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HH PPS 2011 Summary

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					SUMMARY OF THE FINAL
  CY 2011 MEDICARE
 HOME HEALTH RULE




                 December 2010
                                              TABLE OF CONTENTS


 I.     Overview .............................................................................................................................................. 1
        - Major Provisions in the Final Rule .................................................................................................... 1

II.     Legislative Mandates .......................................................................................................................... 2

III.    HH Payment Rates .............................................................................................................................. 2
        - Marketbasket Update ......................................................................................................................... 2
        - Coding Adjustment ............................................................................................................................. 2
        - HH Payment Rate Reduction Due to Outlier Policy Change .............................................................. 3
        - Rural Add-On ..................................................................................................................................... 3
        - National Standardized 60-Day Episode Payment Rate and National Per-Visit Amounts.................... 4
        - Payment for Non-Routine Medical Supplies ....................................................................................... 5

IV.     HH Quality Data “Pay-For-Reporting” Program ............................................................................ 5
        - HH Pay-For-Reporting Payment Determinations ................................................................................ 6
        - Public Reporting of HH Quality Data ................................................................................................. 8

V.      Facility-Level Adjustments................................................................................................................. 10
        - Wage Index… ..................................................................................................................................... 10

VI.     Case-Level Adjustments ..................................................................................................................... 10
        - Cost Outliers ....................................................................................................................................... 10
        - Low-Utilization Payment Adjustment (LUPA) Add-on ...................................................................... 11

VII.    Therapy Coverage Requirements ...................................................................................................... 11

VIII.   Other Provisions .................................................................................................................................. 12
        - Capitalization ...................................................................................................................................... 12
        - Change of Ownership ......................................................................................................................... 12
        - Physician Certification and Recertification of the HH Plan of Care (POC) ........................................ 13

IX.     Future HH PPS Enhancements.......................................................................................................... 14
        - Reporting of Additional Data on the HH Claim.................................................................................. 14
        - HIPPS Codes and Claims Processing.................................................................................................. 16
I. OVERVIEW
CMS published the final Medicare Home Health Prospective Payment System (HH PPS) rule for CY 2011 in
the November 17 Federal Register. Changes are effective January 1, 2011 unless otherwise noted. This
document provides an overview of the final rule. Additional information regarding the HH PPS is available on
the CMS Web site at http://www.cms.hhs.gov/HomeHealthPPS.

Note: Text in italics is extracted from the July 23 or November 17 Federal Register. The Federal Register
has launched a redesigned, easy-to-use Web site that offers flexibility in finding and linking to specific sections
of regulations: http://www.federalregister.gov. The HH PPS rule for CY 2011 is available on the site.

Major Provisions in the Final Rule
National Standardized 60-Day Episode Payment Rate: The marketbasket update to the HH national
standardized 60-day episode payment rate for CY 2011 is 2.1%. Offsetting the update is an ACA-mandated
1.0 percentage point reduction to the marketbasket. In addition, as proposed, CMS is reducing the standard
episode payment rate by 3.79% to adjust for increased payments to HH providers due to coding improvement.
The standard episode payment rate is further reduced by an ACA provision that modifies the HH outlier policy.
The result is a HH national standardized 60-day episode payment rate of $2,192.07 for CY 2011 compared
$2,312.94 in CY 2010, a 5.2% decrease.

Coding Adjustment Reduction: Beginning in CY 2008, CMS implemented a coding reduction over four
years for increases in payments to HH providers that, according to CMS, were due to improvements in the
coding and classification of patients rather than real case-mix changes due to patient characteristics and
treatment patterns. The scheduled reduction for CY 2011 was 2.71%. Based on an updated case-mix analysis,
CMS is adopting its proposal to increase the CY 2011 coding adjustment. For CY 2011, CMS will apply a
3.79% coding reduction. CMS is postponing its proposal to apply an additional 3.79% coding reduction for
CY 2012 until further study of the case-mix change data and/or methodology is completed.

ACA-Mandated HH Rate Reduction Related to the HH Outlier Pool and the HH Outlier Payment Cap:
The ACA mandated a reduction to the HH outlier pool from 5% of total payments to 2.5% effective January 1,
2011. In CY 2010, CMS, through its rulemaking process (prior to the passage of the ACA), reduced the HH
outlier pool from 5% to 2.5% of total estimated HH payments and returned the extra 2.5% to the standard
episode payment rate. Implementation of the ACA provision requires CMS to maintain the HH outlier pool at
2.5% of total payments and reduce HH payment rates by 2.5%, removing the funding from the HH PPS
entirely rather than returning it to the standard episode payment rate. In addition, in CY 2010, CMS
established a policy to cap individual HH provider outlier payments at 10% of their total HH payments. As
mandated by the ACA, CMS is retaining this policy for CY 2011 and subsequent years.

Quality Measures Used for the HH Pay-for-Reporting Program: HH providers that do not successfully
participate in the HH pay-for-reporting program will be subject to a 2.0 percentage point reduction to their HH
PPS marketbasket update – the reduction factor has not changed. For CY 2011 payment determinations, CMS
will consider Outcome and Assessment Information Set (OASIS) submissions by HH providers (as required by
HH Conditions of Participation) for episodes beginning on or after July 1, 2009 and before July 1, 2010 as
fulfilling the HH quality reporting requirement. In addition to the successful submission of OASIS data,
beginning with CY 2012 payment determinations, CMS will require the submission of HH patient satisfaction
data from the HH Consumer Assessment of Healthcare Providers and Systems (HHCAHPS) survey in order for
HHAs to be deemed to have successfully participated in the HH pay-for-reporting program. Currently, the HH
Compare Web site makes quality data on 9 HH outcome measures and 13 HH process of care measures derived
                                                        1
from the OASIS instrument available to the public. CMS has discontinued the public reporting of three
outcome measures and has added one new pressure ulcer measure. CMS anticipates that it will begin publicly
reporting HHCAHPS survey data on the HH Compare Web site in the spring/summer of 2011.

Therapy Coverage Requirements: CMS’ analysis of case-mix change related to the HH coding reduction
identified increases in the number of therapy services per episode as a primary factor in case-mix growth. As a
result, CMS in the final rule clarifies policies regarding coverage of physical therapy, speech language
pathology, and occupational therapy services. In addition, CMS has adopted requirements for plan of care
documentation, periodic assessments, and measurement of progress towards therapy goals.

Low Utilization Payment Adjustment (LUPA) Add-On: CMS is decreasing the LUPA add-on amount
from $94.72 in CY 2010 to $93.31 in CY 2011.

Non-Routine Medical Supplies (NRS) Conversion Factor: CMS is decreasing the NRS conversion factor
from $53.34 in CY 2010 to $52.54 in CY 2011.

Rural Add-On: CMS is implementing, for CY 2011, the ACA-mandated 3.0% add-on to the national
standardized 60-day episode rate, national per-visit rates, LUPA add-on amount, and NRS conversion factor
for HH services provided in rural areas. As mandated by the ACA, the rural add-on will continue through
December 31, 2015.




II. LEGISLATIVE MANDATES
The Benefits Improvement and Protection Act (BIPA) of 2000; Medicare Prescription Drug, Improvement, and
Modernization Act (MMA) of 2003; Deficit Reduction Act (DRA) of 2005; and the ACA each contain
Medicare provisions that either currently affect home health payment policy or will begin to affect payment
policy in upcoming calendar years. Where appropriate, legislative references are provided below.




III. HH PAYMENT RATES
Marketbasket Update
Federal Register page 70400

Background: The HH payment update is based on a marketbasket factor that is intended to reflect changes
over time in the price of an appropriate mix of goods and services included in covered home health services.

CMS’ Final Rule: As required by the ACA, “the CY 2011 market basket update of 2.1 percent must be
reduced by 1 percentage point to 1.1 percent. This updated market basket of 2.1 percent is “…based on IHS
Global Insight Inc.’s third quarter 2010 forecast, utilizing historical data through the second quarter of
2010.”

Coding Adjustment
Federal Register pages 70376 – 70389


                                                      2
Background: The BIPA gave CMS authority to adjust HH payment rates to eliminate the effect of changes
due to coding improvements or classification of discharges that do not reflect real changes in case mix.

Using HH data samples from two periods (pre- and post-HH PPS implementation), CMS conducted an analysis
to distinguish between case-mix increases attributable to real changes in clinical condition versus increases
driven by coding improvements. Based on that analysis, CMS originally determined that 11.75% of the case-
mix change was due to coding practice changes, and not “real” changes in case mix.

CMS has adopted a four-year phase-in of a coding adjustment, applying a 2.75% reduction to the national
standardized 60-day episode payment rate in CYs 2008 through 2010, and a 2.71% reduction for CY 2011.

CMS’ Proposal: CMS’ updated analysis of the HH case-mix changes included an additional year of data (CY
2008) indicating an increase of 17.45% in case mix due to changes in coding practices. “This 17.45 percent
increase in case mix reflects a much larger increase in nominal case mix from the IPS baseline to 2008 than
had been previously been occurring under the HH PPS.” CMS proposed to account for the additional increase
in nominal case mix beyond what was identified in the CY 2008 final rule by imposing a 3.79 percent
reduction per year to the national standardized 60-day episode rates and the NRS conversion factor for CY
2011 and CY 2012.

CMS’ Final Rule: For CY 2011, CMS is adopting its proposal to apply a 3.79 percent reduction to the
national standardized 60-day episode rates due to changes in coding practices. CMS will take more time to
study the case-mix change data before finalizing its proposed reduction for CY 2012. CMS is also
“…withdrawing the proposal to apply the case-mix change reduction to the NRS conversion factor.”

HH Payment Rate Reduction Due to Outlier Policy Change
Federal Register page 70397 – 70398

Background: Prior to CY 2010, HH PPS outlier payments were targeted to equal 5.0% of total HH payments.
This was accomplished by setting the threshold at and appropriate level and setting aside 5.0% of total HH
payments for outliers. The “outlier pool” was funded by reducing HH payment rates by 5.0%. In CY 2010,
through its rulemaking process (prior to the passage of the ACA) CMS modified its outlier policy and reduced
the HH outlier pool from 5.0% to 2.5% of total estimated HH payments. In implementing this policy, CMS
returned 2.5% to the HH payment rates.

CMS’ Proposal: As mandated by the ACA, for CY 2011, CMS is “required to implement a HH PPS outlier
policy whereby we reduce the standard episode payment by 5 percent, and target up to 2.5 percent of total
projected estimated HH PPS payments to be paid as outlier payments.”

CMS’ Final Rule: CMS has adopted its proposal as final.

In effect, the HH outlier change mandated by the ACA requires CMS to maintain the HH outlier pool at 2.5%
of total payments (as established by the agency in CY 2010) but reduce HH payment rates by 5.0% thereby
reducing total HH payment by 2.5%.

Rural Add-On
Federal Register pages 70415 – 70416

Background: The ACA extends the provision in the MMA, allowing for a 3% increase to the HH PPS
payment amount for services provided in a rural area, for episodes and visits ending on or after April 1, 2010

                                                      3
and before January 1, 2016. This 3% add-on is not subject to budget neutrality and is applied to the national
standardization 60-day episode rate, the national per-visit amounts, LUPA add-on payments, and the NRS
conversion factor.

CMS’ Final Rule: For CY 2011, CMS will continue to apply the 3% rural add-on for HH services provided
in rural areas.

National Standardized 60-Day Episode Payment Rate and National Per-Visit
Amounts
Federal Register pages 70412 – 70413

Below are tables that reflect a comparison of final CY 2010 and final CY 2011 national standardized 60-day
episode payment rate and national per-visit amounts for both urban and rural HH agencies (HHAs). The final
payment rates reflect the 2.1% marketbasket update, the ACA-mandated 1.0 percentage point marketbasket
reduction, 3.79% coding adjustment reduction (the per-visit amounts are not subject to the 3.79% coding
reduction), and 2.5% reduction related to the outlier policy change.

HH payment rates for URBAN HH providers:




HH payment rates for RURAL HH providers (rates include 3.0% rural add-on):




HHAs that do not successfully participate in the HH pay-for-reporting program will receive a 2.0 percentage
point reduction to the national 60-day episode payment rate and per-visit amounts. For a complete

                                                     4
discussion of the quality reporting program, refer to the “HH Quality Data “Pay-For-Reporting” Program”
section.

Payment for Non-Routine Medical Supplies
Federal Register pages 70414 – 70415

Background: Prior to 2008, HH PPS, payments for non-routine medical supplies (NRS) have been included
in the national 60-day episode payment rate. The amount related to NRS was calculated using cost data from
facilities’ audited cost reports. In CY 2008, CMS carved out the NRS component from the 60-day episode rate
and established a separate national NRS conversion factor with six severity group weights to provide more
adequate reimbursement for episodes with a high utilization of NRS.

CMS’ Proposal: “For CY 2011, the proposed NRS conversion factor is $50.70.” The proposed NRS
conversion factor reflected the applications of the proposed 2.4% marketbasket update, the ACA-mandated 1.0
percentage point marketbasket reduction, 3.79% coding adjustment reduction, and 2.5% reduction related to
the outlier policy change.

CMS’ Final Rule: “For CY 2011, the NRS conversion factor is $52.54.”

The following table shows the final NRS payment amounts based on severity level for HHAs that participate in
the HH pay-for-reporting program. The amounts reflect the 2.1% final rule marketbasket update, the ACA-
mandated 1.0 percentage point marketbasket reduction, and 2.5% reduction related to the outlier policy change.
In a change from the proposed rule, CMS will not apply the 3.79% coding adjustment reduction to the NRS
payment amounts for CY 2011.

                            Severity         Points        Relative     Payment
                             Level         (Scoring)       Weight       Amount
                               1                0           0.2698       $14.18
                               2              1-14          0.9742       $51.18
                               3             15-27          2.6712      $140.34
                               4             28-48          3.9686      $208.51
                               5             49-98          6.1198      $321.53
                               6              99+          10.5254      $553.00




IV. HH QUALITY DATA “PAY-FOR-REPORTING” PROGRAM
Federal Register pages 70400 – 70404

Background: The DRA of 2005 authorized the Secretary to develop a quality data pay-for-reporting program
for HHAs and make HH quality data available to the public. HHAs that fail to successfully participate in the
HH pay-for-reporting program receive reduced HH payment rates through a reduction of 2.0 percentage points
to the HH marketbasket update. CMS makes HH quality data available to the public through the HH Compare
Web site.



                                                       5
Under the current HH pay-for-reporting program, CMS derives measures of home health care quality from the
OASIS assessment instrument.

HH Conditions of Participation (CoPs) require that all HHAs participating in Medicare and Medicaid collect
and report OASIS data. Because measures of HH quality used for the current HH pay-for-reporting program
are derived from the OASIS assessment instrument, HHAs that meet the current HH CoPs during a defined
time period of time are deemed to have successfully participated in the current HH pay-for-reporting program.

On January 1, 2010, CMS implemented the use of OASIS-C which modified the prior OASIS-B1data set.
Data from the OASIS-B1assessment instrument allowed CMS to derive and publicly report only outcome
measures related to home health care. The implementation of OASIS-C now allows CMS to derive and
publicly report on both HH outcomes and process of care measures.

In addition to the successful submission of OASIS data, beginning with CY 2012 payment determinations,
CMS will require the submission of HH patient satisfaction data from the HH Consumer Assessment of
Healthcare Providers and Systems (HHCAHPS) survey in order for HHAs to be deemed to have successfully
participated in the HH pay-for-reporting program. As set forth in the CY 2010 HH PPS final rule, HHAs
began collecting HHCAHPS data during CY 2010, that will be used for CY 2012 payment determinations.

Currently, the HH Compare Web site makes available to the public, quality data on 9 HH outcome measures
and 13 HH process of care measures derived from the OASIS instrument. CMS anticipates that it will begin
publicly reporting HHCAHPS survey data on the HH Compare Web site in the spring/summer of 2011.

HH PAY-FOR-REPORTING PAYMENT DETERMINATIONS
CY 2011 Payment Determinations
CMS’ Proposal: “We are proposing for CY 2011 to consider OASIS assessments submitted by HHAs to CMS
in compliance with HHA Conditions of Participation for episodes beginning on or after July 1, 2009 and
before July 1, 2010 as fulfilling the quality reporting requirement for CY 2011.”

“We propose to reconcile the OASIS submissions with claims data in order to verify full compliance with the
quality reporting requirements in CY 2011 . . .”

CMS’ Final Rule: CMS is adopting its proposal as final without modification.

HHCAHPS survey data is not used for CY 2011 payment determinations.

HHAs that are certified on or after May 1, 2010 are excluded from the CY 2011 payment determinations under
the HH pay-for-reporting program.

CY 2012 Payment Determinations
For CY 2012 payment determinations, in addition to complying with the OASIS assessment requirements,
HHAs will be required to collect and submit HHCAHPS survey data. This is the first year in which HH
patient satisfaction data will be used under the HH pay-for-reporting program. Specifically, CMS in the CY
2010 HH final rule established the following HHCAHPS data collection and submission timelines for CY
2012 payment determinations:




                                                     6
                                                                             Submission Deadline to the
              Data Collection Period
                                                                              HHCAHPS Data Center

              3rd Quarter 2010 Data (“dry run data” where HHAs were
                                                                                  January 21, 2011
              asked to collect data for at least one month in the quarter)

              4th Quarter 2010 Data (beginning of continuous
                                                                                   April 21, 2011
              collection)


               st
              1 Quarter 2011 Data                                                  July 21, 2011



HHAs must contract with and approved HHCAHPS survey vendor. The vendor, with oversight from the
HHA, will administer and submit HHCAHPS survey data to CMS. A list of approved survey vendors and
other information regarding the HHCAHPS survey is available online at https://www.homehealthcahps.org.

CMS notes that HHAs should target 300 completed HHCAHPS survey annually. Smaller HHAs that are
unable to meet the 300 survey threshold should survey all HHCAHPS eligible patients.

HHAs that are certified on or after April 1, 2011 and HHAs with fewer than 60 HHCAHPS eligible unique
patients from April 1, 2009 through March 31, 2010 would be exempt from the HHCAHPS reporting
requirements related to CY 2012 payment determinations. For HHAs with fewer than 60 HHCAHPS eligible
unique patients, the deadline to apply for the survey exemption is January 21, 2011. A form HHAs must use to
submit their patient counts is available online at: https://www.homehealthcahps.org.

A reconsiderations and appeals process is being developed for HHAs that fail to meet the HHCAHPS data
collection requirements. CMS will detail these procedures in the CY 2012 HH payment rule. During
September through October 2011, CMS will compile a list of HHAs that are not compliant with OASIS–C
and/or HHCAHPS requirements for CY 2012 payment determinations. These HHAs would receive explicit
instructions on how to prepare a request for reconsideration of the CMS decision. CMS will allow 30 days for
HHAs to file their requests for reconsideration. By December 31, 2011, CMS would provide their final
determination for CY 2012 payment determinations. HHAs have a right to appeal to the Prospective
Reimbursement Review Board (PRRB) if they are not satisfied with the CMS determination.

CY 2013 Payment Determinations
For CY 2013 payment determinations, in addition to complying with the OASIS assessment requirements,
HHAs will be required to continue to collect and submit HHCAHPS survey data. For the first time, a full
year’s worth of HHCAHPS data will be used under the HH pay-for-reporting program. Specifically, HHAs
must meet the following HHCAHPS data collection and submission timelines for CY 2013 payment
determinations:




                                                            7
                                                                   Submission Deadline to the
            Data Collection Period
                                                                    HHCAHPS Data Center

             nd
            2 Quarter 2011 Data                                         October 21, 2011


            3rd Quarter 2011 Data                                       January 21, 2012

             th
            4 Quarter 2011 Data                                          April 21, 2012


            1st Quarter 2012 Data                                         July 21, 2012


As is the case for CY 2012 payment determinations, certain HHAs are exempt from the HHCAHPS reporting
requirements related to CY 2013 payment determinations. HHAs that are certified on or after April 1, 2012
and HHAs with fewer than 60 HHCAHPS eligible unique patients from April 1, 2010 through March 31, 2011
would be exempt from the HHCAHPS reporting requirements related to CY 2013 payment determinations.
CMS is eliminating the “full” exemption for newly certified HHAs. HHAs that receive a Medicare
certification during CY 2012 will be required to begin HHCAHPS data collection and submission the quarter
following receipt of the CMS Certification Number (CCN). For HHAs with fewer than 60 HHCAHPS eligible
unique patients, the deadline to apply for the survey exemption is January 21, 2012. A form HHAs must use to
submit their patient counts is available online at: https://www.homehealthcahps.org.

PUBLIC REPORTING OF HH QUALITY DATA
Outcomes and Process of Care Measures
CMS’ Proposal: CMS proposed to change the set of OASIS outcome measures that will be publicly reported
beginning in July 2011. CMS did not propose any changes to the HH process of care measures.

CMS proposed to add one new National Quality Forum (NQF)-endorsed outcome measure:
   Increase in Number of Pressure Ulcers

CMS proposed to discontinue the public reporting of three outcome measures no longer endorsed by the NQF:
   Discharge to community,
   Improvement in Urinary Incontinence, and
   Emergent Care for Wound Infections, Deteriorating Wound Status

In addition, the implementation of the use of OASIS-C required CMS to modify two outcome measures:
      Improvement in Bed Transferring– this measure replaces the previously reported measure
         improvement in transferring.
      Emergency Department Use Without Hospitalization–this measure replaces the previously reported
         Emergent Care measure.

CMS’ Final Rule: CMS is adopting its proposal as final without modification.

OASIS–C outcome measures will be available to preview in May 2011 and will be publicly reported in July
2011. OASIS–C process measures were available to preview as of September 2010 and were publicly reported
in October 2010.


                                                     8
Below is a table that shows the HH quality measures derived from the OASIS assessment instrument and
reported by CMS on the HH Compare Web site:


 Outcome Measures                                           Process Measures
 Currently Reported                                         Publicly Reported as of October 2010
 Improvement in ambulation/locomotion                       Timely initiation of care
 Improvement in bathing                                     Influenza immunization received for current flu season
 Improvement in bed transferring *                          Pneumococcal polysaccharide vaccine ever received
                                                            Heart failure symptoms addressed during short-term
 Improvement in management of oral medications
                                                            episodes
                                                            Diabetic foot care and patient education implemented
 Improvement in pain interfering with activity
                                                            during short-term episodes of care
 Emergency Department Use without Hospitalization *         Pain assessment conducted
 Improvement in dyspnea                                     Pain interventions implemented during short-term episodes
 Acute care hospitalization                                 Depression assessment conducted
                                                            Drug education of all medications provided to
 Improvement in the status of surgical wounds
                                                            patient/caregiver during short-term episodes
 Emergent Care for Wound Infections, Deterioration
                                                            Falls risk assessment for patients 65 or older
 Wound Status **
 Improvement in urinary incontinence **                     Pressure ulcer prevention plans implemented
 Discharge to community **                                  Pressure ulcer risk assessment conducted
                                                            Pressure ulcer prevention included in the plan of care
 Outcome Measures
 Publicly Reported as of July 2011
 Increase in number of pressure ulcers
 Notes:
 * Modifications as a result of the change to OASIS-C
 ** Retired Measures

HHCAHPS Survey Data
CMS anticipates that the first public reporting of HHCAHPS data on the HH Compare Website will be in the
spring/summer 2011. For public reporting purposes, CMS will utilize composite measures and global ratings
of care from the HHCAHPS survey. Each composite measure consists of four or more questions regarding one
of the following related topics:
      Patient care;
      Communications between providers and patients; and
      Specific care issues (medications, home safety and pain).

There are also two global ratings; the first rating asks the patient to assess the care given by the HHA’s care
providers; and the second asks the patient about his/her willingness to recommend the HHA to family and
friends.

According to CMS, the HHCAHPS data displays will be very similar to those of the Hospital CAHPS
(HCAHPS) data displays and presentations on Hospital Compare, where the patients’ perspectives of care data
from HCAHPS are displayed along with the hospital clinical measures of quality.

The first public reporting of HHCAHPS data will include data that were collected in the voluntary period of
HHCAHPS data collection (October 2009 through September 2010), prior to the period when HHCAHPS data
collection will count toward the CY 2012 payment determinations. HHAs will be able to suppress the public


                                                        9
reporting of data collected in the voluntary period of data collection. HHCAHPS data collected during the dry
run period (3rd quarter 2010) will not be publicly reported on the HH Compare Web site.




V. FACILITY-LEVEL ADJUSTMENTS

Wage Index
Federal Register pages 70410 – 70412

Background: CMS is required by law to adjust HH payment rates to account for geographic area wage
differences. CMS defines the HH PPS labor market areas according to the Core-based Statistical Areas
(CBSAs) used in the Inpatient PPS. The pre-rural floor, pre-reclassified hospital wage index used to adjust the
HH payment rates is based on the geographic area in which the beneficiary received the HH services.

CMS’ Final Rule: For CY 2011, CMS will continue to use “…the pre-floor, pre-reclassified hospital wage
index data results…” as the “…adjustment to the labor portion of the costs….”
In addition, “the labor-related share . . . is 77.082 percent . . . .”




VI. CASE-LEVEL ADJUSTMENTS

Cost Outliers
Federal Register pages 70397 – 70400

Background: Outlier payments provide additional payment for extremely high-cost cases. Currently, if an
HHA’s costs for an episode of care (measured by the number of visits multiplied by the wage index-adjusted
national per-visit amount) exceeds the fixed-loss threshold (measured by the case-mix and wage-adjusted
payment for the episode plus a 0.67 fixed-dollar loss [FDL] ratio times the national standardized 60-day
episode payment rate), the agency receives an outlier payment that equals 80% of the HHA’s costs over the
fixed-loss threshold.

For CY 2010, as a result of a CMS analysis that showed estimated outlier payments were greater than twice the
statutory limit of 5.0% of total HH payments, CMS implemented a policy to reduce outlier payments from
5.0% to 2.5% of total HH PPS payments. In implementing this policy, CMS returned 2.5% to the HH payment
rates (see “HH Payment Rate Reduction Due to Outlier Policy Change” section above). In addition, CMS
applied a cap of no more than 10% per agency for outlier payments.

CMS’ Proposal: The ACA mandates that CMS continue the outlier policy changes established by the agency
for CY 2010.

“The Affordable Care Act Section 3131(b) requires that we (1) Reduce the standard payment rates by 5
percent, (2) pay no more than 2.5 percent of total estimated payments for outliers, and (3) apply a 10% agency
aggregate outlier cap.”

For CY 2011, the HH outlier change mandated by the ACA requires CMS to maintain the HH outlier pool at
2.5% of total payments (as established by the agency in CY 2010) but reduce HH payment rates by 5.0%
                                                      10
thereby reducing total HH payments by 2.5% (see “HH Payment Rate Reduction Due to Outlier Policy
Change” section above).

In addition, CMS proposes that “maintaining a FDL ratio of 0.67, in conjunction with a 10 percent cap on
outlier payments at the agency level, would pay more than the 2.5 percent target of outlier payments . . .”

CMS’ Final Rule: CMS is adopting its proposal as final without modification.

Low-Utilization Payment Adjustment (LUPA) Add-on
Federal Register pages 70413 – 70414

Background: For HH episodes with four or fewer visits, HHAs receive a LUPA. Under these circumstances,
the HHA is paid a wage-adjusted national average payment per visit according to the type of visit provided.
Currently, all LUPA episodes receive the same per-visit payment amount regardless of the costs associated
with lengthier start of care visits, a common characteristic of LUPA episodes.

CMS’ Final Rule: “For CY 2011, the add-on to the LUPA payment to HHAs that submit the required quality
data will be updated by the HH market basket update of 1.1 percent” resulting in an add-on payment of
$93.31.

The LUPA add-on payment is subject to the final outlier policy discussed above, however it “is not subject to
the 3.79 percent reduction related to the nominal increase in case mix.”




VII. THERAPY COVERAGE REQUIREMENTS
Federal Register pages 70389 – 70397

Background: CMS, concerned under the initial implementation of the HH PPS that therapy services would be
under-provided because of the high-cost associated with these services established a 10-visit therapy threshold
to identify ‘‘high’’ therapy cases and pay HHAs significantly more for patients receiving high therapy.

Concerned that the 10-visit threshold offered too strong of a financial incentive to provide 10 therapy visits
when a lower number of visits was potentially more clinically appropriate, CMS, for CY 2008, established a
system of three therapy visit thresholds. The current therapy thresholds are set at 6 visits, 14 visits, and 20
visits. Payment for additional therapy visits between the three thresholds increases gradually, incorporating a
declining rather than a constant payment amount per added therapy visit.

Despite the revisions in the therapy thresholds, CMS, in the proposed rule, cited analysis by the Medicare
Payment Advisory Commission (MedPAC) that suggested payment incentives related to therapy services
continue to influence treatment patterns. MedPAC, in its 2010 report suggested that improved guidelines that
more specifically identify patients who are most appropriate for HH care would facilitate more appropriate and
uniform use of the benefit.

CMS’ Proposal: “To address the concerns of MedPAC, we are proposing to clarify our policies regarding
coverage of therapy services at 409.44(c) in order to assist HHAs, and to curb misuse of the benefit.”

CMS’ Final Rule: CMS is adopting its proposed clarifications to the current regulations and policies
surrounding the coverage of therapy services.

                                                      11
The specific clarifications are available on Federal Register pages 70389 – 70397.

The clarifications surround coverage requirements, coverage criteria, functional reassessment expectations, and
documentation expectations of physical therapist assistants, occupational therapy assistants, and qualified
therapists. Also addressed are clarifications related to the expectation that the beneficiary condition will
improve materially in a reasonable period of time and that services are reasonable in amount, frequency, and
duration in order for therapy services to be covered in the home health setting.

In addition to better identifying patients who are most appropriate for therapy services, CMS believes the
improved guidelines could slow case-mix growth that the agency believes is not related to real case mix
change. CMS, in the proposed rule, cited its analysis of case-mix change related to the 3.79% HH coding
reduction and identified increases in the number of therapy services per episode as a major factor in case-mix
growth.

“By describing more clearly the therapy coverage criteria in the home health setting, thereby enabling
providers to better understand when providing therapy to home health patients is appropriate, we believe that
beginning in calendar year 2011, a slower rate of nominal case-mix growth may be achieved.”




VIII. OTHER PROVISIONS
Capitalization
Federal Register pages 70417 – 70419

Background: In 1998, CMS released a final rule that required HHAs to submit proof of sufficient capital to
operate the newly formed HHA for the three-month period after the effective date of its provider agreement.
Any HHA that is issued a new provider number is considered a newly formed HHA, including cases of transfer
of ownership. This rule was enacted to “ensure that an HHA is adequately capitalized when it becomes a
Medicare provider.”

CMS’ Proposal: CMS proposed “to require a prospective HHA to meet the capitalization requirements from
the time of application submission through three months past conveyance of Medicare billing privileges by the
Medicare contractor.”

Therefore, CMS proposed to require an HHA to “submit verification of compliance . . . (1) at the time of
application submission, (2) during the period in which a State Agency or CMS-approved accreditation
organization is making a determination as to whether the provider is in compliance with the Conditions of
Participation; and (3) within three months immediately following the issuance of Medicare billing privileges.”

In addition, CMS proposed to “add meeting the initial reserve operating funds requirement . . . as an
enrollment requirement for prospective home health providers.” Specifically, Medicare will deny or revoke
Medicare billing privileges to any HHA that cannot provide supporting documentation that they meet the initial
reserve operating funds requirement within 30 days of a contractor request.

CMS’ Final Rule: CMS is adopting its proposal as final without modification.

Change of Ownership
                                                      12
Federal Register page 70419 – 70427

Background: Before CY 2010, CMS’ policy recommended surveys when there was a change of ownership,
but did not set rules for when the survey should take place. This allowed a change of ownership to occur
without the new owner undergoing a survey.

In CY 2010, CMS modified this policy to require owners of an HHA that sell, transfer, or relinquish ownership
within 36 months after the effective date of their Medicare enrollment, that the provider agreement and
Medicare billing privileges do not transfer to the new owner. The new owner of the existing HHA would
instead be required to enroll in the Medicare program as a new provider and obtain a state survey or
accreditation.

CMS’ Proposal: CMS proposed “exemptions . . . for certain legitimate transactions . . . .” The following
were proposed to be exempt from the 36-month rule beginning in CY 2011:

       “A publicly-traded company is acquiring another HHA and both entities have submitted cost reports
        to Medicare for the previous five (5) years.
       An HHA parent company is undergoing an internal corporate restructuring, such as a merger or
        consolidation, and the HHA has submitted a cost report to Medicare for the previous five (5) years.
       The owners of an existing HHA decide to change the existing business structure . . . the individual
        owners remain the same, and there is no change in majority ownership. . . .
       The death of an owner who owns 49 percent or less . . . interest in an HHA.”

CMS’ Final Rule: CMS is adopting its proposal with some modification. CMS is replacing the proposed
“publicly-traded exception” with an exception for any existing HHA that has submitted two full consecutive
years of Medicare cost reports. CMS is eliminating the 5-year period cost report submission requirement
proposed for HHAs undergoing an internal corporate restructuring. CMS is removing the proposed
requirement that there be no change in majority ownership from the exception for a HHA that is changing their
existing business structure. Lastly, CMS is removing the 49% ownership threshold for the exception related to
the death of an owner.

Physician Certification and Recertification of the HH Plan of Care (POC)
Federal Register pages 70427 – 70433

Background: Several statutory and regulatory requirements promote the physician’s active involvement in
home health services and CMS continues to propose ways to encourage “more direct ‘in-person’ patient
encounters” with physicians. The POC for providing HH services is required to be established and reviewed
periodically by a physician for the services to qualify for Medicare payment. The physician must confirm that
the patient is confined to his or her home and “needs skilled nursing care on an intermittent basis or physical
or speech therapy.”

The ACA requires physicians to document that they or a specified non-physician practitioner has had a “face-
to-face encounter with the patient incident to the services involved” prior to certification that the patient is
eligible for Medicare home health benefits. The non-physician practitioner that may perform this face-to-face
patient encounter can be a nurse practitioner or clinical nurse specialist that is working with the physician, a
certified nurse-midwife, or a physician assistant.

CMS’ Proposal: As required by the ACA, CMS proposed to revise its regulations for CY 2011 and
subsequent calendar years “such that for initial certification, prior to a physician signing that certification . . .

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the physician . . . must document that a face-to-face encounter (including through the use of telehealth if
appropriate) has occurred no more than 30 days prior to the home health start-of-care date by himself or
herself, or by an authorized non-physician practitioner . . . .”

In addition, CMS proposed that if the clinical condition of the patient changes after the initial face-to-face
encounter such that the primary reason for that patient receiving home care changes, another face-to-face
encounter must occur within two weeks after the start of the home health episode.

If the face-to-face encounter does not occur in the 30 days prior to the start of the home health episode, it must
occur within two weeks after the start of care.

CMS’ Final Rule: CMS is adopting its proposal as final with the some modification. Specifically, CMS will
“…allow the encounter to occur up to 90 days prior to the start of care, if the reason for the encounter is
related to the reason the patient comes to need home health care. If no such encounter has occurred, we will
allow the encounter to occur up to 30 days after the start of care.”




IX. FUTURE HH PPS ENHANCEMENTS
Reporting of Additional Data on the HH Claim
Federal Register pages 70396 – 70397

Background: Citing 2009 and 2010 MedPAC reports that suggest improvements to the HH PPS that would
mitigate payment incentives and improve the case-mix weights, CMS is planning to require HHAs to report
additional data on the HH claim. According to CMS, these additional data will help the agency “differentiate
between these deemed skilled services and direct care skilled nursing or restorative therapy. We believe that
these data will help us better understand services provided, enabling us to more accurately address
overutilization vulnerabilities.”

Beginning in CY 2011, CMS is planning to require HHAs to report additional data on the HH claim.

Data collection requirements are handled via a separate administrative process, and are not included as
part of this final rule. However, CMS has described the additional data collection requirements in the
proposed and final rules to prepare the field for implementation.

Therapy Services
Currently, CMS uses the following G-codes to define therapy services in the home health setting:
    G0151: Services of physical therapist in home health setting, each 15 minutes.
    G0152: Services of an occupational therapist in home health setting, each 15 minutes.
    G0153: Services of a speech-language pathologist in home health setting, each 15 minutes.

CMS is planning to revise the current definitions for existing G-codes described above to include in the
descriptions that they are intended for the reporting of services provided by a qualified physical or occupational
therapist or speech-language pathologist. Additionally, CMS is planning to require the reporting of two
additional G-codes to report the delivery of therapy services by assistants.

“The following are draft descriptions for those revised and new G-codes, for the reporting of restorative
therapy visits by qualified therapists and qualified assistants.
                                                       14
       G0151 Services performed by a qualified physical therapist in the home health setting, each 15
        minutes.

       G0152 Services performed by a qualified occupational therapist in the home health setting, each 15
        minutes.

       G0153 Services performed by a qualified speech-language pathologist in the home health setting,
        each 15 minutes.

       G-Code1 Services performed by a qualified physical therapist assistant in the home health setting,
        each 15 minutes.

       G-Code2 Services performed by a qualified occupational therapist assistant in the home health
        setting, each 15 minutes.”

CMS is also planning to require new G-codes for the reporting of the establishment or delivery of therapy
maintenance programs by qualified therapists.

“The following are draft descriptions for those new G-codes, for the reporting of the establishment or delivery
of therapy maintenance programs by therapists:

       G-Code3 Services performed by a qualified physical therapist, in the home health setting, in the
        establishment or delivery of a safe and effective therapy maintenance program, each 15 minutes.

       G-Code4 Services performed by a qualified occupational therapist, in the home health setting, in the
        establishment or delivery of a safe and effective therapy maintenance program, each 15 minutes.

       G-Code5 Services performed by a qualified speech-language pathologist, in the home health setting,
        in the establishment or deliver of a safe and effective therapy maintenance program, each 15
        minutes.”

Skilled Nursing Services
Currently CMS uses the following G-code for the reporting of skilled nursing services in the home:
     G0154 Skilled services of a nurse in the home health setting, each 15 minutes.

CMS is planning to revise the current definition for the existing G-code for skilled nursing services (G0154),
and require HHAs to use G0154 only for the reporting of direct skilled nursing care to the patient by a licensed
nurse. Additionally, CMS is planning to require three new G-codes:

       “G0154 Skilled services of a licensed nurse in the home health setting, each 15 minutes.

       G-Code7 Skilled services of a licensed nurse, in the training and/or education of a patient or family
        member, in the home health setting, each 15 minutes.”

       Two new G-codes to address skilled services by a licensed nurse, in the delivery of management &
        evaluation of the plan of care while a patient’s treatment regime is stabilized, in the home health
        setting, each 15 minutes AND skilled services by a licensed nurse, in the delivery of observation and
        assessment of the patient’s condition while a patient’s treatment regime is stabilized, in the home

                                                      15
        health setting, each 15 minutes.

HIPPS Codes and Claims Processing
Federal Register pages 70433 – 70435

Background: HHAs are required to report all OASIS data as a condition of participation and they must
encode and electronically transmit the completed OASIS assessment to CMS in a standard format. The
standard format includes a Health Insurance Prospective Payment System (HIPPS) code, which is generated by
grouper software. Once the agency transmits the OASIS assessment and corresponding HIPPS code to CMS,
the CMS OASIS submission system validates the transmitted OASIS items, including the HIPPS code.

CMS has experienced a proliferation of incidents where the agency-submitted HIPPS code does not match the
CMS HIPPS code. CMS maintains that its HH PPS grouper software used to validate HIPPS codes is the
official grouper software of HH PPS. This same software is available for free and can be downloaded from the
CMS Web site. Vendors should use this grouper software in their programs to process OASIS and generate a
HIPPS codes for agencies. If the HH PPS grouper software is used and performs correctly in vendors’
programs, there should be no difference between HIPPS codes generated by an agency or CMS.

When the CMS OASIS submission system finds HIPPS code errors, it informs agencies of those errors via the
“final validation report,” a report generated and sent back to the agency. The final validation report includes
the wrong HIPPS code submitted by the agency and the corrected HIPPS code validated by CMS. The
corrected CMS HIPPS code is the code that should be billed on the claim.

Since 2008, there has been an increase in HIPPS coding errors. HHAs have expressed concerns over the
frequent grouper updates that result in additional complexity which increases their chances of submitting a
claim with an incorrect HIPPS code. They have also expressed concerns about the unexpected costs and
increased burden on the HHA that is caused by the frequent grouper changes.

CMS’ Final Rule: CMS did not propose and is not establishing any changes to address the recent issues
related to HIPPS coding errors. Rather, CMS solicited public comments on a suggested change to assign the
HIPPS code to the HH PPS bill during claim processing. This change would require HHAs to report all the
OASIS items necessary to group the episode on the HH PPS bill and could allow CMS to group HH PPS
claims centrally. CMS will continue to assess the feasibility of such changes.




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