[Federal Register Volume 84, Number 186 (Wednesday, September 25, 2019)]
[Notices]
[Pages 50416-50418]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-20815]


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DEPARTMENT OF DEFENSE

Office of the Secretary


TRICARE; Civilian Health and Medical Program of the Uniformed 
Services (CHAMPUS); Adoption of Medicare's Home Health Value-Based 
Purchasing (HHVBP) Adjustments for Reimbursement Under TRICARE's Home 
Health Prospective Payment System Demonstration

AGENCY: Office of the Secretary, Department of Defense.

ACTION: Notice of TRICARE's adoption of Medicare's Home Health Value-
Based Purchasing Model as a Demonstration.

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SUMMARY: This notice describes the adoption of Medicare's Home Health 
Value-Based Purchasing (HHVBP) adjustments for reimbursement under 
TRICARE's Home Health Prospective Payment System (HH PPS). In 
recognition that the Defense Health Agency (DHA) strongly supports the 
implementation of value-based incentive programs, in accordance with 
Section 705(a) of National Defense Authorization Act (NDAA) for Fiscal 
Year 2017, the adoption of this model establishes a new value-based 
initiative within the TRICARE program, based on Medicare's similar 
pilot. In the Medicare HHVBP model, the Centers for Medicare and 
Medicaid Services (CMS) determines a payment adjustment up to the 
maximum percentage, upward or downward, based on the Home Health 
Agency's (HHA) Total Performance Score (TPS). As a result, the model 
incentivizes quality improvements and encourages efficiency. States 
selected for participation in the Medicare HHVBP model include Arizona, 
Florida, Iowa, Maryland, Massachusetts, Nebraska, North Carolina, 
Tennessee, and Washington.
    CMS cannot release HHVBP adjustment factors to TRICARE, so Home 
Health Agencies (HHAs) in the participating states will be required to 
send their annual payment adjustment reports to the applicable TRICARE 
contractors prior to January 1 each year. Failure to submit the 
required payment adjustment documentation would result in full 
application of the negative adjustment factor for the calendar year. 
This requirement allows TRICARE to mirror Medicare's HHVBP payment 
adjustments. The TRICARE HHVBP model will only apply to Medicare-
certified HHAs in the nine participating states. Specialized HHAs that 
qualify for corporate services provider status but are not Medicare-
certified will continue to be reimbursed under the CHAMPUS Maximum 
Allowable Charge (CMAC) system and will not be subject to the TRICARE 
HHVBP model.

DATES: This demonstration project will be effective January 1, 2020, 
through December 31, 2022, unless terminated earlier by Medicare or by 
TRICARE.

ADDRESSES: Defense Health Agency (DHA), TRICARE, Medical Benefits and 
Reimbursement Office, 16401 East Centretech Parkway, Aurora, CO 80011-
9066.

FOR FURTHER INFORMATION CONTACT: Mr. Jahanbakhsh Badshah, Medical 
Benefits and Reimbursement Section, TRICARE, telephone (303) 676-3881. 
Questions regarding payment of specific claims should be addressed to 
the appropriate TRICARE contractor.

SUPPLEMENTARY INFORMATION: 

A. Background

    As authorized by section 1115A of the Social Security Act and 
finalized in the Medicare calendar year (CY) 2016 Home Health 
Prospective Payment System (HH PPS) final rule (80 FR 68624), CMS began 
testing the Home Health Value-Based Purchasing (HHVBP) Model in January 
2016. 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. It is expected that tying quality to payment through a system 
of value-based purchasing for all Medicare-certified Home Health 
Agencies (HHAs) providing services in the states of Arizona, Florida, 
Iowa, Maryland, Massachusetts, Nebraska, North Carolina, Tennessee, and 
Washington will improve the beneficiaries' experience and outcomes. It 
is also expected that payment adjustments that both reward improved 
quality and penalize poor performance will incentivize quality 
improvement and encourage efficiency. TRICARE's adoption of the HHVBP 
model will strengthen the impact of the incentives included within the 
model by adding TRICARE's market share to Medicare's. Adoption of this 
model by the TRICARE program will also continue DHA's efforts to 
transition payments to reward high-quality providers, and leverages 
Medicare's experience to implement the most effective value-based 
payment methodologies.
    The distribution of payment adjustments under this HHVBP Model are 
based on quality performance, as measured by both achievement and 
improvement, across a set of quality measures constructed to minimize 
the burden as much as possible and improve care. The degree of the 
payment adjustment is dependent on the level of quality achieved or 
improved from the base year, with the highest upward performance 
adjustment going to competing HHAs with the highest overall level of 
performance based on either achievement or improvement in quality. The 
size of a competing HHA's payment adjustment for each year under the 
Model is dependent upon the HHA's performance with respect to that 
calendar year relative to other competing HHAs of similar size in the 
same state, and relative to its own performance during the baseline 
year. Medicare utilizes quarterly performance reports, annual payment 
adjustment reports and annual publicly available performance reports to 
align the competitive forces within the market to deliver care based on 
value. The quality performance scores and relative peer rankings are 
determined through the use of a baseline year and subsequent 
performance periods for each HHA. A payment adjustment report is 
provided once a year to each of the HHAs by CMS. The annual report from 
CMS provides the HHA's payment adjustment percentage and explains how 
the adjustment was determined relative to its performance scores. This 
is the document that the HHAs in the selected states will be required 
to submit to TRICARE contractors prior to the beginning of each 
calendar year, upon adoption of the HHVBP by TRICARE.
    The Medicare model will be implemented over a total of seven years 
that began on January 1, 2016, and ends December 31, 2022. (However, if 
Medicare decides to terminate or expand the demonstration TRICARE

[[Page 50417]]

will follow suit as well as adopt future modifications made to the 
HHVBP model by Medicare, as practicable.) The HHAs were notified of 
their first payment adjustment being finalized, based on the 2016 
performance period (January 1, 2016 to December 31, 2016) with their 
first payment adjustment applied January 1, 2018 through December 31, 
2018. Payment adjustments will be increased incrementally over the 
course of the HHVBP Model as described in Table 1 below:

                 Table 1--CMS HHVBP Payment Adjustments
------------------------------------------------------------------------
                                                              Maximum
                                          Calendar  year      payment
                                              payment       adjustment
            Performance year                adjustment      (upward or
                                              applied        downward)
                                                             (percent)
------------------------------------------------------------------------
2016....................................            2018               3
2017....................................            2019               5
2018....................................            2020               6
2019....................................            2021               7
2020....................................            2022               8
------------------------------------------------------------------------

    For additional information on the quality measures, methodology, 
and considerations used for calculating the HHVBP payment adjustment 
percentages, please go to the CMS Innovation Center website at https://innovation.cms.gov/initiatives/home-health-value-based-purchasing-model.

B. TRICARE's Adoption of the Model

    As a result of the statutory authority granted under Section 705 of 
the NDAA for Fiscal Year (FY) 2017 for development and implantation of 
value-based incentive programs, we evaluated the administrative 
feasibility of adopting HHVBP adjustments under the TRICARE HH PPS in 
accordance with TRICARE's statute.
    Based on the complexity of the multiple reporting systems and 
methodology used in the calculation of TPSs and final payment 
adjustment percentages, it appears that the only administratively 
feasible means of mirroring the HHVBP payment adjustment is to obtain 
the required information from each HHA; i.e., to require submission of 
the HHA's annual payment adjustment report for reimbursement in the 
upcoming calendar year, the process of which will be described in the 
implementing instructions. This would be administratively feasible, 
given the fact that HHAs are notified of subsequent payment adjustments 
in August, prior to their January 1 application date. This would give 
TRICARE sufficient time to load the HHVBP adjustment factors by January 
1 of each subsequent calendar year. Failure to submit the required 
payment adjustment documentation would result in full application of 
the negative adjustment factor for the calendar year (e.g., application 
of a negative 6 percent adjustment in payments for home health services 
provided in CY 20202). This would allow HHAs to continue to receive 
payments under the program, thus avoiding potential access to care 
issues/problems, while at the same time serving as a disincentive for 
non-compliance.
    Although TRICARE will not have access to specific quarterly 
performance reports available to each HHA through the Center for 
Medicare and Medicaid Innovation (CMMI) model specific platform, it 
will have access to publicly available annual quality reports. These 
reports will provide home health industry stakeholders, including 
providers and suppliers that refer their patients to HHAs, with the 
opportunity to confirm that the beneficiaries they are referring for 
home health services are being provided the best possible quality of 
care available. The implementing instructions will also encourage the 
TRICARE contractors to direct care to high-quality providers when 
possible. TRICARE will also have access to annual payment adjustment 
reports focusing on both quality achievement and improvement. 
Submission of these reports will be required to avoid full application 
of the CY negative adjustment factor under the TRICARE HH PPS. Since 
TRICARE does not have the quality monitoring systems in place to assess 
its specific impact on HHAs' quality achievement and improvement, 
TRICARE will have to utilize Medicare's performance reports in its 
evaluation process. This approach permits TRICARE to leverage 
Medicare's dominant market share and technical expertise in evaluation 
quality as it relates to value-based payment methodology. In other 
words, an assumption can be made that quality measures experienced from 
TRICARE's participation in the HHVBP demonstration would be comparable 
to those experienced under the Medicare program, given its dominant 
home health market share, and the overlap in the type of services and 
beneficiaries that utilize the two benefits.

        Table 2--TRICARE Home Health Claims by Age Group, FY 2017
------------------------------------------------------------------------
                                             Number of      Percent of
                Age group                     claims       total claims
------------------------------------------------------------------------
<19.....................................           1,000               5
19-44...................................           3,479              18
44-64...................................          14,740              76
65+ *...................................             243               1
Total...................................          19,462             100
------------------------------------------------------------------------
* Home Health claims for beneficiaries aged 65 and older make up only
  one percent of total claims because, for Medicare-eligible
  beneficiaries, Medicare is the primary payer for most Home Health
  services and home health services have no cost-share.


[[Page 50418]]


                                         Table 3--TRICARE Home Health Claims by Severity and Age Group, FY 2017
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                                                                                                         Percent of category by age group
   Category based on clinical and functional severity            N            Percent    ---------------------------------------------------------------
                                                                                                <19            19-44           45-64            65+
--------------------------------------------------------------------------------------------------------------------------------------------------------
Most Severe.............................................           3,317              17               9               1              15              20
Moderately Severe.......................................           9,288              48              64              43              48              47
Less Severe.............................................           5,339              27               9              30              28              27
Least Severe............................................           1,518               8              18              13               6               5
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................          19,462             100             100             100             100             100
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    The HHVBP model applies to all Medicare-certified HHAs in each of 
the nine selected states, which covered approximately 25 percent of 
total TRICARE claims in fiscal year (FY) 2017. However, those HHAs for 
which Medicare-certification is not available due to the specialized 
beneficiary categories they serve (e.g., those HHAs specializing solely 
in the treatment of TRICARE beneficiaries that are under the age of 18 
or receiving maternity care) are exempt from the HHVBP adjustment 
methodology. These specialized HHAs must qualify for corporate services 
provider status under the Program and are paid for covered professional 
services under the CMAC reimbursement system, and would not participate 
in the TRICARE HHVBP.

C. Implementation

    The new demonstration is effective January 1, 2020 and will 
continue until the end of Medicare's HHVBP model on December 31, 2022, 
unless terminated earlier by the Director, DHA, or Administrator, 
Centers for Medicare and Medicaid Services.

D. Evaluation

    This demonstration project will assist the Department in evaluating 
the feasibility of incorporating the HHVBP model in the TRICARE 
program. Regular status reports and a full analysis of demonstration 
outcomes will be conducted consistent with the requirements in the 
TRICARE Operations Manual, Chapter 29, Section 1.
    TRICARE's hypothesis is that payments that are linked to quality 
outcomes will:
    (1) Be administratively feasible, meaning that the demonstration 
will be successfully implemented and administered within a reasonable 
margin of the DHA's estimate of this demonstration;
    (2) Improve the quality of care delivered over time; and
    (3) Be cost-neutral or result in modest long-term cost savings.
    Success shall be defined as:
    (1) Implementation and ongoing maintenance costs do not exceed 2 
percent of the annual TRICARE total spend on home health care in the 
HHVBP demonstration states, and a high percentage of TRICARE HHAs 
provide their TPS scores.
    (2) Measurable and statistically significant improvements in the 
quality of care received by TRICARE beneficiaries occurs, year-over-
year, with averages from 2014-2018 serving as the baseline data period.
    (3) The average acuity-adjusted home health cost per TRICARE 
beneficiary or episode in the HHVBP states increases at a slower rate 
or at the same rate compared to the same measure in the non-HHVBP 
states.
    Following the end of each 12 months in the demonstration, DHA will 
measure and report the preceding data to the Director, DHA, along with 
a recommendation of whether to continue or discontinue the 
demonstration.
    In the 12 months following termination of the demonstration, DHA 
shall make a report available to the public on the DHA website which 
details the findings of this demonstration, and potential next steps, 
if the demonstration is found to be successful in achieving the 
anticipated results. Continuation of the demonstration, or a transition 
into the Basic program reimbursement methodologies will be issued via 
appropriate Federal Register Notice or rulemaking action, and will be 
based on a demonstration that the pilot met the benchmarks set for 
success that are established in this Notice and Implementing 
Instructions.

    Dated: September 20, 2019.
Aaron T. Siegel,
Alternate OSD Federal Register Liaison Officer, Department of Defense.
[FR Doc. 2019-20815 Filed 9-24-19; 8:45 am]
 BILLING CODE 5001-06-P