 
payment amount (or amounts) for subsequent years to eliminate the 
effect of changes in aggregate payments during a previous year or years 
that was the result of changes in the coding or classification of 
different units of services that do not reflect real changes in case-
mix. Section 1895(b)(5) of the Act provides the Secretary with the 
option to make changes to the payment amount otherwise paid in the case 
of outliers because of unusual variations in the type or amount of 
medically necessary care. Section 1895(b)(3)(B)(v) of the Act requires 
HHAs to submit data for purposes of measuring health care quality, and 
links the quality data submission to the annual applicable percentage 
increase.
    Section 421(a) of the MMA requires that HH services furnished in a 
rural area, for episodes and visits ending on or after April 1, 2010, 
and before January 1, 2016, receive an increase of 3 percent of the 
payment amount otherwise made under section 1895 of the Act. Section 
210 of the MACRA amended section 421(a) of the MMA to extend the 3 
percent increase to the payment amounts for serviced furnished in rural 
areas for episodes and visits ending before January 1, 2018.
    Section 3131(a) of the Affordable Care Act mandates that starting 
in CY 2014, the Secretary must apply an adjustment to the national, 
standardized 60-day episode payment rate and other amounts applicable 
under section 1895(b)(3)(A)(i)(III) of the Act to reflect factors such 
as changes in the number of visits in an episode, the mix of services 
in an episode, the level of intensity of services in an episode, the 
average cost of providing care per episode, and other relevant factors. 
In addition, section 3131(a) of the Affordable Care Act mandates that 
rebasing must be phased-in over a 4-year period in equal increments, 
not to exceed 3.5 percent of the amount (or amounts) as of the date of 
enactment (2010) under section 1895(b)(3)(A)(i)(III) of the Act, and be 
fully implemented in CY 2017.
    The 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 -$130 million. The 
savings impacts related to the HHVBP model are estimated at a total 
projected 5-year gross savings of $378

[[Page 76791]]

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 consider this rulemaking as 
``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 604 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 final 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.
    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 final 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 $130 million in decreased 
payments to HHAs in CY 2017. We applied a wage index budget neutrality 
factor and a case-mix weight budget neutrality factor to the rates as 
discussed in section III.C.3 of this final rule. Therefore, the 
estimated impact of the 2017 wage index and the recalibration of the 
case-mix weights for 2017 is zero. We estimate the impact due to the 
final payment procedures for furnishing Negative Pressure Wound Therapy 
(NPWT) using a disposable device, as outlined in section III.E.3 of 
this final rule, is less than a one-tenth of one percent increase in 
payments for CY 2017. Therefore, the -$130 million impact reflects the 
distributional effects of the 2.5 percent HH payment update percentage 
($450 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), and 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). The $130 million in decreased payments is reflected in the 
last column of the first row in Table 31 as a 0.7 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 conclude that the policies 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 final rule would have a significant 
economic impact on a substantial number of small entities. Further 
detail is presented in Table 31, 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 final 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 final 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 nominal case-mix reductions 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.
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)

[[Page 76792]]

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 5 performance years of the 
Model and only 2 payment adjustment years. We now estimate that this 
will be approximately a decrease of $378 million. This estimate 
represents the 5 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 provides 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 the final rule presents the estimated 
expenditure effects of policy changes 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. Finally, due to current data limitations we are unable to, 
with great confidence, estimate the distributional effects of the 
payment procedures for furnishing NPWT using a disposable device as 
finalized in section III.E of this rule. However, we note that the 
overall impact of this final policy was less than one-tenth of one 
percent and if distributional effects were able to be determined, they 
would in all likelihood round to zero.
    Table 31 represents how HHA revenues are likely to be affected by 
the policy changes 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 June 30, 
2016). The first column of Table 31 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 2017 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 determine whether an 
episode of care receives an outlier payment from 0.45 to 0.55. 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 in 
this rule. Overall, it is projected that aggregate payments in CY 2017 
would decrease by 0.7 percent. As illustrated in Table 31, the combined 
effects of all of the changes vary by specific types of providers and 
by location. We note that some individual HHAs within the same group 
may experience different impacts on payments than others due to the 
distributional impact of the CY 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 31--Estimated Home Health Agency Impacts by Facility Type and Area of the Country, CY 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   60-Day
                                                                                   episode                                            HH
                                              Number of    CY 2017     CY 2017      rate                   Revised     Revised      payment
                                              agencies   wage index   case-mix     nominal    Rebasing     outlier     outlier      update     Total (%)
                                                 \1\       \2\ (%)     weights    case-mix     \5\ (%)     FDL (%)   methodology  percentage
                                                                       \3\ (%)    reduction                              (%)          \6\
                                                                                     \4\
--------------------------------------------------------------------------------------------------------------------------------------------------------
All Agencies...............................      11,327         0.0         0.0        -0.9        -2.3         0.0          0.0         2.5        -0.7
Facility Type and Control:
    Free-Standing/Other Vol/NP.............       1,108        -0.2        -0.1        -0.9        -2.2         0.0          0.8         2.5        -0.1
    Free-Standing/Other Proprietary........       8,876         0.1         0.0        -0.9        -2.3         0.0         -0.4         2.5        -1.0
    Free-Standing/Other Government.........         357         0.2         0.1        -0.9        -2.2         0.0          0.1         2.5        -0.2
    Facility-Based Vol/NP..................         682        -0.1         0.0        -0.9        -2.2         0.0          0.8         2.5         0.1
    Facility-Based Proprietary.............         102         0.1         0.0        -0.9        -2.3         0.0          0.3         2.5        -0.3
    Facility-Based Government..............         202         0.1         0.0        -0.9        -2.3         0.0          0.6         2.5         0.0
        Subtotal: Freestanding.............      10,341         0.0         0.0        -0.9        -2.3         0.0         -0.1         2.5        -0.8
        Subtotal: Facility-based...........         986        -0.1         0.0        -0.9        -2.2         0.0          0.7         2.5         0.0
        Subtotal: Vol/NP...................       1,790        -0.2         0.0        -0.9        -2.2         0.0          0.8         2.5         0.0
        Subtotal: Proprietary..............       8,978         0.1         0.0        -0.9        -2.3         0.0         -0.4         2.5        -1.0
        Subtotal: Government...............         559         0.1         0.1        -0.9        -2.3         0.0          0.4         2.5        -0.1
Facility Type and Control: Rural:
    Free-Standing/Other Vol/NP.............         278         0.2         0.0        -0.9        -2.3         0.0          0.5         2.5         0.0
    Free-Standing/Other Proprietary........         808         0.3         0.0        -0.9        -2.4         0.0         -0.2         2.5        -0.7
    Free-Standing/Other Government.........         250         0.3         0.1        -0.9        -2.2         0.0          0.1         2.5        -0.1
    Facility-Based Vol/NP..................         312         0.4         0.1        -0.9        -2.3         0.0          0.4         2.5         0.2
    Facility-Based Proprietary.............          50        -0.3         0.1        -0.9        -2.3         0.0          0.5         2.5        -0.4

[[Page 76793]]

 
    Facility-Based Government..............         144         0.1         0.1        -0.9        -2.3         0.0          0.3         2.5        -0.2
Facility Type and Control: Urban:
    Free-Standing/Other Vol/NP.............         829        -0.2        -0.1        -0.9        -2.2         0.0          0.8         2.5        -0.1
    Free-Standing/Other Proprietary........       8,063         0.0         0.0        -0.9        -2.3         0.0         -0.4         2.5        -1.1
    Free-Standing/Other Government.........         107         0.0         0.0        -0.9        -2.2         0.0          0.0         2.5        -0.6
    Facility-Based Vol/NP..................         370        -0.2         0.0        -0.9        -2.2         0.0          0.9         2.5         0.1
    Facility-Based Proprietary.............          52         0.3         0.0        -0.9        -2.2         0.0          0.1         2.5        -0.2
    Facility-Based Government..............          58         0.1         0.0        -0.9        -2.3         0.0          0.9         2.5         0.3
Facility Location: Urban or Rural:
    Rural..................................       1,842         0.3         0.0        -0.9        -2.3         0.0          0.0         2.5        -0.4
    Urban..................................       9,479         0.0         0.0        -0.9        -2.3         0.0          0.0         2.5        -0.7
Facility Location: Region of the Country:
    Northeast..............................         863        -0.3        -0.1        -0.9        -2.1         0.0          0.7         2.5        -0.2
    Midwest................................       3,038        -0.1         0.1        -0.9        -2.4         0.0          0.4         2.5        -0.4
    South..................................       5,363        -0.1        -0.1        -0.9        -2.3         0.0         -0.6         2.5        -1.5
    West...................................       2,013         0.6         0.1        -0.9        -2.3         0.0          0.3         2.5         0.3
    Other..................................          50        -0.3        -0.4        -0.9        -2.3         0.0          0.8         2.5        -0.6
Facility Location: Region of the Country
 (Census Region):
    New England............................         355        -0.8        -0.1        -0.9        -2.1        -0.1          0.1         2.5        -1.4
    Mid Atlantic...........................         508         0.0        -0.1        -0.9        -2.1         0.0          1.1         2.5         0.5
    East North Central.....................       2,306        -0.1         0.1        -0.9        -2.4         0.0          0.4         2.5        -0.4
    West North Central.....................         732        -0.1         0.0        -0.9        -2.3         0.0          0.5         2.5        -0.3
    South Atlantic.........................       1,818        -0.4        -0.2        -0.9        -2.3         0.0         -0.6         2.5        -1.9
    East South Central.....................         426         0.0        -0.1        -0.9        -2.5         0.0          0.0         2.5        -1.0
    West South Central.....................       3,119         0.3         0.0        -0.9        -2.3         0.0         -0.8         2.5        -1.2
    Mountain...............................         682         0.1        -0.1        -0.9        -2.3         0.0         -0.3         2.5        -1.0
    Pacific................................       1,331         0.7         0.2        -0.9        -2.3         0.0          0.5         2.5         0.7
Facility Size (Number of 1st Episodes):
    <100 episodes..........................       2,926        -0.1         0.2        -0.9        -2.3         0.0          0.5         2.5        -0.1
    100 to 249.............................       2,599         0.0         0.1        -0.9        -2.4         0.0          0.1         2.5        -0.6
    250 to 499.............................       2,423         0.0         0.1        -0.9        -2.3         0.0         -0.1         2.5        -0.7
    500 to 999.............................       1,831         0.0         0.0        -0.9        -2.3         0.0         -0.1         2.5        -0.8
    1,000 or More..........................       1,548         0.0        -0.1        -0.9        -2.3         0.0          0.0         2.5        -0.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: CY 2015 Medicare claims data for episodes ending on or before December 31, 2015 (as of June 30, 2016) for which we had a linked OASIS
  assessment.
\1\ The number of rural HHAs (1,842) plus the number of urban HHAs (9,479) does not add up to the total number of HHAs (11,327) due to six HHAs that
  have a missing value for the urban/rural indicator in the impact analysis file.
\2\ 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 final
  rule.
\3\ 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 final
  rule offset by the case-mix weights budget neutrality factor described in section III.C.3 of this final rule.
\4\ 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.
\5\ 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
\6\ The CY 2017 home health payment update percentage reflects the home health market basket update of 2.8 percent, reduced by a 0.3 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 final
  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 32 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 finalized proposals to change the smaller-volume 
cohort size determination, calculate achievement thresholds and 
benchmarks 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 will be in the Model. The five (5) 
HHCAHPS measures were based on archived data. The size of the cohorts 
was 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) states.
    Table 33 displays our analysis of the distribution of possible 
payment adjustments based on the same 2013-2014 data used to calculate 
Table 32, providing information on the estimated impact of this final 
rule. We note that this impact analysis is based on the aggregate value 
of all nine (9) states. All

[[Page 76794]]

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 will compete in the HHVBP Model are stratified by 
size as described in section IV.B. of this final rule. As finalized in 
section IV.B. of this final rule, there must be a minimum of eight (8) 
HHAs in any cohort.
    Those HHAs that are in states who do not have at least eight small 
HHAs will not have a smaller-volume cohort and thus there will only be 
one cohort that will include all the HHAs in that state. As indicated 
in Table 33, Massachusetts, Maryland, North Carolina, Tennessee and 
Washington will only have one cohort and Florida, Arizona, Iowa, and 
Nebraska will 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 
33 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 final rule is lower than that 
included in CY 2016 HH PPS 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 34 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 
will 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.

          Table 32--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 33--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
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 76795]]


                                              Table 34--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. Accounting Statement and Table

    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars_a004_a-4), in Table 35, we have 
prepared an accounting statement showing the classification of the 
transfers and costs associated with the HH PPS provisions of this final 
rule. Table 35 provides our best estimate of the decrease in Medicare 
payments under the HH PPS as a result of the changes presented in this 
final rule for the HH PPS provisions.

   Table 35--Accounting Statement--HH PPS Classification of Estimated
            Transfers and Costs, From the CYs 2016 to 2017 *
------------------------------------------------------------------------
                 Category                             Transfers
------------------------------------------------------------------------
Annualized Monetized Transfers............  -$130 million.
From Whom to Whom?                          Federal Government to HHAs.
------------------------------------------------------------------------

Table 36 provides our best estimate of the decrease in Medicare 
payments under the HHVBP Model.

 Table 36--Accounting Statement--HHVBP Model Classification of Estimated
                  Transfers and Costs for CY 2018-2022
------------------------------------------------------------------------
                 Category                             Transfers
------------------------------------------------------------------------
5-Year Gross Transfers....................  -$378 million.
From Whom to Whom?                          Federal Government to
                                             Hospitals and SNFs.
------------------------------------------------------------------------

E. Conclusion

1. HH PPS
    In conclusion, we estimate that the net impact of the HH PPS 
policies in this rule is a decrease of 0.7 percent, or $130 million, in 
Medicare payments to HHAs for CY 2017. The -$130 million impact 
reflects the effects of the 2.5 percent CY 2017 HH payment update 
percentage ($450 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 2017 to account for nominal case-mix growth 
from 2012 through 2014 ($160 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 a final 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 final 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.\123\ 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. The 
Innovation Center 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 6 
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.
---------------------------------------------------------------------------

    \123\ 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.
---------------------------------------------------------------------------

VIII. 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 final rule under the threshold 
criteria of Executive Order 13132, Federalism, and have determined that 
it will not have

[[Page 76796]]

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 Social Security 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 
the following home health services is:
    (a) DME--20 percent of the customary (insofar as reasonable) 
charge.
    (b) An applicable disposable device (as defined in section 
1834(s)(2) of the Act)--20 percent of the payment amount for furnishing 
Negative Pressure Wound Therapy (NPWT) using a disposable device (as 
that term is defined in Sec.  484.202 of this chapter).

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 Social Security Act (42 
U.S.C. 1302 and 1395(hh)) unless otherwise indicated.


0
4. Section 484.202 is amended by adding the definition of ``Furnishing 
Negative Pressure Wound Therapy (NPWT) using a disposable device'' in 
alphabetical order to read as follows:


Sec.  484.202  Definitions.

* * * * *
    Furnishing Negative Pressure Wound Therapy (NPWT) using a 
disposable device means the application of a new applicable disposable 
device, as that term is defined in section 1834(s)(2) of the Act, which 
includes the professional services (specified by the assigned 
CPT[supreg] code) that are provided.
* * * * *

0
 5. Section 484.205 is amended by revising paragraph (b) introductory 
text to read as follows;


Sec.  484.205   Basis of payment.

* * * * *
    (b) Episode payment The national, standardized prospective 60-day 
episode payment represents payment in full for all costs associated 
with furnishing home health services previously paid on a reasonable 
cost basis (except the osteoporosis drug listed in section 1861(m) of 
the Act as defined in section 1861(kk) of the Act) as of August 5, 1997 
unless the national 60-day episode payment is subject to a low-
utilization payment adjustment set forth in Sec.  484.230, a partial 
episode payment adjustment set forth at Sec.  484.235, or an additional 
outlier payment set forth in Sec.  484.240. All payments under this 
system may be subject to a medical review adjustment reflecting 
beneficiary eligibility, medical necessity determinations, and HHRG 
assignment. DME provided as a home health service as defined in section 
1861(m) of the Act continues to be paid the fee schedule amount. 
Separate payment is made for ``furnishing NPWT using a disposable 
device,'' as that term is defined in Sec.  484.202, which is not 
included in the episode payment.
* * * * *

0
6. 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
7. Section 484.305 is amended by revising the definition of 
``Benchmark'' and by removing the definition of ``Starter set'' 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
8. 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
9. Section 484.320 is amended by--:
0
a. Amending paragraphs (a), (b), and (c) by removing the phrase, ``in 
the starter set,'' and
0
b. Amending paragraph (d) by removing the phrase, ``in the starter 
set''.

0
10. 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).
    (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 recalculation 
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

[[Page 76797]]

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 its annual total performance score and payment adjustment percentage 
following a decision on the home health agency's recalculation request 
submitted under paragraph (a) of this section, or the decision to deny 
the 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: October 24, 2016.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Dated: October 25, 2016.
 Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2016-26290 Filed 10-31-16; 4:15 pm]
 BILLING CODE 4120-01-P