Medicare Program; Home Health Prospective Payment System Rate Update for Calendar Year 2011; Changes in Certification Requirements for Home Health Agencies and Hospices, 43236-43306 [2010-17753]

Agencies

• Centers for Medicare & Medicaid Services
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 75, Number 141 (Friday, July 23, 2010)]
[Proposed Rules]
[Pages 43236-43306]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-17753]



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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, 418, 424, et al.



Medicare Program; Home Health Prospective Payment System Rate Update 
for Calendar Year 2011; Changes in Certification Requirements for Home 
Health Agencies and Hospices; Proposed Rule

Federal Register / Vol. 75 , No. 141 / Friday, July 23, 2010 / 
Proposed Rules

[[Page 43236]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 409, 418, 424, 484, and 489

[CMS-1510-P]
RIN 0938-AP88


Medicare Program; Home Health Prospective Payment System Rate 
Update for Calendar Year 2011; Changes in Certification Requirements 
for Home Health Agencies and Hospices

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would set forth an update to the Home 
Health Prospective Payment System (HH PPS) rates, including: The 
national standardized 60-day episode rates, the national per-visit 
rates, the non-routine medical supply (NRS) conversion factors, and the 
low utilization payment amount (LUPA) add-on payment amounts, under the 
Medicare prospective payment system for HHAs effective January 1, 2011. 
This rule also proposes to update the wage index used under the HH PPS 
and, in accordance with The Affordable Care Act of 2010 (The Affordable 
Care Act), Public Law 111-148, to update the HH PPS outlier policy. In 
addition, this rule proposes changes to the home health agency (HHA) 
capitalization requirements. This rule further proposes to add 
clarifying language to the ``skilled services'' section. Finally, this 
rule incorporates new legislative requirements regarding face-to-face 
encounters with providers related to home health and hospice care.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on September 14, 
2010.

ADDRESSES: In commenting, please refer to file code CMS-1510-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to https://www.regulations.gov. Follow the instructions under 
the ``More Search Options'' tab.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-1510-P, P.O. Box 1850, 
Baltimore, MD 21244-1850.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-1510-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments before the close of the comment period 
to either of the following addresses:
    a. For delivery in Washington, DC--

Centers for Medicare & Medicaid Services, Department of Health and 
Human Services, Room 445-G, Hubert H. Humphrey Building, 200 
Independence Avenue, SW., Washington, DC 20201.
    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.

    If you intend to deliver your comments to the Baltimore address, 
please call (410) 786-7195 in advance to schedule your arrival with one 
of our staff members.
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    Submission of comments on paperwork requirements. You may submit 
comments on this document's paperwork requirements by following the 
instructions at the end of the ``Collection of Information 
Requirements'' section in this document.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT:
Randy Throndset, (410) 786-0131 (overall HH PPS).
James Bossenmeyer, (410) 786-9317 (for information related to payment 
safeguards).
Doug Brown, (410) 786-0028 (for quality issues).
Kathleen Walch, (410) 786-7970 (for skilled services requirements and 
clinical issues).

SUPPLEMENTARY INFORMATION:
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. EST. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

Table of Contents

I. Background
    A. Statutory Background
    B. System for Payment of Home Health Services
    C. Updates to the HH PPS
II. Provisions of the Proposed Regulation
    A. Case-Mix Measurement
    B. Hypertension Diagnosis Coding Under the HH-PPS
    C. Therapy Coverage Requirements
    D. Collecting Additional Claims Data for Future HH PPS 
Enhancements and Soliciting Comments on HH PPS Improvements
    E. Outlier Policy
    1. Background
    2. Regulatory Update
    3. Statutory Update
    4. Outlier Cap
    5. Loss Sharing Ratio and Fixed Dollar Ratio
    6. Solicitation of Comments Regarding Imputed Costs
    F. Proposed CY 2011 Payment Update
    1. Home Health Market Basket Update
    2. Home Health Care Quality Improvement
    a. OASIS
    b. Home Health Care CAHPS Survey (HH CAHPS)
    3. Home Health Wage Index
    4. Proposed CY 2011 Payment Update
    a. National Standardized 60-Day Episode Rate
    b. Proposed Updated CY 2011 National Standardized 60-Day Episode 
Payment Rate
    c. Proposed National Per-Visit Rates Used To Pay LUPA's and 
Compute Imputed Costs Used in Outlier Calculations

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    d. Proposed LUPA Add-On Payment Amount Update
    e. Non-Routine Medical Supply Commission Factor Update
    5. Rural Add-On
    G. Enrollment Provisions for HHAs
    1. HHA Capitalization
    2. Change of Ownership
    3. Change in Majority Ownership Within 36 Months of Initial 
Enrollment or Change in Ownership
    H. Home Health Face-to-Face Encounter
    I. Solicitation of Comments: Future Plans To Group HH PPS Claims 
Centrally During Claims Processing
    J. Proposed New Requirements Affecting Hospice Certifications 
and Recertification
III. Collection of Information Requirements
IV. Regulatory Impact Analysis

I. Background

A. Statutory Background

    The Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) enacted on 
August 5, 1997, significantly changed the way Medicare pays for 
Medicare home health services. Section 4603 of the BBA mandated the 
development of the home health prospective payment system (HH PPS). 
Until the implementation of a HH PPS on October 1, 2000, home health 
agencies (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 home health services provided under a plan of care 
(POC) that were paid on a reasonable cost basis by adding section 1895 
of the Social Security Act (the Act), entitled ``Prospective Payment 
for Home Health Services''. Section 1895(b)(1) of the Act requires the 
Secretary to establish a HH PPS for all costs of home health services 
paid under Medicare.
    Section 1895(b)(3)(A) of the Act requires that: (1) The computation 
of a standard prospective payment amount include all costs for home 
health 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 level differences among HHAs.
    Section 1895(b)(3)(B) of the Act addresses the annual update to the 
standard prospective payment amounts by the home health applicable 
percentage increase. Section 1895(b)(4) of the Act governs the payment 
computation. Sections 1895(b)(4)(A)(i) and (b)(4)(A)(ii) of the Act 
require the standard prospective payment amount to be adjusted for 
case-mix and geographic differences in wage levels. Section 
1895(b)(4)(B) of the Act requires the establishment of an appropriate 
case-mix change adjustment factor that adjusts 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 home health 
services furnished in a geographic area compared to the applicable 
national average level. Pursuant to 1895(b)(4)(C), 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, as amended by Section 3131 of the 
Affordable Care Act signed by the President on March 23, 2010 (Pub. L. 
111-148), gives the Secretary the option to make additions or 
adjustments 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 3131(b) revised Section 1895(b)(5) so 
that total outlier payments in a given fiscal year (FY) or year may not 
exceed 2.5 percent of total payments projected or estimated.
    In accordance with the statute, as amended by the BBA, we published 
a final rule (65 FR 41128) in the Federal Register on July 3, 2000, to 
implement the 1997 HH PPS legislation. The July 2000 final rule 
established requirements for the new HH PPS for home health 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 on 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 on November 29, 1999. The requirements 
include the implementation of a HH PPS for home health 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 home health services under Part A and Part B. For a complete and 
full description of the HH PPS as required by the BBA, see the July 
2000 HH PPS final rule (65 FR 41128 through 41214).
    On February 8, 2006, the Deficit Reduction Act of 2005 (Pub. L. 
109-171) (DRA) was enacted. Section 5201 of the DRA added new Section 
1895(b)(3)(B)(v) to the Act, which requires HHAs to submit data for 
purposes of measuring health care quality, and links the quality data 
submission to payment. This requirement is applicable for CY 2007 and 
each subsequent year. If an HHA does not submit quality data, the home 
health market basket percentage increase is reduced 2 percentage 
points. In accordance with the statute, we published a final rule (71 
FR 65884, 65935) in the Federal Register on November 9, 2006, to 
implement the pay-for-reporting requirement of the DRA, which was 
codified at 42 CFR 484.225(h) and (i).
    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 (MMA) of 2003 (Pub. L. 108-173) as 
amended by section 5201(b) of the Deficit Reduction Act of 2005 (Pub. 
L. 109-171). The amended section 421(a) of the MMA requires, for home 
health 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, that the Secretary 
increase by 3 percent the payment amount otherwise made under section 
1895 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 home health disciplines (skilled 
nursing, home health aide, physical therapy, speech-language pathology, 
occupational therapy, and medical social services). Payment for non-
routine medical 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.4.e). Payment for durable medical 
equipment covered under the home health benefit is made outside the HH 
PPS payment. To adjust for case-mix, the HH PPS uses a 153-category 
case-mix classification to assign patients to a home health resource 
group (HHRG). Clinical needs, functional status, and service 
utilization are computed from responses to selected data elements in 
the OASIS assessment instrument.
    For episodes with four or fewer visits, Medicare pays on the basis 
of a national

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per-visit rate by discipline; 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 HH PPS

    As required by section 1895(b)(3)(B) of the Act, we have 
historically updated the HH PPS rates annually in the Federal Register.
    Our 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 Medicare prospective payment system for HHAs for CY 
2008. For analysis performed on CY 2005 home health claims data 
indicated a 12.78 percent increase in the observed case-mix since 2000. 
The case-mix represented the variations in conditions of the patient 
population served by the HHAs. Then a more detailed analysis was 
performed on the 12.78 percent increase in case-mix to see if any 
portion of that increase was associated with a real change in the 
actual clinical condition of home health patients. CMS examined data on 
demographics, family severity, and non-home health Part A Medicare 
expenditure data to predict the average case-mix weight for 2005. As a 
result of that analysis, CMS recognized that an 11.75 percent increase 
in case-mix was due to changes in coding practices and documentation 
rather than to treatment of more resource-intensive patients.
    To account for the changes in case-mix that were not related to an 
underlying change in patient health status, CMS implemented a reduction 
over 4 years in the national standardized 60-day episode payment rates 
and the NRS conversion factor. That reduction was to be taken at 2.75 
percent per year for three years beginning in CY 2008 and at 2.71 
percent for the fourth year in CY 2011. CMS indicated that it would 
continue to monitor for any further increase in case-mix that was not 
related to a change in patient status, and would adjust the percentage 
reductions and/or implement further case-mix change adjustments in the 
future.
    Most recently, we published a final rule in the Federal Register on 
November 10, 2009 (74 FR 58077) that set forth the update to the 60-day 
national episode rates and the national per-visit rates under the 
Medicare prospective payment system for home health services for CY 
2010.

II. Provisions of the Proposed Regulation

A. Case-Mix Measurement

    Since the HH PPS CY 2008 proposed rule, we have stated in HH PPS 
rulemaking that we would continue to monitor case-mix changes in the HH 
PPS and to update our analysis to measure change in case-mix, both 
nominal and real. We have continued to monitor case-mix changes, and 
our latest analysis continues to support the payment adjustments which 
we implemented in the CY 2008 HH PPS. As discussed in the CY 2010 rule, 
the analysis then indicated a 15.03 percent increase in the overall 
observed case-mix since 2000. We next determined what portion of that 
increase was associated with a real change in the actual clinical 
condition of home health patients.
    As was done for the CY 2008 final rule, we used data from the pre-
PPS period to estimate a regression-based, predictive model of 
individual case-mix weights based on measures of patients' demographic 
characteristics, clinical status, inpatient history, and Medicare costs 
in the time period leading up to their home health episodes. The 
regression coefficients from this model were applied to later episodes, 
allowing estimation of how much of the change in observed case-mix is 
attributable to changes in patient characteristics over time. We 
classify the sources of case-mix change into two major types: predicted 
and unpredicted. Predicted (or real) change is based on the 
relationship between patient characteristics and case-mix (that is 
coefficients from the regression model) and changes in the 
characteristics of patients over time (that is the change in mean 
values of the model covariates). Unpredicted (or nominal) change is the 
portion of case-mix change that cannot be explained by changes in 
patient characteristics. Nominal case-mix change is assumed to reflect 
differences over time in agency coding practices.
    Our best estimate in the CY 2010 rule was that approximately 9.77 
percent of the 15.03 percent increase in the overall observed case-mix 
between the IPS baseline and 2007 was real, that is, due to actual 
changes in patient characteristics. Our estimate was that a 13.56 
percent nominal increase (15.03--(15.03 x 0.0977)) in case-mix was due 
to changes in coding procedures and documentation rather than to 
treatment of more resource-intensive patients.
    We have since updated that analysis to include an additional year 
of data (CY 2008) for this CY 2011 proposed rule. This analysis was 
based on regression coefficients from CY 2008 episodes that reflect the 
relationship between model covariates and case-mix using the HHRG153 
system. We used these regression coefficients combined with changes in 
patient characteristics to measure the amount of predicted case mix 
change for 2007 through 2008.
    Our analyses indicate a 19.40 percent increase in the overall 
observed case-mix since 2000. Our estimate is that approximately 10.07 
percent of the total increase in the overall observed case-mix between 
the IPS baseline and 2008 is real, that is, associated with actual 
changes in patient characteristics. Specifics regarding this analysis 
are described later in this section.
    The estimate of real case-mix change is a small proportion of the 
total change in case mix since the IPS baseline. With each successive 
sample, beginning with 2005 data (in the CY 2008 final rule), the 
predicted average national case-mix weight has changed very little 
because the variables (such as preadmission location, non-home health 
Part A Medicare expenditures, and inpatient stay classification, as 
mentioned above) in the model used to predict case-mix are not changing 
much. At the same time, the actual average case-mix has continued to 
grow steadily. Thus, the gap between the predicted case-mix value, 
which is based on information external to the OASIS, and the actual 
case-mix value, has increased with each successive year of data. 
Consequently, as a result of this analysis, we recognize that a 17.45 
percent nominal increase (19.40 - (19.40 x 0.1007)) in case-mix is due 
to changes in coding practices and documentation rather than to 
treatment of more resource-intensive patients. 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. Specifically, from 2000 to 2007, we 
observed about a 1 percent per year increase in total average case-mix. 
However, that annual change increased to slightly more than 4 percent 
between 2007 and 2008.
    We wanted to determine how this growth in case-mix weight from 2007 
to 2008 was affected by the changes implemented with the 2008 
refinements. We identified these average case-mix values by estimating 
the average case mix weight on the 2007 claims of a random 20 percent 
sample of HH beneficiaries. We used two groupers--the 80-group 2007 
grouper

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(average = 1.2606) and the 153-group 2008 grouper (average = 1.2552). 
The difference in averages was -0.0054, indicating that the changeover 
to the new 2008 grouper algorithm itself slightly reduced the average 
case mix weight.
    Next, to assess behavioral changes which may have been incentivized 
by the 2008 refinements, we estimated the average case mix weights on 
both 2007 claims data and 2008 claims data for a random 20 percent 
sample of HH beneficiaries, using the 2008 grouper. (Only non-LUPA 
episodes are included in this analysis, as LUPA episodes are not paid 
using case mix weights.) We compared the resulting averages. The total 
change using the 2008 grouper was 0.0533: the 2007 average was 1.2552 
and the 2008 average was 1.3085. It is important to note that this 
comparison of the 2007 and 2008 claims data uses the same grouper (the 
153-group system, which includes co-morbid conditions), and that this 
estimate of national average case-mix on the 2007 sample differs very 
little (that is -.0054) from the estimate we derived from using the 
actual grouper in effect in 2007.
    We decomposed the change in average case-mix weight, 0.0533, into 
an effect of the 2007-2008 shift in the distribution of the number of 
therapy visits per episode, and an effect of the 2007-2008 change in 
the average case-mix weight at each count of therapy visits in the 
distribution. The latter is assumed to result mostly from the 
incentives to report co-morbid conditions, stemming from the 
introduction of the 153 group system.
    The former is assumed to result mostly from a behavioral response 
on the part of agencies to the new system of therapy thresholds 
introduced in 2008. Prior to 2008, case mix weights were generally 
highest for episodes that met the single, 10-visit therapy threshold. 
Under the system in place since 2008, multiple thresholds above and 
below 10 therapy visits were created. By creating multiple thresholds 
and severity steps between thresholds, we intended to move incentives 
away from payment-driven therapy treatment plans to clinically driven 
ones. However, creating a new set of high therapy thresholds above 13 
therapy visits, to adequately compensate agencies for treating the 
relatively few patients needing such large amounts of therapy, also may 
have had unintended consequences. One such consequence may have been 
that agencies responded by padding treatment plans to reach the new, 
higher thresholds. Episodes which would require such high numbers of 
therapy visits generally would have very high case mix weights (mostly 
weights of 2 or higher).
    The decomposition method first holds the average case mix weight 
constant (at the 2007 values) at each level of therapy visits, and 
measures the effect of the shift to the new distribution of therapy 
visits. The method then holds the distribution of therapy visits 
constant (at the 2007 distribution) and measures the effect of the 
change in average case mix weight at each level of therapy visits. The 
results were that .0205, or 38 percent (.0205/.0533=.38), of the total 
change in average case-mix weights from 2007 to 2008 was due to the 
shift in distribution of therapy visits per episode.
    Figure 1 illustrates the 2007 through 2008 change in the proportion 
of episodes delivering each individual number of therapy visits. 
Several changes are notable. First, the percentage of episodes 
increased at the new, higher therapy visit thresholds (14-19 and 20+). 
The share of episodes at 20 visits or more increased from 4.4 percent 
in 2007 to 5.3 percent in 2008, a substantial increase of about 20 
percent. The large shift towards therapy visit levels of 14 and higher 
was unexpected.
    Second, the percentage of episodes at the single therapy threshold 
(10 visits) that existed before 2008 decreased, as did the percentage 
of episodes between 11 and 13 therapy visits. In 2007, as a proportion 
of all episodes with at least one therapy visit, episodes with 10 to 13 
therapy visits were 32 percent; by 2008, only 21 percent of all therapy 
episodes were in this range. (Note: Figure 1 displays percents of total 
non-LUPA episodes, not just episodes with at least one therapy visit.) 
Third, the proportion of episodes at the new threshold below 10 visits, 
which is 6 visits, increased, as did the proportion of episodes with 7, 
8, or 9 visits. The system of therapy steps we defined for the 2008 
refinements included a step for 7-9 visits (see Table 4 of The August 
29, 2007 final rule [72 FR 49762]). Finally, the proportion of total 
episodes receiving any therapy visits increased slightly, from 54 
percent to 55 percent. The average number of therapy visits per episode 
increased from 5.63 to 5.83 (data not shown).
BILLING CODE 4120-01-P

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[GRAPHIC] [TIFF OMITTED] TP23JY10.000

BILLING CODE 4120-01-C

[[Page 43241]]

    The remaining .0328, or 62 percent of the total change 
(.0328/.0533=.62) in overall average case-mix weight from 2007 to 2008 
was due to an increase in the average case-mix weight at each level of 
therapy visits per episode. Table 1 shows the increases.
[GRAPHIC] [TIFF OMITTED] TP23JY10.001

    The averages increased for all levels of therapy visits per 
episode, with the change ranging from 0.02 to 0.05. The percentage 
changes appear to decline with more therapy visits, because the level 
of the average case mix value increases with each number of therapy 
visits; however, there was no rising trend in the absolute change as 
the number of therapy visits increased.
    Looking directly into the reporting of comorbidities, we examined 
the proportion of episodes that had nonblank diagnoses reported in 
M0240 (Diagnoses and Severity Index). Our concern was that agencies 
were reporting more comorbidities, since the refined system allocates 
case mix points for secondary diagnoses, whereas the system prior to 
the refinements did not. Longstanding OASIS manual language instructs 
providers to encode diagnosis on the OASIS only when the condition is 
unresolved and only when the condition has an impact on the home health 
care. The data comparing the percentages are shown in Table 2.
    The results were a substantial increase in the percentage of 
episodes with a reported diagnosis code in M0240: A 10.4 percentage 
point increase from 2007-2008 in M0240d; a 16.4 percentage point 
increase in M0240e; and a 19.9 percentage point increase in M0240f. 
Table 2 also indicates that these changes represented a significantly 
larger increase in completion rates in these diagnosis fields compared 
to annual increases of about 3.0 percentage points in 2005-2006, and 
about 7.0 percentage points in 2006-2007. We note that we published the 
proposed refinements in the May 2007 Federal Register (72 FR 25356). 
Release of the proposal around mid-year could have been a factor in the 
higher growth of these episodes during the period 2006 through 2007, 
relative to 2005 through 2006.
    We believe it is unlikely that the actual disease burden of home 
health patients, as indicated by reported comorbidities, changed so 
dramatically in a single year; instead, we believe the incentives to 
report more comorbidities under the refined case mix system are the 
reason for the large increases in reported comorbidities.

[[Page 43242]]

[GRAPHIC] [TIFF OMITTED] TP23JY10.002

    An illustrative instance of diagnosis coding change under the HH 
PPS refinements is hypertension. Our analysis of 8 years of claims 
shows that reporting of this diagnosis grew exceedingly quickly in 
2008. Table 3 shows the proportion of HH PPS claims reporting essential 
hypertension, according to ICD-9-CM hypertension code, for 2001 to 
2008. The data indicate a sudden jump of approximately 12 percentage 
points in reporting of unspecified hypertension when the refined HH PPS 
added hypertension as a case mix code in 2008. Annual changes in use of 
this code were small up until 2005 (in the range of 0.1 to 2.4 
percentage points), after which there were two years of 6-percentage 
point increases, followed by the 12-percentage point increase 
coincident with the 2008 refinements. Malignant hypertension is 
unusual; it has been falling as a percentage of episodes. Reporting of 
benign hypertension, which is somewhat more common than malignant 
hypertension, has been slowly rising since 2001.
[GRAPHIC] [TIFF OMITTED] TP23JY10.003

    At the same time, there are indications that the services 
utilization associated with the most commonly reported hypertension 
diagnosis code, hypertension, unspecified, no longer is responsible for 
added resource requirements in home care. Originally, hypertension was 
selected for inclusion in the refined HH PPS system because data 
suggested it elevated utilization. Table 4a illustrates the trends; it 
shows the average number of visits per episode, according to type of 
hypertension diagnosis code. (We exclude outlier cases because of the 
effect that growing numbers of outlier episodes may have had beginning 
around 2005 and 2006; extremely large numbers of visits in the 
distribution can distort the average.)
    Generally episodes reporting malignant or benign hypertension 
exhibit a decline in number of visits per episode during the middle of 
the 8-year

[[Page 43243]]

period. The averages then rise slightly. The averages for episodes 
reporting unspecified hypertension declined until 2005, and then 
stabilized.
    Comparing these data with averages for episodes not reporting 
hypertension, we see that hypertension is generally associated with 
more visits, especially if the hypertension was reported as malignant 
or benign. However, in 2007, the unspecified hypertension episodes had 
an average number of visits equivalent to that of the non-HBP episodes. 
By 2008, the average number of visits for episodes not reporting 
hypertension rose slightly, while the average for unspecified 
hypertension did not. As a result, by 2008, the average number of 
visits for claims reporting unspecified hypertension is slightly lower 
than the average for claims not reporting hypertension. Further, the 
benign hypertension episodes, with a slightly increased share of the 
sample between 2007 and 2008, exhibited a small reduction in the 
average number of visits.
[GRAPHIC] [TIFF OMITTED] TP23JY10.004

    This pattern illustrates an expected effect of nominal coding 
change. We observe a 12-percentage point increase in use of unspecified 
hypertension, but no longer do these hypertension patients use more 
resources than others. These results appear possibly consistent with a 
phenomenon in which agencies increased their reporting of hypertension 
in situations where it did not meet the home health diagnosis reporting 
criteria. More generally, the results are suggestive of changed coding 
practice in which less-severe episodes are being reported with 
hypertension in 2008 than used to be the case.
    These analyses of the change in the therapy visit distribution, 
change in average case mix weights at each level of therapy visits, 
increased use of secondary diagnosis fields, and the change in 
reporting of hypertension all suggest that the refinements which were 
implemented in 2008 affected case-mix weights, with greater therapy 
visits and reporting of co-morbidities each as contributing factors. 
However, as described below, the analyses do not indicate a significant 
increase in real case-mix. Experience with previous analyses reported 
in our past regulations shows that relatively small proportions of the 
total case mix change since the IPS baseline can be considered real 
case mix change.
    Our estimate that 10.07 percent of the total percentage change in 
the national average case mix weight since the IPS baseline is due to 
real change in case mix, is consistent with past results. Most of the 
case mix change has been due to improved coding, coding practice 
changes, and other behavioral responses to the prospective payment 
system, such as more use of high therapy treatment plans. We are 
therefore proposing to exercise authority to compensate for nominal 
case mix change by making reductions to the PPS rates, as we have done 
since 2008.
    For this year's analysis, we used the same approach, a model 
designed to measure real change in case mix, which we developed for the 
CY 2008 HH PPS final rule (72 FR 49841) and continue to use for HH PPS 
rulemaking. For this year's analyses, we utilized a fuller version of 
the 3M APR-DRG grouper that allowed us to expand the number of APR-DRG-
related groups in the model. As previously, we included indicators for 
each APR-DRG group's different severity level if at least 25 episodes 
had the APR-DRG/severity combination in the IPS period file. This 
expanded APR-DRG model was used to re-estimate the IPS period model of 
case-mix weight.
    We also rebased the expanded APR-DRG model on CY2008 data, using 
case-mix weights produced by the refined (153-group) HH PPS grouper. 
One slight difference in the rebased model is that because we are using 
2008 data, the ``living arrangement'' variables are missing on follow-
up OASIS assessments. Consequently, we were not able to use this 
variable in the re-based model.
    We used the results of that rebasing to predict real case mix for 
2007. The national average case mix weight in 2008 was 1.3085. The 
rebased model of real case mix predicts a quantity change in real case 
mix of -0.0025 when working backwards from 2008 (1.3085) to 2007 
(1.3060). The predicted level of real case mix in 2007, which we 
derived from the IPS-based model is 1.1152. To compute a predicted real 
case mix level for 2008, we increased the predicted level of real case 
mix in 2007, 1.1152, by the percentage growth (1.3085/1.3060) in real 
case mix that we estimated from the rebased model. The result is a 
predicted level of real case

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mix in 2008 of 1.1173 ((1.3085/1.3060) x 1.1152 = 1.1173).
    To compute the predicted quantity change in real case mix from the 
IPS baseline to 2008, we subtracted from the IPS baseline average case 
mix weight from the predicted level the real case mix in IPS, for a 
quantity change of 0.0214 (1.1173 - 1.0959 = 0.0214). The total 
difference in case mix from baseline to 2008 is 0.2126 (1.3085 - 1.0959 
= 0.2126). Therefore, the quantity change from baseline to 2008 in real 
case mix represents a 10.07 percent increase (0.0214/0.2126 = 0.1007 or 
10.07 percent).
    The percent change in overall case mix from the IPS baseline to 
2008 is 19.40 percent ((1.3085/1.0959) - 1 = 0.1940 or 19.40 percent). 
To estimate the percent growth in case mix due to nominal change (that 
is, change in case mix not due to actual changes in patient acuity), we 
reduced the overall 19.40 percent change in case mix by the 10.07 
percent increase due to real case mix change, which yielded a residual 
of 17.45 percent ((1 - 0.1007) * 0.1940 = 0.1745).
    As we fully described earlier in this proposed rule, our August 29, 
2007, final rule for CY 2008 finalized a reduction over 4 years in the 
national standardized 60-day episode payments rates to account for an 
11.75 percent increase in case-mix which was not related to treatment 
of more resource intense patients. The 11.75 percent increase was based 
on an analysis of data through 2005. We finalized a 2.75 percent 
reduction each year for 2008, 2009 and 2010, and 2.71 percent reduction 
for CY 2011 to account for this growth in case-mix. We have stated in 
HH PPS rulemaking, since the CY 2008 HH PPS proposed rule, that we 
might find it necessary to adjust the annual offsets (case-mix 
reduction percentages) as new data became available. Because our 
current analysis reveals that nominal case-mix has continued to grow, 
we are faced with having to account for the additional increase in 
nominal case-mix beyond that which was identified for CY 2008 
rulemaking. If we were to account for the remainder of the 17.45 
percent residual increase in nominal case-mix over CY 2011 and CY 2012, 
we estimate that the percentage reduction to the national standardized 
60-day episode rates and the NRS conversion factor for nominal case-mix 
change for each of the two calendar years (2011 and 2012) of the case-
mix change adjustment would be 3.79 percent per year. If we were to 
fully account for the remaining residual increase in nominal case-mix 
in CY 2011, we estimate that the percentage reduction to the national 
standardized 60-day episode rates and the NRS conversion factor would 
be 7.43 percent. Because the Affordable Care Act contains other 
provisions which have an effect on HH PPS payments, we are not 
proposing to account for the entire residual increase in nominal case-
mix in CY 2011, instead we propose to account for the identified 
increase over CY 2011 and CY 2012. We propose to impose 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. Should we 
identify further increases in nominal case-mix as more current data 
become available, it is our intent to account fully for those increases 
when they are identified, rather than continuing to phase-in the 
reductions over more than 1 year. We will continue to monitor any 
future changes in case-mix as more current data become available and 
make updates as appropriate.

B. Hypertension Diagnosis Coding Under the HH PPS

    As part of this rule, we are proposing to remove ICD-9-CM code 
401.9, Unspecified Essential Hypertension, and ICD-9-CM code 401.1, 
Benign Hypertension, from the HH PPS case mix model's hypertension 
group, originally reflected in Table 2B of the August 29, 2007, CY 2008 
HH PPS final rule (72 FR 49762) (subsequent updates to Table 2B have 
been provided in HH PPS grouper software releases). In this section we 
explain the basis for this proposal.
    As part of our refinements to the HH PPS, beginning in CY 2008, 
unspecified hypertension and benign hypertension were included as 
diagnoses in our HH PPS case mix system. Recent analysis of home health 
diagnosis coding shows a significant change in the frequency of 
assigning certain hypertension diagnoses during CY 2008. Specifically, 
our analysis of HH PPS claims from 2001 to 2008 shows a sudden increase 
in the reporting of unspecified hypertension and benign hypertension on 
home health claims in CY 2008 (see Table 3: Percent of episodes 
reporting hypertension ICD-9-CM diagnosis codes: 2001-2008, of this 
proposed rule).
    Classification of blood pressure (BP) was revised in 2003 by the 
National Heart, Lung and Blood Institute (NHLBI) in their ``Seventh 
Report of the Joint National Committee on Prevention, Detection, 
Evaluation, and Treatment of High Blood Pressure'' (the JNC 7 report) 
and published in the May 21, 2003, Journal of the American Medical 
Association. These revisions provided specific clinical guidelines for 
prevention, detection, and treatment of high blood pressure. The 
guidelines, approved by the Coordinating Committee of the NHLBI's 
National High Blood Pressure Education Program (NHBPEP), also 
streamlined the steps by which doctors diagnose and treat patients. A 
key aspect of the guidelines includes the introduction of a ``pre-
hypertension'' level for individuals with a systolic blood pressure of 
120-139 mm Hg or a diastolic blood pressure of 80-89 mm Hg. This 
recognition represented a change from traditional medical views on the 
implications of blood pressures slightly above 120/80. Traditionally, 
such low levels were not considered a significant clinical finding. No 
diagnosis was reportable. There was no medical treatment ordered; nor 
was a change of lifestyle recommended.
    Based upon our review of the revised clinical guidelines, and our 
review of the ICD-9-CM classification of essential hypertension, if the 
patient is considered ``pre-hypertensive,'' some may conclude that a 
diagnosis of benign hypertension may be assigned. If an individual is 
designated as pre-hypertensive, the guidelines stipulate that this 
individual will generally require health promoting lifestyle 
modifications to prevent cardiovascular disease. Additional treatments 
may or may not be appropriate.
    The impact of the new guidelines for hypertension is the 
reclassification of certain patients to a hypertension diagnosis, 
whereas prior to the guidelines, no hypertension diagnosis was 
indicated. Furthermore, under the guidelines, some of the patients 
deemed hypertensive may not need skilled services. Moreover, as we 
described above, we see a substantial increase in the reporting of 
unspecified hypertension, along with some evidence that home health 
patients with either unspecified or benign hypertension no longer 
require extra resources. Given the new guidelines for hypertension and 
their impact on coding, along with coding behavior changes in 2008, we 
believe including unspecified and benign hypertension in the HH PPS 
case mix model reduces the model's accuracy. As such we do not believe 
that we should be including these diagnoses in our case-mix system.
    We also believe that the developments in clinical guidelines of 
recent years may have led to ambiguity in the definition of 
hypertension in the ICD-9-CM classification system. The ``ICD-9-CM 
Official Guidelines for Coding and Reporting'', and the alphabetic and 
tabular indexes of the ICD-9-CM published after May 2003 (effective 
date

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of the ``NHLBI Guidelines for Hypertension''), fail to include the 
NHLBI Blood Pressure (BP) guidelines and classification terminology. 
The NHLBI specific BP mmHg measurements and BP terms are not included 
in the ICD-9-CM classification system.
    In the August 29, 2007, CY 2008 HH PPS final rule, we removed 
diagnosis codes proposed in the NPRM if the code was assigned to a 
minor condition or mild symptom that may be found in the elderly 
population; codes that are non-specific or ambiguous; and codes that 
lack consensus for clear diagnostic criteria within the medical 
community. Due to their unclear relationship with NHLIB guidelines, the 
unspecified and benign hypertension codes fail to meet the criteria we 
laid out in 2007.
    In summary, continued inclusion of the unspecified and benign 
hypertension codes in the HH PPS case mix system threatens to move the 
HH PPS case-mix model away from a foundation of reliable and meaningful 
diagnosis codes that are appropriate for home care. Therefore, we are 
proposing to remove ICD-9-CM code 401.9, Unspecified Essential 
Hypertension, and ICD-9-CM code 401.1, Benign Essential Hypertension, 
from the HH PPS case mix model's hypertension group, in order to 
correlate with the goals of our HH PPS case-mix system.

C. Therapy Coverage Requirements

    With the inception of the HH PPS, as set forth in the July 3, 2000 
final rule (65 FR 41128), patients were grouped according to their 
therapy utilization status in order to ensure that patients who 
required therapy would maintain access to appropriate services. In the 
final rule, we described that we had performed research regarding how 
to use assessment information to predict how much therapy a patient 
would need over the course of a 60-day period. The research found that 
the assessment data could not predict the amount of required therapy 
with sufficient accuracy for use in the payment system. Knowing that 
under a PPS there is significant risk that providers might skimp on 
high-cost services such as therapy, we decided to establish a therapy 
threshold to ensure that therapy would not be under-provided. We used 
clinical judgment to determine what amount of therapy would need to be 
provided to ensure a meaningful amount of rehabilitation services to 
patients who could clearly benefit from it. We determined that this 
amount would be at least 8 hours of therapy services during the 60-day 
episode. Since the average therapy visit was 48 minutes long, it would 
take 10 visits to provide at least 8 hours worth of therapy. Therefore, 
we established a corresponding 10-visit therapy threshold to identify 
``high'' therapy cases, and paid home health agencies significantly 
more for patients receiving high therapy.
    In the years following the adoption of the HH PPS, we have 
continued to analyze the effectiveness of the 10-visit therapy 
threshold in ensuring that rehabilitation services were being provided 
to patients who could clearly benefit from them. Our analyses suggested 
that therapy was not being under-provided, but rather suggested that in 
many cases therapy was being over-provided. As described in the May 4, 
2007 HH PPS proposed rule (72 FR 25356), our analysis of the evidence 
suggested that the single 10-visit threshold offered too strong a 
financial incentive to provide 10 therapy visits when a lower amount of 
therapy was more clinically appropriate. In other words, the data 
suggested that financial incentives to provide 10 therapy visits 
overpowered clinical considerations in therapy prescriptions. During 
this time we conducted further research to model therapy need, but it 
was again unsuccessful. We explained in our proposed rule in May 2007 
that a return to per-visit payment for therapy visits did not meet our 
objectives for having a prospective payment system. Therefore, in the 
CY 2008 final rule, we established a system of three thresholds with 
graduated steps in between which met our objectives of retaining 
prospectivity in the payment system, reducing the strong incentive 
resulting from a single threshold, restoring clinical considerations in 
therapy provision, and paying more accurately for therapy utilization 
below the original 10-visit threshold. Those three thresholds are at 6 
therapy visits, 14 therapy visits, and 20 therapy visits. As a 
disincentive for agencies to deliver more than the appropriate, 
clinically determined number of therapy 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. In our May 4, 2007 HH PPS proposed rule, at 72 FR 
25363, we provided further details explaining the selection of these 
thresholds.
    Analysis of CY 2008 data continues to suggest that some HHAs may be 
providing unnecessary therapy. The 2008 data show a 30 percent increase 
in episodes with between 6-9 therapy visits, which suggests that the 
2008 changes may have been successful in improving clinical 
considerations in the volume of therapy provided. In their March 2010 
report MedPAC states that 2008 data also reveal a 26 percent increase 
of episodes with 14 or more therapy visits (MedPAC, Report to Congress: 
Medicare Payment Policy, Section B, Chapter 3, March 2010, p. 203). The 
increase in episodes with 14 or more therapy visits is especially 
evident in areas of the country where home health fraud is suspected, 
such as Miami-Dade, Florida.
    While this suggests that the therapy payment policies are 
vulnerable to fraud and abuse, the swift, across-the-board therapy 
utilization changes suggest another, more fundamental concern. MedPAC 
wrote that the magnitude of therapy utilization changes and their 
correlations with the payment threshold changes suggest that payment 
incentives continue to influence treatment patterns [MedPAC, 2010, p. 
206]. The Commissioners believed that payment policy is such a 
significant factor in treatment patterns because the criteria for 
receipt of the home health benefit are ill-defined. They 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 [MedPAC, 2010, p. 203]. 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.
    We believe these clarifications also could slow the case-mix growth 
which is unrelated to real changes in patient acuity (nominal case-
mix). As we described above in Section A (``Case Mix Measurement''), 
between 2007 and 2008 we observed a case-mix increase of more than 4 
percent. An analysis of this growth revealed that approximately 38 
percent of the total case mix change between 2007 and 2008 was due to 
the shift in distribution of therapy visits. 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.
Proposed Clarifications to 42 CFR 409.44(c)(1)
    Regulations at Sec.  409.44(c)(1) mandate that for physical 
therapy, speech language pathology, or occupational therapy to be 
covered under the home health benefit, therapy services must

[[Page 43246]]

relate directly and specifically to a treatment regimen, be established 
by the physician (after any needed consultation with a qualified 
therapist), that is designed to treat the beneficiary's illness or 
injury. A qualified therapist is one who meets the personnel 
requirements in the CoPs at 42 CFR 484.4. To ensure that therapy 
services relate directly and specifically to a treatment regimen 
designed to treat the beneficiary's illness or injury, we are proposing 
to clarify our coverage requirements. Specifically, we are proposing to 
revise Sec.  409.44(c)(1) so that, with respect to physical therapy, 
occupational therapy, and speech language pathology, we may clarify 
that:
     The patient's plan of care would include a course of 
therapy and therapy goals which would be consistent with the patient's 
functional assessment, both of which are included in the patient's 
clinical record. The patient's clinical record would document the 
necessity for the course of therapy described in the plan of care. 
Specifically, the clinical record would document how the course of 
therapy for the beneficiary's illness or injury is in accordance with 
accepted standards of clinical practice.
     Therapy treatment goals would be described in the plan of 
care, and they would be measurable. Specifically, therapy treatment 
goals would be such that progress toward those goals could be 
objectively measured. The goals would also pertain directly to the 
patient's illness or injury and the patient's resultant functional 
impairments.
     The patient's clinical record would demonstrate that the 
method used to assess a patient's function included the objective 
measurement of function in accordance with accepted standards of 
clinical practice. As such, successive functional assessments would 
enable comparison of successive measurements, thus enabling objective 
measurement of therapy progress.
    One example of objective measures is functional assessment 
individual item and summary findings (and comparisons to prior 
assessment results/clinical findings) from OASIS functional items or 
other commercially available therapy outcomes instruments. Similarly, 
another example would be functional assessment findings (and 
comparisons to prior assessment results/clinical findings) from tests 
and measurements validated in the professional literature, or used as 
part of accepted standards of clinical practice that are appropriate 
for the condition/function being measured.
Proposed Clarifications to 42 CFR 409.44(c)(2)(i)
    Current regulations at Sec.  409.44(c)(2)(i) mandate that for 
physical therapy, speech language pathology, or occupational therapy 
services to be covered in the home health setting, the services must be 
considered under accepted practices to be a specific, safe, and 
effective treatment for the beneficiary's condition.
    To clarify what we mean by ``accepted practice'' and ``effective 
treatment'', we are proposing to clarify home health therapy coverage 
criteria at Sec.  409.44(c)(2)(i). These clarifications describe our 
expectations that HHAs would regularly reassess a therapy patient's 
physical function, and would objectively measure a patient's progress 
toward therapy goals to determine whether therapy services continued to 
be effective, or whether therapy ceased to be covered. These 
clarifications also describe clinical record documentation expectations 
associated with documenting effective therapy progress.
    We are proposing to revise Sec.  409.44(c)(2)(i) as follows:
Functional Reassessment Expectations
    In order to ensure that a patient receiving home health therapy 
services appropriately remained eligible for the benefit in accordance 
with accepted practice, and that the services continued to be 
effective, the patient's function would be periodically reassessed by a 
qualified therapist. As we described above, for therapy to be covered 
in the home health setting, the method used to assess a patient's 
function would include objective measurement of function in accordance 
with accepted standards of clinical practice. As such, progress toward 
therapy goals would be objectively measurable by comparing measurements 
obtained at successive functional assessment time points. The objective 
measurements obtained from the periodic reassessment of function would 
reflect progress (or lack of progress) toward therapy goals, or 
achievement of therapy goals and the measurements would be documented 
in the clinical record.
    While a qualified therapist could include, as part of the 
functional assessment or reassessment, objective measurements or 
observations made by a PTA or OTA within their scope of practice, the 
qualified therapist would have to actively and personally participate 
in the functional assessment, and measure the patient's progress.
     For those patients requiring 13 or 19 therapy visits, the 
patient would be functionally re-assessed by a qualified therapist, 
minimally, on the 13th and the 19th therapy visit (thus requiring 
reassessment prior to the HH PPS therapy thresholds of 14 and 20 
therapy visits), and at least every 30 days.
     No subsequent therapy visits would be covered until the 
qualified therapist has completed the reassessment, objectively 
measured progress (or lack of progress) toward goals, determine if 
goals have been achieved or require updating, and documented the 
therapy progress in the clinical record. If the objective measurements 
of the reassessment do not reveal progress toward goals, the qualified 
therapist, together with the physician, would determined whether the 
therapy is still effective or should be discontinued. If therapy is 
continued, the clinical record would be documented, as described below, 
with a clinically supportable statement of why there is an expectation 
that anticipated improvement is attainable in a reasonable and 
generally predictable period of time.
    These reassessments would ensure that the patient was receiving 
effective care while also ensuring that, except for covered maintenance 
therapy as described later in this section, patients were not remaining 
on the benefit and continuing to receive therapy services after the 
therapy goals were met, or after improvement could no longer be 
expected.
Documenting ``Effective'' Therapy Progress
Assistant's Participation in Documenting ``Effective'' Therapy Progress
    We are proposing that physical therapist assistants or occupational 
therapy assistants could objectively document progress between the 
functional reassessments by a qualified therapist and/or physician. 
Clinical notes written by assistants are not complete functional 
assessments of progress.
    Only a qualified therapist would be able to document a patient's 
progress towards goals as measured during a functional reassessment, 
regardless of whether the assistant wrote other clinical notes. 
However, notes written by assistants are part of the clinical record 
and need not be copied into the reassessment documentation. Clinical 
notes written by assistants would supplement the functional 
reassessment documentation of qualified therapist and would include:
     The date that the clinical note was written; the 
assistant's signature and job title, or for dictated documentation, the 
identification of the assistant who

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composed the clinical note, and the date on which it was dictated;
     Objective measurements (preferred) or description of 
changes in status relative to each goal currently being addressed in 
treatment, if they occurred. Note that assistants would not make 
clinical judgments about why progress was or was not made, but could 
report the progress objectively.

Descriptions would make identifiable reference to the goals in the 
current plan of care.
Qualified Therapist's Responsibility in ``Effective'' Progress 
Documentation
    In addition to the proposed requirements above for clinical 
documentation by assistants, we are also proposing in Sec.  
409.44(c)(2)(i) that the patient's progress documentation by a 
qualified therapist would also include:
     Documentation of objective measurement obtained during the 
functional assessment and extent of progress (or lack thereof) toward 
each therapy goal.
     Plans for continuing or discontinuing treatment, with 
reference to evaluation results, and/or treatment plan revisions.
     Changes to goals or an updated plan of care that is sent 
to the physician for signature or for discharge.
     Documentation of objective evidence or a clinically 
supportable statement of expectation that: (1) The patient's condition 
has the potential to improve or is improving in response to therapy; or 
(2) maximum improvement is yet to be attained, and there is an 
expectation that the anticipated improvement is attainable in a 
reasonable and generally predictable period of time. Objective evidence 
would consist of standardized patient assessments, outcome measurement 
tools, or measurable assessments of functional outcome. Use of 
objective measures at the beginning of treatment, and during and/or 
after treatment would be required to quantify progress and support 
justifications for continued treatment.
Proposed Clarifications to 42 CFR 409.44(c)(2)(iii)
    Regulations at Sec.  409.44(c)(2)(iii) presently mandate that for 
therapy services to be covered in the home health setting, there must 
be an expectation that the beneficiary's condition will improve 
materially in a reasonable (and generally predictable) period of time 
based on the physician's assessment of the beneficiary's restoration 
potential and unique medical condition, or the services must be 
necessary to establish a safe and effective maintenance program 
required in connection with a specific disease, or the skills of a 
therapist must be necessary to establish a safe and effective 
maintenance program in connection with a specific disease or the skills 
of a therapist must be necessary to perform a safe and effective 
maintenance program. We would clarify these requirements:
     The first sentence currently states, ``There must be an 
expectation that the beneficiary's condition will improve materially in 
a reasonable (and generally predictable) period of time based on the 
physician's assessment of the beneficiary's restoration potential and 
unique medical condition.''
    We propose clarifying the regulatory text to clarify that 
``material'' improvement requires that the clinical record demonstrate 
that the patient is making functional improvements that are ongoing and 
of practical value, when measured against his or her condition at the 
start of treatment.
    We are proposing to clarify that the concept of rehabilitative 
therapy includes recovery or improvement in function and, when 
possible, restoration to a previous level of health and well-being.
    Covered therapy services under the home health benefit shall be 
rehabilitative therapy services unless they meet the criteria for 
maintenance therapy requiring the skills of a therapist as described 
below.
    We are proposing to clarify the regulatory text so that if an 
individual's expected rehabilitation potential would be insignificant 
in relation to the extent and duration of therapy services required to 
achieve such potential, therapy would not be considered reasonable and 
necessary, and therefore would not be covered as rehabilitative therapy 
services.
    We are also proposing to clarify the regulatory text to describe 
that therapy is covered as rehabilitative therapy when the skills of a 
therapist are necessary to safely and effectively furnish or supervise 
a recognized therapy service whose goal is improvement of an impairment 
or functional limitation.
    We are proposing to clarify in regulatory text that therapy would 
not be covered to effect improvement or restoration of function where a 
patient suffered a transient and easily reversible loss or reduction of 
function (e.g., temporary weakness which may follow a brief period of 
bed rest following surgery) which could reasonably be expected to 
improve spontaneously as the patient gradually resumes normal 
activities. Therapy furnished in such situations would not be 
considered reasonable and necessary for the treatment of the 
individual's illness or injury, and the services would not be covered.
    If at any point in the treatment of an illness, it was determined 
that the treatment was not rehabilitative and did not legitimately 
require the services of a qualified therapist for management of a 
maintenance program as described below, the services would no longer be 
considered reasonable and necessary and therapy would cease to be 
covered.
     As currently stated, Sec.  409.44(c)(2)(iii) also covers 
occupational therapy, physical therapy, or speech language pathology if 
the services are ``necessary to establish a safe and effective 
maintenance program required in connection with a specific disease.''
    We are proposing to clarify the existing regulatory text by adding 
that the specialized skill, knowledge and judgment of a therapist would 
be required in developing a maintenance program, and services would be 
covered to design or establish the plan, to ensure patien